þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ☑ No ¨☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨☐ No þ☑

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ☑ No ¨☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated ~~filer~~filer” and ~~large~~“large accelerated filer” in Rule 12b-2 of the Exchange Act.

~~Large accelerated filer~~ þ ~~Accelerated filer~~ ¨ ~~Non-accelerated filer~~ ¨ ~~Smaller reporting company~~ ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No þ☑

As of ~~December 18, 2012, 30,880,830~~November 21, 2016, 29,574,501 shares of the Registrant’s common stock were outstanding. The aggregate market value of shares of common stock held by non-affiliates as of April ~~27, 2012,~~1, 2016, was ~~$2,144,610,042~~$1,890,571,487 (based upon the closing sales price of ~~$69.87~~$64.20 per share).

Part III incorporates information by reference to the registrant’s definitive proxy statement, to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year ended ~~October 26, 2012.~~

Acquisition financing not being available on acceptable terms or at ~~all;~~all.

~~Encountering difficulties identifying and executing acquisitions;~~

~~Increased competition for targets, which may increase acquisition costs;~~

~~Consolidation in our industry reducing the number of acquisition targets; and~~

~~Competition laws and regulations preventing us from making certain acquisitions.~~

In addition, there are potential risks associated with growing our business through acquisitions, including the failure to successfully integrate and realize the expected benefits of an acquisition. For example, with any past or future acquisition, there is the possibility that:

The business culture of the acquired business may not match well with our culture;

Technological and product synergies, economies of scale and cost reductions may not occur as expected;

Management may be distracted from overseeing existing operations by the need to integrate acquired businesses;

We may acquire or assume unexpected liabilities;

Unforeseen difficulties may arise in integrating operations and systems;

We may fail to retain and assimilate employees of the acquired business;

We may experience problems in retaining customers and integrating customer bases; and

Problems may arise in entering new markets in which we may have little or no experience.

Failure to continue implementing our acquisition strategy, including successfully integrating acquired businesses, could have a material adverse effect on our business, financial condition and results of operations.

Future operating results could be impacted by sanctions against Russia.

In 2014, the U.S. and other countries expanded the sanctions against Russia, which increased the restrictions on sales of certain products, including aviation products, to Russia and to specified restricted parties in or affiliated with Russia. Our Avionics & Controls and Sensors & Systems segments have programs with Russian customers. We evaluated the impact of these sanctions and determined the impact from Canadian, European Union and U.S. sanctions against Russia on our sales to Russia was not material; however, increased sanctions could have a material impact on our sales to Russia in future periods.

We may have exposure to greater than anticipated tax liabilities and a higher effective tax rate.

We are subject to income taxes in the United States and foreign jurisdictions. Our effective tax rate is influenced by a number of factors, including, but not limited to, the mix of earnings in countries with differing statutory tax rates, modification on tax policy, interpretation of existing tax laws, and our ability to sustain our reporting positions on examination. Any adverse changes in those factors could have a negative effect on our effective tax rate and financial results.

In addition, the U.S. and foreign governments have introduced proposals for changes in tax legislation, or have adopted tax laws in response to the guidelines provided by the Organization for Economic Co-Operation and Development to address base erosion and profit shifting. These changes will increase tax uncertainty and may adversely impact our effective tax rate.

Our future financial results could be adversely impacted by asset impairment charges.

We are required to test both acquired goodwill and other indefinite-lived intangible assets for impairment on an annual basis based upon a fair value approach, rather than amortizing them over time. We have chosen to perform our annual impairment reviews of goodwill and other indefinite-lived intangible assets during the fourth quarter of each fiscal year. We also are required to test goodwill for impairment between annual tests if events occur or circumstances change that would more likely than not reduce our enterprise fair value below its book value. These events or circumstances could include a significant change in the business climate, including a significant sustained decline in an entity’s market value, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business, or other factors. If the fair market value is less than the book value of goodwill, we could be required to record an impairment charge. The valuation of reporting units requires judgment in estimating future cash flows, discount rates and estimated product life cycles. In making these judgments, we evaluate the financial health of the business, including such factors as industry performance, changes in technology and operating cash flows.

As we have grown through acquisitions, we have accumulated ~~$1.1~~$1.0 billion of goodwill, ~~and have $47.9~~$39.8 million of indefinite-lived intangible assets, and $353.2 million of definite-lived intangible assets, out of total assets of ~~$3.2~~$3.0 billion at October 26, 2012. As a result, the amount of any annual or interim impairment could be significant and could have a material adverse effect on our reported financial results for the period in which the charge is taken. During the third fiscal quarter of 2012, management performed a Step One impairment test for Racal Acoustics, Inc. (Racal Acoustics) upon identification of an indicator of impairment, since Racal Acoustics’ third quarter forecast projected an operating loss for fiscal 2012. Additionally, management determined that requirements for hearing protection devices for the U.S. Army would not recover in our five-year planning horizon in light of the cancellation of Humvee retrofits, delays in VIS-X and the slowdown in operational tempo of the U.S. armed forces as well as a global slowdown in defense spending. As required under U.S. GAAP, a Step Two impairment test was required because the current fair value of the business using a discounted cash flow and market approach was less than its carrying amount of the business. Under the Step Two impairment test, all assets and liabilities were assessed at fair value. The excess of the carrying amount of goodwill over the implied fair value of goodwill resulted in an impairment charge of $52.2 million.

We performed our annual impairment review for fiscal 2012 as of July 28, 2012, and our Step One analysis indicates that no impairment of goodwill or other indefinite-lived assets exists at any of our other reporting units. Our Souriau reporting unit’s margin in passing the Step One analysis was approximately 5%, mainly reflecting lower market valuation assumptions in 2012. Management expects that continued improvements in operations will result in favorable actual results compared with our original plan. It is possible, however, that as a result of events or circumstances, we could conclude at a later date that goodwill of $328.0 million at Souriau may be considered impaired. We also may be required to record an earnings charge or incur unanticipated expenses if, due to a change in strategy or other reasons, we determined the value of other assets has been impaired. These other assets include trade names of $36.2 million and intangible assets of $186.6 million. Our CMC Electronics Incorporated (CMC) reporting unit’s margin in passing the Step One analysis was about 10%, mainly reflecting lower forecast operating results due to the delay in booking new cockpit integration retrofits for military transport aircraft. Management expects that new opportunities for cockpit integration will result in favorable actual results compared to our original plan. It is possible, however, that as a result of events or circumstances, we could conclude at a later date that goodwill of $239.0 million at CMC may be considered impaired. We also may be required to record an earnings charge or incur unanticipated expenses if, due to a change in strategy or other reasons, we determined the value of other assets has been impaired. These other assets include trade names of $27.4 million and intangible assets of $73.9 million. Our Eclipse Electronic Systems, Inc. (Eclipse) reporting unit’s margin in passing the Step One analysis was about 14%, mainly reflecting lower forecast operating results due to uncertainty over defense spending beginning in fiscal 2014. Management expects new opportunities for embedded communication intercept signal intelligence applications will result in more favorable results compared to our current forecast. It is possible, however, that as a result of events or circumstances, we could conclude at a later date that goodwill of $67.4 million at Eclipse may be considered impaired. We also may be required to record an earnings charge or incur unanticipated expenses if, due to a change in strategy or other reasons, we determined the value of intangible assets of up to $42.9 million has been impaired.

A long-lived asset to be disposed of is reported at the lower of its carrying amount or fair value less cost to sell. An asset (other than goodwill and indefinite-lived intangible assets) is considered impaired when estimated future undiscounted cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not deemed recoverable, the asset is adjusted to its estimated fair value. Fair value is generally determined based upon estimated discounted future cash flows. As we have grown through acquisitions, we have accumulated $561.1 million of definite-lived intangible assets.September 30, 2016. As a result, the amount of any annual or interim impairment could be significant and could have a material adverse effect on our reported financial results for the period in which the charge is taken.

We performed our annual impairment review for fiscal 2016 as of July 1, 2016, and our review indicated that no impairment of goodwill or other indefinite-lived assets exists at any of our reporting units.

The amount of debt we have outstanding, as well as any debt we may incur in the future, could have an adverse effect on our operational and financial flexibility.

As of ~~October 26, 2012,~~September 30, 2016, we had approximately ~~$848.7 billion~~$698.8 million of long-term debt outstanding, ~~which is~~$155.0 million outstanding under the long-term credit facility, and $16.8 million in current maturities of long-term debt. Under our existing secured credit facility, we have a ~~$460~~$500 million revolving line of credit and a ~~€62.0~~$250.0 million term loan ~~(Euro~~(U.S. Term Loan). ~~Up to $100.0 million in letters of credit may be drawn in U.K. pounds or euros in addition to U.S. dollars.~~ The credit facility is secured by substantially all of the Company’s assets, and interest is based on standard inter-bank offering rates. In addition, we have unsecured foreign currency credit facilities that have been extended by foreign banks for up to ~~$67.8~~$27.8 million. Available credit under the above credit facilities was ~~$256.2~~$353.2 million at ~~October 26, 2012,~~September 30, 2016, reflecting bank borrowings of ~~$240.0~~$155.0 million and letters of credit of ~~$31.7~~$19.6 million.

We also have outstanding ~~$175.0~~€330.0 million ~~6.625% senior notes~~3.625% Senior Notes due in ~~March 2017 and $250.0 million 7.0% senior notes due in August 2020.~~April 2023 (2023 Notes). The indentures governing those notes and other debt agreements limit ~~but do not prohibit, us from incurring~~the amount of additional debt ~~in the future.~~ we may incur.

Our level of debt could have significant consequences to our business, including the following:

Depending on interest rates and debt maturities, a substantial portion of our cash flow from operations could be dedicated to paying principal and interest on our debt, thereby reducing funds available for our acquisition strategy, capital expenditures or other ~~purposes;~~purposes, including repurchases of outstanding shares of common stock, depending on market conditions, share price and other factors;

A significant amount of debt could make us more vulnerable to changes in economic conditions or increases in prevailing interest rates;

Our ability to obtain additional financing for acquisitions, capital expenditures or for other purposes could be impaired;

The increase in the amount of debt we have outstanding increases the risk of non-compliance with some of the covenants in our debt agreements which require us to maintain specified financial ratios; and

We may be more leveraged than some of our competitors, which may result in a competitive disadvantage.

~~The loss of a significant customer or defense program could have a material adverse effect on our operating results.~~

Some of our operations are dependent on a relatively small number of customers and aerospace and defense programs, which change from time to time. Significant customers in fiscal 2012 included The Boeing Company, Flame, General Electric, Hawker Beechcraft, Honeywell, Lockheed Martin, Northrop Grumman, Rolls-Royce, Sikorsky, and the U.S. Department of Defense. There can be no assurance that our current significant customers will continue to buy our products at current levels. The loss of a significant customer or the cancellation of orders related to a sole-source defense program could have a material adverse effect on our operating results if we were unable to replace the related sales.

Our revenues are subject to fluctuations that may cause our operating results to decline.

Our business is susceptible to seasonality and economic cycles, and as a result, our operating results have fluctuated widely in the past and are likely to continue to do so. Our revenue tends to fluctuate based on a number of factors, including domestic and foreign economic conditions and developments affecting the specific industries and customers we serve. For example, it is possible that a global recession could occur and result in a more severe downturn in commercial aviation and defense.

It is also possible that in the future our operating results in a particular quarter or quarters will not meet the expectations of securities analysts or investors, causing the market price of our common stock or senior notes to decline. We believe that quarter-to-quarter comparisons of our operating results are not a good indication of our future performance and should not be relied upon to predict our future performance.

A global recession may adversely affect our business operations and results, capital, and cost of capital.

12In the event of a global recession, our customers may choose to delay or postpone purchases from us until the economy and their businesses strengthen. Decisions by current or future customers to forgo or defer purchases and/or our customers’ inability to pay for our products may adversely affect our earnings and cash flow. A recession could also adversely affect our future cost of debt and equity. Any inability to obtain adequate financing from debt and equity sources could force us to self-fund strategic initiatives or even forgo some opportunities, potentially harming our financial position, results of operations, and liquidity.

Our operations depend on our production facilities throughout the world. These production facilities are subject to physical and other risks that could disrupt production.

Our production facilities could be damaged or disrupted by a natural disaster, war, political unrest, terrorist activity or a pandemic. In addition, our facilities are subject to local labor conditions that may lead to labor strikes, work stoppages or high levels of employee turn-over that could also disrupt our business operations. Several of our production facilities are located in California, and thus are in areas with above average seismic activity and may also be at risk of damage in wildfires. Although we have obtained property damage and business interruption insurance for our production facilities, a major catastrophe such as an earthquake or other natural disaster at any of our sites, or significant labor strikes, work stoppage, political unrest, war or terrorist activities in any of the areas where we conduct operations, could result in a prolonged interruption of our business. Any disruption resulting from these events could cause significant delays in shipments of products and the loss of sales and customers. We cannot assure you that we will have insurance to adequately compensate us for any of these events.

Political and economic changes in foreign countries and markets, including foreign currency fluctuations, may have a material effect on our operating results.

Foreign sales originating from non-U.S. locations were approximately 49% of our total sales in fiscal ~~2012,~~2016, and we have manufacturing facilities in a number of foreign countries. A substantial portion of our Avionics & Controls operations is based in Belgium, Canada and the U.K., and a substantial portion of our Sensors & Systems operations is based in the U.K. and France. We also have manufacturing operations in China, the Dominican Republic, Germany, India, Japan, Mexico, and Morocco. Doing business in foreign countries is subject to numerous risks, including political and economic instability, restrictive trade policies of foreign governments, changes in the local labor-relations climate, economic conditions in local markets, health concerns, inconsistent product ~~regulation~~regulations or unexpected changes in regulatory and other legal requirements by foreign agencies or governments, the imposition of product tariffs and the burdens of complying with a wide variety of international and U.S. export laws and differing regulatory requirements. To the extent that foreign sales are transacted in a foreign currency, we are subject to the risk of losses due to foreign currency fluctuations. In addition, we have substantial assets denominated in foreign currencies, primarily the Canadian dollar, ~~U.K.~~British pound and euro, that are not offset by liabilities denominated in those foreign currencies. These net foreign currency investments are subject to material changes in the event of fluctuations in foreign currencies against the U.S. dollar.

~~We are subject to numerous regulatory requirements, which could adversely affect our business.~~

Among other things, we are subject to the Foreign Corrupt Practices Act, or FCPA, and the U.K. Bribery Act which generally prohibit companies and their intermediaries from bribing foreign officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment. In particular, we may be held liable for actions taken by our strategic or local partners even though our partners are not subject to the FCPA or the U.K. Bribery Act. Any determination that we have violated the FCPA or the U.K. Bribery Act could result in sanctions that could have a material adverse effect on our business, financial condition and results of operations.

We are also subject to a variety of international laws, as well as U.S. export laws and regulations, such as the International Traffic in Arms Regulations (ITAR), which generally restrict the export of defense products, technical data and defense services. We have filed voluntary disclosure reports in fiscal 2012 at certain U.S. operating units and voluntarily reported certain technical violations of U.S. export laws and regulations. We continue to enhance our internal and external auditing compliance program. While management believes that this increased oversight is adequate to address the technical violations, the impact of filing these voluntary disclosure statements covering technical violations, as well as compliance with these laws and regulations and any changes thereto, are difficult to predict. The costs to maintain compliance with these regulations, or failure to comply with these regulations could result in penalties, loss, or suspension of contracts or other consequences, any of which could adversely affect our operations or financial condition in the future.

A downturn in the aircraft market could adversely affect our business.

The aerospace industry is cyclical in nature and affected by periodic downturns that are beyond our control. The principal customers for manufacturers of commercial aircraft are the commercial and regional airlines, which can be adversely affected by a number of factors, including a recession, increasing fuel and labor costs, intense price competition, outbreak of infectious disease and terrorist attacks, as well as economic cycles, all of which can be unpredictable and are outside our control. Any decrease in demand resulting from a downturn in the market could adversely affect our business, financial condition and results of operations.

We may not be able to compete effectively.

Our products and services are affected by varying degrees of competition. We compete with other companies and divisions and units of larger companies in most markets we serve, many of which have greater sales volumes or financial, technological or marketing resources than we do. Our principal competitors include: Astronautics, BAE, Bose, Eaton, ECE, Elbit, EMS, GE Aerospace, Honeywell, IAI, L-3, Otto Controls, RAFI, Rockwell Collins, SELEX, Telephonics, Thales, Ultra Electronics, and Universal Avionics Systems Corporation in our Avionics & Controls segment; Ametek, Amphenol, Eaton, ECE, ~~Goodrich, Hamilton Sundstrand,~~ MPC Products, Meggitt, STPI-Deutsch, and ~~Tyco~~TE Connectivity in our Sensors & Systems segment; and Chemring, Doncasters, ~~Hitemp,~~Hi-

Temp, J&M, JPR Hutchinson, Kmass, Meggitt (including Dunlop Standard Aerospace Group), Rheinmetall, Trelleborg, ULVA, UTAS, and UMPCO in our Advanced Materials segment. The principal competitive factors in the commercial markets in which we participate are product performance, on-time delivery performance, quality, service and price. Maintaining product performance requires expenditures in research and development that lead to product improvement and new product introduction. Companies with more substantial financial resources may have a better ability to make such expenditures. We cannot assure that we will be able to continue to successfully compete in our markets, which could adversely affect our business, financial condition and results of operations.

Our backlog is subject to modification or termination, which may reduce our sales in future periods.

We currently have a backlog of orders based on our contracts with customers. Under many of our contracts, our customers may unilaterally modify or terminate their orders at any time. In addition, the maximum contract value specified under a government contract awarded to us is not necessarily indicative of the sales that we will realize under that contract. For example, we are a sole-source prime contractor for many different military programs with the U.S. Department of Defense. We depend heavily on the government contracts underlying these programs. Over its lifetime, a program may be implemented by the award of many different individual contracts and subcontracts. The funding of government programs is subject to congressional appropriation.

Changes in defense procurement models may make it more difficult for us to successfully bid on projects as a prime contractor and limit sole-source opportunities available to us.

In recent years, the trend in combat system design and development appears to be evolving toward the technological integration of various battlefield components, including combat vehicles, command and control network communications, advanced technology artillery systems and robotics. If the U.S. military procurement approach continues to require this kind of overall battlefield combat system integration, we expect to be subject to increased competition from aerospace and defense companies which have significantly greater resources than we do.

We may lose money or generate less than expected profits on our contracts, including our fixed-price contracts.

Our customers set demanding specifications for product performance, reliability and cost. Some of our government contracts and subcontracts provide for a predetermined, fixed price for the products we make regardless of the costs we incur. Therefore, we must absorb cost overruns, notwithstanding the difficulty of estimating all of the costs we will incur in performing these contracts and in projecting the ultimate level of sales that we may achieve. Our failure to accurately scope the statement of work, anticipate technical problems, estimate costs accurately, integrate technical processes effectively, reduce dependency on sole-source or poor-performing suppliers, control costs or otherwise meet contractual obligations such as timely delivery and meeting quality specifications during performance of a ~~fixed-price~~ contract may reduce the profitability ~~of a fixed-price contract~~ or cause a ~~loss.~~loss on the contract. While we believe that we have recorded adequate provisions in our financial statements for losses on our fixed-price and other contracts as required under GAAP, we cannot assure that our contract loss provisions will be adequate to cover all actual future losses. Therefore, we may incur losses on ~~fixed-price~~ contracts that we had expected to be profitable, or such contracts may be less profitable than expected.

Our business is subject to government contracting regulations, and our failure to comply with such laws and regulations could harm our operating results and prospects.

We estimate that approximately 18% of our sales in fiscal 2016 were attributable to contracts in which we were either the prime contractor to, or a subcontractor to a prime contractor to, the U.S. government. As a contractor and subcontractor to the U.S. government, we must comply with laws and regulations relating to the formation, security, administration and performance of federal government contracts that affect how we do business with our customers and may impose added costs to our business. For example, these regulations and laws include provisions that contracts we have been awarded are subject to:

Protest or challenge by unsuccessful bidders; and

Unilateral termination, reduction or modification in the event of changes in government requirements.

The accuracy and appropriateness of certain costs and expenses used to substantiate our direct and indirect costs for the U.S. government under both cost-plus and fixed-price contracts are subject to extensive regulation and audit by the Defense Contract Audit Agency, an arm of the U.S. Department of Defense. Responding to governmental audits, inquiries or investigations may involve significant expense and divert management attention. Our failure to comply with these or other laws and regulations could result in contract termination, suspension or debarment from contracting with the federal government, civil fines and damages, and criminal prosecution and penalties, any of which could have a material adverse effect on our operating results.

A significant portion of our business depends on U.S. government contracts, which are often subject to competitive bidding, and a failure to compete effectively or accurately anticipate the success of future projects could adversely affect our business.

We obtain many of our U.S. government contracts through a competitive bidding process that subjects us to risks associated with:

The frequent need to bid on programs in advance of the completion of their design, which may result in unforeseen technological difficulties and/or cost overruns;

The substantial time and effort, including design, development and marketing activities, required to prepare bids and proposals for contracts that may not be awarded to us; and

The design complexity and rapid rate of technological advancement of defense-related products.

In addition, in order to win the award of developmental programs, we must be able to align our research and development and product offerings with the government’s changing concepts of national defense and defense systems. The government’s termination of, or failure to fully fund, one or more of the contracts for our programs would have a negative impact on our operating results and financial condition. Furthermore, we serve as a subcontractor on several military programs that, in large part, involve the same risks as prime contracts.

Overall, we rely on key contracts with U.S. government entities for a significant portion of our sales and business. A substantial reduction in these contracts would materially adversely affect our operating results and financial position.

The market for our products may be affected by our ability to adapt to technological change.

The rapid change of technology is a key feature of all of the markets in which our businesses operate. To succeed in the future, we will need to design, develop, manufacture, assemble, test, market, and support new products and enhancements to our existing products in a timely and cost-effective manner. Historically, our technology has been developed through internal research and development expenditures, as well as customer-sponsored research and development programs. There is no guarantee that we will continue to maintain, or benefit from, comparable levels of research and development in the future. In addition, our competitors may develop technologies and products that are more effective than those we develop or that render our technology and products obsolete or noncompetitive. Furthermore, our products could become unmarketable if new industry standards emerge. We cannot assure that our existing products will not require significant modifications in the future to remain competitive or that new products we introduce will be accepted by our customers, nor can we assure that we will successfully identify new opportunities, ~~and~~ continue to have the needed financial resources to develop new products in a timely or cost-effective ~~manner.~~

~~Our business is subject to government contracting regulations, and our failure to comply with such laws and regulations could harm our operating results and prospects.~~

~~We estimate that approximately 26% of our sales in fiscal 2012 were attributable to contracts in which we were either the prime contractor to,~~manner or a subcontractor to a prime contractor to, the U.S. government. As a contractor and subcontractor to the U.S. government, we must comply with laws and regulations relating to the formation, administration and performance of federal government contracts that affect how we do business with our customers and may impose added costs to our business. For example, these regulations and laws include provisions that contracts we have been awarded are subject to:

~~Protest or challenge by unsuccessful bidders; and~~

~~Unilateral termination, reduction or modification in the event of changes in government requirements.~~

~~A significant portion of our business depends on U.S. government contracts, which are often subject to competitive bidding, and~~ a ~~failure to compete effectively or accurately anticipate the success of future projects could adversely affect our business.~~

~~We obtain many of our U.S. government contracts through a competitive bidding process that subjects us to risks associated with:~~

~~The frequent need to bid on programs in advance of the completion of their design, which may result in unforeseen technological difficulties and/or cost overruns;~~

~~The substantial time and effort, including design, development and marketing activities, required to prepare bids and proposals for contracts that may not be awarded to us; and~~

~~The design complexity and rapid rate of technological advancement of defense-related products.~~

~~In addition, in order to win the award of developmental programs, we must be able to align our~~ research and development ~~and product offerings with the government’s changing concepts of national defense and defense systems. The government’s termination of,~~program effectively to yield expected or ~~failure to fully fund, one or more of the contracts for our programs would have a negative impact~~any return on ~~our operating results and financial condition. Furthermore, we serve as a subcontractor on several military programs that, in large part, involve the same risks as prime contracts.~~investment.

The airline industry is heavily regulated and if we fail to comply with applicable requirements, our results of operations could suffer.

Governmental agencies throughout the world, including the U.S. Federal Aviation Administration ~~or the FAA,~~(FAA), prescribe standards and qualification requirements for aircraft components, including virtually all commercial airline and general aviation products, as well as regulations regarding the repair and overhaul of aircraft engines. Specific regulations vary from country to country, although compliance with FAA requirements generally satisfies regulatory requirements in other countries. We include, with the replacement parts that we sell to our customers, documentation certifying that each part complies with applicable regulatory requirements and meets applicable standards of airworthiness established by the FAA or the equivalent regulatory agencies in other countries. In order to sell our products, we and the products we manufacture, must also be certified by our individual OEM customers. If any of the material authorizations or approvals qualifying us to supply our products is revoked or suspended, then the sale of the subject product would be prohibited by law, which would have an adverse effect on our business, financial condition and results of operations.

From time to time, the FAA or equivalent regulatory agencies in other countries propose new regulations or changes to existing regulations, which are usually more stringent than existing regulations. If these proposed regulations are adopted and enacted, we may incur significant additional costs to achieve compliance, which could have a material adverse effect on our business, financial condition and results of operations.

We depend on the continued contributions of our executive officers and other key management, each of whom would be difficult to replace.

Our future success depends to a significant degree upon the continued contributions of our senior management and our ability to attract and retain other highly qualified management personnel. We face competition for management from other companies and organizations. Therefore, we may not be able to retain our existing management personnel or fill new management

positions or vacancies created by expansion or turnover at our existing compensation levels. Although we have entered into change of control agreements with members of senior management, we do not have employment contracts with our key executives, nor have we purchased “key-person” insurance on the lives of any of our key officers or management personnel to reduce the impact to our company that the loss of any of them would cause. Specifically, the loss of any of our executive officers would disrupt our operations and divert the time and attention of our remaining officers. Additionally, failure to attract and retain highly qualified management personnel would damage our business prospects.

If we are unable to protect our intellectual property rights adequately, the value of our products could be diminished.

Our success is dependent in part on obtaining, maintaining and enforcing our proprietary rights and our ability to avoid infringing on the proprietary rights of others. While we take precautionary steps to protect our technological advantages and intellectual property and rely in part on patent, trademark, trade secret and copyright laws, we cannot assure that the precautionary steps we have taken will completely protect our intellectual property rights. Because patent applications in the United States are maintained in secrecy until either the patent application is published or a patent is issued, we may not be aware of third-party patents, patent applications and other intellectual property relevant to our products that may block our use of our intellectual property or may be used in third-party products that compete with our products and processes. In the event a competitor successfully challenges our products, processes, patents or licenses or claims that we have infringed upon their intellectual property, we could incur substantial litigation costs defending against such claims, be required to pay royalties, license fees or other damages or be barred from using the intellectual property at issue, any of which could have a material adverse effect on our business, operating results and financial condition.

In addition to our patent rights, we also rely on unpatented technology, trade secrets and confidential information. Others may independently develop substantially equivalent information and techniques or otherwise gain access to or disclose our technology. We may not be able to protect our rights in unpatented technology, trade secrets and confidential information effectively. We require each of our employees and consultants to execute a confidentiality agreement at the commencement of an employment or consulting relationship with us. However, these agreements may not provide effective protection of our information or, in the event of unauthorized use of disclosure, they may not provide adequate remedies.

Future asbestos claims could harm our business.

We are subject to potential liabilities relating to certain products we manufactured containing asbestos. ~~To date, our~~We had insurance ~~has covered claims against us relating~~coverage for asbestos exposures in products prior to ~~those products.~~November 1, 2003. Commencing November 1, 2003, insurance coverage for asbestos claims has been unavailable. ~~However,~~Our policy coverage for exposures prior to November 1, 2003, declines ratably, by formula, as the number of years increases since coverage expired. Accordingly, we continue to have ~~some~~partial insurance coverage for exposure to asbestos contained in our products prior to ~~that date.~~November 1, 2003. To date, asbestos claims have not been material to our consolidated results of operations or financial position.

As a result of the termination of the NASA Space Shuttle program, manufacturing of rocket engine insulation material containing asbestos ceased in July 2010. In December 2011, we dismantled our facility used to manufacture the asbestos-based insulation for the Space Shuttle program. We have an agreement ~~with the customer~~ for indemnification for certain losses we may incur as a result of asbestos claims relating to a product we previously manufactured, but we cannot assure that this indemnification agreement will fully protect us from losses arising from asbestos claims.

To the extent we are not insured or indemnified for losses from asbestos claims relating to our products, asbestos claims could adversely affect our operating results and our financial condition.

Environmental laws and regulations may subject us to significant liability.

Our business and our facilities are subject to a number of federal, state, local and foreign laws, regulations and ordinances governing, among other things, the use, manufacture, storage, handling and disposal of hazardous materials and certain waste products. Among these environmental laws are rules by which a current or previous owner or operator of land may be liable for the costs of investigation, removal or remediation of hazardous materials at such property. In addition, these laws typically impose liability regardless of whether the owner or operator knew of, or was responsible for, the presence of any hazardous materials. Persons who arrange for the disposal or treatment of hazardous materials may be liable for the costs of investigation, removal or remediation of such substances at the disposal or treatment site, regardless of whether the affected site is owned or operated by them.

Because we own and operate, and previously owned and operated, a number of facilities that use, manufacture, store, handle or arrange for the disposal of various hazardous materials, we may incur costs for investigation, removal and remediation, as well as capital costs, associated with compliance with environmental laws. At the time of our asset acquisition of the Electronic Warfare Passive Expendables Division of BAE Systems North America (BAE), certain environmental remedial activities were

required under a Part B Permit issued to the infrared decoy flare facility by the Arkansas Department of Environmental Quality under the Federal Resource Conservation and Recovery Act. The Part B Permit was transferred to our subsidiary, Armtec, along with the remedial obligations. Under the terms of the asset purchase agreement, BAE ~~Systems~~ agreed to perform and

pay for these remedial obligations at the infrared decoy flare facility up to a maximum amount of $25.0 million. BAE is currently conducting monitoring activities as required under the asset purchase agreement.

At the end of fiscal 2016, we had a $0.8 million liability related to environmental remediation at a previously sold business for which the Company provided indemnification.

Although environmental costs have not been material in the past, we cannot assure that these matters, or any similar liabilities that arise in the future, will not exceed our resources, nor can we completely eliminate the risk of accidental contamination or injury from these materials.

An accident at our combustible ordnance or flare countermeasure operations could harm our business.

We are subject to potential liabilities in the event of an accident at our combustible ordnance and flare countermeasure operations. Our products are highly flammable during certain phases of the manufacturing process. Accordingly, our facilities are designed to isolate these operations from direct contact with employees. Our overall safety infrastructure is compliant with regulatory guidelines. In addition, we utilize hazard detection and intervention systems. Our employees receive safety training and participate in internal safety demonstrations. We continuously track safety effectiveness in relation to the U.S. Bureau of Labor Statistics, OSHA, and the HSE in the U.K. to help ensure performance is within industry standards. In addition, we perform on-going process safety hazard analyses, which are conducted by trained safety teams to identify risk areas that arise. We monitor progress through review of safety action reports that are produced as part of our operations. Although we believe our safety programs are robust and our compliance with our programs is high, it is possible for an accident to occur. ~~For example,~~We have had incidents in the past, including accidents at our Arkansas plant in 2014 and 2016 and an ~~explosion occurred in 2006~~accident at our Wallop ~~facility~~plant in ~~the U.K. (causing a fatality, several minor~~2016. The accidents in 2016 resulted in three serious injuries and ~~extensive damage to~~ the ~~facility).~~closure of our Arkansas plant for approximately 4 months. We are insured in excess of our deductible on losses from property, loss of business, and for personal liability claims from an accident; however, we may not be able to maintain insurance coverage in the future at an acceptable cost. Significant losses not covered by insurance could have a material adverse effect on our business, financial condition, and results of operations.

We may be required to defend lawsuits or pay damages in connection with the alleged or actual harm caused by our products.

We face an inherent business risk of exposure to product liability claims in the event that the use of our products is alleged to have resulted in harm to others or to property. For example, our operations expose us to potential liabilities for personal injury or death as a result of the failure of an aircraft component that has been designed, manufactured or serviced by us. We may incur significant liability if product liability lawsuits against us are successful. While we believe our current general liability and product liability insurance is adequate to protect us from future product liability claims, we cannot assure that coverage will be adequate to cover all claims that may arise. Additionally, we may not be able to maintain insurance coverage in the future at an acceptable cost. Significant losses not covered by insurance or for which third-party indemnification is not available could have a material adverse effect on our business, financial condition and results of operations.

Our financial performance may be adversely affected by information technology business disruptions.

Our business may be impacted by information technology attacks or failures. Cybersecurity attacks, in particular, are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and corruption of data. We have experienced cybersecurity attacks in the past and may experience them in the future, potentially with more frequency. We have taken measures to mitigate potential risks to our technology and our operations from these information technology-related potential disruptions. For example, we utilize third-party software and tools at many domestic operating locations to scan incoming e-mail for viruses and other harmful content and to scan networks maintained by certain of our domestic operating units that exclusively perform U.S. defense work. However, given the unpredictability of the timing, nature and scope of such disruptions, we could potentially be subject to production downtimes, operational delays, other detrimental impacts on our operations or ability to provide products and services to our customers, the compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches, or other manipulation or improper use of our systems or networks. We may also experience financial losses from remedial actions, loss of business or potential liability under contracts or pursuant to regulations that require us to maintain confidential and other data securely, and/or damage to our reputation. Any of these consequences could have a material adverse effect on our competitive position, results of operations, cash flows or financial condition.

Item 2. Properties

The following table summarizes our properties that are greater than 100,000 square feet or related to a principal operation, including identification of the business segment, as of ~~October 26, 2012:~~September 30, 2016:

Approximate

Owned

Location

Type of Facility

Business Segment

~~Approximate~~

Square
Footage

~~Owned~~

or
Leased

Brea, CA

Office & Plant

Advanced Materials

~~329,000~~

~~Owned~~

~~Montréal, Canada~~

~~Office & Plant~~

325,000

~~Avionics & Controls~~

Owned

~~269,000~~

~~Owned~~

East Camden, AR

Office & Plant

Advanced Materials

~~262,000~~

276,000

Leased

~~Leased~~

Stillington, U.K.

Office & Plant

Advanced Materials

~~222,000~~

275,000

Owned

~~Owned~~

Montréal, Canada

Office & Plant

Avionics & Controls

272,000

Owned

Everett, WA

Office & Plant

Avionics & Controls

216,000

Leased

~~Leased~~

Champagné, France

Office & Plant

Sensors & Systems

191,000

Owned

~~Owned~~

Coeur ~~d’Alene,~~d'Alene, ID

Office & Plant

Avionics & Controls

140,000

Leased

~~Leased~~

Coachella, CA

Office & Plant

Advanced Materials

140,000

Owned

~~Owned~~

Marolles, France

Office & Plant

Sensors & Systems

~~127,000~~

140,000

Owned

~~Owned~~

Kortrijk, Belgium

Office & Plant

Avionics & Controls

130,000

Owned

Tijuana, Mexico

Office & Plant

Sensors & Systems

129,000

Leased*

Buena Park, CA

Office & Plant

Sensors & Systems

~~110,000~~

115,000

Owned**

Owned*

Tangier, Morocco

Office & Plant

Sensors & Systems

115,000

Leased

Bourges, France

Office & Plant

Sensors & Systems

109,000

Owned

~~Owned~~

Farnborough, U.K.

Office & Plant

Sensors & Systems

103,000

Leased

~~Leased~~

~~Hampshire, U.K.~~Sylmar, CA

Office & Plant

~~Advanced Materials~~

Avionics & Controls

103,000

Leased

~~Owned~~

Kent, WA

Office & Plant

Advanced Materials

~~103,000~~

~~Owned~~

~~Wenatchee, WA~~

~~Office & Plant~~

~~Sensors & Systems~~

~~96,000~~

~~Leased~~

~~Milan, TN~~

~~Office & Plant~~

~~Advanced Materials~~

~~96,000~~

~~Leased~~

~~Sylmar, CA~~

100,000

~~Office & Plant~~

~~Avionics & Controls~~

Owned

~~96,000~~

~~Leased~~

Valencia, CA

Office & Plant

Advanced Materials

~~88,000~~

85,000

Owned

~~Owned~~

~~Kanata, Canada~~Tijuana, Mexico

Office & Plant

~~Avionics~~

Sensors & ~~Controls~~Systems

~~83,000~~

73,000

Leased*

~~Leased~~

Tijuana, Mexico

Office & Plant

Sensors & Systems

61,000

Leased*

Gloucester, U.K.

Office & Plant

Advanced Materials

~~59,000~~

68,000

Leased

~~Leased~~

Tijuana, Mexico

Office & Plant

Advanced Materials

58,000

Leased*

* Included in the Company’s Tijuana manufacturing campus.

** The building is located on a parcel of land covering 16.1 acres that is leased by the Company.

In total, we own approximately ~~2,300,000~~2,400,000 square feet and lease approximately ~~2,000,000~~2,200,000 square feet of manufacturing facilities and properties.

Item 3. Legal Proceedings

From time to time we are involved in legal proceedings arising in the ordinary course of ~~our~~ business. We believe ~~we have adequately reserved~~that adequate reserves for these liabilities have been made and that there is no litigation pending that could have a material adverse effect on our results of operations and financial condition.

See Note 12 to the consolidated financial statements included in Part 1, Item 8 of this report for information regarding legal proceedings.

Item 4. ~~Submission of Matters to a Vote of Security Holders~~Mine Safety Disclosures

~~No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year ended October 26, 2012.~~

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Price of Esterline Common Stock

In Dollars


For Fiscal Years	2012				2011				2016				2015
	High		Low		High		Low
									High		Low		High		Low
Quarter
First		$ 62.35		$ 48.50		$ 73.49		$ 56.61	$	96.44	$	75.86	$	120.71	$	98.70
Second		76.86		60.55		73.46		64.93		81.99		45.12		120.45		103.31
Third		70.47		56.88		82.28		69.54		70.52		56.72		114.22		85.95
Fourth		60.85		51.13		78.04		47.48		79.10		58.71		89.15		69.77

Principal Market – New York Stock Exchange

At the end of fiscal ~~2012,~~2016, there were approximately ~~327~~242 holders of record of the Company’s common stock. On ~~December 18, 2012,~~November 21, 2016, there were ~~325~~239 holders of record of our common stock.

On June 19, 2014, our board of directors approved a $200 million share repurchase program. On March 11, 2015, our board of directors approved an additional $200 million for the share repurchase program. Under the program, we are authorized to repurchase up to $400 million of outstanding shares of common stock from time to time, depending on market conditions, share price and other factors. We made no repurchases of common stock during the fourth quarter of fiscal 2016. There is $91.5 million available for purchase under our share repurchase program.

No cash dividends were paid during fiscal ~~2012~~2016 and ~~2011. We are restricted from paying dividends under our~~2015. Our current secured credit facility ~~and~~restricts the amount of dividends we can pay. We do not anticipate paying any dividends in the foreseeable future.

The following graph shows the performance of the Company’s common stock compared to the S&P 500 Index, the S&P MidCap 400 Index, and the S&P 400 Aerospace & Defense Index for a $100 investment made on October ~~26, 2007.~~28, 2011.

Item 6. Selected Financial Data

Selected Financial Data

In Thousands, Except Per Share Amounts

	Twelve Months Ended
For Fiscal Years	2016			2015			2014			2013			2012
				(Unaudited) (Recast)

Operating Results ¹
Net sales	$	1,992,631		$	2,002,793		$	2,029,471		$	1,866,659		$	1,853,467
Cost of Sales		1,331,386			1,323,405			1,314,762			1,168,632			1,182,959
Selling, general and administrative		395,274			384,156			361,190			364,149			346,024
Research, development and engineering		95,939			100,426			97,591			88,982			99,560
Restructuring charges		4,873			8,143			13,642			-			-
Insurance recovery		(5,000	)		-			-			-			-
Gain on sale of product line		-			-			-			(2,264	)		-
Gain on settlement of contingency		-			-			-			-			(11,891	)
Goodwill impairment		-			-			-			3,454			52,169
Other income		-			(12,503	)		-			-			(1,263	)
Operating earnings from continuing operations		170,159			199,166			242,286			243,706			185,909
Interest income		(367	)		(632	)		(555	)		(535	)		(463	)
Interest expense		30,091			33,114			33,010			39,637			46,227
Loss on extinguishment of debt		-			11,451			533			946			-
Earnings from continuing operations before income taxes		140,435			155,233			209,298			203,658			140,145
Income tax expense		22,535			26,911			43,716			32,803			27,073
Earnings from continuing operations including noncontrolling interests		117,900			128,322			165,582			170,855			113,072
Earnings (loss) from discontinued operations attributable to Esterline, net of tax		(15,266	)		(40,319	)		(62,611	)		(4,391	)		503
Net earnings attributable to Esterline		101,685			87,576			102,418			164,734			112,535

Gross profit as a percent of sales		33.2	%		33.9	%		35.2	%		37.4	%		36.2	%
Selling, general and administrative as a percent of sales		19.8	%		19.2	%		17.8	%		19.5	%		18.7	%
Research, development and engineering as a percent of sales		4.8	%		5.0	%		4.8	%		4.8	%		5.4	%

Earnings (loss) per share attributable to Esterline - diluted:
Continuing operations	$	3.93		$	4.10		$	5.09		$	5.33		$	3.58
Discontinued operations		(0.51	)		(1.29	)		(1.93	)		(0.14	)		0.02
Earnings (loss) per share - diluted		3.42			2.81			3.16			5.19			3.60

Selected Financial Data

In Thousands, Except Per Share Amounts

For Fiscal Years    2012 2011 2010 2009 2008
Operating Results¹

Net sales
   $     1,992,318    $     1,717,985    $     1,526,601    $     1,407,459    $     1,462,196
Cost of sales
   1,273,365    1,128,265    1,010,390    954,161    981,934
Selling, general
and administrative
   382,887    304,154    258,290    235,483    234,451
Research, development
and engineering
   107,745    94,505    69,753    64,456    85,097
Gain on settlement of
contingency
   (11,891 ) 0    0    0    0
Goodwill impairment
   52,169    0    0    0    0
Other (income) expense
   (1,263 ) (6,853 ) (8 ) 7,970    86
Operating earnings from
continuing operations
   189,306    197,914    188,176    145,389    160,628
Interest income
   (465 ) (1,615 ) (960 ) (1,634 ) (4,373 )
Interest expense
   46,238    40,216    33,181    28,689    29,922
Income from
continuing operations
before income taxes
   143,533    158,482    154,749    118,334    136,929
Income tax expense
   29,958    24,938    24,504    12,549    25,288
Income from continuing
operations including
noncontrolling interests
   113,575    133,544    130,245    105,785    111,641
Income (loss) from
discontinued operations
attributable to Esterline,
net of tax
   0    (47 ) 11,881    14,230    9,275
Net earnings attributable
to Esterline
   112,535    133,040    141,920    119,798    120,533
Gross margin
   36.1%    34.3%    33.8%    32.2%    32.8%
Selling, general and
administrative as a
percent of sales
   19.2%    17.7%    16.9%    16.7%    16.0%
Research, development and
engineering as a percent of sales
   5.4%    5.5%    4.6%    4.6%    5.8%

	Eleven Months Ended
For Fiscal Years	2015			2014
				(Unaudited) (Recast)

Operating Results ¹
Net sales	$	1,774,449		$	1,801,127
Cost of Sales		1,185,056			1,176,413
Selling, general and administrative		346,781			323,957
Research, development and engineering		91,491			88,656
Restructuring charges		6,639			12,103
Other income		(12,503	)		-
Operating earnings from continuing operations		156,985			199,998
Interest income		(578	)		(501	)
Interest expense		30,090			29,986
Loss on extinguishment of debt		11,451			533
Earnings from continuing operations before income taxes		116,022			169,980
Income tax expense		18,956			35,759
Earnings from continuing operations including noncontrolling interests		97,066			134,221
Earnings (loss) from discontinued operations attributable to Esterline, net of tax		(37,053	)		(59,240	)
Net earnings attributable to Esterline		59,612			74,454

Gross profit as a percent of sales		33.2	%		34.7	%
Selling, general and administrative as a percent of sales		19.5	%		18.0	%
Research, development and engineering as a percent of sales		5.2	%		4.9	%

Earnings (loss) per share attributable to Esterline - diluted:
Continuing operations	$	3.10		$	4.12
Discontinued operations		(1.19	)		(1.83	)
Earnings (loss) per share - diluted		1.91			2.29

2022

Selected Financial Data

In Thousands, Except Per Share Amounts

For Fiscal Years    2012 2011 2010 2009 2008
Operating Results¹

Earnings per share
attributable to

Esterline – diluted:

Continuing operations
   $ 3.60    $ 4.27    $ 4.27    $ 3.52    $ 3.72
Discontinued
operations
   0.00    0.00    0.39    0.48    0.31
Earnings per share
attributable to
Esterline – diluted
   3.60    4.27    4.66    4.00    4.03

Financial Structure

Total assets
   $     3,227,117    $     3,378,586    $     2,587,738    $     2,314,247    $     1,922,102
Credit facilities
   240,000    360,000    0    0    0
Long-term debt, net
   598,060    660,028    598,972    520,158    388,248
Total Esterline
shareholders’ equity
   1,610,481    1,562,835    1,412,796    1,253,021    1,026,341
Weighted average shares
outstanding – diluted
   31,282    31,154    30,477    29,951    29,908

Other Selected Data

Cash flows provided
(used) by operating
activities
   $ 194,171    $ 192,429    $ 179,801    $ 156,669    $ 118,893
Cash flows provided
(used) by investing
activities
   (48,502 ) (869,021 ) (20,719 ) (250,357 ) (30,139 )
Cash flows provided
(used) by financing
activities
   (167,820 ) 436,420    84,260    103,515    (63,278 )
Net increase (decrease)
in cash
   (24,360 ) (237,085 ) 245,326    16,149    13,576
EBITDA from continuing
operations^2,3
   347,390    280,926    257,815    214,553    223,443
Capital expenditures⁴
   49,446    49,507    45,417    58,694    38,785
Interest expense
   46,238    40,216    33,181    28,689    29,922
Depreciation and
amortization from
continuing operations
   105,915    83,012    69,639    69,164    62,815
Ratio of debt to EBITDA^2,5
   2.4    3.7    2.4    2.5    1.8

For Fiscal Years	2016			2015			2014			2013			2012

Financial Structure
Total assets	$	3,032,031		$	3,000,488		$	3,193,467		$	3,262,112		$	3,227,117
Credit facilities		155,000			160,000			100,000			130,000			240,000
Long-term debt, net		698,796			701,457			509,720			537,859			598,060
Total Esterline shareholders' equity		1,600,557			1,537,467			1,887,817			1,873,605			1,610,481

Weighted average shares outstanding - diluted		29,764			31,215			32,448			31,738			31,282

Other Selected Data
Cash flows provided (used) by operating activities	$	167,158		$	144,295		$	216,364		$	250,772		$	194,171
Cash flows provided (used) by investing activities		(65,943	)		(173,568	)		(89,851	)		(93,721	)		(48,502	)
Cash flows provided (used) by financing activities		(29,388	)		967			(55,208	)		(141,023	)		(167,820	)
Net increase (decrease) in cash		67,165			(46,789	)		58,966			18,503			(24,360	)
EBITDA from continuing operations ²		269,021			245,674			342,342			339,616			277,137
Capital expenditures ³		68,472			49,341			45,678			55,335			49,446
Interest expense		30,091			30,090			33,010			39,637			46,227

Depreciation and amortization from continuing operations		98,862			88,689			100,056			95,910			91,228
Ratio of debt to EBITDA ⁴		3.2			3.5			1.8			2.0			3.0

Operating results reflect the segregation of continuing operations from discontinued operations. See Note 21 to the Consolidated Financial Statements. Operating results include the acquisitions of ~~Souriau~~DAT in ~~July 2011, Eclipse~~January 2015, Sunbank in December ~~2010, Racal Acoustics~~2013, and Gamesman in ~~January 2009, and NMC Group, Inc. (NMC) in December 2008.~~February 2013. See Note 15 to the Consolidated Financial Statements.

²	Excludes the goodwill impairment in 2012 of $52.2 million. Investors, financial analysts, and others in the aerospace and defense industry find it useful to exclude goodwill impairments, because the resulting information is more representative of ongoing operations.

EBITDA from continuing operations is a measurement not calculated in accordance with GAAP. We define EBITDA from continuing operations as operating earnings from continuing operations plus depreciation and amortization (excluding amortization of debt issuance costs). We do not intend EBITDA from continuing operations to represent cash

flows from continuing operations or any other items calculated in accordance with GAAP, or as an indicator of Esterline’s operating performance. Our definition of EBITDA from continuing operations may not be comparable with EBITDA from continuing operations as defined by other companies. We believe EBITDA is commonly used by financial analysts and others in the aerospace and defense industries and thus provides useful information to investors. Our management and certain financial creditors use EBITDA as one measure of our leverage capacity and debt servicing ability, and is shown here with respect to Esterline for comparative purposes. EBITDA is not necessarily indicative of amounts that may be available for discretionary uses by us. EBITDA includes goodwill impairment charges of $3,454 and $52,169 in fiscal 2013 and 2012, respectively. The following table reconciles operating earnings from continuing operations to EBITDA from continuing operations:

~~In Thousands~~

For Fiscal Years    2012    2011    2010    2009    2008
Operating earnings from
continuing operations
   $     189,306       $     197,914       $     188,176       $     145,389       $     160,628
Depreciation and
amortization from
continuing operations
   105,915       83,012       69,639       69,164       62,815
Goodwill impairment
   52,169       0       0       0       0

EBITDA from
continuing operations
   $ 347,390       $ 280,926       $ 257,815       $ 214,553       $ 223,443

In Thousands

For Fiscal Years	2016		2015		2014		2013		2012

Operating earnings from continuing operations	$	170,159	$	156,985	$	242,286	$	243,706	$	185,909
Depreciation and amortization from continuing operations		98,862		88,689		100,056		95,910		91,228
EBITDA from continuing operations	$	269,021	$	245,674	$	342,342	$	339,616	$	277,137

⁴³

Excludes capital expenditures accounted for as a capitalized lease obligation of ~~$8,139, $28,202,~~$11,260, $2,753 and ~~$7,981~~$11,691 in fiscal ~~2010, 2009,~~2016, 2014 and ~~2008,~~2013, respectively.

⁵⁴

We define the ratio of debt to EBITDA as total debt divided by EBITDA.

2223

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes in Item 8 of this report. This discussion and analysis contains forward-looking statements and estimates that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those discussed in the “Forward-Looking Statements” section in Item 1 of this report and the “Risk Factors” section in Item 1A of this report.

On June 5, 2014, we changed the Company’s fiscal year end to the last Friday of September from the last Friday in October. We reported our financial results for the 11-month transition period of November 1, 2014, through October 2, 2015, on our Transition Report on Form 10-K, and thereafter we will file our annual report for the 12-month period ending the last Friday of September of each year, beginning with the 12-month period ending September 30, 2016. Prior year results have been recast on a calendar quarter basis. Refer to the Transition Report on Form 10-K for the eleven months ended October 2, 2015, for additional information regarding our fiscal year change.

Unless otherwise noted in this Item 7:

When financial results for the 2016 fiscal year are compared to the financial results for the prior-year period, the results compare the twelve-month periods ended September 30, 2016, and October 2, 2015, respectively.

When financial results for the fourth quarter of fiscal 2016 are compared to the fourth quarter of fiscal 2015, the results compare the three-month periods ended September 30, 2016, and October 2, 2015, respectively.

When financial results for the 2015 transition period are compared to financial results for the prior-year period, the results compare the eleven-month periods ended October 2, 2015, and September 26, 2014, respectively.

When financial results for the fourth quarter of fiscal 2015 are compared to the fourth quarter of fiscal 2014, the results compare the two-month periods ended October 2, 2015, and September 26, 2014, respectively.

The results for the eleven-month period and two-month period ended September 26, 2014, are unaudited. The following tables show the months included in the various comparison periods:

Fiscal 2016 (12-month) Results Compared with Fiscal 2015 (12-month recast, unaudited)

Fiscal 2016 (12-month)			Fiscal 2015 (12-month recast, unaudited)

October 2015 - September 2016			October 2014 - September 2015


Fourth Quarter of Fiscal 2016 (3-month, unaudited) Results Compared with Fourth Quarter of Fiscal 2015 (3-month recast, unaudited)

Fourth Quarter of Fiscal 2016 (3-month, unaudited)			Fourth Quarter of Fiscal 2015 (3-month recast, unaudited)

July 2016 - September 2016			July 2015 - September 2015


Fiscal 2015 (11-month) Results Compared with Fiscal 2014 (11-month recast, unaudited)

Fiscal 2015 (11-month)			Fiscal 2014 (11-month recast, unaudited)

November 2014 - September 2015			November 2013 - September 2014

OVERVIEW

We operate our businesses in three segments: Avionics & Controls, Sensors & Systems and Advanced Materials. Our segments are structured around our technical capabilities. ~~Sales in all~~All segments include sales to domestic, international, defense and commercial customers.

The Avionics & Controls segment includes avionics systems, control ~~systems, interface technologies~~ and communication systems, and interface technologies capabilities. Avionics systems designs and develops cockpit systems integration and avionics solutions for commercial and military applications and visualization solutions for a variety of demanding defense and commercial aerospace applications. Control and communication systems designs and manufactures technology interface systems for military and commercial aircraft and land- and sea-based military vehicles. Additionally, control and communication systems designs and manufactures military audio and data products for severe battlefield environments and communication control systems to enhance security

and aural clarity in military applications. Interface technologies manufactures and develops custom control panels and input systems for medical, industrial, military and ~~casino~~ gaming industries. Communication systems designs and manufactures military audio and data products for severe battlefield environments, embedded communication intercept receivers for signal intelligence applications, as well as communication control systems to enhance security and aural clarity in military applications.

The Sensors & Systems segment includes power systems, connection technologies and advanced sensors capabilities. Power systems develops and manufactures electrical power switching and other related systems, principally for aerospace and defense customers. Connection technologies develops and manufactures highly engineered connectors for harsh environments and serves the aerospace, defense & space, power generation, rail and industrial equipment markets. Advanced sensors develops and manufactures high precision temperature and pressure sensors for aerospace and defense customers.

The Advanced Materials segment includes engineered materials and defense technologies capabilities. Engineered materials develops and manufactures thermally engineered components and high-performance elastomer products used in a wide range of commercial aerospace and military applications. Defense technologies develops and manufactures combustible ordnance components and warfare countermeasure devices for military customers.

Our current business and strategic plan focuses on the continued development of ~~our~~ products and solutions principally for aerospace and defense markets. We are concentrating our efforts to expand our capabilities in these markets, ~~and to~~ anticipate the global needs of our customers and respond to such needs with comprehensive solutions. These efforts focus on continuous research and new product development, acquisitions and strategic realignments of operations to expand our capabilities as a more comprehensive supplier to our customers across our entire product offering.

~~On July 26, 2011,~~In March 2014, we ~~acquired~~entered into a Consent Agreement with the ~~Souriau Group (Souriau). Souriau~~U.S. Department of State’s Directorate of Defense Trade Controls Office of Defense Trade Controls Compliance (DDTC) to resolve alleged International Traffic in Arms Regulations (ITAR) civil violations. Among other things, the Consent Agreement required us to pay a $20 million penalty, of which $10 million was suspended and eligible for offset credit. In fiscal 2016, the DTCC approved costs we incurred to implement compliance measures to fully offset the $10 million suspended payment. More information about the Consent Agreement is ~~a leading global supplier of highly engineered connection technologies for harsh environments. Souriau is~~set forth in Note 12 to the Consolidated Financial Statements included in ~~our Sensors & Systems segment.~~Part 1, Item 8 of this report.

On ~~December 30, 2010,~~June 19, 2014, our board of directors approved a share repurchase program and authorized the repurchase of up to $200 million of outstanding shares of common stock. In March 2015, our board of directors authorized an additional $200 million for the repurchase of outstanding shares of common stock under the program. Under the program, the Company is authorized to repurchase up to $400 million of the outstanding shares of common stock from time to time, depending on market conditions, share price and other factors. In fiscal 2015, we ~~acquired~~repurchased 2,562,122 shares under this program at an average price paid per share of $101.29, for an aggregate purchase price of $259.5 million. During fiscal 2016, we repurchased 304,577 shares under this program at an average price paid per share of $61.51, for an aggregate purchase price of $18.7 million.

As explained under Part I, Item 1 of this report, in September 2014, our board of directors approved the plan to sell certain non-core business units including Eclipse, ~~Electronic Systems, Inc. (Eclipse).~~Wallop, and PA&E. We recorded an estimated after-tax loss of $49.5 million in fiscal 2014 on the assets held for sale in discontinued operations. In fiscal 2015, we sold Eclipse ~~is a designer~~ and ~~manufacturer~~PA&E and in fiscal 2016 we sold certain assets of ~~embedded communication intercept receivers~~Wallop and entered into an agreement to sell Wallop’s naval business. We recorded an estimated after-tax loss of $8.4 million and $30.8 million in fiscal 2016 and 2015, respectively, on assets held for ~~signal intelligence applications. Eclipse is included~~sale in ~~our~~discontinued operations.

Sales for the fourth quarter of fiscal 2016 were $543.8 million; sales volume increased by $16 million compared with the prior-year period, and was mainly due to strong sales for Avionics & Controls ~~segment.~~segment products. This increase was offset by lower sales of Advanced Materials segment products mainly due to an energetic incident at one of our countermeasure operations in the third quarter of fiscal 2016.

~~On September 8, 2010, we sold Pressure Systems, Inc.~~Gross margin was 35.6% in the fourth quarter of fiscal 2016 compared with 34.1% in the prior-year period. Gross margin in the fourth quarter of fiscal 2016 benefited from higher sales volumes/mix of Avionics & Controls segment products and a favorable contract settlement.

For further explanation about changes in sales and gross profit in the fourth quarter of fiscal 2016 over the prior-year period, please see the table at the end of the Overview section for ~~approximately $25.0~~a roll forward presentation of sales and gross profit.

Selling, general and administrative expenses increased by $7.4 million in the fourth quarter of fiscal 2016 over the prior-year period to $102.0 million mainly due to a delinquent accounts receivable from an avionics systems customer under a long-term contract which ~~was included in our Sensors & Systems segment.~~is no longer probable of collection.

During the fourth quarter of fiscal 2016, we received a $5 million insurance recovery due to an energetic incident at one of our countermeasure operations, which occurred in the third quarter of fiscal 2016.

The income tax rate was 17.6% in the fourth quarter of fiscal 2016 compared with 7.9% in the prior-year period. In the fourth fiscal quarter of ~~2012, net~~2015, the income tax rate was ~~$61.7~~lower mainly due to the additional tax benefits resulting from DAT operating losses.

Earnings from continuing operations in the fourth quarter of fiscal 2016 were $52.0 million, or ~~$1.97~~$1.75 per diluted share, compared with ~~$19.4~~$40.3 million, or ~~$0.62~~$1.34 per diluted share, in the prior-year period. Income from discontinued operations in the fourth quarter of fiscal 2016 was $0.2 million, or $0.01 per diluted share, compared with a $19.3 million loss, or $0.64 per diluted share, in the prior-year period. Net income in the fourth quarter of fiscal 2016 was $52.3 million, or $1.76 per diluted share, compared with $21 million, or $0.70 per diluted share, in the prior-year period.

Sales for fiscal 2016 decreased by $10 million, or 0.5%, to $1.993 billion compared with fiscal 2015. Sales decreased by $25 million due to the effects of a weakening Canadian dollar, British pound and euro compared with the prior-year period. Sales volume decreased by $19 million compared with the prior-year period and was mainly due to lower sales of Avionics & Controls and Sensors & Systems. Advanced Materials sales were impacted by the energetic incident at one of our countermeasure operations. These decreases were partially offset by $52 million in acquired sales from the DAT acquisition, in addition to organic DAT sales growth of $21 million.

Consolidated gross margin was 33.2% in fiscal 2016 compared with 33.9% in the prior-year period, reflecting lower gross margin on sales of Avionics & Controls and Advanced Materials products. Our gross margin percentage was impacted by higher manufacturing costs and a lower recovery of fixed costs due to decreased sales volumes.

Selling, general administrative expense increased by $11 million to $395.3 million or 19.8% of sales, compared with fiscal 2015, mainly due to increased bad debt expense of $8 million.

Research, development and engineering spending decreased by $4 million to $95.9 million or 4.8% of sales, compared with fiscal 2015. The decrease mainly reflects lower spending for Avionics & Controls and Sensors & Systems research, development and engineering, partially offset by incremental research, development and engineering expense from the DAT acquisition of $7 million.

In connection with the redemption of debt in fiscal 2015, we incurred an $8.75 million redemption premium and wrote off $2.7 million in unamortized debt issuance costs as a loss on extinguishment of debt.

In fiscal 2015, we recognized a $15.7 million gain in other income and a $2.4 million reduction in interest expense upon the lapse of a statutory period related to a liability for a non-income tax position of an acquired company. In addition, we incurred a $2.9 million loss in other income on foreign currency exchange resulting from the funding of the acquisition of DAT.

The income tax rate was 16.0% in fiscal 2016 compared with 17.3% in the prior-year period, mainly reflecting additional discrete benefits recognized in fiscal 2016.

Earnings from continuing operations in fiscal 2016 were $117.0 million, or $3.93 per diluted share, compared with $127.9 million, or $4.10 per diluted share, in the prior-year period. Loss from discontinued operations in fiscal 2016 was $15.3 million, or $0.51 per diluted share, compared with $40.3 million, or $1.29 per diluted share, in the prior-year period. Net income for fiscal 2016 was $101.7 million, or $3.42 per diluted share, compared with $87.6 million, or $2.81 per diluted share, in the prior-year period.

Cash flows from operating activities were $167.2 million in fiscal 2016 compared with $193.7 million in the prior-year period, mainly reflecting lower cash receipts from the sale of products.

Our sales, gross profit and earnings results for the three and twelve month periods ended September 30, 2016, compared with the three and twelve month periods ended October 2, 2015, included a number of significant items which are summarized in the tables below.

The following is a roll forward of sales and gross profit from the fourth quarter of fiscal 2015 to the fourth quarter of fiscal 2016:

In Thousands	Avionics &			Sensors &			Advanced
	Controls			Systems			Materials			Total
Sales:
Three-month period ended October 2, 2015	$	232,019		$	184,989		$	128,241		$	545,249
Foreign currency gain (loss)		(2,314	)		(477	)		(4,791	)		(7,582	)
Forward contract gain (loss)		2,702			791			-			3,493
Defense Technologies energetic incident		-			-			(13,077	)		(13,077	)
Sales volume		20,594			(4,107	)		(818	)		15,669
Three-month period ended September 30, 2016	$	253,001		$	181,196		$	109,555		$	543,752

Gross Profit:
Three-month period ended October 2, 2015		79,251			63,765			42,824			185,840
Foreign currency gain (loss)		(1,514	)		(133	)		(1,352	)		(2,999	)
Forward contract gain (loss)		2,684			791			-			3,475
DAT purchase accounting adjustment		2,484			-			-			2,484
DAT integration		(921	)		-			-			(921	)
Volume/mix		11,499			823			464			12,786
Lower (higher) manufacturing costs		(2,731	)		1,264			(292	)		(1,759	)
Cost initiatives		-			11			(667	)		(656	)
EAC adjustment		828			-			-			828
Defense Technologies energetic incident		-			-			(5,309	)		(5,309	)
Three-month period ended September 30, 2016	$	91,580		$	66,521		$	35,668		$	193,769

The following is a roll forward of sales and gross profit from fiscal 2015 to fiscal 2016:

In Thousands	Avionics &			Sensors &			Advanced
	Controls			Systems			Materials			Total
Sales:
Twelve-month period ended October 2, 2015	$	826,044		$	714,965		$	461,784		$	2,002,793
Foreign currency gain (loss)		(10,067	)		(11,518	)		(9,814	)		(31,399	)
Forward contract gain (loss)		2,859			3,078			-			5,937
DAT acquired sales		51,734			-			-			51,734
Defense Technologies energetic incident		-			-			(17,669	)		(17,669	)
Sales volume		(10,076	)		(10,493	)		1,804			(18,765	)
Twelve-month period ended September 30, 2016	$	860,494		$	696,032		$	436,105		$	1,992,631

Gross Profit:
Twelve-month period ended October 2, 2015		279,148			251,060			149,180			679,388
Foreign currency gain (loss)		(4,944	)		(1,773	)		(2,399	)		(9,116	)
Forward contract gain (loss)		2,710			3,078			-			5,788
DAT purchase accounting adjustment		7,021			-			-			7,021
DAT acquired sales		20,962			-			-			20,962
DAT integration		(4,341	)		-			-			(4,341	)
Volume/mix		(13,474	)		(2,304	)		4,467			(11,311	)
Lower (higher) manufacturing costs		(7,901	)		(7,160	)		(10,835	)		(25,896	)
Cost initiatives		67			3,065			(544	)		2,588
EAC adjustment		3,052			-			-			3,052
Defense Technologies energetic incident		-			-			(6,890	)		(6,890	)
Twelve-month period ended September 30, 2016	$	282,300		$	245,966		$	132,979		$	661,245

The following table shows the average foreign exchange rates for the British pound, Canadian dollar and euro relative to the U.S. dollar for the three and twelve month periods ended September 30, 2016, and October 2, 2015.

	Three Months Ended					Twelve Months Ended
	September 30,		October 2,			September 30,		October 2,
	2016			2015	Change	2016			2015	Change

GBP to USD		1.3164		1.5492	(15.0)%		1.4208		1.5458	(8.1)%
CAD to USD		0.7680		0.7691	(0.1)%		0.7579		0.8157	(7.1)%
EURO to USD		1.1188		1.1120	0.6%		1.1077		1.1501	(3.7)%

The following tables show the impact of changes in the foreign currency exchange rates for the British pound, Canadian dollar and euro relative to the U.S. dollar on operating earnings during the fourth quarter of fiscal 2016, compared with the prior-year period.

In Thousands	Avionics &			Sensors &			Advanced
	Controls			Systems			Materials			Total

Foreign currency gain (loss)	$	(2,911	)	$	(1,235	)	$	(3,559	)	$	(7,705	)
Forward contract gain (loss)		2,197			888			2,014			5,099
Impact on Operating Earnings (Loss)	$	(714	)	$	(347	)	$	(1,545	)	$	(2,606	)

In Thousands	Avionics &			Sensors &		Advanced
	Controls			Systems		Materials			Total

Foreign currency gain (loss)	$	(6,392	)	$	313	$	(2,404	)	$	(8,483	)
Forward contract gain (loss)		1,696			8,741		(2,638	)		7,799
Impact on Operating Earnings (Loss)	$	(4,696	)	$	9,054	$	(5,042	)	$	(684	)

Results of Operations

For further explanation, please see the roll forward table of sales and gross profit at the end of the Overview section.

Fiscal 2016 Compared with Fiscal 2015

Sales for fiscal 2016 decreased by $10.2 million or 0.5% from fiscal 2015. Fiscal 2015 benefited from a strong October 2014. The last Friday in October 2014 was our previous year-end, and in changing our year-end from the last Friday in October to the last Friday in September, October 2014 was included in our recast first fiscal quarter of 2015. Fiscal 2016 consisted of 52 weeks and fiscal 2015 consisted of 53 weeks.

	Increase (Decrease)
In Thousands	From Prior Year		2016		2015
					(Unaudited)
					(Recast)

Avionics & Controls		4.2%	$	860,494	$	826,044
Sensors & Systems	(2.6)%			696,032		714,965
Advanced Materials	(5.6)%			436,105		461,784
Total Net Sales			$	1,992,631	$	2,002,793

The $34 million increase in Avionics & Controls sales over fiscal 2015 mainly reflected acquired sales from the DAT acquisition of $52 million, in addition to organic DAT sales growth of $21 million, partially offset by the following;

Lower sales volumes of $10 million

•

Lower sales volumes of avionics systems of $21 million for certain commercial and defense programs, including an $8 million decrease on the T-6B military trainer program for the U.S. Navy nearing completion. Looking

forward to 2017, T-6B sales are expected to decrease $20 million from fiscal 2016. We are working to develop new products to offset the impact of the end-of-life decline in the T-6B program.

Lower sales volumes of communications and control systems of $11 million due to decreased sales of headset communication devices for defense applications of $17 million, mainly due to the shipment of delinquent orders in fiscal 2015 and a strong October 2014, partially offset by increased sales volumes of secure communications of $5 million

Partially offset by

Higher sales volumes of displays of $21 million mainly due to higher demand for defense applications and a contract termination for convenience fee of $4 million

Higher sales volumes of interface technologies for gaming applications of $1 million

Unfavorable effect of changes in foreign currency exchange rates of $7 million

The $19 million decrease in Sensors & Systems sales over the prior-year period principally reflected the following:

Decreased sales volumes of $11 million primarily driven by

Lower sales of power systems of $8 million due to shipment delays relating to export control compliance requirements, partially offset by higher sales of ground fault indicators due to an FAA requirement

Lower sales volumes of connection technologies systems of $4 million due to lower demand for oil and gas and defense applications

Partially offset by higher sales of advanced sensors of $1 million due to a price increase

Unfavorable effect of foreign currency exchange rates of $8 million

The $26 million decrease in Advanced Materials sales over the prior-year period mainly reflected the following:

Decreased sales volumes of defense technologies of $18 million mainly due to an energetic incident that occurred at one of our countermeasure operations in May 2016. The incident resulted in injury to two employees, some damage to the building, and the destruction of inventory and certain equipment. Operations at the factory were halted through early September 2016 for investigation of the incident, repairs to the building and equipment, and implementation of process and facility improvements. Reduced manufacturing operations commenced in the fourth fiscal quarter of 2016, and management expects the factory to be operating at planned capacity in the second fiscal quarter of 2017.

Decreased sales volumes of engineered materials for metal insulation applications of $13 million due to delayed orders for commercial aviation and lower demand for oil and gas applications

Partially offset by

Higher sales of engineered materials mainly from a defense program of $7 million. Looking forward to fiscal 2017, sales are expected to decline by approximately $15 million due to new long-term contract pricing. We are working to offset this impact by decreasing manufacturing expenses through improved efficiency and higher sales prices on certain commercial contracts.

Higher sales of mainly combustible ordnance of $8 million

Unfavorable effect of foreign currency exchange rates of $10 million

Foreign sales originating from non-U.S. locations, together with export sales by domestic operations, totaled $1.2 billion and $1.1 billion for fiscal 2016 and for the eleven-month period ended October 2, 2015, respectively, and accounted for 57.9% and 60.2% of our sales in fiscal 2016 and for the eleven-month period ended October 2, 2015, respectively.

Overall, gross margin was 33.2% and 33.9% for fiscal 2016 and 2015, respectively. Gross profit was $661.2 million and $679.4 million for fiscal 2016 and 2015, respectively. Gross profit was impacted by $3.8 million and $6.5 million in restructuring expense in fiscal 2016 and 2015, respectively. Gross profit and gross margin percentage by segment were as follows:

	Increase (Decrease)
In Thousands	From Prior Year	2016			2015
					(Unaudited)
					(Recast)

Avionics & Controls	1.1%	$	282,300		$	279,148
Sensors & Systems	(2.0)%		245,966			251,060
Advanced Materials	(10.9)%		132,979			149,180
Total Gross Profit		$	661,245		$	679,388

Avionics & Controls	(1.0)%		32.8	%		33.8	%
Sensors & Systems	0.2%		35.3	%		35.1	%
Advanced Materials	(1.8)%		30.5	%		32.3	%
Gross Margin Percentage			33.2	%		33.9	%

Avionics & Controls segment gross margin was 32.8% and 33.8% for fiscal 2016 and 2015, respectively. Segment gross profit was $282.3 million compared with $279.1 million in the prior-year period. The $3 million increase in gross profit mainly reflected the following:

$21 million in acquired gross profit from the DAT acquisition

$7 million in a DAT fair value of inventory adjustment recorded in the prior-year period

Substantially offset by

A $14 million decrease due to sales volume/mix mainly due to lower sales of control and communication systems

An $8 million decrease due to higher manufacturing costs primarily at control and communication systems operations

A $3 million decrease due to an unfavorable effect of changes in foreign currency exchange rates, DAT integration expense, partially offset by a favorable estimated cost at completion adjustment

Sensors & Systems segment gross margin was 35.3% and 35.1% for fiscal 2016 and 2015, respectively. Segment gross profit was $246.0 million compared with $251.1 million in the prior-year period. The $5 million decrease in Sensors & Systems segment gross profit mainly reflected the following:

A $2 million decrease in volume/mix mainly due to lower sales of connection technologies and power systems

$7 million in higher manufacturing costs mainly due to factory closures and transfers to a low-cost country

Partially offset by

A $3 million decrease in restructuring expense for advanced sensors and connection technologies operations

A $1 million favorable effect of change in foreign currency exchange rates

Advanced Materials segment gross margin was 30.5% and 32.3% for fiscal 2016 and 2015, respectively. Segment gross profit was $133.0 million compared with $149.2 million in the prior-year period. The $16 million decrease in Advanced Materials segment gross profit principally reflected the following:

A $9 million increase in manufacturing expense mainly due to engineered materials manufacturing inefficiencies and lower sales volumes of metallic insulation mainly for commercial aviation and oil & gas applications

A $7 million increase in expense due to an energetic incident at one of our countermeasure operations described further above

Selling, general and administrative expenses (which include corporate expenses) totaled $395.3 million, or 19.8% of sales, and $384.2 million, or 19.2% of sales, for fiscal 2016 and 2015, respectively. The $11 million increase in selling, general and administrative expense mainly reflected the following:

An $11 million increase due to incremental DAT expenses

An $8 million increase in bad debt expense

A $5 million increase in stock option expense, severance and segment pension expense

•

Partially offset by

A $9 million decrease in corporate expense due to lower professional fees primarily for compliance and a $3 million pension settlement recorded in fiscal 2015

A $2 million favorable effect of foreign currency rates

A $2 million write-off of fixed assets due to an avionics systems program realignment in the prior-year

Research, development and engineering spending was $95.9 million, or 4.8% of sales, for fiscal 2016 compared with $100.4 million, or 5.0% of sales, for the prior-year period. The $4.5 million decrease in research, development and engineering principally reflected the following:

Decreased spending of $11 million mainly for Avionics & Controls and Sensors & Systems developments

Partially offset by incremental expense from DAT of $7 million

Total restructuring expenses were $8.7 million, or 0.4% of sales, in fiscal 2016, of which $4.9 million is reported separately as restructuring expenses and $3.8 million is included in cost of goods sold. Total restructuring expenses were $14.6 million, or 0.7% of sales, in fiscal 2015, of which $8.1 million is reported separately as restructuring expenses and $6.5 million is included in cost of goods sold.

Segment earnings (operating earnings excluding corporate expenses and other income or expense) for fiscal 2016 totaled ~~$90.3~~$240.6 million, or ~~17.0%~~12.1% of sales, compared with ~~$45.1~~$268.8 million, or 9%13.4% of sales, ~~in the prior-year period. The increase in~~for fiscal 2015. Segment earnings by segment ~~earnings reflected improved operating earnings from~~ were as follows:

	Increase (Decrease)
In Thousands	From Prior Year	2016			2015
					(Unaudited)
					(Recast)

Avionics & Controls	(15.9)%	$	78,356		$	93,225
Sensors & Systems	4.2%		87,768			84,235
Advanced Materials	(18.4)%		74,515			91,334
Total Segment Earnings		$	240,639		$	268,794

Avionics & Controls	(2.2)%		9.1	%		11.3	%
Sensors & Systems	0.8%		12.6	%		11.8	%
Advanced Materials	(2.7)%		17.1	%		19.8	%
Segment Earnings Percentage			12.1	%		13.4	%

Avionics & Controls segment earnings were $78.4 million, or 9.1% of sales, for fiscal 2016 and ~~Advanced Materials. Operating earnings~~$93.2 million, or 11.3% of ~~Sensors & Systems increased due to incremental earnings from the Souriau acquisition and the~~sales, for fiscal ~~2011 effect of acquisition-related expenses incurred, as well as improved results of advanced sensors and a recovery of non-recurring engineering expenses from a customer~~2015. The $15 million decrease in ~~fiscal 2012.~~ Avionics & Controls ~~results benefited from solid~~segment earnings ~~from our avionics software testing business compared to an~~mainly reflected the following:

DAT incremental operating ~~loss~~expenses of $18 million

An $8 million increase in ~~the prior-year period. Avionics & Controls results also benefited from~~bad debt expense

A $4 million unfavorable effect of foreign currency ~~exchange gains on embedded derivatives~~rates and ~~monetary assets and lower~~increase in severance

Partially offset by

A $3 million increase in gross profit

A $10 million decrease in research, development and engineering for avionics ~~systems. Advanced Materials benefited from shipping previously delayed international shipments~~systems and controls and communication systems, and a $2 million write-off of ~~flare countermeasure devices~~fixed assets due to an avionics systems program realignment in the ~~fourth quarter.~~prior year

Sensors & Systems segment earnings were $87.8 million, or 12.6% of sales, for fiscal 2016 compared with $84.2 million, or 11.8% of sales, for fiscal 2015. The ~~income tax rate for~~$4 million increase in Sensors & Systems segment earnings principally reflected the ~~fourth fiscal quarter~~following:

An $8 million favorable effect of ~~2012 was 13.0% compared~~changes in foreign currency exchange rates

A $2 million decrease in restructuring expense

A $2 million decrease in research, development and engineering

Partially offset by

A $5 million decrease in gross profit

A $3 million increase in selling, general and administrative expense mainly due to ~~11.8%~~a curtailment of a post-retirement medical benefit plan in the prior-year ~~period. Our income tax rate in the fourth quarter was favorably impacted by a $1.4 million release of valuation allowance related to foreign tax credits as a result of a tax examination.~~

~~During fiscal 2012, net income was $112.5~~31

Advanced Materials segment earnings were $74.5 million, or ~~$3.60 per diluted share,~~17.1% of sales, for fiscal 2016, compared with ~~$133.0~~$91.3 million, or $4.27 per diluted share, during fiscal 2011. The decrease in net income reflected a $52.2 million, or $1.67 per diluted share, impairment charge against goodwill of Racal Acoustics, our military headset business, which is included in our Avionics & Controls segment.

~~Excluding the impairment charge, segment earnings totaled $271.5 million, or 13.6%~~19.8% of sales, infor fiscal ~~2012 compared with $240.0~~2015. The $17 million or 14% of sales, in fiscal 2011, reflecting weaker sales and earnings from Avionics & Controls and strong results from Sensors & Systems and Advanced Materials. Sales and earnings in the fourth quarter increased over the fourth quarter of the prior year. This compared with weaker sales and earnings in each of the first, second and third quarters of fiscal 2012 against the respective corresponding quarters in 2011. Avionics & Controls full year results were impacted by lower sales and earnings of the T-6B military trainer and retrofits of military transport aircraft. Sensors & Systems sales and earnings benefited principally due to the inclusion of full-year results from Souriau. This business was acquired in July 2011, and the inventory fair value adjustment was principally recorded in the prior-year period. Sensors & Systems sales and earnings also benefited from improved sales and earnings of advanced sensors and power systems. The increasedecrease in Advanced Materials segment earnings mainly reflected ~~strong sales~~the following:

A $16 million decrease in gross profit

A $3 million increase in selling, general and ~~earnings~~administrative expense

A $3 million unfavorable effect of changes in foreign currency exchange rates

Partially offset by a $5 million insurance recovery from ~~higher sales of engineered materials.~~the incident at our countermeasure operation

~~The income tax rate for~~Interest expense was $30.1 million during fiscal ~~2012 was 20.9%~~2016, compared with ~~15.7% for fiscal 2011.~~

~~Cash flows from operating activities were $194.2 million in fiscal 2012 compared to $192.4~~$33.1 million in the prior-year period. The decrease in interest expense reflected lower interest from our refinancing in April 2015 of our $250 million 7% Senior Notes with our €330 million 3.625% Senior Notes. Additionally, in fiscal 2015 we recorded a $2.4 million reduction in interest expense upon the lapse of a statutory period related to a liability for a non-income tax position of an acquired company.

The income tax rates were 16.0% and 17.3% for fiscal 2016 and 2015, respectively. The decrease in the income tax rate principally reflected the following:

During fiscal 2016, we recognized $1.4 million of additional tax benefits primarily due to the release of reserves upon the settlement of an audit

Both years benefited from various tax credits, certain foreign interest deductions, and lower income tax rates on permanently invested foreign sourced income

We ~~paid down our revolving credit facility and Euro Term Loan by $193.1~~expect the income tax rate to be approximately 25% in fiscal 2017.

It is reasonably possible that within the next twelve months approximately $1.4 million ~~during~~of tax benefits that are currently unrecognized could be recognized as a result of settlement of examinations and/or expiration of a statute of limitations.

New orders for fiscal ~~2012.~~2016 were $2.1 billion compared with $2.0 billion for fiscal 2015. Backlog at September 30, 2016, was $1.3 billion compared with $1.2 billion at October 2, 2015. Approximately $355 million is scheduled to be delivered after fiscal 2017. Backlog is subject to cancellation until delivery.

~~Results of Operations~~

Fiscal ~~2012~~2015 Compared with Fiscal ~~2011~~2014

Sales for fiscal ~~2012 increased 16.0%~~2015 decreased 1.5% over the prior year. Sales by segment were as follows:

						Increase (Decrease)
In Thousands	Increase (Decrease) From Prior Year	2012		2011		From Prior Year		2015		2014
										(Unaudited)
Avionics & Controls	(6.2)%	$	790,015	$	841,939		8.9%	$	727,801	$	668,595
Sensors & Systems	69.4%		702,394		414,609	(8.2)%			633,446		689,850
Advanced Materials	8.3%		499,909		461,437	(6.7)%			413,202		442,682

Total		$	1,992,318	$	1,717,985

Total Net Sales								$	1,774,449	$	1,801,127

The ~~$51.9~~$59.2 million, or ~~(6.2)% decrease,~~8.9%, increase in Avionics & Controls sales over fiscal 2014 reflected incremental sales from the DAT acquisition of $83 million. This increase was partially offset by the effect of weakening foreign currencies, which reduced segment sales by $10 million compared with the prior-year period. In addition, the settlement of forward foreign currency contracts qualifying under hedge accounting reduced sales by $11 million. Sales volume decreased by $3 million and mainly reflected ~~decreased~~lower sales ~~volumes~~ of avionics systems for defense applications of ~~$64~~$10 million partially offset by higher sales of interface technologies for gaming applications of $8 million.

The $56.4 million, or 8.2%, decrease in Sensors & Systems sales over fiscal 2014 reflected the impact of weakening foreign currencies of $65 million and ~~communication~~the impact of forward contracts under hedge accounting of $8 million. This decrease in sales was partially offset by incremental sales from the Sunbank acquisition of $5 million. Sales volume increased by $12 million, reflecting a $7 million increase in advanced sensors sales for OEM and aftermarket and an $11 million increase in power systems sales for commercial aviation applications. These increases were partially offset by an ~~increase in sales volumes of control systems. The~~$8 million decrease in ~~avionics systems was principally~~connection technologies sales mainly due to lower ~~cockpit integration~~demand from defense and industrial customers, including oil and gas.

The $29.5 million, or 6.7%, decrease in Advanced Materials sales ~~volumes for the T-6B military trainer~~compared with fiscal 2014 reflected a $20 million decrease in sales volume and ~~retrofits for military transport aircraft.~~a $9 million impact of weakening foreign currencies. The decrease in sales ~~for the T-6B was due the bankruptcy filing of Hawker Beechcraft. The decrease in segment sales also~~volume reflected a $16 million decrease in defense technologies sales ~~of hearing protection headsets~~ due to reduced demand and order delays, of which about 50% was offset by higher sales of communication intercept receivers for signal intelligence applications. The increase in control systems sales was mainly due to higher sales to OEM customers. The prior-year period benefited from a $4.4 million retroactive price settlement due to product scope changes.

The $287.8 million, or 69.4% increase, in Sensors & Systems principally reflected incremental sales from the Souriau acquisition of $250 million and increased sales volume of advanced sensors and power systems of $36 million. About 60% of the increase in advanced sensors and power systems sales reflected increased sales of power systems due to higherlower demand for ~~commercial aviation products. The increase in advanced sensors reflected higher OEM sales~~flare countermeasures and ~~strong aftermarket demand for aerospace and industrial customers. Sales in fiscal 2012 reflected~~ a ~~weaker euro relative to the U.S. dollar compared with the prior-year period.~~

~~The $38.5~~$4 million or 8.3% increase, in sales of Advanced Materials principally reflected increased sales volumes of engineered materials of $40 million, partially offset by decreased sales volumes of defense technologies. The increase in engineered materials primarily reflected strong demand for elastomer and insulation materials for commercial aviation products. The decrease in defense technologies principally reflected a decrease in sales of ~~non-U.S. countermeasure flares~~engineered materials due to ~~reduced demand and order delays as well as~~ lower demand for ~~combustible ordnance.~~

defense applications.

Foreign sales originating from non-U.S. locations, including export sales by domestic operations, totaled ~~$1.2~~$1.1 billion and ~~$971.0 million,~~$1.3 billion for fiscal 2015 and 2014, respectively, and accounted for ~~59.2%~~60.2% and ~~56.5%~~61.9% of our sales in fiscal ~~2012~~2015 and ~~2011,~~2014, respectively.

Overall, gross ~~margin~~profit as a percentage of sales was ~~36.1%~~33.2% and ~~34.3% in~~34.7% for fiscal ~~2012~~2015 and ~~2011,~~2014, respectively. Gross profit was ~~$719.0~~$589.4 million and ~~$589.7~~$624.7 million for fiscal 2015 and 2014, respectively. Gross profit was impacted by restructuring expense of $5.1 million, or 0.3% of sales, for fiscal 2015, and $5.3 million, or 0.3% of sales, in fiscal ~~2012 and 2011, respectively.~~2014.

Avionics & Controls segment gross ~~margin~~profit as a percentage of sales was ~~39.5%~~32.3% and ~~38.8%~~36.2% for fiscal ~~2012~~2015 and ~~2011,~~2014, respectively. Segment gross profit was ~~$311.7~~$234.9 million compared ~~to $326.5~~with $241.8 million in the prior-year period. The decrease in gross profit reflected a $15 million decrease on sales of avionics systems, an $8 million decrease on sales of control and communication systems, and a $3 million decrease on sales of interface technologies. The decrease in avionics systems gross profit was mainly due to lower sales volumes ~~for~~of $8 million, a $1 million inventory write-off due to the ~~T-6B military trainer~~uncertainty over a specific cockpit integration program, and ~~retrofits~~a $2 million estimate-at-completion adjustment due to development program realignments. Additionally, gross profit was impacted by the effect of ~~military aircraft,~~foreign currencies and the settlement of forward contracts of $5 million. The decrease in control and communication systems was mainly due to lower sales volumes and mix of $4 million and higher manufacturing costs of $4 million. The decrease in interface technologies gross profit was mainly due to sales mix. These decreases were partially offset by ~~increased~~incremental gross profit from the DAT acquisition of ~~our avionics software testing business.~~$19 million. DAT gross profit included the effect of shipping acquired inventory valued at fair value at acquisition. A fair value adjustment of $7 million lowered incremental gross profit from DAT from $26 million to $19 million.

Sensors & Systems segment gross margin percentage was ~~34.8%~~34.9% and ~~28.3%~~33.7% for fiscal ~~2012~~2015 and ~~2011,~~2014, respectively. Segment gross profit was ~~$244.6~~$221.2 million and ~~$117.4~~$232.4 million for fiscal ~~2012~~2015 and ~~2011,~~2014, respectively. ~~Approximately 10%~~The decrease in gross margin percentage mainly reflected a $10 million decrease on sales of connection technologies, and a $2 million decrease on sales of advanced sensors, partially offset by a $1 million increase on sales of power systems. The decrease in connection technologies gross margin percentage was due to lower sales volumes of $4 million and the effects of weakening foreign currencies of $8 million, partially offset by incremental gross margin percentage from the Sunbank acquisition. The decrease in advanced sensors gross margin percentage was due to the effect of weakening foreign currencies and the settlement of forward contracts of $4 million and higher cost initiative expense of $2 million, partially offset by higher sales volume and mix. The increase in gross ~~profit reflected strong demand for~~margin percentage of power systems ~~for commercial aviation applications. Approximately 85% of the increase in gross profit~~ was due to ~~incremental gross profit from~~higher sales volume and mix of $5 million and lower manufacturing expense of $2 million, partially offset by the ~~Souriau acquisition. Souriau’s gross profit was impacted by a $12 million charge in the first fiscal quarter~~effect of 2012 due to recording Souriau’s acquired inventory at its fair value. The prior-year period included a $27.9 million inventory fair value adjustment, recognized principally in the fourth fiscal quarterweakening foreign currencies of ~~2011.~~$7 million.

Advanced Materials segment gross margin percentage was ~~32.5%~~32.2% and ~~31.6%~~34.0% for fiscal ~~2012~~2015 and ~~2011,~~2014, respectively. Segment gross profit was ~~$162.7~~$133.3 million and ~~$145.8~~$150.4 million for fiscal ~~2012~~2015 and ~~2011,~~2014, respectively. The ~~increase~~decrease in segment gross profit ~~was~~ principally due to higher sales of elastomer materials and insulation materials primarily for commercial aviation applications. Gross profit on defense technologies increased slightly, principally reflecting an increase in gross profit and margin on flare countermeasures, partially offset byreflected lower gross profit on ~~combustible ordnance~~sales of engineered materials of $17 million, mainly due to ~~decreased~~lower sales ~~volumes.~~volume and mix of $3 million, a lower recovery of fixed costs of $4 million and higher operating expenses of $7 million due mainly to manufacturing inefficiencies and the effects of weakening foreign currencies of $3 million. Defense technologies gross profit was even with prior-year period. The impact of lower sales volumes of $4 million was offset by lower manufacturing costs from our cost initiative project.

Selling, general and administrative expenses (which include corporate expenses) ~~increased to $382.9~~totaled $346.8 million, or ~~19.2%~~19.5% of sales, ~~in fiscal 2012 compared with $304.2~~and $324.0 million, or ~~17.7%~~18.0% of sales, infor fiscal ~~2011.~~2015 and 2014, respectively. The increase in selling, general and administrative expense ~~principally~~ reflected incremental selling, general and administrative expenses from the DAT acquisition of $24.9 million and increased corporate expenses of $13.9 million, partially offset by a ~~$65.1 million~~decrease in segment selling, general and administrative expense. The increase in corporate expense was mainly due to higher compliance expense and $3.5 million in higher pension costs due to our settlement with vested terminated pension plan participants. These increases in corporate expense were partially offset by a $9 million reduction in incentive compensation. The decrease in segment selling, general and administrative expense ~~at our Sensors & Systems segment due to incremental~~reflected the effect of translating selling, general and administrative expenses denominated in non-U.S. functional currencies to the U.S. dollar of $19.0 million and a decrease in segment incentive compensation expense of $4.3 million. These decreases were partially offset by a $2.1 million write-off of fixed assets associated with an avionics systems program and mainly higher compliance expense.

In fiscal 2014, we offered vested terminated participants of our U.S. pension plan a one-time opportunity to elect a lump-sum payment from the ~~Souriau acquisition. Selling, general and administrative expense increased $19.4 million at Avionics & Controls and Advanced Materials. This increase reflects~~plan in lieu of a ~~$2.8 million increase in bad debt due to~~lifetime annuity. In the ~~bankruptcy filing~~first fiscal quarter of ~~Hawker Beechcraft, $5~~2015, we made $16.6 million in ~~incremental selling, general and administrative expense~~lump-sum payments to vested terminated pension plan participants from the ~~Eclipse acquisition, and $4.3 million~~plan, which resulted in ~~severance costs. Corporate expense decreased $5.8 million from fiscal 2011, principally reflecting lower acquisition-related expenses.~~an actuarial settlement charge of $3.5 million.

~~Research, development and related engineering spending increased to $107.7~~Total restructuring expenses were $11.7 million, or ~~5.4%~~0.7% of sales, in fiscal ~~2012 compared with $94.5~~2015, of which $6.6 million is reported separately as restructuring expenses and $5.1 million is included in cost of goods sold. Total restructuring expenses were $17.4 million, or ~~5.5%~~1.0% of sales, in fiscal ~~2011.~~2014, of which $12.1 million is reported separately as restructuring expenses and $5.3 million is included in cost of goods sold.

Research, development and engineering spending was $91.5 million, or 5.2% of sales, for fiscal 2015 compared with $88.7 million, or 4.9% of sales, for fiscal 2014. The ~~$13.2 million~~ increase in research, development and ~~related~~engineering spending reflects incremental research, development and engineering expense ~~principally reflects~~from the ~~incremental spending of $9 million on connection technologies reflecting a full-year impact due to the~~DAT acquisition of ~~Souriau~~$10.5 million, partially offset by lower spending on control and ~~$6 million on power systems.~~communication systems developments.

Segment earnings (operating earnings excluding corporate expenses and other income or expense) for fiscal ~~2012 were $219.4~~2015 totaled $218.6 million, or ~~11.0%~~12.3% of sales, compared with ~~$240.0~~$260.3 million, or ~~14.0%~~14.5% of sales, for fiscal ~~2011. The decrease in~~2014. Excluding restructuring expenses of $11.7 million, segment earnings ~~reflects the $52.2 million impairment charge against goodwill of Racal Acoustics. If the impairment charge is excluded, segment earnings totaled $271.5~~were $230.4 million, or ~~13.6%~~13.0% of sales, for fiscal ~~2012.~~2015. Excluding restructuring expenses of $17.4 million, segment earnings were $277.8 million, or 15.4% of sales, for fiscal 2014.

Avionics & Controls segment earnings were ~~$54.9~~$65.9 million, or ~~7.0%~~9.1% of sales, in fiscal ~~2012~~2015 compared with ~~$135.2~~$92.2 million, or ~~16.1%~~13.8% of sales, in fiscal ~~2011. Excluding the $52.2 million impairment charge, segment earnings were $107.1 million, or 13.6% of sales, in fiscal 2012. The decrease in segment earnings from the prior-year period reflects~~2014, mainly reflecting a ~~$22~~$5 million decrease in avionics systems, ~~earnings~~a $16 million incremental loss from the DAT acquisition, and a $5 million decrease in control and communication systems earnings. ~~Avionics~~The decrease in avionics systems earnings ~~were impacted by decreased~~mainly reflected lower gross profit ~~and a $2.3 million bad debt expense due to the bankruptcy of Hawker Beechcraft,~~as explained above, partially offset by aan $8 million decrease in ~~spending on~~selling, general and administrative expense and a $1 million decrease in research, development and engineering. ~~Control~~The decrease in avionics systems selling, general and administrative expense was mainly due to gains on monetary assets and translation gains and lower restructuring expenses. The decrease in earnings ~~were impacted by an increase in research, development and engineering expense. Additionally, the second fiscal quarter of 2011 benefited~~ from ~~a $1.1 million recovery of non-recurring engineering expense upon settlement with a customer~~sales of control ~~systems.~~and communication systems principally reflected lower gross profit as explained above, partially offset by lower research, engineering and development expense and selling, general and administrative expenses. Segment restructuring expenses were $0.7 million and $5.1 million in fiscal 2015 and 2014, respectively. The effect of foreign currencies and settlement of forward contracts on segment earnings had a favorable $2 million impact in fiscal 2015 compared with the prior-year period.

Sensors & Systems segment earnings were ~~$70.9~~$71.8 million, or ~~10.1%~~11.3% of sales, in fiscal ~~2012~~2015 compared with ~~$22.5~~$73.7 million, or ~~5.4%~~10.7% of sales, in fiscal ~~2011, principally~~2014, reflecting ~~$40~~a $10 million decrease in ~~incremental earnings from the Souriau acquisition~~gross profit on sales of connection technologies as described above, substantially offset by lower selling, general and ~~increases in sales in both power systems~~administrative expenses due to foreign currency translation gains. Additionally, segment restructuring expenses were $7.1 million and ~~advanced sensors. Souriau incurred an operating loss of $22.4~~$6.8 million in fiscal ~~2011 principally reflecting~~2015 and 2014, respectively. The effect of foreign currencies and settlement of forward contracts on segment earnings had an unfavorable $3 million impact in fiscal 2015 compared with the inventory fair value adjustment referenced above. Power systems benefited from increased gross profits, partially offset by higher research, development and engineering spending. Advanced sensors benefited from increased gross profits mainly due to higher aftermarket demand and a $1.9 million recovery of non-recurring engineering and higher French tax credits on research, development and engineering expense.prior-year period.

Advanced Materials segment earnings were ~~$93.5~~$81.0 million, or ~~18.7%~~19.6% of sales, infor fiscal ~~2012~~2015 compared with ~~$82.3~~$94.5 million, or ~~17.8%~~21.3% of sales, infor fiscal ~~2011,~~2014, primarily reflecting ~~increased~~lower earnings from sales of engineered ~~materials of $9 million and improved earnings~~materials. Earnings from sales of defense ~~technologies. The increase in engineered materials earnings reflected the increase in gross profit. The prior-year period benefited from a $3.2~~technologies improved mainly due to lower restructuring expense. Segment restructuring expense was $2.8 million ~~gain on sale of a facility, partially offset by a $1.7~~and $4.9 million ~~increase in an estimated liability for an environmental issue, which was paid~~ in fiscal ~~2012.~~2015 and 2014, respectively. The ~~improvement~~effect of foreign currencies and settlement of forward contracts on segment earnings had an unfavorable $2 million impact in ~~results for defense technologies principally reflected an increase in earnings for countermeasures operations partially offset by decreased earnings of combustible ordnance of $3 million.~~

Prior to our March 2007 acquisition of CMC, CMC was involved in a transaction in which CMC shareholders had a limited amount of time in which to tender their shares in exchange for cash. In May 2008, afterfiscal 2015 compared with the prescribed time period had expired, CAD $11.8 million remained unclaimed. As a result, the paying agent returned the unclaimed amount to CMC in accordance with Canadian law. In December 2008, CMC’s former parent company instituted a legal action against the paying agent, alleging negligence and breached contract terms by returning the funds to CMC. The plaintiff lost at trial and appealed. In the second quarter of fiscal 2012, CMC received notice that the plaintiff abandoned its appeal. In addition, CMC and the paying agent settled all remaining issues. Management concluded that all contingencies relating to this matter were resolved, and accordingly, the Company recorded a gain of approximately CAD $11.8 million or $11.9 million, or $9.5 million after tax, in the second fiscal quarter of 2012.prior-year period.

Interest expense ~~increased to $46.2~~was $30.1 million during fiscal ~~2012~~2015, compared with ~~$40.2~~$30.0 million in the ~~prior year, reflecting higher borrowings.~~prior-year period.

The income tax ~~rate~~rates were 16.3% and 21.0% for fiscal ~~2012 was 20.9% compared with 15.7% in fiscal 2011.~~2015 and 2014, respectively. The income tax rate was lower than the statutory rate, as both years benefited from various tax credits and certain foreign interest expense deductions. During fiscal ~~2012,~~2015, we recognized ~~$8.7~~$1 million of discrete ~~income~~ tax benefits as a result of the following items: The first item was a $2.3 million tax benefit due to a change in French tax laws associated with the holding company structure and the financing of the Souriau acquisition. The second item was a $2.9 million reduction of the U.K. statutory income tax rate. The third item was a $2.1 million tax benefit as a result of reconciling the prior year’s income tax return to the U.S. income tax provision and settlement of tax examinations. The fourth item was a $1.4 million release of valuation allowanceprincipally related to ~~foreign tax credits as a result of a tax examination.~~

~~In fiscal 2011, we recognized $11.4 million of discrete income tax benefits as result of~~ the following items. The first item was ~~$3.1~~a $1.5 million ~~of income~~ tax ~~benefits~~benefit due to the retroactive extension of the U.S. federal research and experimentation ~~credits and the release of a valuation allowance related to a net operating loss of an acquired subsidiary.~~credits. The second item was ~~$5.6~~a $1.2 million ~~of income~~ tax benefits associated with net operating losses of an acquired subsidiary as a result of concluding a tax examination. The third item was $3.5 million of net reduction of deferred income tax liabilities as a result of a reduction in the U.K. statutory income tax rate. The fourth item was $0.8 million of income tax expense as a result of reconciling the prior-year’s income tax returnsbenefit due to the ~~prior year’s provision for income tax. We expect the income tax rate to be approximately 23% in fiscal 2013.~~

~~It is reasonably possible that within the next 12 months approximately $8.5 million~~release of ~~tax benefits associated with research and experimentation tax credits, capital and operating losses that are currently unrecognized could be recognized as a result of settlement of examinations and/or~~reserves upon the expiration of a statute of limitations. ~~If these~~The third item was a $1.7 million tax ~~benefits were~~expense due to ~~be recognized during fiscal 2013, fiscal 2013 expected~~the income tax ~~rate could decrease~~return to ~~approximately 21%~~

~~To the extent that sales are transacted in a currency other than the functional currency of the operating unit,~~provision adjustments. During fiscal 2014, we ~~are subject to foreign currency fluctuation risk.~~

We use forward contracts to hedge our foreign currency exchange risk. To the extent that these hedges qualify under U.S. GAAP, the amount of gain or loss is deferred in Accumulated Other Comprehensive Income (AOCI) until the related sale occurs. Also, we are subject to foreign currency gains or losses from embedded derivatives on backlog denominated in a currency other than the functional currency of our operating companies or its customers. Gains and losses on forward

~~contracts, embedded derivatives, and revaluation of assets and liabilities denominated in currency other than the functional currency of the Company for fiscal 2012 and 2011 were as follows:~~

In Thousands
   2012    2011
Forward foreign currency contracts – gain (loss)
   $         (6,338 )    $ 701
Forward foreign currency contracts – reclassified from AOCI
   783       10,185
Embedded derivatives – gain
   425       797
Revaluation of monetary assets/liabilities – gain
   2,250       2,108

Total
   $ (2,880 )    $          13,791

New orders for fiscal 2012 were $2.1 billion compared with $1.9 billion for fiscal 2011. Orders increased across all of our segments. Backlog at the end of fiscal 2012 and 2011 was $1.3 billion. Approximately $408.0 million is scheduled to be delivered after fiscal 2013. Backlog is subject to cancellation until delivery.

~~Fiscal 2011 Compared with Fiscal 2010~~

~~Sales for fiscal 2011 increased 12.5% over the prior year. Sales by segment were as follows:~~

In Thousands    Increase (Decrease)
From Prior Year 2011    2010
Avionics & Controls
     6.6% $ 841,939       $ 790,016
Sensors & Systems
   38.9% 414,609       298,559
Advanced Materials
     5.3% 461,437       438,026

Total
   $     1,717,985       $     1,526,601

The $51.9 million, or 6.6% increase, in Avionics & Controls mainly reflected increased sales volumes of avionics systems of $25 million, control systems of $25 million, and communication systems of $6 million, mostly offset by decreased sales volumes of interface technologies systems. The increase in avionics systems principally reflected strong sales volumes of avionics products of $18.2 million. The increase in control systems reflected strong OEM and after-market sales and a $4.4 million retroactive price settlement due to product scope changes. The first six months of fiscal 2011 benefited from higher demand for after-market spares due to restocking of depleted inventory by our customers. During the second six months, demand levels for spares declined and more closely reflected the underlying activity of the flying fleet. The increased sales of communication systems principally reflected $37.6 million in incremental sales from the Eclipse acquisition completed in the first fiscal quarter of 2011, partially offset by decreased sales of hearing protection headset devices due to uncertainty over the U.S. and U.K. military budgets.

The $116.1 million, or 38.9% increase, in Sensors & Systems mainly reflected incremental sales from the Souriau acquisition in the third quarter of fiscal 2011 of $78 million and increased sales volumes of advanced sensors of $16 million and power systems of $22 million. The increase in advanced sensors sales mainly reflected strong aftermarket demand for temperature and pressure sensors. The increase in power systems mainly reflected higher OEM and retrofit sales for commercial aviation. Segment sales in the second, third and fourth quarters of fiscal 2011 reflected a stronger pound sterling and euro compared to the U.S. dollar compared to the prior-year period, while sales in the first quarter of fiscal 2011 reflected a weaker pound sterling and euro relative to the U.S. dollar relative to the prior-year period.

The $23.4 million, or 5.3%, increase in sales of Advanced Materials principally reflected a $33 million decrease in sales volumes of defense technologies and a $54 million increase in sales of engineered materials. The decrease in sales of defense technologies mainly reflected lower sales volumes of countermeasures, principally due to lower requirements from our non-U.S. customers. The increase in sales of engineered materials reflected strong demand for elastomer and insulation materials for commercial aerospace applications.

~~Foreign sales, including export sales by domestic operations, totaled $971.0 million and $860.0 million, and accounted for 56.5% and 56.3% of our sales in fiscal 2011 and 2010, respectively.~~

~~Overall, gross margin as a percentage of sales was 34.3% and 33.8% in fiscal 2011 and 2010, respectively. Gross profit was $589.7 million and $516.2 million in fiscal 2011 and 2010, respectively.~~

Avionics & Controls segment gross margin was 38.8% and 35.7% for fiscal 2011 and 2010, respectively. Segment gross profit was $326.5 million compared to $282.4 million in the prior-year period. About 70% of the net $44 million increase in segment gross profit was due to strong sales volume and improved gross margin on avionics systems. This reflects increased sales volumes of aviation products and higher gross margin on cockpit integration sales. Nearly 35% of the increase in segment gross profit reflected robust sales of control systems due to strong aftermarket demand and the $4.4 million retroactive price increase referenced above. Control systems gross profit was impacted by a $2.0 million charge in the fourth fiscal quarter of 2011 for engineering costs not probable of recovery from the customer. Eclipse’s gross profit was impacted by purchase accounting requirements resulting in a $5.4 million inventory fair value adjustment and recognizing the adjustment as expense over the first inventory turn; approximately $2.0 million was recorded as an expense in the fourth fiscal quarter of 2011. Interface technologies gross profit decreased by approximately $3.5 million, principally due to lower demand and gross margin for interface devices for casino gaming applications.

Sensors & Systems segment gross margin was 28.3% and 34.6% for fiscal 2011 and 2010, respectively. Segment gross profit was $117.4 million and $103.2 million for fiscal 2011 and 2010, respectively. Connection technologies reported only minimal gross profit, net of a $27.9 million inventory fair value adjustment, principally recognized in the fourth fiscal quarter of 2011. An additional $12.6 million in fair value adjustments was recognized in the first fiscal quarter of 2012. Approximately 55% of the increase in segment gross profit was due to increased sales volumes of pressure sensors for OEM and aftermarket requirements. About 45% of the increase in segment gross profit was due to improved gross margin on power systems from increased retrofit and OEM sales.

Advanced Materials segment gross margin was 31.6% and 29.8% for fiscal 2011 and 2010, respectively. Segment gross profit was $145.8 million and $130.6 million for fiscal 2011 and 2010, respectively. A $26 million increase in engineered materials gross profit was partially offset by a decrease in gross profit at our defense technologies operations. The increase in engineered materials gross profit was principally due to increased sales volumes of elastomer and insulation material for commercial aerospace applications. The decrease in gross profit of defense technologies mainly reflected lower sales volumes of countermeasures.

Selling, general and administrative expenses (which include corporate expenses) increased to $304.2 million in fiscal 2011 compared with $258.3 million in fiscal 2010. The $45.9 million increase reflected increases of $9$1.6 million of corporate expense, $14 million in our Avionics & Controls segment, and $23 million in our Sensors & Systems segment. The $9 million increase at corporate primarily reflects Souriau acquisition-related expenses, of which approximately $1.4 million was incurred in the fourth fiscal quarter of 2011. The $14 million increase in Avionics & Controls reflects $8 million in incremental selling, general and administrative expenses related to the Eclipse acquisition. The $23 million increase in Sensors & Systems reflects $20 million in incremental selling, general and administrative expenses related to the Souriau acquisition. Selling, general and administrative expenses in Advanced Materials increased slightly compared to the prior-year period reflecting $1.9 million for an estimated liability for an environmental issue, $2.0 million in severance at our defense technologies operations and a $1.3 million expensediscrete tax benefits principally related to the ~~write-off of accounts receivable. These increases were principally offset by~~following items. The first item was a ~~$3.2~~$0.9 million ~~gain on a sale of a facility and an insurance recovery in fiscal 2010.~~

Research, development and related engineering spending increased to $94.5 million, or 5.5% of sales, in fiscal 2011 compared with $69.8 million, or 4.6% of sales, in fiscal 2010. The $24.8 million increase in research, development and related engineering expense principally reflects $14 million in higher spending on avionics systems, $4 million on control systems and $4 million on communication systems.

~~In fiscal 2011 we benefited from $6.3 million in foreign currency exchange gains associated with funding the acquisition of Souriau.~~

Segment earnings (operating earnings excluding corporate expenses and other income or expense) for the fourth quarter of fiscal 2011 were $45.1 million, or 9.0% of sales, compared with $83.2 million, or 19.3% of sales, for the prior-year period. The $38.1 million decrease in earnings mainly reflected the operating loss of Souriau of $21.6 million, principallytax benefit due to the fair value inventory adjustment noted above and partially offset by incremental earnings of Eclipse of $2.3 million. The decrease also reflected weaker operating earnings at our avionics systems and communications headset operations totaling $15 million and defense technologies countermeasure operations totaling $8 million, partially offset by stronger operating results at our engineered materials operations of $11 million. Avionics systems earnings in the fourth quarter were impacted by higher research and development expense and lower shipments of the integrated cockpit for the T-6B military trainer compared to the same periods last year. The decrease at communication systems and defense technologies was due to lower demand for headsets and flare countermeasures, respectively, which reflect slower than expected order releases from our defense customers. Engineered materials operations benefited from strong demand for elastomer and insulation materials for commercial aerospace. The decrease in segment earnings also reflected a $2.0 million write-off of engineering costs at controls systems, a $1.1 million inventory and accounts receivable write-off at advanced sensors, a $2.0 million write-off of accounts receivable and inventory at defense technologies, and a $0.6 million late delivery penalty at engineering materials, partially offset by a $3.2 million gain on the sale of an engineered materials facility.

Segment earnings for fiscal 2011 were $240.0 million, or 14.0% of sales, compared with $228.6 million, or 15.0% of sales, for fiscal 2010. Avionics & Controls segment earnings were $135.2 million, or 16.1% of sales, in fiscal 2011 compared with $125.9 million, or 15.9% of sales, in fiscal 2010, mainly reflecting a $12 million increase in earnings from sales of avionics systems, a $9 million increase in earnings from sales of control systems, partially offset by a $10.0 million decrease in earnings from sales of communication systems, and a $2 million decrease in earnings from sales of interface technologies. Avionics systems benefited from strong gross profit, partially offset by a $14 million increase in research, development and engineering expense and a $5.0 million increase in selling, general and administrative expenses, reflecting increased bid and proposal expense and incentive compensation. Control systems benefited from increased gross profit, partially offset by a $4 million increase in research, engineering and development expense, net of a $1.1 million recovery of non-recurring engineering expense upon settlement with the customer. The decrease in communication systems earnings mainly reflected decreased gross profit from lower sales of certain communication systems for audio and data products for severe battlefield environments, resulting in a $14 million decrease in communication systems earnings, partially offset by incremental income from the Eclipse acquisition.

Sensors & Systems segment earnings were $22.5 million, or 5.4% of sales, in fiscal 2011 compared with $33.9 million, or 11.4% of sales, in fiscal 2010, principally reflecting a $6.6 million increase in advanced sensors and a $4.5 million increase in power systems, both operations benefiting from increased gross profit. Souriau incurred an operating loss of $22.4 million, principally reflecting the inventory fair value adjustment referenced above.

Advanced Materials segment earnings were $82.3 million, or 17.8% of sales, in fiscal 2011 compared with $68.8 million, or 15.7% of sales, in fiscal 2010, primarily reflecting increased earnings from sales of engineered materials, partially offset by a $15 million decrease in defense technologies. The increase in engineered materials principally reflected the increase in gross profit, a $3.2 million gain on sale of a facility, partially offset by a $1.9 million increase in an estimated liability for an environmental issue. Defense technologies principally reflected a $19 million decrease in earnings for countermeasures operations and increased earnings from combustible ordnance. The decrease in earnings for countermeasures mainly reflected the decrease in gross profit and certain charges in the fourth fiscal quarter of 2011 totaling $2.0 million, consisting principally of a write-off of an accounts receivable of $0.8 million and $0.5 million in inventory. Also, $2.0 million in severance was recorded in the third fiscal quarter of 2011.

~~Interest expense increased to $40.2 million during fiscal 2011 compared with $33.2 million in the prior year, reflecting higher borrowings.~~

The income tax rate for fiscal 2011 was 15.7% compared with 15.8% in fiscal 2010. The tax rate was lower than the statutory rate, as both years benefited from various tax credits and certain foreign interest expense deductions. During fiscal 2011, we recognized $11.4 million of discrete income tax benefits as a result of the following items: $3.1 million of income tax benefits due to the retroactive extension of the U.S. federal research and experimentation credits and the release of a valuation allowance related to a net operating loss of an acquired subsidiary; $5.6 million of income tax benefits associated with net operating losses of an acquired subsidiary as a result of concluding a tax examination; $3.5 million of net reduction of deferred income tax liabilities as a result of enactment of income tax laws reducing the U.K. statutory income tax rate; and $0.8 million of income tax expense as a result of reconciling the prior-year’s income tax returns to the prior year’s provision for income tax.

In fiscal 2010, we recognized $11.0 million in net discrete tax benefits. The $11.0 million discrete tax benefits were the result of four events. The first event was a $7.6 million benefit as a result of the release of tax reserves ~~for uncertain tax positions mainly associated with losses on the disposition of assets. This release of tax reserves resulted from~~upon the expiration of a statute of limitations. The second ~~event was a $1.7 million net reduction in deferred~~item consisted of income tax ~~liabilities, which was the result~~return to provision adjustments of the enactment of tax laws reducing the U.K. statutory income tax rate. The third event was a $0.8 million tax expense related to tax liabilities associated with an examination of the U.S. federal and state income tax returns. The fourth event was a $2.5 million reduction of valuation allowances related to acquired net operating losses and foreign tax credits that were generated in prior years.$0.7 million.

~~To the extent that sales are transacted in a currency other than the functional currency of the operating unit, we are subject to foreign currency fluctuation risk.~~

In Thousands
   2011    2010
Forward foreign currency contracts – gain (loss)
   $ 701       $ (139 )
Forward foreign currency contracts – reclassified from AOCI
   10,185       11,042
Embedded derivatives – gain (loss)
   797       (1,476 )
Revaluation of monetary assets/liabilities – gain (loss)
   2,108       (3,282 )

Total
   $     13,791       $     6,145

New orders for fiscal ~~2011~~2015 were $1.9 billion compared with ~~$1.6~~$1.8 billion for fiscal ~~2010.~~2014. Orders by segment for fiscal 2015 increased ~~across all~~for our Avionics & Controls segment compared to the prior-year period due to the acquisition of ~~our segments, principally reflecting~~DAT. Orders for Sensors & Systems and Advanced Materials decreased compared to the ~~acquired backlog~~prior-year period mainly due to the effects of ~~Eclipse~~foreign currency and ~~Souriau and partially offset by order declines for avionics systems, certain communication systems and defense technologies.~~the timing of receiving orders. Backlog at ~~the end of fiscal 2011~~October 2, 2015, was ~~$1.3~~$1.2 billion compared with $1.1 billion at ~~the end of the prior year.~~October 31, 2014.

Liquidity and Capital Resources

Working Capital and Statement of Cash Flows

Cash and cash equivalents at the end of fiscal ~~2012~~2016 totaled ~~$160.7~~$258.5 million, ~~a decrease~~an increase of ~~$24.4~~$67.2 million from ~~the prior year.~~October 2, 2015. Net working capital increased to ~~$639.3~~$777.3 million at the end of fiscal ~~2012~~2016 from ~~$621.0~~$718.2 million at the end of the prior year.

Cash flows from operating activities were ~~$194.2~~$167.2 million and ~~$192.4~~$193.7 million in fiscal ~~2012~~2016 and ~~2011,~~2015, respectively. The decrease principally reflected lower cash receipts from sale of products and higher sales in September, which have not been

converted to cash. Sources and uses of cash flows from operating activities principally ~~consist~~consisted of cash received from the sale of products ~~offset by~~and cash payments for material, labor and operating ~~expenses.~~expense.

Cash flows used by investing activities were ~~$48.5~~$65.9 million and ~~$869.0~~$179.6 million in fiscal ~~2012~~2016 and ~~2011,~~2015, respectively. Cash flows used by investing activities in fiscal ~~2012 principally~~2016 primarily reflected capital expenditures of $68.5 million, partially offset by proceeds from the ~~use~~sale of ~~cash for the purchase~~a discontinued operation of ~~capital assets of $49.4~~$3.7 million. Cash flows used by investing activities in fiscal ~~2011 principally~~2015 reflected ~~the use~~cash paid for an acquisition of $156.0 million, net of cash ~~for acquisition of businesses of $814.9 million~~acquired, and capital ~~assets~~expenditures of ~~$49.5~~$55.4 million, partially offset by proceeds from the sale of discontinued operations of $30.2 million.

Cash flows used by financing activities were ~~$167.8~~$29.4 million and $17.7 million in fiscal ~~2012~~2016 and ~~cash flows provided by financing activities were $436.4 million in fiscal 2011.~~2015, respectively. Cash flows used by financing activities in fiscal ~~2012~~2016 primarily reflected ~~cash repayments~~repayment of ~~our~~ long-term debt and credit facilities of ~~$193.1 million.~~$62.4 million, $18.7 million in shares repurchased, partially offset by $6.1 million from the issuance of common stock under our employee stock plans and $45.0 million in proceeds from our credit facilities. Cash flows ~~provided~~used by financing activities in fiscal ~~2011~~2015 primarily reflected ~~a $400.0 million increase in our credit facility, $176.9~~$269.3 million in ~~proceeds for the issuance~~shares repurchased, $834.0 million in repayment of long-term debt and ~~$164.9~~credit facilities, and $8.3 million of debt issuance costs, partially offset by $465.0 million in ~~cash repayments~~proceeds from our credit facilities, $356.5 million in proceeds from issuance of ~~long-term debt.~~the 2023 Notes, $250.0 million in proceeds from the issuance of the U.S. Term Loan, due 2020, and $16.6 million from the issuance of common stock under our employee stock plans.

Capital Expenditures

Net property, plant and equipment was ~~$356.4~~$338.0 million at the end of fiscal ~~2012~~2016 compared with ~~$368.4~~$309.4 million at ~~the end of the prior year.~~October 2, 2015. Capital expenditures for fiscal ~~2012~~2016 and ~~2011~~for the twelve-month period ended October 2, 2015, were ~~$49.4~~$68.5 million and ~~$49.5~~$55.4 million, respectively (excluding acquisitions), and included facilities, machinery, equipment and enhancements to information technology systems. Capital expenditures are anticipated to approximate ~~$80.0~~$60 million for fiscal ~~2013, which includes plant expansions, as well as deferred capital spending from 2011 and 2012.~~2017. We will continue to support expansion through investments in infrastructure including machinery, equipment, and information systems.

Acquisitions

On ~~July 26, 2011, the Company~~January 31, 2015, we acquired the ~~Souriau Group (Souriau)~~defense, aerospace and training display (DAT) business of Belgium-based Barco N.V. (Barco) for €150 million, or approximately ~~$726.7~~$171 million, ~~net~~in cash before a working capital adjustment of ~~acquired cash. Souriau is~~approximately $15 million. We incurred a ~~leading global supplier~~$2.9 million foreign currency exchange loss in the funding of ~~highly engineered connection technologies~~the acquisition in the first quarter of fiscal 2015. Acquisition related costs of $3.4 million have been recognized as selling, general and administrative expense. We financed the acquisition primarily using international cash reserves, with the balance funded by borrowings under its existing credit facility. The DAT business develops and manufactures visualization solutions for ~~harsh environments. Souriau is included in our Sensors & Systems segment.~~

~~On December 30, 2010, the Company acquired Eclipse Electronic Systems, Inc. (Eclipse) for $123.8 million. Eclipse is~~ a ~~designer~~variety of demanding defense and ~~manufacturer of embedded communication intercept receivers for signal intelligence applications. Eclipse~~commercial aerospace applications and is included in our Avionics & Controls segment.

On December 20, 2013, we acquired Sunbank Family of Companies, LLC (Sunbank) for approximately $51.7 million. Sunbank is a manufacturer of electrical cable accessories, connectors and flexible conduit systems. Sunbank is included in the Sensors & Systems segment.

Debt Financing

Total debt decreased $188.0 million from the prior year to approximately $848.7 million at the end of fiscal 2012. Total debt outstanding at the end of fiscal 2012 consisted of $250.0 million Senior Notes due in 2020, $175.0 million of Senior Notes due in 2017, $80.2 million (€62.0 million) under our Euro Term Loan, $240.0 million in borrowings under our secured credit facility, $44.9 million under capital lease obligations, $51.8 million government refundable advances, and $6.8 million in various foreign currency debt agreements and other debt agreements.

U.S. Credit Facility

~~In July 2011,~~On April 9, 2015, we amended the secured credit facility to extend the expiration to April 9, 2020, increase the revolving credit facility to $500 million, and provide for a ~~new €125.0 million~~delayed-draw term loan (Euro Term Loan). The interest rate on the Euro Term Loan ranges from Euro LIBOR plus 1.5% to Euro LIBOR plus 2.25% depending on the leverage ratios at the time the funds are drawn. At October 26, 2012, the Company had €62.0facility of $250 million. We recorded $2.3 million outstanding or $80.2 million under the Euro Term Loan at an interest rate of Euro LIBOR plus 1.75% or 1.82%. The loan amortizes at 1.25% of the original principal balance quarterly through March 2016, with the remaining balance due in ~~July 2016.~~

~~In March 2011, we entered into a secured credit facility for $460.0 million made available through a group of banks.~~debt issuance costs. The credit facility is secured by substantially all ~~of our~~the Company’s assets and interest is based on standard inter-bank offering rates. The interest rate ranges from LIBOR plus ~~1.5%~~1.25% to LIBOR plus ~~2.25%~~2.00%, depending on the leverage ratios at the time the funds are drawn. At ~~October 26, 2012,~~September 30, 2016, we had ~~$240.0~~$155.0 million outstanding under the secured credit facility at an ~~initial~~ interest rate of LIBOR plus 1.75% ~~or 1.97%~~, which ranged from 2.27% to 2.29%. An additional $27.8 million of unsecured foreign currency credit facilities have been extended by foreign banks for a total of $527.8 million available companywide. Available credit under the above credit facilities was $353.2 million at fiscal 2016 year end, when reduced by outstanding borrowings of $155.0 million and letters of credit of $19.6 million.

U.S. Term Loan, due April 2020

On August ~~2, 2010,~~3, 2015, we borrowed $250 million under the ~~Company issued $250.0 million~~delayed-draw term loan provided for under the amended credit facility. The interest rate on this loan ranges from LIBOR plus 1.25% to LIBOR plus 2.00%, depending on the leverage ratios at the time the funds are drawn. At September 20, 2016, the interest rate was LIBOR plus 1.75%, which equaled 2.28%. The loan amortizes at 1.25% of the original principal balance quarterly through March 2020, with the remaining balance due in 7%April 2020.

3.625% Senior Notes, due ~~2020~~April 2023

In April 2015, we issued €330.0 million in 3.625% Senior Notes, due April 2023 (2023 Notes) requiring semi-annual interest payments in ~~March~~April and ~~September~~October of each year until maturity. The net proceeds from the sale of the notes, after deducting ~~$4.4~~

$5.9 million of debt issuance ~~cost,~~costs, were ~~$245.6~~$350.8 million. The ~~Senior~~2023 Notes are general unsecured senior obligations of the Company. The ~~Senior~~2023 Notes are unconditionally guaranteed ~~jointly and severally~~ on a senior basis by ~~all~~ the ~~existing~~Company and ~~future domestic~~certain subsidiaries of the Company ~~unless designated as an “unrestricted subsidiary,” and those foreign subsidiaries~~ that ~~executed related subsidiary guarantees~~are guarantors under the ~~indenture covering the Senior Notes.~~Company’s existing secured credit facility. The ~~Senior~~2023 Notes are subject to redemption at the option of the Company at any time prior to ~~August 1, 2015,~~April 15, 2018, at a price equal to 100% of the principal amount, plus any accrued interest to the date of redemption and a make-whole provision. ~~In addition, before August 1, 2013, the Company~~We may also redeem up to 35% of the ~~principal amount at 107.000% plus accrued interest~~2023 Notes before April 15, 2018, with the net cash proceeds ~~of one or more Public Equity Offerings.~~from equity offerings. The ~~Senior~~2023 Notes are also subject to redemption at the option of the Company, in whole or in part, on or after ~~August 1, 2015,~~April 15, 2018, at redemption prices starting at ~~103.500%~~102.719% of the principal amount plus accrued interest during the period beginning ~~August 1, 2015,~~April 15, 2018, and declining annually to 100% of principal and accrued interest on or after ~~August 1, 2018.~~April 15, 2021.

~~The Company also has $175.0~~

In connection with the redemption of debt in fiscal 2015, we incurred an $8.75 million ~~outstanding~~redemption premium and wrote off $2.7 million in unamortized debt issuance costs as a loss on extinguishment of Senior Notes due in 2017, with an interest rate of 6.625%. The Senior Notes are general unsecured senior obligations of the Company. In 2010, the Company entered into interest rate swap agreements to exchange the fixed interest rates on the Senior Notes due in 2017 for variable interest rates. The Senior Notes are guaranteed, jointly and severally on a senior basis, by all the existing and future domestic subsidiaries of the Company unless designated as an “unrestricted subsidiary,” and those foreign subsidiaries that executed related subsidiary guarantees under the indenture covering the Senior Notes. The Senior Notes are also subject to redemption at the option of the Company, in whole or in part, on or after March 1, 2012, at redemption prices starting at 103.3125% of the principal amount plus accrued interest during the period beginning March 1, 2007, and declining annually to 100% of principal and accrued interest on or after March 1, 2015.debt.

We believe cash on hand, funds generated from operations and other available debt facilities are sufficient to fund operating cash requirements and capital expenditures through fiscal ~~2013. Current conditions in the capital markets are uncertain; however, we~~2017. We believe we will have adequate access to capital markets to fund future acquisitions.

Share Repurchase Program

On June 19, 2014, our board of directors approved a share repurchase program and authorized the repurchase of up to $200 million of outstanding shares of common stock. In March 2015, our board of directors authorized an additional $200 million. Under the program, the Company is authorized to repurchase up to $400 million of the outstanding shares of common stock from time to time, depending on market conditions, share price and other factors. During fiscal 2014 we repurchased 269,228 shares under this program at an average price paid per share of $112.40, for an aggregate purchase price of $30.3 million. During fiscal 2015, we repurchased 2,562,122 shares under this program at an average price paid per share of $101.29, for an aggregate purchase price of $259.5 million. During fiscal 2016, we repurchased 304,577 shares under this program at an average price paid per share of $61.51, for an aggregate purchase price of $18.7 million. At September 30, 2016 the amount of remaining authorization under this program is $91.5 million.

Permanent Investment of Undistributed Earnings of Foreign Subsidiaries

Our non-U.S. subsidiaries have ~~$138.8~~$255.2 million in cash and cash equivalents at ~~October 26, 2012.~~September 30, 2016. Cash and cash equivalents at our U.S. parent and subsidiaries aggregated ~~$21.9~~$3.3 million at ~~October 26, 2012,~~September 30, 2016, and cash flow from these operations isand credit facilities are sufficient to fund working capital, capital expenditures, acquisitions and debt repayments of our domestic operations. We have available credit to our U.S. parent and subsidiaries of ~~$220.0~~$325.4 million on our U.S. secured credit facility. The earnings of our non-U.S. subsidiaries are considered to be indefinitely invested, and accordingly, no provision for federal income taxes has been made on accumulated earnings of foreign subsidiaries. The amount of the unrecognized deferred income tax liability for temporary differences related to investments in foreign subsidiaries is not practical to determine because of the complexities regarding the calculation of unremitted earnings and the potential for tax credits.

Government Refundable Advances

Government refundable advances consist of payments received from the Canadian government to assist in the research and development related to commercial aviation. These advances totaled ~~$51.8~~$45.0 million and ~~$34.5~~$43.3 million at ~~October 26, 2012,~~September 30, 2016, and October ~~28, 2011,~~2, 2015, respectively. The repayment of the advances is based on year-over-year commercial aviation revenue growth at CMC Electronics, Inc. (CMC) beginning in 2014. Imputed interest on the advances was ~~5.03%~~3.4% at ~~October 26, 2012.~~September 30, 2016.

Pension and Other Post-Retirement Benefit Obligations

Our pension plans principally include a U.S. pension plan maintained by Esterline, ~~and non-U.S.~~Non-U.S. plans maintained by ~~CMC.~~CMC, and Other Non-U.S. plans. Our principal post-retirement plans include non-U.S. plans maintained by CMC, which are non-contributory health care and life insurance plans.

We account for pension expense using the end of the fiscal year as our measurement date, and we make actuarially computed contributions to our pension plans as necessary to adequately fund benefits. Our funding policy is consistent with the minimum funding requirements of ERISA. In fiscal ~~2012~~2016 and ~~2011,~~2015, operating cash flow included ~~$27.3~~$12.0 million and ~~$32.5~~$9.2 million, respectively, of cash funding to these pension plans. There is no funding requirement for fiscal 2017 for the U.S. pension plans maintained by Esterline. We expect pension funding requirements for the CMC plans ~~maintained by Esterline~~ and ~~CMC~~other non-U.S. plans to be approximately ~~$16.3~~$4.4 million ~~and $10.8 million, respectively,~~ in fiscal ~~2013.~~2017. The rate of increase in future compensation levels is consistent with our historical experience and salary administration policies. The expected long-term rate of return on plan assets is based on long-term target asset allocations of 70% equity and 30% fixed income. We periodically review allocations of plan assets by investment type and evaluate external sources of information regarding long-term historical returns and expected future returns for each investment type, and accordingly, believe a ~~6.5%~~3.25% to ~~7.0%~~8.0% assumed long-term rate of return on plan assets is appropriate for ~~both~~ the ~~Esterline and CMC~~pension plans. Current allocations are consistent with the long-term targets.

We made the following assumptions with respect to our Esterline pension obligation in ~~2012~~fiscal 2016 and ~~2011:~~2015:


	2012			2011			2016	2015
Principal assumptions as of fiscal year end:
Discount rate		3.85	%		5.0	%	3.60%	4.40%
Rate of increase in future compensation levels		4.5	%		4.5	%	4.28%	4.22%
Assumed long-term rate of return on plan assets		7.0	%		7.5	%	7.00%	7.00%

We made the following assumptions with respect to our CMC pension obligation in ~~2012~~fiscal 2016 and ~~2011:~~2015:


	2012			2011			2016	2015
Principal assumptions as of fiscal year end:
Discount rate		4.35	%		5.0	%	3.22%	4.00%
Rate of increase in future compensation levels		3.1	%		3.1	%	2.75%	3.00%
Assumed long-term rate of return on plan assets		6.5 – 6.75	%		7.0	%	5.66%	5.70%

We made the following assumptions with respect to our Other Non-U.S. pension obligations in fiscal 2016 and 2015:

	2016	2015
Principal assumptions as of fiscal year end:
Discount rate	0.90 - 7.75%	1.80 - 8.25%
Rate of increase in future compensation levels	2.96 - 10.13%	4.50 - 8.90%
Assumed long-term rate of return on plan assets	3.25 - 8.00%	3.25 - 8.00%

We use a discount rate for expected returns that is a spot rate developed from a yield curve established from high-quality corporate bonds and matched to plan-specific projected benefit payments. Although future changes to the discount rate are unknown, had the discount rate increased or decreased by 25 basis points in ~~2012,~~fiscal 2016, pension liabilities in total would have decreased ~~$12.0~~$14.5 million or increased ~~$12.8~~$15.2 million, respectively. If all other assumptions are held constant, the estimated effect on fiscal ~~2012~~2016 pension expense from a hypothetical 25 basis points increase or decrease in both the discount rate and expected long-term rate of return on plan assets would not have a material effect on our pension expense.

We made the following assumptions with respect to our Esterline post-retirement obligation in ~~2012~~fiscal 2016 and ~~2011:~~2015:


	2012			2011			2016	2015
Principal assumptions as of fiscal year end:
Discount rate		3.85	%		5.0	%	3.60%	4.40%
Initial weighted average health care trend rate		6.0	%		6.0	%	6.00%	6.00%
Ultimate weighted average health care trend rate		6.0	%		6.0	%	6.00%	6.00%

We made the following assumptions with respect to our CMC post-retirement obligation in ~~2012~~fiscal 2016 and ~~2011:~~2015:


	2012			2011			2016	2015
Principal assumptions as of fiscal year end:
Discount rate		4.35	%		5.0	%	3.16%	4.00%
Initial weighted average health care trend rate		3.7	%		3.7	%	6.00%	3.70%
Ultimate weighted average health care trend rate		3.2	%		3.2	%	4.20%	3.10%

The assumed health care trend rate ~~has~~can have a significant impact on our post-retirement benefit obligations. Our health care trend rate was based on the experience of our plan and expectations for the future. A 100 basis points increase in the health care trend rate would increase our post-retirement benefit obligation by $1.1 million at ~~October 26, 2012.~~September 30, 2016. A 100 basis points decrease in the health care trend rate would decrease our post-retirement benefit obligation by $0.9 million at ~~October 26, 2012.~~September 30, 2016. Assuming all other assumptions are held constant, the estimated effect on fiscal ~~2012~~2016 post-retirement benefit expense from a hypothetical 100 basis points increase or decrease in the health care trend rate would not have a material effect on our post-retirement benefit expense.

Research and Development Expense

For the three years ended ~~October 26, 2012,~~September 30, 2016, research and development expense has averaged ~~5.2%~~4.9% of sales. We estimate that research and development expense in fiscal ~~2013~~2017 will be about ~~5% to 5.5%~~5.0% of sales for the full year.

Contractual Obligations

The following table summarizes our outstanding contractual obligations as of fiscal year end. Liabilities for income taxes were excluded from the table, as we are not able to make a reasonably reliable estimate of the amount and period of related future payments.

~~In Thousands~~

In Thousands			Less than		1‒3		4‒5		After 5
	Total		1 year		years		years		years

Long-term debt ¹	$	950,225	$	22,536	$	39,140	$	369,562	$	518,987
Interest obligations		105,039		18,810		37,124		28,936		20,169
Operating lease obligations		47,684		13,431		17,686		9,985		6,582
Purchase obligations		657,396		621,660		29,288		5,313		1,135
Total contractual obligations	$	1,760,344	$	676,437	$	123,238	$	413,796	$	546,873

      Less than       1-3       4-5       After 5
   Total       1 year       years       years       years
Long-term debt¹
   $ 918,330       $ 14,488       $ 25,347       $ 483,772       $ 394,723
Interest obligations
   194,148       29,340       58,680       52,884       53,244
Operating lease obligations
   65,421       15,121       21,882       13,763       14,655
Purchase obligations
   1,040,883       997,001       33,484       5,764       4,634

   Total contractual obligations
   $     2,218,782       $       1,055,950       $       139,393       $       556,183       $       467,256

¹	Includes ~~$69.7~~$74.0 million representing interest on capital lease obligations.

Seasonality

The timing of our revenues is impacted by the purchasing patterns of our customers and, as a result, we do not generate revenues evenly throughout the year. Moreover, our first fiscal quarter, ~~November~~October through ~~January,~~December, includes significant holiday vacation periods in both Europe and North America. This leads to decreased order and shipment activity; consequently, first quarter results are typically weaker than other quarters and not necessarily indicative of our performance in subsequent quarters. We changed our fiscal year to the twelve months ended the last Friday of September to better align with the aerospace industry’s business cycle.

Disclosures About Market Risk

Interest Rate Risks

Our debt includes fixed rate and variable rate obligations at ~~October 26, 2012.~~September 30, 2016. We are not subject to interest rate risk on the fixed rate obligations. We are subject to interest rate risk on the ~~Euro~~U.S. Term Loan ~~interest rate swap agreements,~~ and U.S. credit facility. For long-term debt, the table presents principal cash flows and the related weighted-average interest rates by contractual maturities.

A hypothetical 10% increase or decrease in average market rates would not have a material effect on our pretax income.

~~In Thousands~~

In Thousands	Long-Term Debt ‒ Variable Rate
	Principal		Average
	Amount		Rates ¹
Maturing in:

2017	$	12,500	*
2018		12,500	*
2019		12,500	*
2020		355,000	*
2021		-	*
2022 and thereafter		-	*
Total	$	392,500

Fair value at 9/30/2016	$	392,500

         Long-Term Debt – Variable Rate
     Principal            Average
Maturing in:
   Amount          Rates ¹
2013
   $ 8,089          *
2014
   8,089          *
2015
   8,089          *
2016
   295,973          *
2017
   0          *
2018 and thereafter
   0          *

Total
   $ 320,240


Fair Value at

   10/26/2012
   $ 320,240

¹	Borrowings under the ~~Euro~~U.S. Term Loan ~~facility~~ bear interest at a rate equal to either: (a) the LIBOR rate plus 1.75% or (b) the “Base Rate” (defined as the higher of ~~Wachovia~~Wells Fargo Bank, National Association’s prime rate and the Federal funds rate plus 0.50%) ~~plus 0.75%~~.

~~In Thousands~~

      Long-Term Debt – Fixed Rate       Long-Term Debt – Variable Rate
                        Average
   Principal          Average          Notional          Average       Receive
Maturing in:
   Amount          Rates          Amount          Pay Rate ¹    Rate
2013
   $ 0          6.625%          $ 0          *       6.625%
2014
   0          6.625%          0          *       6.625%
2015
   0          6.625%          0          *       6.625%
2016
   0          6.625%          0          *       6.625%
2017
   100,000          6.625%          100,000          *       6.625%
2018 and thereafter
   0          0.0%          0          *       0.0%



Total
   $ 100,000                $ 100,000




Fair Value at

   10/26/2012
   $ 103,630                $ 2,207

¹	~~The average pay rate is LIBOR plus 4.865%.~~

~~In Thousands~~

      Long-Term Debt – Fixed Rate       Long-Term Debt – Variable Rate
                        Average
   Principal          Average          Notional          Average       Receive
Maturing in:
   Amount          Rates          Amount          Pay Rate ¹    Rate
2013
   $ 0          6.625%          $ 0          *       6.625%
2014
   0          6.625%          0          *       6.625%
2015
   0          6.625%          0          *       6.625%
2016
   0          6.625%          0          *       6.625%
2017
   75,000          6.625%          75,000          *       6.625%
2018 and thereafter
   0          0.0%          0          *       0.0%



Total
   $ 75,000                $ 75,000




Fair Value at

   10/26/2012
   $ 77,723                $ 1,944

¹	~~The average pay rate is LIBOR plus 4.47%.~~

Currency Risks

We own significant operations in Canada, France and the United Kingdom. To the extent that sales are transacted in a foreign currency, we are subject to foreign currency fluctuation risk. Furthermore, we have assets denominated in foreign currencies that are not offset by liabilities in such foreign currencies. At ~~October 26, 2012,~~September 30, 2016, we had the following monetary assets subject to foreign currency fluctuation risk: U.S. dollar-denominated backlog with customers whose functional currency is other than the U.S. dollar; U.S. dollar-denominated accounts receivable and payable; and certain forward contracts, which are not accounted for as a cash flow hedge. The foreign exchange rate for the dollar relative to the euro ~~increased~~decreased to ~~0.773~~0.890 at September 30, 2016, from 0.892 at October ~~26, 2012, from 0.707 at October 28, 2011;~~2, 2015; the dollar relative to the ~~U.K.~~British pound increased to ~~0.621~~0.771 from ~~0.620;~~0.659; and

the dollar relative to the Canadian dollar ~~increased~~decreased to ~~0.997~~1.313 from ~~0.992.~~1.315. Foreign currency transactions affecting monetary assets, ~~and~~ forward contracts and backlog resulted in a ~~$2.9~~$19.8 million loss in fiscal ~~2012,~~2016, a ~~$13.8~~$1.3 million gain in fiscal ~~2011,~~2015, and a ~~$6.1~~$0.9 million gain in fiscal ~~2010. The $13.8 million gain in fiscal 2011 included a $6.3 million gain due to our holding euros to fund the Souriau acquisition.~~2014.

Our policy is to hedge a portion of our forecasted transactions and a portion of our net monetary assets, including the embedded derivatives in our backlog, using forward exchange ~~contracts with maturities up to 45 months.~~contracts. The Company does not enter into any forward contracts for trading purposes. At ~~October 26, 2012,~~September 30, 2016, and October ~~28, 2011,~~2, 2015, the notional value of foreign currency forward contracts was ~~$359.3~~$451.3 million and ~~$431.2~~$403.4 million, respectively. The notional value of our foreign currency forward contracts include $70 million related to the hedge of a portion of our net monetary assets, including the embedded derivatives in our backlog. The net fair value of ~~these~~our open foreign currency forward contracts was ~~a $2.5~~an $11.5 million ~~asset~~liability and a ~~$5.7~~$25.4 million ~~asset~~liability at ~~October 26, 2012,~~September 30, 2016, and October ~~28, 2011,~~2, 2015, respectively. If the U.S. dollar increased by a hypothetical 5%, the effect on the fair value of the foreign currency contracts at October 2, 2015, would be ~~an increase~~a decrease in the net liability of ~~$19.2~~$14.2 million. If the U.S. dollar decreased by a hypothetical 5%, the effect on the fair value of the foreign currency contracts would be ~~a decrease~~an increase in net liability of ~~$16.0~~$30.9 million.

The following tables provide information about our significant derivative financial instruments, including foreign currency forward exchange agreements and certain firmly committed sales transactions denominated in currencies other than the functional currency at ~~October 26, 2012,~~September 30, 2016, and October ~~28, 2011.~~2, 2015. The information about certain firmly committed sales contracts and derivative financial instruments is in U.S. dollar equivalents. For forward foreign currency exchange agreements, the following tables present the notional amounts at the current exchange rate and weighted-average contractual foreign currency exchange rates by contractual maturity dates.

Firmly Committed Sales Contracts

Operations with Foreign Functional Currency

At ~~October 26, 2012~~September 30, 2016

Principal Amount by Expected Maturity

In Thousands
   Firmly Committed Sales Contracts in United States Dollar
Fiscal Years
           Canadian Dollar       Euro       U.K. Pound
2013
   $ 157,010       $ 78,043       $ 60,288
2014
   43,991       16,225       12,908
2015
   20,685       360       2,457
2016
   14,720       16       2,457
2017 and thereafter
   9,499       10       6,974

Total
   $ 245,905       $ 94,654       $ 85,084

In Thousands	Firmly Committed Sales Contracts in United States Dollar
Fiscal Years	Canadian Dollar		Euro		British Pound

2017	$	122,010	$	119,826	$	35,984
2018		47,119		23,247		1,902
2019		21,195		4,397		-
2020		11,997		50		-
2021 and thereafter		17,920		301		-
Total	$	220,241	$	147,821	$	37,886

Derivative Contracts

Operations with Foreign Functional Currency

At ~~October 26, 2012~~September 30, 2016

Notional Amount by Expected Maturity

Average Foreign Currency Exchange Rate (USD/Foreign Currency)¹

Related Forward Contracts to Sell U.S. Dollar for Euro


In Thousands, Except for Average Contract Rate	United States Dollar			United States Dollar
Fiscal Years		Notional Amount	Avg. Contract Rate	Notional Amount		Avg. Contract Rate

2013	$	75,938	1.291
2014		4,320	1.281

2017				$	112,593		1.127
2018					7,180		1.144
Total	$	80,258		$	119,773


Fair Value at 10/26/2012	$	258
Fair value at 9/30/16				$	241

¹	The Company has no derivative contracts maturing after fiscal ~~2014.~~2018.

Derivative Contracts

Operations with Foreign Functional Currency

At ~~October 26, 2012~~September 30, 2016

Notional Amount by Expected Maturity

Average Foreign Currency Exchange Rate (USD/Foreign Currency)¹

Related Forward Contracts to Sell U.S. Dollar for ~~U.K.~~British Pound

In Thousands, Except for Average Contract Rate       United States Dollar
Fiscal Years
      Notional Amount       Avg. Contract Rate
2013
      $ 47,098       1.587
2014
      16,982       1.588
2015
      5,030       1.600
2016
      4,633       1.599

Total
      $ 73,743


Fair Value at 10/26/2012
      $ 923

In Thousands, Except for Average Contract Rate	United States Dollar
Fiscal Years	Notional Amount			Avg. Contract Rate

2017	$	49,358			1.468
2018		20,400			1.502
2019		3,000			1.440
Total	$	72,758

Fair value at 9/30/16	$	(8,131	)

¹	The Company has no derivative contracts maturing after fiscal ~~2016.~~2019.

Derivative Contracts

Operations with Foreign Functional Currency

At ~~October 26, 2012~~September 30, 2016

Notional Amount by Expected Maturity

Average Foreign Currency Exchange Rate (USD/Foreign Currency)¹

Related Forward Contracts to Sell U.S. Dollar for Canadian Dollar


In Thousands, Except for Average Contract Rate	United States Dollar			United States Dollar
Fiscal Years		Notional Amount	Avg. Contract Rate	Notional Amount			Avg. Contract Rate

2013	$	126,728	.992
2014		77,624	.980

2017				$	185,100			0.756
2018					73,300			0.825
Total	$	204,352		$	258,400


Fair Value at 10/26/2012	$	1,331
Fair value at 9/30/16				$	(3,567	)

¹	The Company has no derivative contracts maturing after fiscal ~~2014.~~2018.

Firmly Committed Sales Contracts

Operations with Foreign Functional Currency

At October ~~28, 2011~~2, 2015

Principal Amount by Expected Maturity

In Thousands    Firmly Committed Sales Contracts in United States Dollar
Fiscal Years
           Canadian Dollar       Euro       U.K. Pound
2012
   $ 177,056       $ 74,559       $ 67,277
2013
   12,289       14,855       14,601
2014
   311       304       6,313
2015
   0       22       6,021
2016 and thereafter
   5,796       6       6,076

Total
   $ 195,452       $ 89,746       $ 100,288

In Thousands	Firmly Committed Sales Contracts in United States Dollar
Fiscal Years	Canadian Dollar		Euro		British Pound

2016	$	111,192	$	105,213	$	32,949
2017		25,152		20,663		8,106
2018		10,583		4,566		318
2019		4,311		2,597		-
2020 and thereafter		3,279		1,447		-
Total	$	154,517	$	134,486	$	41,373

Derivative Contracts

Operations with Foreign Functional Currency

At October ~~28, 2011~~2, 2015

Notional Amount by Expected Maturity

Average Foreign Currency Exchange Rate (USD/Foreign Currency)¹

Related Forward Contracts to Sell U.S. Dollar for Euro


In Thousands, Except for Average Contract Rate	United States Dollar			United States Dollar
Fiscal Years		Notional Amount	Avg. Contract Rate	Notional Amount			Avg. Contract Rate

2012	$	76,200	1.373
2013		4,240	1.388

2016				$	93,585			1.131
2017					4,500			1.121
Total	$	80,440		$	98,085


Fair Value at 10/28/2011	$	2,060
Fair value at 10/2/2015				$	(336	)

¹	The Company ~~has~~had no derivative contracts maturing after fiscal ~~2013.~~2016.

Derivative Contracts

Operations with Foreign Functional Currency

At October 2, 2015

Notional Amount by Expected Maturity

Average Foreign Currency Exchange Rate (USD/Foreign Currency)¹

Related Forward Contracts to Sell U.S. Dollar for British Pound

In Thousands, Except for Average Contract Rate	United States Dollar
Fiscal Years	Notional Amount			Avg. Contract Rate

2016	$	60,673			1.570
2017		41,475			1.546
Total	$	102,148

Fair value at 10/2/2015	$	(2,777	)

The Company had no derivative contracts maturing after fiscal 2016.

Derivative Contracts

Operations with Foreign Functional Currency

At October ~~28, 2011~~2, 2015

Notional Amount by Expected Maturity

Average Foreign Currency Exchange Rate (USD/Foreign Currency)¹

~~Related Forward Contracts to Sell U.S. Dollar for U.K. Pound~~

In Thousands, Except for Average Contract Rate    United States Dollar
Fiscal Years
           Notional Amount       Avg. Contract Rate
2012
   $ 53,124       1.581
2013
   15,110       1.594

Total
   $ 68,234


Fair Value at 10/28/2011
   $ 816

¹	~~The Company has no derivative contracts maturing after fiscal 2013.~~

~~Derivative Contracts~~

~~Operations with Foreign Functional Currency~~

~~At October 28, 2011~~

~~Notional Amount by Expected Maturity~~

~~Average Foreign Currency Exchange Rate (USD/Foreign Currency)~~¹

Related Forward Contracts to Sell U.S. Dollar for Canadian Dollar


In Thousands, Except for Average Contract Rate	United States Dollar			United States Dollar
Fiscal Years		Notional Amount	Avg. Contract Rate	Notional Amount			Avg. Contract Rate

2012	$	145,002	.980
2013		87,594	1.000

2016				$	121,600			0.881
2017					79,600			0.814
Total	$	232,596		$	201,200


Fair Value at 10/28/2011	$	3,593
Fair value at 10/2/2015				$	(22,296	)

The Company ~~has~~had no derivative contracts maturing after fiscal ~~2013.~~2016.

Critical Accounting Policies

Our financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from estimates under different assumptions or conditions. These estimates and assumptions are affected by our application of accounting policies. Our critical accounting policies include revenue recognition, accounting for the allowance for doubtful accounts receivable, accounting for inventories, impairment of goodwill and intangible assets, impairment of long-lived assets, accounting for assets held for sale, accounting for legal contingencies, accounting for pension benefits, and accounting for income taxes.

Revenue Recognition

We recognize revenue when the title and risk of loss have passed to the customer, there is persuasive evidence of an agreement, delivery has occurred or services have been rendered, the price is determinable, and the ~~collectibility~~collectability is reasonably assured. We recognize product revenues at the point of shipment or delivery in accordance with the terms of sale. Sales are net of returns and allowances. Returns and allowances are not significant because products are manufactured to customer specification and are covered by the terms of the product warranty.

least quarterly. The impact of revisions of profit estimates are recognized on a cumulative catch-up basis in the period in which the revisions are made. Provisions for anticipated losses on contracts are recorded in the period they become evident. When change orders have been approved by both the company and the customer for both scope and price and realization is deemed probable, the original contract price is adjusted and revenues are recognized on contract performance (as determined by the achievement of contractual milestones and the cost-to-cost method). For partially approved change orders, costs attributable to unpriced change orders are treated as costs of the contract performance in the period the costs are incurred. Claims are also recognized as contract revenue when approved by both the company and the customer, based on contract performance.

Allowance for Doubtful Accounts

We establish an allowance for doubtful accounts for losses expected to be incurred on accounts receivable balances. Judgment is required in estimation of the allowance and is based upon specific identification, collection history and creditworthiness of the debtor.

Inventories

We account for inventories on a first-in, first-out or average cost method of accounting at the lower of its cost or market. The determination of market requires judgment in estimating future demand, selling prices and cost of disposal. Judgment is required when determining inventory cost adjustments. Inventory cost adjustments are recorded when inventory is considered to be excess or obsolete based upon an analysis of actual on-hand quantities on a part-level basis to forecasted product demand and historical usage.

Impairment of Goodwill and Intangible Assets

Goodwill and indefinite-lived intangible assets are required to be tested for impairment at least annually. We are also required to test goodwill for impairment between annual tests if events occur or circumstances change that would more likely than not reduce our enterprise fair value below its book value. These events or circumstances could include a significant change in the business climate, including a significant sustained decline in an entity’s market value, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business, or other factors.

Goodwill is tested for impairment in a two-step process. The first step (Step One) of the goodwill impairment test involves estimating the fair value of a reporting unit. Fair value (Fair Value) is defined as “the amount at which an asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced liquidation sale.” A reporting unit is generally defined at the operating segment level or at the component level one level below the operating segment, if said component constitutes a business. The Fair Value of a reporting unit is then compared to its carrying value, which is defined as the book basis of total assets less total liabilities. In the event a reporting unit’s carrying value exceeds its estimated Fair Value, evidence of potential impairment exists. In such a case, the second step (Step Two) of the impairment test is required, which involves allocating the Fair Value of the reporting unit

to all of the assets and liabilities of that unit, with the excess of Fair Value over allocated net assets representing the Fair Value of goodwill. An impairment loss is measured as the amount by which the carrying value of the reporting unit’s goodwill exceeds the estimated Fair Value of goodwill.

As we have grown through acquisitions, we have accumulated ~~$1.1~~$1.0 billion of goodwill and ~~$47.9~~$39.8 million of indefinite-lived intangible assets out of total assets of ~~$3.2~~$3.0 billion at ~~October 26, 2012.~~September 30, 2016. The amount of any annual or interim impairment could be significant and could have a material adverse effect on our reported financial results for the period in which the charge is taken. During the third fiscal quarter of 2012, management performed a Step One impairment test for Racal Acoustics upon identification of an indicator of impairment, since Racal Acoustics’ third quarter forecast projected an operating loss for fiscal 2012. Additionally, management determined that requirements for hearing protection devices for the U.S. Army would not recover in our five-year planning horizon in light of the cancellation of Humvee retrofits, delays in VIS-X and the slowdown in operational tempo of the U.S. armed forces as well as a global slowdown in defense spending. The excess of the carrying amount of goodwill over the implied fair value of goodwill resulted in an impairment charge of $52.2 million.

We performed our annual impairment review for fiscal ~~2012~~2016 as of July ~~28, 2012,~~1, 2016, and our Step One analysis indicates that no impairment of goodwill or other indefinite-lived assets exists at any of our ~~other~~ reporting units. Our ~~Souriau~~connection technologies and avionics systems reporting unit’s margin in passing the Step One analysis was ~~about~~approximately 5% and 9%, respectively. This mainly ~~reflecting~~reflects lower ~~market valuation~~cash flow assumptions ~~in 2012.~~over the five-year forecast period. Management expects that continued improvements in operations will result in favorable actual results compared towith our ~~original plan.~~2016 five-year forecast. It is possible, however, that as a result of events or circumstances, we could conclude at a later date that goodwill of ~~$328.0~~$307.7 million at ~~Souriau~~connection technologies and $229.1 million at avionics systems may be considered impaired. We also may be required to record an earnings charge or incur unanticipated expenses if, due to a change in strategy or other reasons, we ~~determined~~determine the value of other assets has been impaired. These other assets include trade names of ~~$36.2~~$37.3 million and intangible assets of ~~$186.6~~$212.2 million. Our CMC reporting unit’s margin in passing the Step One analysis was about 10%, mainly reflecting lower forecast operating results due to the delay in booking new cockpit integration retrofits for military transport aircraft. Management expects that new opportunities for cockpit integration will result in favorable actual results compared to our original plan. It is possible, however, that as a result of events or circumstances, we could conclude at a later date that goodwill of $239.0 million at CMC may be considered impaired. We also may be required to record an earnings charge or incur unanticipated expenses if, due to a change in strategy or other reasons, we determined the value of other assets has been impaired. These other assets include trade names of $27.4 million and intangible assets of $73.9 million. Our Eclipse Electronic Systems, Inc. (Eclipse) reporting unit’s margin in passing the Step One analysis was about 14%, mainly reflecting lower forecast operating results due to uncertainty over defense spending beginning in fiscal 2014. Management expects new opportunities for embedded communication intercept signal intelligence applications will result in more favorable results compared to our current forecast. It is possible, however, that as a result of events or circumstances, we could conclude at a later date that goodwill of $67.4 million at Eclipse may be considered impaired. We also may be required to record an earnings charge or incur unanticipated expenses if, due to a change in strategy or other reasons, we determined the value of intangible assets of up to $42.9 million has been impaired.

The valuation of reporting units requires judgment in estimating future cash flows, discount rates and estimated product life cycles. In making these judgments, we evaluate the financial health of the business, including such factors as industry performance, changes in technology and operating cash flows.

We used available market data and a discounted cash flow analysis in completing our ~~2012~~2016 annual impairment test. We believe that our cash flow estimates are reasonable based upon the historical cash flows and future operating and strategic plans of our reporting units. In addition to cash flow estimates, our valuations are sensitive to the rate used to discount cash flows and future growth assumptions. ~~Except for Souriau and CMC, the~~The fair value of all our other reporting units exceeds its book value by greater than ~~30%~~24%. A 0.5% change in the discount rate used in the cash flow analysis would result in a change in the fair value of our other reporting units of approximately ~~$71.8~~$83.9 million. A 0.5% change in the growth rate assumed in the calculation of the terminal value of cash flows would result in a change in the fair value of our other reporting units by ~~$53.0~~$56.5 million. None of these changes would have resulted in any of our other reporting units ~~to be~~being impaired.

Impairment of ~~Long-lived~~Long-Lived Assets

Long-lived assets that are to be disposed of are required to be reported at the lower of its carrying amount or fair value less cost to sell. An asset (other than goodwill and indefinite-lived intangible assets) is considered impaired when estimated future cash flows are less than the carrying amount of the asset. The first step (Step One) of an impairment test of long-lived assets is to determine the amount of future undiscounted cash flow of the long-lived asset. In the event the undiscounted future cash flow is less than the carrying amount of the long-lived asset, a second step is required (Step Two), and the long-lived asset is adjusted to its estimated fair value. Fair value is generally determined based upon estimated discounted future cash flows.

As we have grown through acquisitions, we have accumulated ~~$561.1~~$353.2 million of definite-lived intangible assets. The amount of any annual or interim impairment could be significant and could have a material adverse effect on our reported financial results for the period in which the charge is taken.

Assets Held for Sale

Assets held for sale are to be reported at the lower of its carrying amount or fair value less cost to sell. Judgment is required in estimating the sales price of assets held for sale and the time required to sell the assets. These estimates are based upon available market data and operating cash flows of the assets held for sale.

39As more fully described in Note 17 of the consolidated financial statements, the Company’s board of directors approved a plan to sell certain non-core business units including Eclipse Electronic Systems, Inc., Wallop Defence Systems, Ltd., Pacific Aerospace and Electronics Inc., and a small distribution business. During the fourth quarter of fiscal 2015, we approved a plan to sell a small manufacturing business included in our Avionics & Controls segment, which is reported as discontinued operations in all periods presented. As a result, we recorded an after-tax loss of $8.4 million, $31.2 million and $49.5 million in fiscal 2016, 2015, and 2014, respectively, on assets held for sale in discontinued operations.

Contingencies

We are party to various lawsuits and claims, both as plaintiff and defendant, and have contingent liabilities arising from the conduct of business. We are covered by insurance for general liability, product liability, workers’ compensation and certain environmental exposures, subject to certain deductible limits. We are self-insured for amounts less than our deductible and where no insurance is available. An estimated loss from a contingency should be accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. Disclosure of a contingency is required if there is at least a reasonable possibility that a loss has been incurred. We evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss.

Pension and Other Post-Retirement Benefits

We account for pension expense using the end of the fiscal year as our measurement date. We select appropriate assumptions including discount rate, rate of increase in future compensation levels and assumed long-term rate of return on plan assets and expected annual increases in costs of medical and other health care benefits in regard to our post-retirement benefit obligations. Our assumptions are based upon historical results, the current economic environment and reasonable expectations of future events. Actual results which vary from our assumptions are accumulated and amortized over future periods, and accordingly, are recognized in expense in these periods. Significant differences between our assumptions and actual experience or significant changes in assumptions could impact the pension costs and the pension obligation.

Income Taxes

The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our financial statements or tax returns. Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or tax returns. Variations in the actual outcome of these future tax consequences could materially impact our financial position and results of operations.

~~Recent Accounting Pronouncements~~

In June 2011, the Financial Accounting Standards Board (FASB) amended requirements for the presentation of other comprehensive income (OCI), requiring presentation of comprehensive income in either a single, continuous statement of comprehensive income or on separate but consecutive statements, the statement of operations and the statement of OCI. The amendment is effective for the Company at the beginning of fiscal year 2013, with early adoption permitted. The adoption of this guidance did not impact the Company’s financial position, results of operations or cash flows and only impacts the presentation of OCI on the financial statements.44

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We hereby incorporate by reference the information set forth under the section “Disclosures About Market Risk” under Item 7.

Item 8. Financial Statements and Supplementary Data

Consolidated Statement of Operations

In Thousands, Except Per Share Amounts

For Each of the Three Fiscal Years
in the Period Ended October 26, 2012
   2012 2011 2010
Net Sales
   $      1,992,318    $      1,717,985    $      1,526,601
Cost of Sales
   1,273,365    1,128,265    1,010,390

   718,953    589,720    516,211
Expenses

Selling, general and administrative
   382,887    304,154    258,290
Research, development and engineering
   107,745    94,505    69,753
Gain on settlement of contingency
   (11,891 ) 0    0
Goodwill impairment
   52,169    0    0
Other income
   (1,263 ) (6,853 ) (8 )

Total Expenses
   529,647    391,806    328,035
Operating Earnings From Continuing Operations
   189,306    197,914    188,176
Interest income
   (465 ) (1,615 ) (960 )
Interest expense
   46,238    40,216    33,181
Loss on extinguishment of debt
   0    831    1,206

Income From Continuing Operations

Before Income Taxes
   143,533    158,482    154,749
Income Tax Expense
   29,958    24,938    24,504

Income From Continuing Operations

Including Noncontrolling Interests
   113,575    133,544    130,245
Income Attributable to Noncontrolling Interests
   (1,040 ) (457 ) (206 )

Income From Continuing Operations

Attributable to Esterline, Net of Tax
   112,535    133,087    130,039
Income (Loss) From Discontinued Operations

Attributable to Esterline, Net of Tax
   0    (47 ) 11,881

Net Earnings Attributable to Esterline
   $ 112,535    $ 133,040    $ 141,920

Earnings Per Share Attributable to Esterline – Basic:

Continuing operations
   $ 3.66    $ 4.36    $ 4.34
Discontinued operations
   .00    .00    .39

Earnings Per Share Attributable to
Esterline – Basic
   $ 3.66    $ 4.36    $ 4.73

Earnings Per Share Attributable to Esterline – Diluted:

Continuing operations
   $ 3.60    $ 4.27    $ 4.27
Discontinued operations
   .00    .00    .39

Earnings Per Share Attributable to
Esterline – Diluted
   $ 3.60    $ 4.27    $ 4.66

										Eleven
										Months
	Twelve Months Ended									Ended
	2016			2015			2014			2015
				(Unaudited) (Recast)

Net Sales	$	1,992,631		$	2,002,793		$	2,029,471		$	1,774,449
Cost of Sales		1,331,386			1,323,405			1,314,762			1,185,056
		661,245			679,388			714,709			589,393
Expenses
Selling, general & administrative		395,274			384,156			361,190			346,781
Research, development and engineering		95,939			100,426			97,591			91,491
Restructuring charges		4,873			8,143			13,642			6,639
Insurance recovery		(5,000	)		-			-			-
Other income		-			(12,503	)		-			(12,503	)
Total Expenses		491,086			480,222			472,423			432,408

Operating Earnings from Continuing Operations		170,159			199,166			242,286			156,985
Interest Income		(367	)		(632	)		(555	)		(578	)
Interest Expense		30,091			33,114			33,010			30,090
Loss on Extinguishment of Debt		-			11,451			533			11,451

Earnings from Continuing Operations Before Income Taxes		140,435			155,233			209,298			116,022
Income Tax Expense		22,535			26,911			43,716			18,956
Earnings from Continuing Operations Including Noncontrolling Interests		117,900			128,322			165,582			97,066

Earnings Attributable to Noncontrolling Interests		(949	)		(427	)		(553	)		(401	)
Earnings from Continuing Operations Attributable to Esterline, Net of Tax		116,951			127,895			165,029			96,665

Loss from Discontinued Operations Attributable to Esterline, Net of Tax		(15,266	)		(40,319	)		(62,611	)		(37,053	)

Net Earnings Attributable to Esterline	$	101,685		$	87,576		$	102,418		$	59,612

Earnings (Loss) Per Share Attributable to Esterline - Basic:
Continuing operations	$	3.97		$	4.16		$	5.19		$	3.15
Discontinued operations		(0.52	)		(1.31	)		(1.97	)		(1.21	)
Earnings (Loss) Per Share - Basic	$	3.45		$	2.85		$	3.22		$	1.94

Earnings (Loss) Per Share Attributable to Esterline - Diluted:
Continuing operations	$	3.93		$	4.10		$	5.09		$	3.10
Discontinued operations		(0.51	)		(1.29	)		(1.93	)		(1.19	)
Earnings (Loss) Per Share - Diluted	$	3.42		$	2.81		$	3.16		$	1.91

See Notes to Consolidated Financial Statements.

Consolidated Statement of Comprehensive Income (Loss)

In Thousands

Eleven

Months

Twelve Months Ended

Ended

2016

2015

2014

2015

(Unaudited)
(Recast)

Net earnings
$
101,685

$
87,576

$
102,418

$
59,612

Change in Fair Value of Derivative Financial Instruments

18,394

(10,456
)

(12,327
)

(8,763
)
Income Tax Expense (Benefit)

(4,959
)

3,294

3,534

2,147

13,435

(7,162
)

(8,793
)

(6,616
)

Change in Pension and Post-Retirement Obligations

(16,622
)

(20,199
)

(6,009
)

(9,499
)
Income Tax Expense (Benefit)

6,029

7,246

2,041

3,703

(10,593
)

(12,953
)

(3,968
)

(5,796
)

Foreign currency translation adjustment

(42,871
)

(175,222
)

(96,532
)

(164,839
)
Comprehensive Income (Loss)
$
61,656

$
(107,761
)

$
(6,875
)

$
(117,639
)

See Notes to Consolidated Financial Statements

Consolidated Balance Sheet

In Thousands, Except Share and Per Share Amounts


As of October 26, 2012 and October 28, 2011	2012		2011
As of September 30, 2016 and October 2, 2015					2016		2015

Assets

Current Assets
Cash and cash equivalents	$	160,675	$	185,035	$	258,520	$	191,355
Cash in escrow		5,016		5,011		1,125		-
Accounts receivable, net of allowances of $9,029 and $7,063		383,362		369,826
Accounts receivable, net of allowances of $17,028 and $10,050						422,073		380,748
Inventories		409,837		402,548		450,206		446,768
Income tax refundable		4,832		2,857		5,183		12,575
Deferred income tax benefits		46,000		48,251		-		41,082
Prepaid expenses		21,340		19,245		17,909		23,008
Other current assets		4,631		6,540		5,322		5,427

Current assets of businesses held for sale						15,450		27,851
Total Current Assets		1,035,693		1,039,313		1,175,788		1,128,814

Property, Plant and Equipment
Land		32,597		34,029		28,152		28,361
Buildings		231,210		225,600		240,878		225,237
Machinery and equipment		437,734		410,291		526,760		475,719
						795,790		729,317
		701,541		669,920
Accumulated depreciation		345,140		301,504		457,756		419,918

		356,401		368,416		338,034		309,399

Other Non-Current Assets
Goodwill		1,098,962		1,163,725		1,024,667		1,041,991
Intangibles, net		609,045		693,915		393,035		452,040
Debt issuance costs, net of accumulated amortization of $4,577 and $2,700		8,818		10,695
Deferred income tax benefits		97,952		79,605		75,409		28,979
Other assets		20,246		22,917		13,698		14,348

Non-current assets of businesses held for sale						11,400		24,917
Total Assets	$	3,227,117	$	3,378,586	$	3,032,031	$	3,000,488

See Notes to Consolidated Financial Statements.

4247

Consolidated Balance Sheet (continued)

As of October 26, 2012 and October 28, 2011    2012 2011
Liabilities and Shareholders’ Equity

Current Liabilities

Accounts payable
   $ 108,689    $ 119,888
Accrued liabilities
   269,553    270,422
Credit facilities
   0    5,000
Current maturities of long-term debt
   10,610    11,595
Deferred income tax liabilities
   5,125    9,538
Federal and foreign income taxes
   2,369    1,918

Total Current Liabilities
   396,346    418,361
Long-Term Liabilities

Credit facilities
   240,000    360,000
Long-term debt, net of current maturities
   598,060    660,028
Deferred income tax liabilities
   205,198    238,709
Pension and post-retirement obligations
   132,074    107,877
Other liabilities
   34,904    19,693
Shareholders’ Equity

Common stock, par value $.20 per share,
authorized 60,000,000 shares, issued and
outstanding 30,869,390 and 30,613,448 shares
   6,174    6,123
Additional paid-in capital
   569,235    551,703
Retained earnings
   1,120,356    1,007,821
Accumulated other comprehensive loss
   (85,284 ) (2,812 )

Total Esterline shareholders’ equity
   1,610,481    1,562,835
Noncontrolling interests
   10,054    11,083

Total Shareholders’ Equity
   1,620,535    1,573,918

Total Liabilities and Shareholders’ Equity
   $       3,227,117    $       3,378,586

In Thousands, Except Share and Per Share Amounts

As of September 30, 2016 and October 2, 2015	2016			2015

Liabilities and Shareholders' Equity

Current Liabilities
Accounts payable	$	121,816		$	117,976
Accrued liabilities		238,163			259,734
Current maturities of long-term debt		16,774			13,376
Federal and foreign income taxes		10,932			2,404
Current liabilities of businesses held for sale		10,813			17,106
Total Current Liabilities		398,498			410,596

Long-Term Liabilities
Credit facilities		155,000			160,000
Long-term debt, net of current maturities		698,796			701,457
Deferred income tax liabilities		53,798			73,849
Pension and post-retirement obligations		92,520			75,019
Other liabilities		21,968			29,367
Non-current liabilities of businesses held for sale		320			2,409

Shareholders' Equity
Common stock, par value $.20 per share, authorized 60,000,000 shares, issued 32,564,252 and 32,378,185 shares		6,513			6,476
Additional paid-in capital		702,610			682,479
Treasury stock at cost, repurchased 3,135,927 and 2,831,350 shares		(308,514	)		(289,780	)
Retained earnings		1,548,805			1,447,120
Accumulated other comprehensive loss		(348,857	)		(308,828	)
Total Esterline shareholders' equity		1,600,557			1,537,467
Noncontrolling interests		10,574			10,324
Total Shareholders' Equity		1,611,131			1,547,791
Total Liabilities and Shareholders' Equity	$	3,032,031		$	3,000,488

See Notes to Consolidated Financial Statements.

Consolidated Statement of Cash Flows

In Thousands

																			Eleven
For Each of the Three Fiscal Years in the Period Ended October 26, 2012	2012			2011			2010
																			Months
										Twelve Months Ended									Ended
										2016			2015			2014			2015
													(Unaudited) (Recast)

Cash Flows Provided (Used) by Operating Activities
Net earnings including noncontrolling interests	$	113,575		$	133,497		$	142,126		$	102,634		$	88,003		$	102,971		$	60,013
Adjustments to reconcile net earnings including noncontrolling interests to net cash provided
(used) by operating activities:
Adjustments to reconcile net earnings including noncontrolling interests to net cash provided (used) by operating activities:
Depreciation and amortization		107,792			84,658			72,117			100,258			103,357			116,027			90,575
Deferred income tax		(25,410	)		(12,345	)		(9,997	)
Deferred income taxes											(22,166	)		(18,165	)		(14,893	)		(17,976	)
Share-based compensation		9,543			7,963			7,134			13,462			12,106			13,044			10,771
Gain on sale of discontinued operations		0			0			(14,625	)
Gain on sale of capital assets		(944	)		(3,684	)		0
Gain on settlement of contingency		(11,891	)		0			0
Goodwill impairment		52,169			0			0
Loss (gain) on disposal of capital assets											-			-			3,174			-
Gain on release of non-income tax liability											-			(15,656	)		-			(15,656	)
Loss on assets held for sale											8,448			30,792			49,472			31,154
Working capital changes, net of effect of acquisitions:
Accounts receivable		(22,381	)		23,811			(39,164	)		(44,759	)		(13,757	)		(17,375	)		10,188
Inventories		(19,303	)		15			10,734			551			5,189			(21,491	)		(7,746	)
Prepaid expenses		(2,506	)		667			1,114			4,875			(2,965	)		(3,237	)		(4,268	)
Other current assets		(1,002	)		(2,575	)		2,285			373			(2,068	)		1,009			(3,567	)
Accounts payable		(6,482	)		(2,942	)		856			1,445			6,749			1,341			(10,476	)
Accrued liabilities		14,879			(10,509	)		21,303			(7,876	)		18,894			13,461			10,880
Federal and foreign income taxes		(2,858	)		(816	)		(6,607	)		14,878			(21,027	)		(11,175	)		(12,821	)
Other liabilities		(14,702	)		(22,983	)		(7,571	)		(3,639	)		7,964			(13,852	)		8,994
Other, net		3,692			(2,328	)		96			(1,326	)		(5,750	)		(2,112	)		(5,770	)
											167,158			193,666			216,364			144,295
		194,171			192,429			179,801
Cash Flows Provided (Used) by Investing Activities
Purchases of capital assets		(49,446	)		(49,507	)		(45,540	)
Purchase of capital assets											(68,472	)		(55,407	)		(45,678	)		(49,341	)
Escrow deposit		0			(14,033	)		0			(1,125	)		-			-			-
Proceeds from sale of discontinued operations, net of cash		0			0			24,994
Proceeds from sale of discontinued operations											3,654			30,156			-			30,156
Proceeds from sale of capital assets		944			9,453			595			-			1,592			572			1,592
Acquisitions of businesses, net of cash acquired		0			(814,934	)		(768	)
Acquisition of business, net of cash acquired											-			(155,975	)		(44,745	)		(155,975	)
											(65,943	)		(179,634	)		(89,851	)		(173,568	)
		(48,502	)		(869,021	)		(20,719	)

4449

Consolidated Statement of Cash Flows (continued)

For Each of the Three Fiscal Years
in the Period Ended October 26, 2012    2012 2011 2010
Cash Flows Provided (Used)
by Financing Activities

Proceeds provided by stock issuance
under employee stock plans
   7,658    13,253    13,654
Excess tax benefits from stock option exercises
   382    1,830    3,488
Proceeds from credit facilities
   0    400,014    (4,015 )
Repayment of long-term debt and credit facilities
   (193,145 ) (164,916 ) (183,082 )
Proceeds from issuance of long-term debt
   0    176,875    250,000
Proceeds from government assistance
   17,285    15,000    9,168
Dividends paid to noncontrolling interests
   0    (238 ) (234 )
Debt and other issuance costs
   0    (5,398 ) (4,719 )

   (167,820 ) 436,420    84,260
Effect of Foreign Exchange Rates on Cash
and Cash Equivalents
   (2,209 ) 3,087    1,984

Net Increase (Decrease) in Cash
and Cash Equivalents
   (24,360 ) (237,085 ) 245,326
Cash and Cash Equivalents
– Beginning of Year
   185,035    422,120    176,794

Cash and Cash Equivalents – End of Year
   $       160,675    $       185,035    $       422,120

Supplemental Cash Flow Information

Cash paid for interest
   $ 43,854    $ 38,361    $ 30,629
Cash paid for taxes
   54,366    45,074    53,704
Supplemental Non-cash Investing and
Financing Activities

Capital asset and lease obligation additions
   0    0    8,139
In Thousands

										Eleven
										Months
	Twelve Months Ended									Ended
	2016			2015			2014			2015
				(Unaudited) (Recast)

Cash Flows Provided (Used) by Financing Activities
Proceeds provided by stock issuance under employee stock plans		6,139			16,573			31,215			14,063
Excess tax benefits from stock option exercises		567			2,613			7,090			1,973
Shares repurchased		(18,734	)		(269,257	)		(30,262	)		(259,518	)
Repayment of long-term credit facilities		(50,000	)		(415,000	)		(55,000	)		(405,000	)
Repayment of long-term debt		(12,360	)		(418,999	)		(35,810	)		(416,827	)
Proceeds from long-term credit facilities		45,000			465,000			25,000			465,000
Proceeds from issuance of long-term debt		-			606,532			-			606,532
Proceeds from government assistance		-			3,083			3,337			3,007
Dividends paid to noncontrolling interests		-			-			(778	)		-
Debt and other issuance costs		-			(8,263	)		-			(8,263	)
		(29,388	)		(17,718	)		(55,208	)		967

Effect of Foreign Exchange Rates on Cash and Cash Equivalents		(4,662	)		(18,210	)		(12,339	)		(18,483	)
Net Increase (Decrease) in Cash and Cash Equivalents		67,165			(21,896	)		58,966			(46,789	)

Cash and Cash Equivalents - Beginning of Year		191,355			213,251			179,178			238,144
Cash and Cash Equivalents - End of Year	$	258,520		$	191,355		$	238,144		$	191,355

Supplemental Cash Flow Information:
Cash paid for interest	$	27,679		$	28,075		$	28,593		$	26,638
Cash paid for taxes		24,803			43,543			65,147			34,550

Supplemental Non-cash Investing and Financing Activities:
Capital asset and lease obligation additions	$	11,260		$	-		$	2,753		$	-

See Notes to Consolidated Financial Statements.

Consolidated Statement of Shareholders’ Equity,

Noncontrolling ~~Interest,~~Interests and Comprehensive Income (Loss)

In Thousands, Except Per Share Amounts

										Twelve			Eleven			Twelve
For Each of the Three Fiscal Years in the Period Ended October 26, 2012	2012			2011			2010
										Months			Months			Months
										Ended			Ended			Ended
										2016			2015			2014

Common Stock, Par Value $.20 Per Share
Beginning of year	$	6,123		$	6,056		$	5,955		$	6,476		$	6,425		$	6,288
Shares issued under stock option plans		51			67			101

Shares issued under employee stock plans											37			51			137
End of year		6,174			6,123			6,056			6,513			6,476			6,425

Additional Paid-in Capital
Beginning of year		551,703			528,724			504,549			682,479			655,723			604,511
Shares issued under stock option plans		7,989			15,016			17,041
Shares issued under employee stock plans											6,669			15,985			38,168
Share-based compensation expense		9,543			7,963			7,134			13,462			10,771			13,044
End of year											702,610			682,479			655,723

Treasury Stock
Beginning of year											(289,780	)		(30,262	)		-
Shares repurchased											(18,734	)		(259,518	)		(30,262	)
End of year		569,235			551,703			528,724			(308,514	)		(289,780	)		(30,262	)

Retained Earnings
Beginning of year		1,007,821			874,781			732,861			1,447,120			1,387,508			1,285,090
Net earnings		112,535			133,040			141,920			101,685			59,612			102,418

End of year		1,120,356			1,007,821			874,781			1,548,805			1,447,120			1,387,508

Accumulated Other Comprehensive Income (Loss)
Beginning of year		(2,812	)		3,235			9,656			(308,828	)		(131,577	)		(22,284	)
Change in fair value of derivative financial instruments, net of tax benefit of $1,158, $2,282 and $1,045		(2,399	)		(5,934	)		(1,407	)
Change in pension and post-retirement obligations, net of tax benefit of $11,626, $5,060 and $3,741		(23,708	)		(9,986	)		(10,618	)
Change in fair value of derivative financial instruments, net of tax (expense) benefit of $(4,959), $2,147 and $3,534											13,435			(6,616	)		(8,793	)
Change in pension and post-retirement obligations, net of tax benefit of $6,029, $3,703 and $2,041											(10,593	)		(5,796	)		(3,968	)
Foreign currency translation adjustment		(56,365	)		9,873			5,604			(42,871	)		(164,839	)		(96,532	)

End of year		(85,284	)		(2,812	)		3,235			(348,857	)		(308,828	)		(131,577	)

Noncontrolling Interests
Beginning of year		11,083			2,703			2,731			10,324			10,183			11,147
Shares repurchases		(2,069	)		0			0
Noncontrolling interest resulting from an acquisition		0			8,160			0
Net changes in equity attributable to noncontrolling interest		1,040			220			(28	)		250			141			(964	)

End of year		10,054			11,083			2,703			10,574			10,324			10,183

Total Shareholders’ Equity	$	1,620,535		$	1,573,918		$	1,415,499


Comprehensive Income
Net earnings	$	112,535		$	133,040		$	141,920
Change in fair value of derivative financial instruments, net of tax		(2,399	)		(5,934	)		(1,407	)
Change in pension and post-retirement obligations, net of tax		(23,708	)		(9,986	)		(10,618	)
Foreign currency translation adjustment		(56,365	)		9,873			5,604

Comprehensive Income	$	30,063		$	126,993		$	135,499

Total Shareholders' Equity										$	1,611,131		$	1,547,791		$	1,898,000

See Notes to Consolidated Financial Statements.

4651

Notes to Consolidated Financial Statements

NOTE 1: Accounting Policies

Nature of Operations

Esterline Technologies Corporation (the Company) designs, manufactures and markets highly engineered products. The Company serves the aerospace and defense industry, primarily in the United States and Europe. The Company also serves the industrial/commercial and medical markets.

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the Company and all subsidiaries. All significant intercompany accounts and transactions have been eliminated. Classifications have been changed for certain amounts in prior periods to conform with the current year’s presentation. ~~The~~

On June 5, 2014, the Company’s board of directors authorized a change in the Company’s fiscal year ~~ends on~~end to the last Friday of ~~October.~~September from the last Friday in October effective beginning with the year-ended on September 30, 2016. The Company reported our financial results for the 11-month transition period of November 1, 2014, through October 2, 2015, on the Transition Report on Form 10-K, and thereafter the Company will file an annual report for the twelve-month period ending the last Friday of September of each year, beginning with the twelve-month period ending September 30, 2016. Prior year results have been recast on a calendar quarter basis. Refer to the Transition Report on Form 10-K for the eleven months ended October 2, 2015, for additional information regarding our fiscal year change.

Management Estimates

To prepare financial statements in conformity with U.S. generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of Risks

The Company’s products are principally focused on the aerospace and defense industry, which includes military and commercial aircraft original equipment manufacturers and their suppliers, commercial airlines, and the United States and foreign governments. Sales directly to the U.S. government ~~aggregated 7%~~or indirectly through subcontractors to the U.S. government account for approximately 18% and ~~10%~~19% of sales in fiscal ~~2012~~2016 and ~~2011,~~2015, respectively. Accordingly, the Company’s current and future financial performance is dependent on the economic condition of the aerospace and defense industry. The commercial aerospace ~~market has~~and defense markets have historically been subject to cyclical downturns during periods of weak economic conditions or material changes arising from domestic or international events. Management believes that the Company’s sales are ~~fairly well~~ balanced across its customer base, which includes not only aerospace and defense customers but also medical and industrial commercial customers. ~~However, material changes in the economic conditions of the aerospace industry could have a material effect on the Company’s results of operations, financial position or cash flows.~~

Revenue Recognition

The Company recognizes revenue when the title and risk of loss have passed to the customer, there is persuasive evidence of an agreement, delivery has occurred or services have been rendered, the price is determinable, and the ~~collectibility~~collectability is reasonably assured. The Company recognizes product revenues at the point of shipment or delivery in accordance with the terms of sale. Sales are net of returns and allowances. Returns and allowances are generally not significant because products are manufactured to customer specification and are covered by the terms of the product warranty.

Revenues and profits on fixed-price contracts with significant engineering as well as production requirements are recorded based on the achievement of contractual milestones and the ratio of total actual incurred costs to date to total estimated costs for each contract (cost-to-cost method). Types of milestones include design review and prototype completion. The Company reviews cost performance and estimates to complete on its ongoing contracts at least quarterly. The impact of revisions of profit estimates are recognized on a cumulative catch-up basis in the period in which the revisions are made. Provisions for anticipated losses on contracts are recorded in the period they become evident. When change orders have been approved by both the company and the customer for both scope and price and realization is deemed probable, the original contract price is adjusted and revenues are recognized on contract performance (as determined by the achievement of contractual milestones and the cost-to-cost method). For partially approved change orders, costs attributable to unpriced change orders are treated as costs of the contract performance in the period the costs are incurred. Claims are also recognized as contract revenue when approved by both the company and the customer, based on contract performance.

Research and Development

Expenditures for internally-funded research and development are expensed as incurred. Customer-funded research and development projects performed under contracts are accounted for as work in process as work is performed and recognized as cost of sales and sales under the proportional performance method. Research and development expenditures are net of government assistance and tax subsidies, which are not contingent upon paying income tax. In addition, government assistance for research and development is recorded as a reduction of research and development expense when repayment royalties are contingent upon sales generated directly from the funded research and development. If reimbursement is not tied directly to sales generated from the funded research and development, the assistance is accounted for as a loan until the criteria for forgiveness has been met.

Financial Instruments

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, short-term borrowings, long-term debt, foreign currency forward contracts, and from time to time interest rate swap agreements. The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate their respective fair values because of the short-term maturities or expected settlement dates of these instruments. The fair market value of the Company’s long-term debt and short-term borrowings was estimated at ~~$882.5~~$870.5 million and ~~$1.0 billion~~$859.0 million at the end of fiscal ~~year end 2012~~2016 and ~~2011,~~2015, respectively. These estimates were derived using discounted cash flows with interest rates and quoted market prices currently available to the Company for issuance of debt with similar terms and remaining maturities.

Foreign Currency Exchange Risk Management

The Company is subject to risks associated with fluctuations in foreign currency exchange rates from the sale of products in currencies other than its functional currency. Furthermore, the Company has assets denominated in foreign currencies that are not offset by liabilities in such foreign currencies. The Company has significant operations in Canada, France, and the United Kingdom, and accordingly, wethe Company may experience gains or losses due to foreign exchange fluctuations.

The Company’s policy is to hedge a portion of its forecasted transactions and a portion of its net monetary assets including the embedded derivatives in its backlog using forward exchange contracts in general, with maturities up to 2324 months. These forward contracts have been designated as cash flow hedges. The portion of the net gain or loss on a derivative instrument that is effective as a hedge is reported as a component of other comprehensive income in shareholders’ equity and is reclassified into earnings in the same period during which the hedged transaction affects earnings. The remaining net gain or loss on the derivative in excess of the present value of the expected cash flows of the hedged transaction is recorded in earnings immediately. If a derivative does not qualify for hedge accounting, or a portion of the hedge is deemed ineffective, the change in fair value is recorded in earnings. The amount of hedge ineffectiveness has not been material in any of the three fiscal ~~years in the period~~periods ended ~~October 26, 2012.~~September 30, 2016. At ~~October 26, 2012,~~September 30, 2016, and October ~~28, 2011,~~2, 2015, the notional value of foreign currency forward contracts accounted for as a cash flow hedge was ~~$260.7~~$308.2 million and ~~$288.9~~$306.4 million, respectively. The notional value of the Companies foreign currency forward contracts include $70 million related to the hedge of a portion of its net monetary assets including the embedded derivatives in our backlog. The fair value of these contracts was ~~$1.5~~a liability of $4.9 million and ~~$4.6~~$23.3 million at ~~October 26, 2012,~~September 30, 2016, and October ~~28, 2011,~~2, 2015, respectively. The Company does not enter into any forward contracts for trading purposes.

In ~~July 2011,~~April 2015, the Company ~~entered into a Euro Term Loan for €125.0~~issued €330.0 million ~~under the secured credit facility.~~in 3.625% Senior Notes due April 2023 (2023 Notes) and requiring semi-annual interest payments in April and October each year until maturity. The Company designated the ~~Euro Term Loan~~2023 Notes and accrued interest as a hedge of the investment in a certain ~~French~~foreign business ~~unit.~~units. The foreign currency gain or loss that is effective as a hedge is reported as a component of ~~accumulated~~ other comprehensive income (loss) in shareholders’ equity. To the extent that this hedge is ineffective, the foreign currency gain or loss is recorded in earnings. There was no ineffectiveness in 2012 and 2011. The gain or loss included in Accumulated Other Comprehensive Income will remain until the underlying investment in a certain French business unit is liquidated. The amount of foreign currency translation included in Accumulated Other Comprehensive Income was a gain of $19.8 million at October 26, 2012.

~~Interest Rate Risk Management~~

Depending on the interest rate environment, the Company may enter into interest rate swap agreements to convert the fixed interest rates on notes payable to variable interest rates or terminate any swap agreements in place. These interest rate swap agreements have been designated as fair value hedges. Accordingly, a gain or loss on swap agreements as well as the offsetting loss or gain on the hedged portion of notes payable are recognized in interest expense during the periodsince inception of the change in fair values. The Company attempts to manage exposure to counterparty credit risk by only entering into agreements with major financial institutions which are expected to be able to fully perform under the terms of the agreement.hedge.

In December 2010, the Company entered into an interest rate swap agreement for $75.0 million on the $175.0 million Senior Notes due in 2017. The swap agreement exchanged the fixed interest rate of 6.625% for a variable interest rate on the $75.0 million of the principal amount outstanding. The variable interest rate is based upon LIBOR plus 4.47% and was 4.78% at October 26, 2012.

In November 2010, the Company entered into an interest rate swap agreement for $100.0 million on the $175.0 million Senior Notes due in 2017. The swap agreement exchanged the fixed interest rate of 6.625% for a variable interest rate on the $100.0 million of the principal amount outstanding. The variable interest rate is based upon LIBOR plus 4.87% and was 5.18% at October 26, 2012.

Depending on the interest rate environment, the Company may enter into interest rate swap agreements to convert the variable interest rates on notes payable to fixed interest rates. ~~These swap agreements are accounted for as cash flow hedges and the fair market value of the hedge instrument is included in Other Comprehensive Income.~~

~~The fair market value of the interest rate swaps was estimated by discounting expected cash flows using quoted market interest rates.~~

Foreign Currency Translation

Foreign currency assets and liabilities are translated into their U.S. dollar equivalents based on year-end exchange rates. Revenue and expense accounts are translated at average exchange rates. Aggregate exchange gains and losses arising from the translation of foreign assets and liabilities are included in shareholders’ equity as a component of comprehensive income. Accumulated ~~gain~~loss on foreign currency translation adjustment was ~~$12.3~~$268.8 million, ~~$68.6~~$226.0 million, and ~~$58.8~~$61.1 million as of the fiscal ~~years~~period ended September 30, 2016, October ~~26, 2012, October 28, 2011,~~2, 2015, and October ~~29, 2010,~~31, 2014, respectively.

Foreign Currency Transaction Gains and Losses

Foreign currency transaction gains and losses are included in results of operations and are primarily the result of revaluing assets and liabilities denominated in a currency other than the functional currency, the impact of changes in exchange rates, gains and losses on forward exchange contracts, and the change in value of foreign currency embedded derivatives in backlog. These foreign currency transactions resulted in a ~~$2.9~~$19.8 million loss in fiscal ~~2012,~~2016, a ~~$13.8~~$1.3 million gain in fiscal ~~2011,~~2015, and a ~~$6.1~~$0.9 million gain in fiscal ~~2010.~~2014.

Cash Equivalents

Cash equivalents consist of highly liquid investments with original maturities of three months or less at the date of purchase. Fair value of cash equivalents approximates carrying value. ~~Cash equivalents included $29.3 million in cash associated with a letter of credit at October 28, 2011.~~

Accounts Receivable

Accounts receivable are recorded at the net invoice price for sales billed to customers. Accounts receivable are considered past due when outstanding more than normal trade terms allow. An allowance for doubtful accounts is established when losses are expected to be incurred. Accounts receivable are written off to the allowance for doubtful accounts when the balance is considered to be uncollectible.

Inventories

Inventories are stated at the lower of cost or market using the first-in, first-out (FIFO) or average cost method. Inventory cost includes material, labor and factory overhead. The Company defers pre-production engineering costs as work-in-process inventory in connection with long-term supply arrangements that include contractual guarantees for reimbursement from the customer. Inventory cost adjustments are recorded when inventory is considered to be excess or obsolete based upon an analysis of actual on-hand quantities on a part level basis to forecasted product demand and historical usage.

Property, Plant and Equipment, and Depreciation

Property, plant and equipment is carried at cost and includes expenditures for major improvements. Depreciation is generally provided on the straight-line method based upon estimated useful lives ranging from 15 to 30 years for buildings and 3 to 10 years for machinery and equipment. Depreciation expense was ~~$52.4~~$49.5 million, ~~$42.5~~$50.7 million, and ~~$39.5~~$56.2 million for fiscal ~~years 2012, 2011~~2016, 2015, and ~~2010,~~2014, respectively. Depreciation expense included in discontinued operations was $0.7 million and $5.0 million in fiscal 2015 and 2014, respectively. Assets under capital leases were ~~$38.8~~$48.2 million, ~~at October 26, 2012,~~$40.7 million, and ~~$38.1~~$43.1 million ~~at October 28, 2011.~~for fiscal 2016, 2015, and 2014, respectively. Amortization expense of assets accounted for as capital leases is included with depreciation expense. The fair value of liabilities related to the retirement of property is recorded when there is a legal or contractual obligation to incur asset retirement costs and the costs can be estimated. The Company records the asset retirement cost by increasing the carrying cost of the underlying property by the amount of the asset retirement obligation. The asset retirement cost is depreciated over the estimated useful life of the underlying property.

Debt Issuance Costs

Costs incurred to issue debt are deferred and amortized as interest expense over the term of the related debt using a method that approximates the effective interest method.

Long-lived Asset Impairments

The carrying amount of long-lived assets is reviewed periodically for impairment. An asset (other than goodwill and indefinite-lived intangible assets) is considered impaired when estimated future undiscounted cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not deemed recoverable, the asset is adjusted to its estimated fair value. Fair value is generally determined based upon estimated discounted future cash flows.

Assets of Business Held for Sale

Assets held for sale are to be reported at lower of its carrying amount or fair value less cost to sell. Judgment is required in estimating the sales price of assets held for sale and the time required to sell the assets. These estimates are based upon available market data and operating cash flows of the assets held for sale.

49Contingencies

The Company is party to various lawsuits and claims, both as plaintiff and defendant, and has contingent liabilities arising from the conduct of business. The Company is covered by insurance for general liability, product liability, workers’ compensation and certain environmental exposures, subject to certain deductible limits. The Company is self-insured for amounts less than our deductible and where no insurance is available. An estimated loss from a contingency should be accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. The Company evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss.

Goodwill and Intangibles

Goodwill is not amortized, but is tested for impairment at least annually or when circumstances require. A reporting unit is generally defined at the operating segment level or at the component level one level below the operating segment, if said component constitutes a business. Goodwill is allocated to reporting units based upon the purchase price of the acquired unit, the valuation of acquired tangible and intangible assets, and liabilities assumed. When a reporting unit’s carrying value exceeds its estimated fair value, an impairment test is required. This test involves allocating the fair value of the reporting unit to all of the assets and liabilities of that unit, with the excess of fair value over allocated net assets representing the fair value of goodwill. An impairment loss is measured as the amount by which the carrying value of goodwill exceeds the estimated fair value of goodwill.

Intangible assets are amortized over their estimated period of benefit, ranging from 2 to 20 years. Amortization expense is reflected in selling, general and administrative expense on the Consolidated Statement of Operations. The Company periodically evaluates the recoverability of intangible assets and takes into account events or circumstances that warrant revised estimates of useful lives or that indicate that an impairment exists.

Indefinite-lived intangible assets (other than goodwill) are tested annually for impairment or more frequently on an interim basis if circumstances require.

Environmental

Environmental exposures are provided for at the time they are known to exist or are considered probable and reasonably estimable. No provision has been recorded for environmental remediation costs which could result from changes in laws or other circumstances currently not known by the Company. Costs provided for future expenditures on environmental remediation are not discounted to present value.

Pension Plan and Post-Retirement Benefit Plan Obligations

The Company accounts for pension expense using the end of the fiscal year as its measurement date. Management selects appropriate assumptions including discount rate, rate of increase in future compensation levels and assumed long-term rate of return on plan assets and expected annual increases in costs of medical and other health care benefits in regard to the Company’s post-retirement benefit obligations. These assumptions are based upon historical results, the current economic environment and reasonable expectations of future events. Actual results which vary from assumptions are accumulated and amortized over future periods, and accordingly, are recognized in expense in these periods. Significant differences between our assumptions and actual experience or significant changes in assumptions could impact the pension costs and the pension obligation.

Legal Expenses

The Company recognizes legal costs related to loss contingencies when the expense is incurred.

Share-Based Compensation

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.

Product Warranties

Estimated product warranty expenses are recorded when the covered products are shipped to customers and recognized as revenue. Product warranty expense is estimated based upon the terms of the warranty program.

Income Taxes

The Company recognizes the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our financial statements or tax returns.

Earnings Per Share

Basic earnings per share is computed on the basis of the weighted average number of common shares outstanding during the year. Diluted earnings per share also includes the dilutive effect of stock ~~options.~~options and restricted stock units. Common shares issuable from stock options that are excluded from the calculation of diluted earnings per share because they were anti-dilutive were ~~627,475, 331,300,~~602,900, 409,050, and ~~50,984~~136,200 for fiscal ~~2012, 2011,~~2016, 2015, and ~~2010,~~2014, respectively. The weighted average number of shares outstanding used to compute basic earnings per share was ~~30,749,000, 30,509,000,~~29,490,000, 30,729,000, and ~~29,973,000~~31,840,000 for fiscal years ~~2012, 2011,~~2016, 2015, and ~~2010,~~2014, respectively. The weighted average number of shares outstanding used to compute diluted earnings per share was ~~31,282,000, 31,154,000,~~29,764,000, 31,215,000, and ~~30,477,000~~32,448,000 for fiscal years ~~2012, 2011,~~2016, 2015, and ~~2010,~~2014, respectively.

~~Subsequent Events~~

~~The Company has evaluated subsequent events through the date the Consolidated Financial Statements were issued.~~

Recent Accounting Pronouncements

In ~~June 2011,~~October 2016, the Financial Accounting Standards Board (FASB) ~~amended requirements~~, issued new guidance regarding income taxes. The new guidance will require the tax effects of intercompany transactions, other than sales of inventory, to be recognized currently, eliminating an exception under current Generally Accepted Accounting Principles (GAAP) in which the tax effects of intra-entity asset transfers are deferred until the transferred asset is sold to a third party or otherwise recovered through use. The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures. The guidance will be effective for the ~~presentation of other comprehensive income (OCI), requiring presentation of comprehensive income~~company in ~~either a single, continuous statement of comprehensive income or on separate but consecutive statements,~~fiscal year 2019, with early adoption permitted.

In August 2016, the FASB issued new guidance addressing how certain cash receipts and cash payments are presented and classified in the statement of ~~operations~~cash flows. The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures. The guidance will be effective for the ~~statement~~Company in fiscal year 2019, with early adoption permitted.

In June 2016, the FASB issued a new standard on the measurement of ~~OCI.~~credit losses, which will impact the Company's measurement of trade receivables. The ~~amendment~~new standard replaces the current incurred loss model with a forward-looking expected loss model that is likely to result in earlier recognition of losses. The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures. The new standard is effective for the Company atin 2021, with early adoption permitted, but not earlier than 2020.

In March 2016, the ~~beginning~~FASB issued new guidance simplifying certain aspects of accounting for share-based payments. The key provision of the new standard requires that excess tax benefits and shortfalls be recorded as income tax benefit or expense in the income statement, rather than in equity. The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures. The new guidance is effective for the Company in fiscal year ~~2013,~~2018, with early adoption permitted.

In February 2016, the FASB issued a new lease accounting standard, which provides revised guidance on accounting for lease arrangements by both lessors and lessees. The central requirement of the new standard is that lessees must recognize lease-related assets and liabilities for all leases with a term longer than 12 months. The Company is evaluating the effect the standard will have on the Company’s consolidated financial statements and related disclosures. The new standard is effective for the Company in fiscal year 2020, with early adoption permitted.

In November 2015, the FASB issued new guidance requiring all deferred tax assets and liabilities to be classified as noncurrent on the balance sheet instead of separating those balances into current and noncurrent amounts. The new guidance is effective for the Company in fiscal year 2018, with early adoption permitted. The ~~adoption of~~Company adopted this guidance ~~did not impact~~prospectively on April 1, 2016, and reclassified the current portion of net deferred tax assets and liabilities to net noncurrent deferred tax assets and liabilities. No prior periods were retrospectively adjusted.

In May 2014, the FASB amended requirements for an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective, and permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial ~~position, results~~statements and related disclosures. The updated standard becomes effective for the Company in the first fiscal quarter of ~~operations or cash flows~~2019, with early adoption is permitted.

NOTE 2: Allowance for Doubtful Accounts

The allowance for doubtful accounts reflects the best estimate of probable losses inherent in the accounts receivable balance and ~~only impacts~~is based on known troubled accounts, historical experience and other currently available evidence. Activity in the ~~presentation~~allowance for doubtful accounts was as follows:

In Thousands	2016			2015			2014

Beginning balance	$	10,050		$	10,023		$	9,215
Charged to expense		9,690			1,502			860
Other ¹		-			378			349
Write-offs		(2,712	)		(1,853	)		(401	)
	$	17,028		$	10,050		$	10,023

¹Other includes balances acquired and balances reclassified to assets held for sale.

NOTE 3: Inventories

Inventories at the end of ~~OCI~~fiscal 2016 and 2015 consisted of the following:

In Thousands	2016		2015

Raw materials and purchased parts	$	177,069	$	169,153
Work in progress		158,671		162,434
Inventory costs under long-term contracts		12,844		18,753
Finished goods		101,622		96,428
	$	450,206	$	446,768

NOTE 4: Goodwill

The following table summarizes the changes in goodwill by segment for fiscal 2016 and 2015:

In Thousands	Avionics &			Sensors &			Advanced
	Controls			Systems			Materials			Total

Balance, October 31, 2014	$	440,015		$	425,353		$	206,418		$	1,071,786
Goodwill from acquisitions		48,537			-			-			48,537
Goodwill adjustments		(841	)		(3,295	)		-			(4,136	)
Goodwill write off on assets held for sale		(2,043	)		-			-			(2,043	)
Foreign currency translation adjustment		(35,069	)		(34,351	)		(2,733	)		(72,153	)
Balance, October 2, 2015		450,599			387,707			203,685			1,041,991

Goodwill adjustments		(1,732	)		-			-			(1,732	)
Foreign currency translation adjustment		(6,073	)		(2,140	)		(7,379	)		(15,592	)
Balance, September 30, 2016	$	442,794		$	385,567		$	196,306		$	1,024,667

On September 3, 2014, the Board of Directors approved a plan to sell certain non-core business units. These business units are reported as discontinued operations. In fiscal 2015, based upon the estimated fair values, the Company recorded and estimated after-tax loss of $31.2 million on the ~~financial statements.~~assets held for sale in discontinued operations, of which $2.0 million was recorded against goodwill.

~~NOTE 2:~~ ~~Discontinued Operations~~

On September 8, 2010, the Company sold Pressure Systems, Inc., which was included in the Sensors & Systems segment, for approximately $25.0 million, resulting in an after tax gain of $10.4 million. As a result, the consolidated income statement presents Pressure Systems, Inc. as discontinued operations. There were no discontinued operations in 2012.

~~The operating results of the discontinued operations for fiscal years 2011 and 2010 consisted of the following:~~

In Thousands    2011    2010
Sales
   $ 0       $ 16,509
Income (loss) before taxes
   (75)       16,960
Tax expense (benefit)
   (28)       5,079

Income (loss) from discontinued operations
   $           (47)       $     11,881

~~NOTE 3:~~ ~~Inventories~~

~~Inventories at the end of fiscal 2012 and 2011 consisted of the following:~~

In Thousands    2012    2011
Raw materials and purchased parts
   $ 146,390       $ 130,444
Work in process
   155,617       168,934
Inventory costs under long-term contracts
   19,207       18,990
Finished goods
   88,623       84,180

   $   409,837       $   402,548

~~NOTE 4:~~ ~~Goodwill~~

~~The following table summarizes the changes in goodwill by segment for fiscal 2012 and 2011:~~

In Thousands    Avionics &
Controls Sensors &
Systems Advanced
Materials Total
Balance, October 29, 2010
   $     438,339    $     87,389    $     214,002    $     739,730
Goodwill from acquisitions
   67,613    343,053    0    410,666
Foreign currency translation adjustment
   7,556    5,203    570    13,329

Balance, October 28, 2011
   513,508    435,645    214,572    1,163,725
Sale of product line
   (523 ) 0    0    (523 )
Goodwill adjustments
   (234 ) 24,280    0    24,046
Goodwill impairment
   (52,169 ) 0    0    (52,169 )
Foreign currency translation adjustment
   (4,490 ) (31,505 ) (122 ) (36,117 )

Balance, October 26, 2012
   $     456,092    $     428,420    $     214,450    $     1,098,962

During the third fiscal quarter of 2012, management performed a Step One impairment test for Racal Acoustics upon identification of an indicator of impairment. Racal Acoustics’ third quarter forecast projected an operating loss for fiscal 2012. Additionally, management determined that requirements for hearing protection devices for the U.S. Army would not recover in the five-year planning horizon in light of the cancellation of certain programs that include Racal Acoustics’ products, and the expected decline in demand for Racal Acoustics’ products from the U.S. armed forces. As required under U.S. GAAP, a Step Two impairment test was required because the current fair value of the business using a discounted cash flow and market approach was less than its carrying amount of the business. Under Step Two, the fair value of all Racal Acoustics’ assets and liabilities were estimated, including tangible assets, existing technology, and trade names, for the purpose of deriving an estimate of the implied fair value of goodwill. The implied fair value of the goodwill was then compared to the recorded goodwill to determine the amount of the impairment. Assumptions used in measuring the value of these assets and liabilities included the discount rates, royalty rates, and obsolescence rates used in valuing the intangible assets, and pricing of comparable transactions in the market in valuing the tangible assets. The excess of the carrying amount of goodwill over the implied fair value of goodwill resulted in an impairment charge of $52.2 million.

NOTE 5: Intangible Assets

Intangible assets at the end of fiscal ~~2012~~2016 and ~~2011~~2015 were as follows:

In Thousands													2016				2015
											Weighted		Gross				Gross
			2012				2011				Average Years		Carrying		Accum.		Carrying		Accum.
In Thousands	Weighted Average Years Useful Life		Gross Carrying Amount		Accum. Amort.		Gross Carrying Amount		Accum. Amort.
											Useful Life		Amount		Amort.		Amount		Amort.
Amortized Intangible Assets:
Programs		15	$	701,396	$	202,333	$	728,433	$	157,383		16	$	607,276	$	293,223	$	635,761	$	270,830
Core technology		16		9,589		6,112		9,589		5,514		12		15,926		11,778		15,926		10,273
Patents and other		12		96,721		38,140		101,834		31,835		12		86,286		51,250		87,506		45,402

Total			$	807,706	$	246,585	$	839,856	$	194,732			$	709,488	$	356,251	$	739,193	$	326,505


Indefinite-lived Intangible Assets:
Trademark			$	47,924			$	48,791					$	39,798			$	39,352

Programs represent the valuation of systems or components sold under long-term supply agreements with aerospace companies, military contractors, and OEM manufacturers using similar technology. The valuation of the program includes the values of the program-specific technology, the backlog of contracts, and the relationship with customers which lead to potential future contracts. The valuation of the program is based upon its discounted cash flow at a market-based discount rate.

Amortization of intangible assets from continuing operations was ~~$53,523,000, $40,539,000,~~$49.4 million, $44.0 million, and ~~$30,705,000~~$49.4 million in fiscal years ~~2012, 2011,~~2016, 2015, and ~~2010,~~2014, respectively.Amortization of intangible assets related to discontinued operations was $1.2 million and $9.1 million in fiscal years 2015 and 2014, respectively.

Estimated amortization expense related to intangible assets for each of the next five fiscal years is as follows:

In Thousands

Fiscal Year
2013
   $     53,226
2014
   53,432
2015
   52,223
2016
   51,841
2017
   50,883

Fiscal Year

2017	$	46,049
2018		45,121
2019		43,783
2020		41,580
2021		40,137

NOTE 6: Accrued Liabilities

Accrued liabilities at the end of fiscal ~~2012~~2016 and ~~2011~~2015 consisted of the following:


In Thousands	2012		2011		2016		2015

Payroll and other compensation	$	128,269	$	123,454	$	107,132	$	107,912
Commissions		5,776		5,675		5,901		5,373
Casualty and medical		12,971		13,435		14,933		14,881
Interest		7,091		6,599		6,397		6,999
Warranties		21,870		19,298		13,365		14,658
State and other tax accruals		6,136		5,383		4,737		3,986
Customer deposits		18,193		25,143		22,302		32,566
Deferred revenue		30,707		22,602		26,618		19,647
Contract reserves		13,716		13,050		8,822		13,008
Forward foreign exchange contracts		2,375		614		12,036		20,932
Unclaimed property – non-U.S.		0		11,861
Litigation reserves						4,006		6,657
Environmental reserves		3,119		4,426		646		646
Asset retirement obligations		200		308
Rent and future lease obligations		2,258		1,308		1,925		1,958
Other		16,872		17,266		9,343		10,511
					$	238,163	$	259,734
	$	269,553	$	270,422

Accrued liabilities are recorded to reflect the Company’s contractual obligations relating to warranty commitments to customers. Warranty coverage of various lengths and terms is provided to customers depending on standard offerings and negotiated contractual agreements. An estimate for warranty expense is recorded at the time of sale based on the length of the warranty and historical warranty return rates and repair costs.

Changes in the carrying amount of accrued product warranty costs are summarized as follows:


In Thousands	2012			2011			2016			2015

Balance, beginning of year	$	19,298		$	17,159		$	14,658		$	16,243
Warranty costs incurred		(2,752	)		(4,583	)		(2,423	)		(1,917	)
Reclassification to liabilities held for sale								-			(108	)
Product warranty accrual		8,471			7,239			6,850			7,762
Release of reserves								(5,700	)		(6,702	)
Acquisitions		0			645			-			1,024
Release of reserves		(2,967	)		(1,476	)
Foreign currency translation adjustment		(180	)		314			(20	)		(1,644	)

Balance, end of year	$	21,870		$	19,298		$	13,365		$	14,658

NOTE 7: Retirement Benefits

Approximately ~~40%~~41% of U.S. employees have a defined benefit earned under the Esterline pension plan.

Under the Esterline plan, pension benefits are based on years of service and five-year average compensation orfor the highest five consecutive years’ compensation during the last ten years of employment. Esterline amended its defined benefit plan to add the cash balance formula with annual pay credits ranging from 2% to 6% effective January 1, 2003. Participants elected either to continue earning benefits under the current plan formula or to earn benefits under the cash balance formula. Effective January 1, 2003, all new participants are enrolled in the cash balance formula. Esterline also has an unfunded supplemental retirement plan for key executives providing for periodic payments upon retirement.

CMC Electronics, Inc. (CMC) sponsors defined benefit pension plans and other retirement benefit plans for its non-U.S. employees. Pension benefits are based upon years of service and final average salary. Other retirement benefit plans are non-contributory health care and life insurance plans.

The Company sponsors a number of other non-U.S. defined benefit pension plans primarily in Belgium, France and Germany. These defined benefit plans generally provide benefits to employees based on formulas recognizing length of service and earnings.

The Company accounts for pension expense using the end of the fiscal year as its measurement date. In addition, the Company makes actuarially computed contributions to these plans as necessary to adequately fund benefits. The Company’s funding policy is consistent with the minimum funding requirements of ERISA.

The accumulated benefit obligation and projected benefit obligation for the Esterline plans are ~~$283,057,000~~$307.0 million and ~~$292,183,000,~~$318.7 million, respectively, with plan assets of ~~$217,035,000~~$270.9 million as of ~~October 26, 2012.~~September 30, 2016. The underfunded status for the Esterline plans is ~~$75,148,000~~$47.8 million at

~~October 26, 2012.~~ September 30, 2016. Contributions to the Esterline plans totaled ~~$17,097,000~~$1.4 million and ~~$24,556,000~~$1.2 million in fiscal years ~~2012~~2016 and ~~2011,~~2015, respectively. ~~The expected~~There is no funding requirement for fiscal ~~2013~~2017 for the U.S. pension plans maintained by ~~Esterline is $16,304,000.~~ Esterline.

The accumulated benefit obligation and projected benefit obligation for the CMC plans are ~~$139,904,000~~$137.6 million and ~~$141,575,000,~~$138.3 million, respectively, with plan assets of ~~$113,883,000~~$133.7 million as of ~~October 26, 2012.~~September 30, 2016. The underfunded status for these CMC plans is ~~$27,692,000~~$4.6 million at ~~October 26, 2012.~~September 30, 2016. Contributions to the CMC plans totaled ~~$10,241,000~~$5.6 million and ~~$7,906,000~~$6.3 million in fiscal ~~2012~~2016 and ~~2011,~~2015, respectively. The expected funding requirement for fiscal ~~2013~~2017 for the CMC plans is ~~$10,847,000.~~$3.7 million.

The accumulated benefit obligation and projected benefit obligation for the other non-U.S. plans are $37.5 million and $48.4 million, respectively, with plan assets of $21.2 million as of September 30, 2016. The underfunded status for these other non-U.S. plans is $27.1 million at September 30, 2016. Contributions to the other non-U.S. plans totaled $5.0 million and $1.7 million in fiscal 2016 and 2015, respectively. The expected funding requirement for fiscal 2017 for the other non-U.S. plans is $0.7 million.

Principal assumptions of the Esterline, CMC and ~~CMC~~Other Non-U.S. plans are as follows:

   Esterline
          Defined Benefit
Pension Plans CMC
          Defined Benefit
Pension Plans
   2012 2011 2012 2011
Principal assumptions
as of fiscal year end:

Discount Rate
   3.85 % 5.0 % 4.35 % 5.0 %
Rate of increase in future
compensation levels
   4.5 % 4.5 % 3.1 % 3.1 %
Assumed long-term rate
of return on plan assets
   7.0 % 7.5 % 6.5 – 6.75 % 7.0 %
   Esterline
Post-Retirement
Benefit Plans CMC
Post-Retirement
Benefit Plans
   2012 2011 2012 2011
Principal assumptions
as of fiscal year end:

Discount Rate
   3.85 % 5.0 % 4.35 % 5.0 %
Initial weighted average
health care trend rate
   6.0 % 6.0 % 3.7 % 3.7 %
Ultimate weighted average
health care trend rate
   6.0 % 6.0 % 3.2 % 3.2 %

	Esterline		CMC		Other Non-U.S.
	Defined Benefit		Defined Benefit		Defined Benefit
	Pension Plans		Pension Plans		Pension Plans
	2016	2015	2016	2015	2016	2015
Principal assumptions as of year end:
Discount rate	3.60%	4.40%	3.22%	4.00%	0.90 - 7.75%	1.80 - 8.25%
Rate of increase in future compensation levels	4.28%	4.22%	2.75%	3.00%	2.96 - 10.13%	4.50 - 8.90%
Assumed long-term rate of return on plan assets	7.00%	7.00%	5.66%	5.70%	3.25 - 8.00%	3.25 - 8.00%

	Esterline		CMC
	Post-Retirement		Post-Retirement
	Pension Plans		Pension Plans
	2016	2015	2016	2015
Principal assumptions as of year end:
Discount rate	3.60%	4.40%	3.16%	4.00%
Initial weighted average health care trend rate	6.00%	6.00%	6.00%	3.70%
Ultimate weighted average health care trend rate	6.00%	6.00%	4.20%	3.10%

The Company uses a discount rate for expected returns that is a spot rate developed from a yield curve established from high-quality corporate bonds and matched to plan-specific projected benefit payments. Although future changes to the discount rate are unknown, had the discount rate increased or decreased by 25 basis points, pension liabilities in total would have decreased ~~$12.0~~$14.5 million or increased ~~$12.8~~$15.2 million, respectively. If all other assumptions are held constant, the estimated effect on fiscal ~~2012~~2016 pension expense from a hypothetical 25 basis points increase or decrease in both the discount rate and expected long-term rate of return on plan assets would not have a material effect on our pension expense. Management is not aware of any legislative or other initiatives or circumstances that will significantly impact the Company’s pension obligations in fiscal ~~2013.~~2017.

The assumed health care trend rate ~~has~~can have a significant impact on the Company’s post-retirement benefit obligations. The Company’s health care trend rate was based on the experience of its plan and expectations for the future. A 100 basis points increase in the health care trend rate would increase the post-retirement benefit obligation by $1.1 million. A 100 basis points decrease in the health care trend rate would decrease the post-retirement benefit obligation by $0.9 million. Assuming all other assumptions are held constant, the estimated effect on fiscal ~~2012~~2016 post-retirement benefit expense from a hypothetical 100 basis points increase or decrease in the health care trend rate would not have a material effect on our post-retirement benefit expense.

Plan assets are invested in a diversified portfolio of equity and debt securities consisting primarily of common stocks, bonds and government securities. The objective of these investments is to maintain sufficient liquidity to fund current benefit payments and achieve targeted risk-adjusted returns. Management periodically reviews allocations of plan assets by investment type and evaluates external sources of information regarding the long-term historical returns and expected future returns for each investment type, and accordingly, the ~~6.5%~~3.25% to ~~7.0%~~8.00% assumed long-term rate of return on plan assets is considered to be appropriate. Allocations by investment type are as follows:

		Actual
	Target	2016			2015
Plan assets allocation as of fiscal year end:
Equity securities	35 - 70%		56.4	%		56.8	%
Debt securities	30 - 65%		37.1	%		38.2	%
Cash	0%		6.5	%		5.0	%
Total			100.0	%		100.0	%

           Actual
   Target                 2012             2011
Plan assets allocation as of fiscal year end:

Equity securities
   55 – 75 % 58.8 % 52.3 %
Debt securities
   25 – 45 % 38.7 % 38.7 %
Cash
   0 % 2.5 % 9.0 %
Total
   100.0 % 100.0 %

The following table presents the fair value of the Company’s Pension Plan assets as of ~~October 26, 2012,~~September 30, 2016, by asset category segregated by level within the fair value hierarchy, as described in Note 8.

In Thousands    Fair Value Hierarchy
         Level 1                Level 2                  Total
Asset category:

Equity Funds

Registered Investments Company
Funds – U.S. Equity
   $ 61,634       $ 0       $ 61,634
Commingled Trust Funds – U.S. Equity
   0       18,751       18,751
U.S. Equity Securities
   46,140       0       46,140
Non-U.S. Equity Securities
   24,986       0       24,986
Commingled Trust Fund – Non-U.S.
Securities
   0       45,213       45,213
Fixed Income Securities

Registered Investments Company
Funds – Fixed Income
   35,528       0       35,528
Commingled Trust Fund – Fixed Income
   0       44,194       44,194
Non-U.S. Foreign Commercial
and Government Bonds
   49,749       0       49,749
Cash and Cash Equivalents
   8,427       0       8,427

Total
   $ 226,464       $ 108,158       $ 334,622

In Thousands	Fair Value Hierarchy
	Level 1		Level 2		Total
Asset category:
Equity Funds:
Registered Investment Company Funds - U.S. Equity	$	104,075	$	-	$	104,075
Commingled Trust Funds - U.S. Equity		-		-		-
U.S. Equity Securities		55,196		-		55,196
Non-U.S. Equity Securities		28,031		-		28,031
Commingled Trust Funds - Non-U.S. Securities		-		52,973		52,973
Fixed Income Securities:
Commingled Trust Funds - Fixed Income		-		82,627		82,627
Non-U.S. Foreign Commercial and Government Bonds		-		75,414		75,414
Cash and Cash Equivalents		27,465		-		27,465
Total	$	214,767	$	211,014	$	425,781

The following table presents the fair value of the Company’s Pension Plan assets as of October ~~28, 2011,~~2, 2015, by asset category segregated by level within the fair value hierarchy, as described in Note 8.

In Thousands    Fair Value Hierarchy
         Level 1                Level 2                  Total
Asset category:

Equity Funds

Registered Investments Company
Funds – U.S. Equity
   $ 47,444       $ 0       $ 47,444
Commingled Trust Funds – U.S. Equity
   0       27,936       27,936
U.S. Equity Securities
   25,729       0       25,729
Non-U.S. Equity Securities
   21,444       0       21,444
Commingled Trust Fund – Non-U.S.
Securities
   0       34,707       34,707
Fixed Income Securities

Registered Investments Company
Funds – Fixed Income
   31,790       0       31,790
Commingled Trust Fund – Fixed Income
   0       38,070       38,070
Mortgage and Asset-backed
   0       317       317
Non-U.S. Foreign Commercial
and Government Bonds
   46,410       0       46,410
Cash and Cash Equivalents
   26,979       0       26,979

Total
   $ 199,796       $ 101,030       $ 300,826

In Thousands	Fair Value Hierarchy
	Level 1		Level 2		Total
Asset category:
Equity Funds:
Registered Investment Company Funds - U.S. Equity	$	95,481	$	-	$	95,481
Commingled Trust Funds - U.S. Equity		-		25,307		25,307
U.S. Equity Securities		30,868		-		30,868
Non-U.S. Equity Securities		20,898		-		20,898
Commingled Trust Funds - Non-U.S. Securities		-		48,592		48,592
Fixed Income Securities:
Commingled Trust Funds - Fixed Income		-		80,424		80,424
Non-U.S. Foreign Commercial and Government Bonds		-		68,390		68,390
Cash and Cash Equivalents		19,501		-		19,501
Total	$	166,748	$	222,713	$	389,461

Valuation Techniques

Level 1 Equity Securities are actively traded on U.S. and non-U.S. exchanges and are either valued using the market approach at quoted market prices on the measurement date or at the net asset value of the shares held by the plan on the measurement date based on quoted market prices.

Level 12 fixed income securities are primarily valued using the market approach at either quoted market prices, pricing models that use observable market data, or bids provided by independent investment brokerage firms.

Level 2 primarily consists of commingled trust funds that are primarily valued at the net asset value provided by the fund manager. Net asset value is based on the fair value of the underlying investments.

Cash and cash equivalents include cash which is used to pay benefits and cash invested in a short-term investment fund that holds securities with values based on quoted market prices, but for which the funds are not valued on quoted market basis.

Net periodic pension cost for the Company’s defined benefit plans at the end of each fiscal year consisted of the following:

In Thousands    Defined Benefit
Pension Plans Post-Retirement
Benefit Plans
             2012 2011 2010           2012 2011 2010
Components of Net
Periodic Cost

Service cost
   $ 9,393    $ 8,583    $ 7,370    $ 436    $ 447    $ 326
Interest cost
   19,403    19,044    18,950    715    754    785
Expected return
on plan assets
   (21,508 ) (20,354 ) (17,954 ) 0    0    0
Amortization of prior
service cost
   41    21    21    (69 ) 0    0
Amortization of
actuarial (gain) loss
   10,551    8,450    7,602    41    (17 ) (78 )

Net periodic cost
   $ 17,880    $     15,744    $     15,989    $       1,123    $       1,184    $        1,033

In Thousands	Defined Benefit									Post-Retirement
	Pension Plans									Benefit Plans
	2016			2015			2014			2016			2015			2014
Components of Net Periodic Cost
Service cost	$	12,861		$	11,811		$	11,367		$	342		$	359		$	489
Interest cost		18,095			16,159			19,387			473			464			685
Expected return on plan assets		(24,491	)		(23,872	)		(25,999	)		-			-			-
Contractual termination		-			-			94			-			-			-
Curtailment		-			-			23			-			-			(1,747	)
Settlement		2			3,522			-			-			-			-
Amortization of prior service cost		487			404			107			(17	)		(63	)		(151	)
Amortization of actuarial (gain) loss		6,590			5,165			6,052			-			-			38
Net periodic cost (benefit)	$	13,544		$	13,189		$	11,031		$	798		$	760		$	(686	)

The funded status of the defined benefit pension and post-retirement plans at the end of fiscal ~~2012~~2016 and ~~2011~~2015 were as follows:


In Thousands	Defined Benefit Pension Plans						Post-Retirement Benefit Plans						Defined Benefit						Post-Retirement
	2012			2011			2012			2011			Pension Plans						Benefit Plans
													2016			2015			2016			2015
Benefit Obligations
Beginning balance	$	401,579		$	360,859		$	14,392		$	15,078		$	453,283		$	473,348		$	12,187		$	13,797
Currency translation adjustment		(2,623	)		3,697			(175	)		384			268			(23,642	)		26			(1,923	)
Service cost		9,393			8,583			436			447			12,861			11,811			342			359
Interest cost		19,403			19,044			715			754			18,095			16,159			473			464
Plan participants contributions		44			95			0			0			376			256			-			-
Amendment		416			0			546			(287	)		-			3,407			-			-
Acquisitions														-			13,982			-			-
Actuarial (gain) loss		50,116			18,490			1,918			(880	)		44,136			(2,552	)		738			(67	)
Acquisitions		0			10,147			0			0
Other adjustments														(859	)		(1,096	)		-			-
Benefits paid		(21,467	)		(19,336	)		(792	)		(1,104	)		(22,862	)		(38,390	)		(530	)		(443	)

Ending balance	$	456,861		$	401,579		$	17,040		$	14,392		$	505,298		$	453,283		$	13,236		$	12,187


Plan Assets – Fair Value
Plan Assets - Fair Value
Beginning balance	$	300,826		$	269,889		$	0		$	291		$	389,461		$	427,474		$	-		$	-
Currency translation adjustment		(838	)		2,873			0			4			341			(19,977	)		-			-
Realized and unrealized gain (loss) on plan assets		27,918			14,936			0			0			45,817			2,021			-			-
Plan participants contributions		44			95			0			0			376			256			-			-
Company contribution		29,014			33,228			792			510			12,041			9,185			530			443
Acquisitions														-			9,988			-			-
Other adjustments														1,466			-			-			-
Expenses paid		(875	)		(859	)		0			0			(859	)		(1,096	)		-			-
Benefits paid		(21,467	)		(19,336	)		(792	)		(805	)		(22,862	)		(38,390	)		(530	)		(443	)

Ending balance	$	334,622		$	300,826		$	0		$	0		$	425,781		$	389,461		$	-		$	-


Funded Status
Fair value of plan assets	$	334,622		$	300,826		$	0		$	0		$	425,781		$	389,461		$	-		$	-
Benefit obligations		(456,861	)		(401,579	)		(17,040	)		(14,392	)		(505,298	)		(453,283	)		(13,236	)		(12,187	)

Net amount recognized	$	(122,239	)	$	(100,753	)	$	(17,040	)	$	(14,392	)	$	(79,517	)	$	(63,822	)	$	(13,236	)	$	(12,187	)


Amount Recognized in the
Consolidated Balance Sheet
Amount Recognized in the Consolidated Balance Sheet													Amount Recognized in the Consolidated Balance Sheet
Non-current asset													$	2,395		$	2,172		$	-		$	-
Current liability	$	(6,145	)	$	(6,711	)	$	(1,060	)	$	(557	)		(1,912	)		(2,463	)		(716	)		(699	)
Non-current liability		(116,094	)		(94,042	)		(15,980	)		(13,835	)		(80,000	)		(63,531	)		(12,520	)		(11,488	)

Net amount recognized	$	(122,239	)	$	(100,753	)	$	(17,040	)	$	(14,392	)	$	(79,517	)	$	(63,822	)	$	(13,236	)	$	(12,187	)


Amounts Recognized in Accumulated Other Comprehensive Income													Amounts Recognized in Accumulated Other Comprehensive Income
Net actuarial loss (gain)	$	148,758		$	115,738		$	759		$	(1,233	)	$	112,420		$	96,073		$	975		$	232
Prior service cost		589			268			0			0			2,951			3,436			-			(17	)

Ending balance	$	149,347		$	116,006		$	759		$	(1,233	)	$	115,371		$	99,509		$	975		$	215

The accumulated benefit obligation for all pension plans was ~~$442,165,000~~$482.2 million at September 30, 2016, and $433.1 million at October ~~26, 2012, and $387,378,000 at October 28, 2011.~~

2, 2015.

5762

Estimated future benefit payments expected to be paid from the plan or from the Company’s assets are as follows:

~~In Thousands~~

Fiscal Year

2013
   $         25,143
2014
   25,773
2015
   26,786
2016
   27,954
2017
   29,331
2018 – 2022
   174,652

In Thousands

Fiscal Year

2017	$	26,816
2018		27,595
2019		29,247
2020		30,328
2021		32,418
2022 - 2026		170,693

Employees may participate in certain defined contribution plans. The Company’s contribution expense under these plans totaled ~~$8,900,000, $8,203,000,~~$10.7 million, $9.5 million, and ~~$7,533,000~~$10.3 million in fiscal ~~2012, 2011,~~2016, 2015, and ~~2010,~~2014, respectively. The Company contributes a matching amount that varies by participating company and employee group based on the first 6% of earnings contributed. The three formulas used are: 25% of the first 6%; or 50% of the first 6%; or 100% of the first 2% and 50% on the next 4%.

In fiscal 2014, the Company offered vested terminated participants in the Esterline plan a one-time opportunity to elect a lump-sum payment from the plan in lieu of a lifetime annuity. In the first fiscal quarter of 2015, the Company paid $16.6 million in lump-sum payments to vested terminated pension plan participants from the plan, which resulted in an actuarial settlement charge of $3.0 million. During the remainder of fiscal 2015, an additional $1.4 million in lump-sum payments was distributed to cash balance participants under the ongoing terms of the plan, which resulted in an additional settlement charge of $0.5 million in fiscal 2015.

NOTE 8: Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy has been established that prioritizes the inputs to valuation techniques used to measure fair value. An ~~asset~~asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy of fair value measurements is described below:

●

Level 1 – Valuations are based on quoted prices that the Company has the ability to obtain in actively traded markets for identical assets and liabilities. Since valuations are based on quoted prices that are readily and regularly available in an active market or exchange traded market, a valuation of these instruments does not require a significant degree of judgment.

●

Level 2 – Valuations are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

●

Level 3 – Valuations are based on model-based techniques for which some or all of the assumptions are obtained from indirect market information that is significant to the overall fair value measurement and which require a significant degree of management judgment.

The following table sets forth the Company’s financial assets and liabilities that were measured at fair value on a recurring basis by level within the fair value hierarchy at the end of fiscal ~~2012~~2016 and ~~2011:~~2015:

In Thousands    Level 2


   2012        2011
Assets:

Derivative contracts designated as hedging instruments
   $ 7,753           $         7,553
Derivative contracts not designated as hedging instruments
   $ 1,387           $ 2,214
Embedded derivatives
   $ 51           $ 38
Liabilities:

Derivative contracts designated as hedging instruments
   $ 2,143           $ 1,632
Derivative contracts not designated as hedging instruments
   $ 361           $ 1,070
Embedded derivatives
   $         470           $ 895

In Thousands	Level 2
	2016		2015
Assets:
Derivative contracts designated as hedging instruments	$	2,948	$	1,386
Derivative contracts not designated as hedging instruments		143		189
Embedded derivatives		2,485		3,992

Liabilities:
Derivative contracts designated as hedging instruments	$	7,828	$	24,660
Derivative contracts not designated as hedging instruments		6,720		2,324
Embedded derivatives		985		380

5863

In Thousands	Level 3
	2016		2015
Assets:
Estimated value of assets held for sale	$	26,850	$	52,768

Liabilities:
Estimated value of liabilities held for sale	$	11,133	$	19,515
Contingent purchase obligation		-		3,750

In Thousands    Level 3


   2012        2011
Liabilities:

Contingent purchase obligation
   $         9,000       $         13,350

The Company’s embedded derivatives are the result of entering into sales or purchase contracts that are denominated in a currency other than the Company’s functional currency or the supplier’s or customer’s functional currency. The fair value is determined by calculating the difference between quoted exchange rates at the time the contract was entered into and the period-end exchange rate. These contracts are categorized as Level 2 in the fair value hierarchy.

The Company’s derivative contracts consist of foreign currency exchange contracts and, from time to time, interest rate swap agreements. These derivative contracts are over the counter and their fair value is determined using modeling techniques that include market inputs such as interest rates, yield curves, and currency exchange rates. These contracts are categorized as Level 2 in the fair value hierarchy.

In the fourth quarter of fiscal 2014, the Company’s board of directors approved the plan to sell certain non-core business units. Based upon the estimated fair values, the Company adjusted the carrying value of the assets and liabilities of the businesses to fair value. Principle assumptions used in measuring the estimated value of assets and liabilities held for sale included estimated selling price of the discontinued business, discount rates, industry growth rates, and pricing of comparable transactions in the market.

The Company’s contingent purchase ~~obligation consists~~obligations consist of additional contingent consideration in connection with the acquisition of ~~Eclipse. The contingent consideration will be~~Sunbank Family of Companies, LLC (Sunbank) of $3.75 million as of October 2, 2015, which was paid toin fiscal 2016, upon achievement of the ~~seller if certain~~ performance ~~objectives are met over the three-year period from the date of acquisition.~~objectives. The value recorded on the balance sheet at October 2, 2015, was derived from the estimated probability that the performance ~~objective~~objectives will be ~~met by the end of the three-year period.~~met. The contingent purchase obligation iswas categorized as Level 3 in the fair value hierarchy. The Company paid $5.0 million of the contingent purchase consideration in the second fiscal quarter of 2012. The Company recorded an additional $0.7 million of contingent purchase obligation in the fourth fiscal quarter of 2012.

NOTE 9: Derivative Financial Instruments

The Company ~~uses~~may use derivative financial instruments in the form of foreign currency forward exchange contracts and interest rate swap contracts for the purpose of minimizing exposure to changes in foreign currency exchange rates on business transactions and interest rates, respectively. The Company’s policy is to execute such instruments with banks the Company believes to be credit worthy and not to enter into derivative financial instruments for speculative purposes. These derivative financial instruments do not subject the Company to undue risk, as gains and losses on these instruments generally offset gains and losses on the underlying assets, liabilities, or anticipated transactions that are being hedged.

All derivative financial instruments are recorded at fair value in the Consolidated Balance Sheet. For a derivative that has not been designated as an accounting hedge, the change in the fair value is recognized immediately through earnings. For a derivative that has been designated as an accounting hedge of an existing asset or liability (a fair value hedge), the change in the fair value of both the derivative and underlying asset or liability is recognized immediately through earnings. For a derivative designated as an accounting hedge of an anticipated transaction (a cash flow hedge), the change in the fair value is recorded on the Consolidated Balance Sheet in Accumulated Other Comprehensive Income (AOCI) to the extent the derivative is effective in mitigating the exposure related to the anticipated transaction. The change in the fair value related to the ineffective portion of the hedge, if any, is immediately recognized in earnings. The amount recorded within AOCI is reclassified into earnings in the same period during which the underlying hedged transaction affects earnings.

The fair values of derivative instruments are presented on a gross basis, as the Company does not have any derivative contracts which are subject to master netting arrangements. The Company does not have any derivative instruments with credit-risk-related contingent features or that required the posting of collateral as of ~~October 26, 2012.~~September 30, 2016. The cash flows from derivative contracts are recorded in operating activities in the Consolidated Statement of Cash Flows.

Foreign Currency Forward Exchange Contracts

The Company transacts business in various foreign currencies which subjects the Company’s cash flows and earnings to exposure related to changes in foreign currency exchange rates. These exposures arise primarily from purchases or sales of products and services from third parties. Foreign currency forward exchange contracts provide for the purchase or sale of

foreign currencies at specified future dates at specified exchange rates, and are used to offset changes in the fair value of certain assets or liabilities or forecasted cash flows resulting from transactions denominated in foreign currencies. As of ~~October 26, 2012,~~September 30, 2016, and October ~~28, 2011,~~2, 2015, the Company had outstanding foreign currency forward exchange contracts principally to sell U.S. dollars with notional amounts of ~~$358.4~~$450.9 million and ~~$431.2~~$402.9 million, respectively. These notional values consist primarily of contracts for the European euro, British pound sterling and Canadian dollar, and are stated in U.S. dollar equivalents at spot exchange rates at the respective dates.

Interest Rate Swaps

The Company manages its exposure to interest rate risk by maintaining an appropriate mix of fixed and variable rate debt, which over time should moderate the costs of debt financing. When considered necessary, the Company may use financial instruments in the form of interest rate swaps to help meet this objective. In November 2010, the Company entered into an interest rate swap agreement for $100.0 million on the $175.0 million Senior Notes due in 2017. The swap agreement exchanged the fixed interest rate of 6.625% for a variable interest rate on the $100.0 million of the principal amount outstanding. The variable interest rate is based upon LIBOR plus 4.865% and was 5.178% at October 26, 2012. The fair value of the Company’s interest rate swap was a $2.2 million asset at October 26, 2012, and was estimated by discounting expected cash flows using market interest rates. The Company records interest receivable and interest payable on interest rate swaps on a net basis. In December 2010, the Company entered into an interest rate swap agreement for $75.0 million on the $175.0 million Senior Notes due in 2017. The swap agreement exchanged the fixed interest rate of 6.625% for a variable interest rate on the $75.0 million of the principal amount outstanding. The variable interest rate is based upon LIBOR plus 4.47% and was 4.783% at October 26, 2012. The fair value of the Company’s interest rate swap was a $1.9 million asset at October 26, 2012, and was estimated by discounting expected cash flows using market interest rates. The Company recognized a net interest receivable on the swaps of $0.5 million at October 26, 2012.

Embedded Derivative Instruments

Net Investment Hedge

In ~~July 2011,~~April 2015, the Company ~~entered into a Euro Term Loan for €125.0~~issued €330.0 million ~~under the secured credit facility.~~in 3.625% Senior Notes due April 2023 (2023 Notes) and requiring semi-annual interest payments in April and October each year until maturity. The Company designated the ~~Euro Term Loan~~2023 Notes and accrued interest as a hedge of the investment in a certain ~~French~~foreign business ~~unit.~~units. The foreign currency gain or loss that is effective as a hedge is reported as a component of other comprehensive income (loss) in shareholders’ equity. To the extent that this hedge is ineffective, the foreign currency gain or loss is recorded in earnings. There ~~has been~~was no ineffectiveness since inception of the hedge.

Fair Value of Derivative Instruments

Fair values of derivative instruments in the Consolidated Balance Sheet at the end of fiscal ~~2012~~2016 and ~~2011~~2015 consisted of:

In Thousands
        Classification
   Fair Value
                      2012                    2011
Foreign Currency Forward Exchange Contracts:
   Other current assets    $ 3,694       $ 7,092
   Other assets    1,294       1,321
   Accrued liabilities    2,228       1,606
   Other liabilities    276       1,096
Embedded Derivative Instruments:
   Other current assets    $ 51       $ 38
   Accrued liabilities    148       82
   Other liabilities    322       813
Interest Rate Swap:
   Long-term debt, net
   of current maturities    $ 4,152       $ 1,354

In Thousands		Fair Value
	Classification	2016		2015
Foreign Currency Forward Exchange Contracts:
	Other current assets	$	1,757	$	1,527
	Other assets		1,334		48
	Accrued liabilities		11,168		20,688
	Other liabilities		3,380		6,296

Embedded Derivative Instruments:
	Other current assets	$	1,864	$	2,913
	Other assets		621		1,079
	Accrued liabilities		866		351
	Other liabilities		119		29

The effect of derivative instruments on the Consolidated Statement of Operations for fiscal ~~2012~~2016 and ~~2011~~2015 consisted of:

Fair Value Hedges

In Thousands
Location of
        Gain (Loss)
   2012 2011
Fair Value Hedges:

Interest rate swap contracts
   Interest Expense    $ 2,388    $ 2,547
Embedded derivatives
   Sales    $ 433    $ 929
Cash Flow Hedges:

Foreign currency forward exchange contracts:

Amount of (loss) gain recognized in
AOCI (effective portion)
   AOCI    $ (4,343 ) $ (18,307 )
Amount of gain (loss) reclassified from
AOCI into income
   Sales    $           784    $           10,092
Net Investment Hedges:

Euro term loan
   AOCI    $ 14,812    $ 5,054

The Company recognized the following gains (losses) on contracts designated as fair value hedges:

In Thousands	2016			2015

Embedded derivatives:
Gain (loss) recognized in sales	$	(3,552	)	$	1,433

Cash Flow Hedges

The Company recognized the following gains (losses) on contracts designated as cash flow hedges:

In Thousands	2016			2015

Foreign currency forward exchange contracts:
Gain (loss) recognized in AOCI (effective portion)	$	37,969		$	15,484
Gain (loss) reclassified from AOCI into sales		(19,575	)		(24,246	)

Net Investment Hedges

We recognized the following gains (losses) on contracts designated as net investment hedges:

In Thousands	2016			2015

2023 Notes and Accrued Interest:
Gain (loss) recognized in AOCI	$	(1,256	)	$	(13,596	)

During fiscal years ~~2012~~2016 and ~~2011,~~2015, the Company recorded ~~losses~~a loss of ~~$1.7~~$6.1 million and ~~$0.3~~a loss of $0.7 million, respectively, on foreign currency forward exchange contracts that have not been designated as an accounting ~~hedge, respectively.~~hedge. These foreign currency exchange gains (losses) are included in selling, general and administrative expense.

There was no significant impact to the Company’s earnings related to the ineffective portion of any hedging instruments during fiscal years ~~2012~~2016 and ~~2011.~~2015. In addition, there was no significant impact to the Company’s earnings when a hedged firm commitment no longer qualified as a fair value hedge or when a hedged forecasted transaction no longer qualified as a cash flow hedge during fiscal years ~~2012~~2016 and ~~2011.~~2015.

Amounts included in AOCI are reclassified into earnings when the hedged transaction settles. The Company expects to reclassify approximately ~~$0.7~~$5.6 million of net ~~gain~~loss into earnings ~~over the next 12 months.~~in fiscal year 2017. The maximum duration of a foreign currency cash flow hedge contract at ~~October 26, 2012,~~September 30, 2016, is 2324 months.

NOTE 10: Income Taxes

Income tax expense from continuing operations for each of the fiscal years consisted of:


In Thousands	2012			2011			2010			2016			2015			2014

Current
U.S. Federal	$	33,790		$	14,817		$	16,787		$	14,959		$	11,045		$	27,243
State		356			2,994			2,781			(852	)		492			1,732
Foreign		21,222			19,472			14,933			30,314			24,131			28,944
											44,421			35,668			57,919
		55,368			37,283			34,501

Deferred
U.S. Federal		(4,578	)		8,332			1,188			(6,703	)		(7,686	)		(1,024	)
State		793			205			(480	)		2,060			(195	)		(10	)
Foreign		(21,625	)		(20,882	)		(10,705	)		(17,243	)		(8,831	)		(13,169	)
											(21,886	)		(16,712	)		(14,203	)
		(25,410	)		(12,345	)		(9,997	)

Income tax expense	$	29,958		$	24,938		$	24,504		$	22,535		$	18,956		$	43,716

U.S. and foreign components of ~~income~~earnings from continuing operations before income taxes for each of the fiscal years were:

In Thousands    2012    2011    2010
U.S.
   $ 108,436       $ 110,798       $ 71,980
Foreign
   35,097       47,684       82,769

Income from continuing operations,
before income taxes
   $         143,533       $         158,482       $         154,749

In Thousands	2016		2015		2014

U.S.	$	71,319	$	43,592	$	101,803
Foreign		69,116		72,430		107,495
Earnings from continuing operations before income taxes	$	140,435	$	116,022	$	209,298

6166

Primary components of the Company’s deferred tax assets (liabilities) at the end of the fiscal ~~year~~years resulted from temporary tax differences associated with the following:


In Thousands	2012			2011			2016			2015

Reserves and liabilities	$	58,510		$	45,526		$	53,119		$	48,918
NOL carryforwards (net of valuation allowances of $0.3 million and $0.3 million at fiscal year end 2012 and 2011, respectively)		725			247
Tax credit carryforwards (net of valuation allowance of $1.4 million at fiscal year end 2011)		26,687			26,237
Loss carryforwards								51,760			49,667
Tax credit carryforwards								34,836			32,015
Employee benefits		17,524			13,500			13,853			12,316
Retirement benefits		25,379			19,629			22,703			17,055
Non-qualified stock options		13,220			10,977			13,571			11,908
Hedging activities								3,350			6,092
Other		600			3,560			1,003			2,187

Total deferred tax assets		142,645			119,676			194,195			180,158
Less valuation allowance								(42,976	)		(42,694	)
Total deferred tax assets, net of valuation allowance								151,219			137,464

Depreciation and amortization		(18,024	)		(22,382	)		(7,456	)		(9,352	)
Intangibles and amortization		(182,921	)		(207,619	)		(116,620	)		(124,941	)
Deferred costs		(5,981	)		(6,216	)		(3,907	)		(5,779	)
Hedging activities		(111	)		(1,007	)
Other		(1,979	)		(2,843	)		(1,625	)		(1,180	)

Total deferred tax liabilities		(209,016	)		(240,067	)		(129,608	)		(141,252	)

Net deferred tax liabilities	$	(66,371	)	$	(120,391	)

Net deferred tax assets (liabilities)							$	21,611		$	(3,788	)

The tax credit carryforwards can be carried forward indefinitely.

The Company operates in numerous taxing jurisdictions and is subject to regular examinations by various U.S. federal, state and foreign jurisdictions for various tax periods. Additionally, the Company has retained tax liabilities and the rights to tax refunds in connection with various acquisitions and divestitures of businesses in prior years. The Company’s income tax positions are based on research and interpretations of income tax laws and rulings in each of the jurisdictions in which the Company does business. Due to the subjectivity and complexity of the interpretations of the tax laws and rulings in each jurisdiction, the differences and interplay in the tax laws between those jurisdictions, as well as the inherent uncertainty in estimating the final resolution of complex tax audit matters, the Company’s estimates of income tax liabilities and assets may differ from actual payments, assessments or refunds.

Management believes that it is more likely than not that the Company will realize the current and long-term deferred tax assets as a result of future taxable income. Significant factors management considered in determining the probability of the realization of the deferred tax assets include expected future earnings, the Company’s historical operating results, and the reversal of deferred tax liabilities. Accordingly, no valuation allowance has been recorded on the deferred tax assets other than certain capital and net operating losses. The majority of the losses will expire in fiscal 2020.

~~The~~ U.S. and various state and foreign income tax returns are open to examination, and presently ~~several~~there are foreign income tax returns ~~are~~ under examination. Such examinations could result in challenges to tax positions taken, and accordingly, the Company may record adjustments to provisions based on the outcomes of such matters. However, the Company believes that the resolution of these matters, after considering amounts accrued, will not have a material adverse effect on its consolidated financial statements.

The incremental tax benefit received by the Company upon exercise of non-qualified employee stock options was ~~$0.4~~$0.6 million, ~~$1.8~~$2.0 million, and ~~$3.5~~$7.1 million in fiscal ~~2012, 2011,~~years 2016, 2015, and ~~2010,~~2014, respectively.

A reconciliation of the U.S. federal statutory income tax rate to the effective income tax rate for each of the fiscal years was as follows:


	2012			2011			2010			2016			2015			2014

U.S. statutory income tax rate		35.0	%		35.0	%		35.0	%		35.0	%		35.0	%		35.0	%
Foreign taxes											-9.8	%		-10.7	%		-7.6	%
Difference in foreign tax rates											-4.3	%		-5.2	%		-4.4	%
Research & development credits											-5.0	%		-5.1	%		-2.5	%
Non-deductible under consent agreement											0.0	%		2.2	%		0.4	%
Domestic manufacturing deduction											-1.1	%		-0.7	%		-1.3	%
Net change in tax reserves											-0.6	%		-0.2	%		0.1	%
State income taxes		0.7			1.4			1.2			0.2	%		0.2	%		0.5	%
Foreign taxes		(14.8	)		(10.6	)		(8.8	)
Goodwill impairment		12.7			0.0			0.0
Difference in foreign tax rates		(2.3	)		(0.2	)		(1.5	)
Domestic manufacturing deduction		(2.3	)		(1.3	)		(0.7	)
Research & development credits		(3.4	)		(5.5	)		(3.3	)
Net change in tax reserves		0.5			(2.4	)		(4.3	)
Valuation allowance		(1.0	)		(3.0	)		(1.6	)
Change in foreign tax rates and laws		(3.6	)		(2.2	)		(1.1	)
Acquisition and organizational restructuring		0.0			3.0			0.0
Other, net		(0.6	)		1.5			0.9			1.6	%		0.8	%		0.7	%

Effective income tax rate		20.9	%		15.7	%		15.8	%		16.0	%		16.3	%		20.9	%

No provision for federal income taxes has been made on accumulated earnings of foreign subsidiaries, since such earnings are considered indefinitely reinvested. The amount of undistributed foreign earnings which are considered to be indefinitely reinvested at ~~October 26, 2012,~~September 30, 2016, is approximately ~~$400.0~~$533.5 million. Furthermore, the Company determined it was not practical to estimate the deferred taxes on these earnings. The amount of deferred income taxes is not practical to compute due to the complexity of the Company’s international holding company structure, layers of regulatory requirements that have to be evaluated to determine the amount of allowable dividends, numerous potential repatriation scenarios that could be created to facilitate the repatriation of earnings to the U.S., and the complexity of computing foreign tax credits.

~~The Company adopted the provisions related to accounting for business combination transactions at the beginning of fiscal year 2010.~~

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


In Thousands	Total

Unrecognized tax benefits as of October 28, 2011	$	10,908
Unrecognized tax benefits as of October 2, 2015				Unrecognized tax benefits as of October 2, 2015	$	10,583
Unrecognized gross benefit change:				Unrecognized gross benefit change:
Gross increases due to prior-period adjustments		3,145
Gross (decrease) due to prior-period adjustments		0
Gross increases due to current-period adjustment		926
Gross (decrease) due to current-period adjustment		0
Gross (decrease) due to settlements with taxing authorities		0
Gross (decrease) due to a lapse with taxing authorities		0

Gross decrease due to prior period adjustments				Gross decrease due to prior period adjustments		(475	)
Gross increase due to current period adjustments				Gross increase due to current period adjustments		1,475
Gross decrease due to settlements with taxing authorities				Gross decrease due to settlements with taxing authorities		(2,068	)
Gross decrease due to a lapse with taxing authorities				Gross decrease due to a lapse with taxing authorities		(2,889	)
Total change in unrecognized gross benefit	$	4,071		Total change in unrecognized gross benefit		(3,957	)

Unrecognized tax benefits as of October 26, 2012	$	14,979

Unrecognized tax benefits as of September 30, 2016				Unrecognized tax benefits as of September 30, 2016	$	6,626

Unrecognized tax benefits that, if recognized, would impact the effective tax rate	$	14,979		Unrecognized tax benefits that, if recognized, would impact the effective tax rate	$	6,626

Statement of operations:				Statement of operations:
Total amount of interest income (expense) included in income tax expense	$	(588	)	Total amount of interest income (expense) included in income tax expense	$	(308	)

Recognized in the statement of financial position:				Recognized in the statement of financial position:
Total amount of accrued interest included in income taxes payable	$	2,024		Total amount of accrued interest included in income taxes payable	$	583

During the next 12 months, it is reasonably possible that approximately ~~$8.5~~$1.4 million of previously unrecognized tax benefits related to operating losses and tax credits could decrease as a result of settlement of examinations and/or the expiration of statutes of limitations. The Company recognizes interest related to unrecognized tax benefits in income tax expense.

The Company is no longer subject to income tax examinations by tax authorities in its major tax jurisdictions as follows:


		Years No Longer
Tax Jurisdiction		Subject to Audit

U.S. Federal		~~2005~~ 2012 and prior
Canada		~~2004~~ 2007 and prior
France		~~2007~~ 2012 and prior
United Kingdom		~~2009~~ 2013 and prior

NOTE 11: Debt

Long-term debt at the end of fiscal ~~2012~~2016 and ~~2011~~2015 consisted of the following:


In Thousands	2012		2011		2016			2015

U.S. credit facility	$	240,000	$	360,000	$	155,000		$	160,000
7.00% Senior Notes, due August 2020		250,000		250,000
Euro term loan, due July 2016		80,240		162,725
6.625% Senior Notes, due March 2017		175,000		175,000
U.S. Term Loan, due April 2020						237,500			250,000
3.625% Senior Notes, due April 2023						370,920			370,062
Government refundable advances		51,763		34,509		44,994			43,326
Obligations under Capital Leases		44,847		45,184
Other		6,820		4,205

		848,670		1,031,623
Debt issuance costs						(5,609	)		(6,542	)
Obligation under capital leases						67,765			57,987
						870,570			874,833
Less current maturities		10,610		11,595		16,774			13,376

Carrying amount of long-term debt	$	838,060	$	1,020,028	$	853,796		$	861,457

~~Long-term debt~~

~~In July 2011,~~U.S. Credit Facility

On April 9, 2015, the Company amended the secured credit facility to extend the expiration to April 9, 2020, increase the revolving credit facility to $500 million, and provide for a ~~€125.0 million~~delayed-draw term loan ~~(Euro Term Loan).~~facility of $250 million. The Company recorded $2.3 million in debt issuance costs. The credit facility is secured by substantially all the Company’s assets, and interest is based on standard inter-bank offering rates. The interest rate ~~on the Euro Term Loan will range~~ranges from ~~Euro~~ LIBOR plus ~~1.5%~~1.25% to ~~Euro~~ LIBOR plus ~~2.25%~~2.00%, depending on the leverage ratios at the time the funds are drawn. At ~~October 26, 2012,~~September 30, 2016, the Company had €62.0 million outstanding or $80.2 million under the Euro Term Loan at an interest rate of Euro LIBOR plus 1.75% or 1.82%. The loan amortizes at 1.25% of the original principal balance quarterly through March 2016, with the remaining balance due in July 2016.

In March 2011, the Company entered into a secured credit facility for $460 million made available through a group of banks. The credit facility is secured by substantially all of the Company’s assets and interest is based on standard inter-bank offering rates. The credit facility expires in July 2016. The interest rate will range from LIBOR plus 1.5% to LIBOR plus 2.25% depending on the leverage ratios at the time the funds are drawn. At October 26, 2012, the Company had $240.0$155.0 million outstanding under the secured credit facility at an interest rate of LIBOR plus 1.75% ~~or 1.97%~~, which ranged from 2.27% to 2.29%. An additional ~~$67.8~~$27.8 million of unsecured foreign currency credit facilities have been extended by foreign banks for a total of $527.8 million available companywide. Available credit under the above credit facilities was ~~$256.2~~$353.2 million at fiscal ~~2012~~2016 year end, when reduced by outstanding borrowings of ~~$240.0~~$155.0 million and letters of credit of ~~$31.7~~$19.6 million.

U.S. Term Loan, due April 2020

On August ~~2, 2010,~~3, 2015, the Company borrowed $250 million under the delayed-draw term loan provided for under the amended credit facility (U.S. Term Loan, due 2020). The interest rate on the U.S. Term Loan, due 2020, ranges from LIBOR plus 1.25% to LIBOR plus 2.00%, depending on the leverage ratios at the time the funds are drawn. At September 20, 2016, the interest rate was LIBOR plus 1.75%, which equaled 2.28%. The loan amortizes at 1.25% of the original principal balance quarterly through March 2020, with the remaining balance due in April 2020.

3.625% Senior Notes, due April 2023

In April 2015, the Company issued ~~$250.0~~€330.0 million in 7%3.625% Senior Notes, due ~~2020 and~~April 2023 (2023 Notes) requiring semi-annual interest payments in ~~March~~April and ~~September~~October of each year until maturity. The net proceeds from the sale of the notes, after deducting ~~$4.4~~$5.9 million of debt issuance ~~cost,~~costs, were ~~$245.6~~$350.8 million. The ~~Senior~~2023 Notes are general unsecured senior obligations of the Company. The ~~Senior~~2023 Notes are unconditionally guaranteed ~~jointly and severally~~ on a senior basis by ~~all~~ the ~~existing~~Company and ~~future domestic~~certain subsidiaries of the Company ~~unless designated as an “unrestricted subsidiary,” and those foreign subsidiaries~~ that ~~executed related subsidiary guarantees~~are guarantors under the ~~indenture covering the Senior Notes.~~Company’s existing secured credit facility. The ~~Senior~~2023 Notes are subject to redemption at the option of the Company at any time prior to ~~August 1, 2015,~~April 15, 2018, at a price equal to 100% of the principal amount, plus any accrued interest to the date of redemption and a make-whole provision. ~~In addition, before August 1, 2013, the~~The Company may also redeem up to 35% of the ~~principal amount at 107.000% plus accrued interest~~2023 Notes before April 15, 2018, with the net cash proceeds ~~of one or more Public Equity Offerings.~~from equity offerings. The ~~Senior~~2023 Notes are also subject to redemption at the option of the Company, in whole or in part, on or after ~~August 1, 2015,~~April 15, 2018, at redemption prices starting at ~~103.500%~~102.719% of the principal amount plus accrued interest during the period beginning ~~August 1, 2015,~~April 15, 2018, and declining annually to 100% of principal and accrued interest on or after ~~August 1, 2018.~~

On March 1, 2007, the Company issued $175.0 million in 6.625% Senior Notes due March 1, 2017, and requiring semi-annual interest payments in March and September of each year until maturity. The Senior Notes are general unsecured senior obligations of the Company. The Senior Notes are guaranteed, jointly and severally on a senior basis, by all the existing and future domestic subsidiaries of the Company unless designated as an “unrestricted subsidiary,” and those foreign subsidiaries that executed related subsidiary guarantees under the indenture covering the Senior Notes. The Senior Notes were also subject to redemption at the option of the Company, in whole or in part, on or after March 1, 2012, at redemption prices starting at 103.3125% of the principal amount plus accrued interest during the period beginning March 1, 2007, and declining annually to 100% of principal and accrued interest on or after March 1, 2015.April 15, 2021.

Based on quoted market prices, the fair value of the Company’s ~~$250.0 million 7.0% Senior~~2023 Notes ~~due August 2020~~ was ~~$277.5~~$365.3 million and ~~$263.1~~$347.7 million as of ~~October 26, 2012,~~September 30, 2016, and October ~~28, 2011, respectively. The fair value of the Company’s $175.0 million 6.625% Senior Notes due March 2017 was $181.3 million and $175.0 million as of October 26, 2012, and October 28, 2011,~~2, 2015, respectively. The carrying amounts of the secured credit facility and ~~Euro~~the U.S. Term Loan, due ~~2016~~2020, approximate fair value. ~~Estimates~~The estimate of fair value for the ~~Senior~~2023 Notes ~~are~~was based on Level 2 inputs as defined in the fair value hierarchy.

In connection with the redemption of debt in fiscal 2015, the Company incurred an $8.75 million redemption premium and wrote off $2.7 million in unamortized debt issuance costs as a loss on extinguishment of debt.

Government Refundable Advances

Government refundable advances consist of payments received from the Canadian government to assist in research and development related to commercial aviation. The repayment of this advance is based on year-over-year commercial aviation

revenue growth at CMC beginning in 2014. Imputed interest on the advance was ~~5.03%~~3.4% at September 30, 2016. The debt recognized was $45.0 million and $43.3 million as of September 30, 2016, and October ~~26, 2012.~~2, 2015, respectively.

~~In December 2010, the~~Obligation Under Capital Lease

The Company ~~entered into an interest rate swap agreement for $75.0 million on the $175.0 million Senior Notes due in 2017.~~leases building and equipment under capital leases. The ~~swap agreement exchanged the fixed interest rate of 6.625% for a variable interest rate, LIBOR plus 4.47%. The fair~~present value of the ~~Company’s interest rate swap was a $1.9 million asset at October 26, 2012.~~

In November 2010, the Company entered into an interest rate swap agreement for $100.0 million on the $175.0 million Senior Notes due in 2017. The swap agreement exchanged the fixed interest rate of 6.625% for a variable interest rate, LIBOR plus 4.865%. The fair valueminimum capital lease payments, net of the ~~Company’s interest rate swap was a $2.2~~current portion, totaled $66.2 million ~~asset at October 26, 2012.~~

~~On August 2, 2010, the Company repurchased approximately $157.6 million~~as of ~~the Senior Subordinated Notes due in 2013 under a cash tender offer. The remaining $17.4 million of Senior Subordinated Notes due in 2013 were redeemed on~~ September ~~9, 2010. A loss on extinguishment of debt of $1.2 million was recorded, which includes recognizing previously recorded deferred gains on terminated interest rate swaps of $3.7 million.~~

~~Capital leases~~

In fiscal 2009, the Company amended the building lease for an interface technologies facility to extend the term of the lease to 2027. At October 26, 2012, the amount recorded as a capitalized lease obligation is $12.1 million. The imputed interest rate is 6.4%.

~~In fiscal 2008, the Company entered into a land and building lease for a 216,000 square-foot manufacturing facility for a control systems operation. The land and building lease has a fixed term of~~ 30, years and includes an option to purchase the building at fair market value five years after construction is complete. The expected minimum lease payments include a 2% minimum annual rent increase. At October 26, 2012, the amount recorded as a capitalized lease obligation is $32.1 million. The imputed interest rate is 8.2%.2016.

As of ~~October 26, 2012,~~September 30, 2016, aggregate annual maturities of long-term debt and future non-cancelable minimum lease payments under capital lease obligations were as follows:

In Thousands

Fiscal Year

2013
   $          14,488
2014
   12,760
2015
   12,587
2016
   300,311
2017
   183,461
2018 and thereafter
   394,723

Total
   $ 918,330

Less: amount representing interest on capital leases
   69,660


Total long-term debt
   $ 848,670

In Thousands

Fiscal Year
2017	$	22,536
2018		19,515
2019		19,625
2020		362,219
2021		7,343
2022 and thereafter		518,987
Total		950,225

Less: debt issuance costs		5,609
amount representing interest on capital leases		74,046
Total long-term debt	$	870,570

A number of underlying agreements contain various covenant restrictions which include maintenance of net worth, payment of dividends, interest coverage, and limitations on additional borrowings. The Company was in compliance with these covenants at ~~October 26, 2012.~~September 30, 2016.

~~Subsequent to year end, the Company has paid down $15,000,000 on the U.S. credit facility and $19,440,000 on the Euro Term Loan.~~

NOTE 12: Commitments and Contingencies

Rental expense for operating leases for engineering, selling, administrative and manufacturing totaled ~~$17,603,000, $14,208,000~~$19.0 million, $18.6 million and ~~$14,498,000~~$18.1 million in fiscal years ~~2012, 2011,~~2016, 2015, and ~~2010,~~2014, respectively.

At ~~October 26, 2012,~~September 30, 2016, the Company’s rental commitments for noncancelable operating leases with a duration in excess of one year were as follows:

In Thousands
Fiscal Year

2013
   $          15,121
2014
   12,691
2015
   9,191
2016
   7,218
2017
   6,545
2018 and thereafter
   14,655

   $ 65,421

In Thousands

Fiscal Year
2017	$	13,431
2018		9,679
2019		8,007
2020		5,637
2021		4,348
2022 and thereafter		6,582
Total	$	47,684

The Company is subject to purchase obligations for goods and services. The purchase obligations include amounts under legally enforceable agreements for goods and services with defined terms as to quantity, price and timing of delivery. As of ~~October 26, 2012,~~September 30, 2016, the Company’s purchase obligations were as follows:

~~In Thousands~~

   Total
Less than
1 year


1-3
years



4-5
years


After 5
years


Purchase obligations
   $         653,641             $         613,759             $           29,484             $         5,764             $                4,634

In Thousands			Less than		1‒3		4‒5		After 5
	Total		1 year		years		years		years

Purchase obligations	$	657,396	$	621,660	$	29,288	$	5,313	$	1,135

The Company is a party to various lawsuits and claims, both as plaintiff and defendant, and has contingent liabilities arising from the conduct of business, none of which, in the opinion of management, is expected to have a material effect on the Company’s financial position or results of operations. The Company believes that it has made appropriate and adequate provisions for contingent liabilities.

At the end of fiscal 2016 and fiscal 2015, the Company had a $0.8 million and $1.6 million liability, respectively, related to environmental remediation at a previously sold business for which the Company provided indemnification.

66On March 5, 2014, the Company entered into a Consent Agreement with the U.S. Department of State’s Directorate of Defense Trade Controls Office of Defense Trade Controls Compliance (DTCC) to resolve alleged International Traffic in Arms Regulations (ITAR) civil violations. The Consent Agreement settled the pending ITAR compliance matter with the DTCC previously reported by the Company that resulted from voluntary reports the Company filed with DTCC that disclosed possible technical and administrative violations of the ITAR. The Consent Agreement has a three-year term and provides for: (i) a payment of $20 million, $10 million of which is suspended and eligible for offset credit based on verified expenditures for past and future remedial compliance measures; (ii) the appointment of an external Special Compliance Official to oversee compliance with the Consent Agreement and the ITAR; (iii) two external audits of the Company’s ITAR compliance program; and (iv) continued implementation of ongoing compliance measures and additional remedial compliance measures related to automated systems and ITAR compliance policies, procedures, and training. The Company expects to be released from the Consent Agreement in fiscal 2017, depending upon the Company’s satisfactory completion of the remaining requirements under the agreement and the timing of final approval by the DTCC. The $10 million portion of the settlement that is not subject to suspension will be paid in installments, with $8 million paid over fiscal years 2014, 2015, and 2016 and $2 million is payable in March 2017. In fiscal 2016, the DTCC approved costs the Company incurred to implement compliance measures to fully offset the $10 million suspended payment.

~~Prior~~During fiscal 2015, the Company recognized a $15.7 million gain in other income and a $2.4 million reduction in interest expense upon the lapse of a statutory period related to a liability for a non-income tax position of an acquired company. In addition, the ~~March 2007~~Company incurred a $2.9 million loss in other income on foreign currency exchange resulting from the funding of the acquisition of ~~CMC, CMC was involved in a transaction in which CMC shareholders had a limited amount of time in which to tender their shares in exchange for cash. In May 2008, after~~DAT.

During the prescribed time period had expired, CAD $11.8 million remained unclaimed. As a result, the paying agent returned the unclaimed amount to CMC in accordance with Canadian law. In December 2008, CMC’s former parent company instituted a legal action against the paying agent, alleging negligence and breached contract terms by returning the funds to CMC. The plaintiff lost at trial and appealed. In the secondfourth quarter of fiscal 2012, CMC received notice that the plaintiff abandoned its appeal. In addition, CMC and the paying agent settled all remaining issues. Management concluded that all contingencies relating to this matter were resolved, and accordingly,2016, the Company ~~recorded~~received a ~~gain~~$5 million insurance recovery due to an energetic incident at one of ~~approximately CAD $11.8 million or $11.9 million or $9.5 million after tax,~~our countermeasure operations, which occurred in the ~~second fiscal~~third quarter of ~~2012.~~fiscal 2016.

Approximately ~~579~~554 U.S.-based employees or 12% of total U.S.-based employees were represented by various labor unions. The Company’s ~~European~~non-U.S. operations are subject to union and national trade union agreements and to local regulations governing employment.

NOTE 13: Employee Stock Plans

The Company has three share-based compensation plans, which are described below. The compensation cost that has been charged against income for those plans for fiscal ~~2012, 2011,~~2016, 2015, and ~~2010~~2014 was ~~$9.5~~$13.5 million, ~~$7.9~~$10.8 million, and ~~$7.1~~$13.0 million, respectively. The total income tax benefit recognized in the income statement for the share-based compensation arrangement for fiscal ~~2012, 2011,~~2016, 2015, and ~~2010~~2014 was ~~$2.9~~$3.6 million, $2.7 million, and ~~$2.2~~$3.0 million, respectively.

Employee Stock Purchase Plan

The Company offers an employee stock purchase plan to its employees. The plan qualifies as a noncompensatory employee stock purchase plan under Section 423 of the Internal Revenue Code. Employees are eligible to participate through payroll deductions subject to certain limitations.

The plan ~~is as~~has a safe harbor design where shares are purchased by participants at 95% of the fair market value on the purchase date and, therefore, compensation cost is not recorded. During fiscal ~~2012,~~2016, employees purchased ~~32,238~~24,441 shares at a fair market value price of ~~$57.10~~$71.44 per share. At the end of fiscal 2012, the Company had reserved 73,794 shares for issuance under its employee share-save scheme for U.K. employees, leaving a balance of 682,119 shares available for issuance in the future. As of ~~October 26, 2012,~~September 30, 2016, deductions aggregating ~~$703,875~~$0.5 million were accrued for the purchase of shares on December 15, ~~2012.~~2016.

Employee Share-Save Scheme

~~In 2009, the~~The Company ~~began offering~~offers shares under its employee share-save scheme for U.K. employees. This plan allows participants the option to purchase shares at 95% of the market price of the stock as of the beginning of the offering period. The term of these options is three years. At the end of fiscal 2016, the Company had reserved 142,030 shares for issuance under its employee share-save scheme for U.K. employees, leaving a balance of 465,087 shares available for issuance in the future. The share-save scheme is not a “safe-harbor” design, and, therefore, compensation cost is recognized on this plan.

Under the employee share-save scheme, option exercise prices are equal to the fair market value of the Company’s common stock on the date of grant. The Company granted ~~45,063, 9,956~~70,673, 25,984 and ~~10,133~~29,242 options in fiscal ~~2012, 2011,~~2016, 2015, and ~~2010,~~2014, respectively. The weighted-average grant date fair value of options granted in fiscal ~~2012~~2016 was ~~$19.85~~$16.65 per share. During fiscal ~~2012, 150,769~~2016, 1,813 options were exercised at a weighted average exercise price of ~~$19.85.~~$65.84.

The fair value of the awards under the employee share-save scheme was estimated using a Black-Scholes pricing model which uses the assumptions noted in the following table. The risk-free rate for the contractual life of the option is based on the U.S. Treasury zero coupon issues in effect the time of grant.


	2012			2011			2010			2016			2015			2014

Volatility		38.96	%		51.10	%		51.61	%		33.21	%		25.80	%		33.69	%
Risk-free interest rate		0.38	%		0.98	%		1.34	%		1.19	%		0.93	%		0.73	%
Expected life (years)		3			3			3		3			3			3
Dividends		0			0			0		0			0			0

Equity Incentive Plan

The Company also provides an equity incentive plan for officers and key employees. At the end of fiscal ~~2012,~~2016, the Company had ~~2,696,775~~1,693,557 shares reserved for issuance to officers and key employees, of which ~~572,475~~866,158 shares were available to be granted in the future.

Stock Options

The Board of Directors authorized the Compensation Committee to administer awards granted under the equity incentive plan and to establish the terms of such awards. Awards under the equity incentive plan may be granted to eligible employees of the Company over the 10-year period ending March ~~3, 2014.~~5, 2023. Options granted generally become exercisable ratably over a period of four years following the date of grant and expire on the tenth anniversary of the grant. Option exercise prices are equal to the fair market value of the Company’s common stock on the date of grant. The weighted-average grant date fair value of the options granted in fiscal ~~2012~~2016 and ~~2011~~2015 was ~~$24.61~~$35.69 per share and ~~$32.51~~$47.85 per share, respectively.

The fair value of each option granted by the Company was estimated using a Black-Scholes pricing model which uses the assumptions noted in the following table. The Company uses historical data to estimate volatility of the Company’s common stock and option exercise and employee termination assumptions. The range of the expected term reflects the results from certain groups of employees exhibiting different behavior. The risk-free rate for the periods within the contractual life of the grant is based upon the U.S. Treasury zero coupon issues in effect at the time of the grant.


	2012			2011			2010			2016	2015	2014

Volatility		41.62 – 44.29	%		40.8 – 42.8	%		43.0 – 43.2	%	33.06 - 40.52%	40.73 - 41.89%	41.87 - 43.17%
Risk-free interest rate		0.91 – 2.11	%		2.02 – 3.64	%		2.42 – 4.00	%	1.61 - 2.24%	1.43 - 2.00%	1.73 - 2.99%
Expected life (years)		4.5 – 9.5			4.5 – 9.5			4.5 – 9.5		5 - 9	5 - 9	5 - 9
Dividends		0			0			0		0	0	0

The following table summarizes the changes in outstanding options granted under the Company’s ~~stock option plans:~~equity incentive plan:

   2012    2011    2010


Shares
Subject to
Option



Weighted
Average
Exercise
Price




Shares
Subject to
Option



Weighted
Average
Exercise
Price




Shares
Subject to
Option



Weighted
Average
Exercise
Price



Outstanding,
beginning of year
   1,825,300    $ 44.49       1,838,950    $ 39.31       1,960,775    $ 35.54
Granted
   386,400    52.97       331,300    67.03       359,800    41.83
Exercised
   (60,775 ) 36.52       (295,175 ) 37.03       (455,700 ) 24.96
Cancelled
   (26,625 ) 50.68       (49,775 ) 47.28       (25,925 ) 41.37

Outstanding,
end of year
   2,124,300    $ 46.18       1,825,300    $ 44.49       1,838,950    $ 39.31

Exercisable,
end of year
   1,258,900    $ 41.89       994,950    $ 39.85       956,350    $ 38.73

	2016					2015					2014
				Weighted					Weighted					Weighted
	Shares			Average		Shares			Average		Shares			Average
	Subject to			Exercise		Subject to			Exercise		Subject to			Exercise
	Option			Price		Option			Price		Option			Price
Outstanding, beginning of year		1,363,921		$	68.23		1,367,793		$	60.23		1,829,488		$	51.08
Granted		221,200			90.16		203,200			107.34		207,200			97.61
Exercised		(112,790	)		48.61		(182,322	)		50.94		(618,645	)		45.16
Forfeited/cancelled		(73,375	)		89.91		(24,750	)		74.73		(50,250	)		66.65
Outstanding, end of year		1,398,956		$	72.14		1,363,921		$	68.23		1,367,793		$	60.23
Exercisable, end of year		922,706		$	61.09		826,496		$	55.63		752,943		$	50.36

The aggregate intrinsic value of the option shares outstanding and exercisable at ~~October 26, 2012,~~September 30, 2016, was ~~$25.4~~$17.8 million and ~~$19.1~~$17.2 million, respectively.

The number of option shares vested or that ~~are~~were expected to vest at ~~October 26, 2012,~~September 30, 2016, was ~~2.0~~1.3 million and the aggregate intrinsic value was ~~$24.5~~$17.7 million. The weighted average exercise price and weighted average remaining contractual term of option shares vested or that ~~are~~were expected to vest at ~~October 26, 2012,~~September 30, 2016, was ~~$45.87~~$71.12 and ~~6.0~~5.5 years, respectively. The weighted-average remaining contractual term of option shares currently exercisable is ~~4.7~~4.4 years as of ~~October 26, 2012.~~September 30, 2016.

The table below presents stock activity related to stock options exercised in fiscal ~~2012~~2016 and ~~2011:~~2015:


In Thousands	2012		2011		2016		2015

Proceeds from stock options exercised	$	5,240	$	11,710	$	8,175	$	11,420
Tax benefits related to stock options exercised	$	366	$	1,830		406		1,869
Intrinsic value of stock options exercised	$	1,751	$	9,940		3,195		10,861

Total unrecognized compensation expense for stock options that have not vested as of ~~October 26, 2012,~~September 30, 2016, is ~~$7.2~~$7.4 million, which will be recognized over a weighted average period of ~~1.9~~1.8 years. The total fair value of option shares vested during the year ended ~~October 26, 2012,~~September 30, 2016, was ~~$7.5~~$2.4 million.

The following table summarizes information for stock options outstanding at ~~October 26, 2012:~~September 30, 2016:

Options Outstanding

Options Exercisable

     Weighted
     Average Weighted      Weighted

Range of
     Remaining Average      Average

Exercise Prices
     Shares Life (years) Price      Shares     Price
$

19.65 – 38.00
     418,300 5.2 $      30.65      326,975     $      30.43

38.01 – 40.00
     400,375 3.4 38.93      398,375     38.93

40.01 – 50.00
     343,950 6.5 41.97      194,750     42.55

50.01 – 55.00
     576,000 7.0 51.93      260,500     52.74

55.01 – 79.90
     385,675 8.4 65.72      78,300     67.10

	Options Outstanding						Options Exercisable
			Weighted
			Average		Weighted				Weighted
			Remaining		Average				Average
Range of Exercise Prices	Shares		Life (years)		Price		Shares		Price

$ 23.66 - 50.00		200,771		2.8	$	39.95		200,771	$	39.95
50.01 - 52.00		189,575		4.4		51.06		189,575		51.06
52.01 - 65.00		321,660		3.7		60.63		300,310		60.63
65.01 - 80.00		190,350		7.1		73.16		93,100		70.37
80.01 - 100.00		313,550		8.0		94.83		87,225		94.37
100.01 - 118.32		183,050		8.0		109.57		51,725		109.72

~~In December 2012, the Board of Directors~~

Restricted Stock Units

The Company granted 37,000 and ~~Compensation Committee approved~~28,150 restricted stock ~~unit awards under~~units (RSUs) during fiscal 2016 and 2015, respectively. The fair value of each RSU granted by the ~~equity incentive plan that will fully vest on~~Company is equal to the ~~three-year anniversary~~fair market value of the Company’s common stock on the date of grant. ~~Upon~~RSUs granted generally have a three-year cliff vesting ~~each recipient will receive one share of~~schedule.

The following table summarizes the changes in RSUs granted under the Company’s ~~common~~equity incentive plan:

	2016					2015
				Weighted					Weighted
				Average					Average
				Grant Date					Grant Date
	Shares			Fair Value		Shares			Fair Value

Non-vested, beginning of year		117,281		$	85.95		103,971		$	80.01
Granted		37,000			84.70		28,150			105.34
Vested		(48,053	)		75.35		(12,740	)		79.84
Forfeited/cancelled		(6,450	)		94.58		(2,100	)		88.99
Non-vested, end of year		99,778		$	90.04		117,281		$	85.95

Total unrecognized compensation expense for RSUs that have not vested as of September 30, 2016, is $3.4 million, which will be recognized over a weighted average period of 1.7 years.

The table below presents stock ~~for each restricted stock unit. There were no~~activity related to restricted stock units ~~issued~~vested in fiscal ~~2012.~~2016 and 2015:

In Thousands	2016		2015

Tax benefits related to restricted stock units vested	$	162	$	104
Intrinsic value of restricted stock units vested		3,847		912

Performance Shares

The Company granted 56,275 and 36,800 performance share plan (PSP) shares during fiscal 2016 and 2015, respectively. PSP shares will be paid out in shares of Esterline common stock at the end of the three year performance period. The actual number of shares that will be paid out upon completion of the performance period is based on actual performance and may range from 0% to 300% of the target number of shares.

The following table summarizes the activity in the target PSP shares granted under the Company’s equity incentive plan:

	2016			2015

Non-vested, beginning of year		34,700			-
Granted		56,275			36,800
Vested		-			-
Forfeited/cancelled		(1,700	)		(2,100	)
Non-vested, end of year		89,275			34,700

NOTE 14: ~~Capital Stock~~Shareholder’s Equity

The authorized capital stock of the Company consists of 25,000 shares of preferred stock ($100 par value), 475,000 shares of serial preferred stock ($1.00 par value), each issuable in series, and 60,000,000 shares of common stock ($.20 par value). At the end of fiscal ~~2012,~~2016, there were no shares of preferred stock or serial preferred stock outstanding.

Changes in outstanding common shares are summarized as follows:

	2016			2015

Shares Outstanding
Shares issued, beginning of year		32,378,185			32,123,717
Shares issued under share-based compensation plans		186,067			254,468
Shares issued, end of year		32,564,252			32,378,185

Treasury stock purchased, beginning of year		(2,831,350	)		(269,228	)
Treasury stock purchased		(304,577	)		(2,562,122	)
Treasury stock purchased, end of year		(3,135,927	)		(2,831,350	)
Shares outstanding, end of year		29,428,325			29,546,835

On June 19, 2014, the Company’s board of directors approved a $200 million share repurchase program. In March 2015, the Company’s board of directors approved an additional $200 million for the share repurchase program. Under the program, the Company is authorized to repurchase up to $400 million of outstanding shares of common stock from time to time, depending on market conditions, share price and other factors. Repurchases may be made in the open market or through private transactions, in accordance with SEC requirements. The Company may enter into a Rule 10(b)5-1 plan designed to facilitate the repurchase of all or a portion of the repurchase amount. The program does not require the Company to acquire a specific number of shares. Common stock repurchased can be reissued, and accordingly, the Company accounts for repurchased stock under the cost method of accounting.

The Company purchased the following shares of common stock in fiscal 2016 under the above described repurchase plan:

In Thousands, Except Shares Amounts	Shares		Amount

First quarter		-	$	-
Second quarter		202,310		12,077
Third quarter		102,267		6,657
Fourth quarter		-		-
Total		304,577	$	18,734

The components of Accumulated Other Comprehensive Loss:

In Thousands	2016			2015

Unrealized gain (loss) on derivative contracts	$	(4,547	)	$	(22,941	)
Tax effect		1,077			6,036
		(3,470	)		(16,905	)

Pension and post-retirement obligations		(116,346	)		(99,724	)
Tax effect		39,804			33,775
		(76,542	)		(65,949	)

Currency translation adjustment		(268,845	)		(225,974	)
Accumulated other comprehensive loss	$	(348,857	)	$	(308,828	)

NOTE 15: Acquisitions

On ~~July 26, 2011,~~January 31, 2015, the Company acquired the ~~Souriau Group (Souriau)~~defense, aerospace and training display (DAT) business of Belgium-based Barco N.V. (Barco) for €150 million, or approximately ~~$726.7~~$171 million, ~~including~~in cash ~~on hand~~before a working capital adjustment of ~~$17.8~~approximately $15 million. ~~Souriau is~~The Company incurred a ~~leading global supplier~~$2.9 million foreign currency exchange loss in the funding of ~~highly engineered connectors~~the acquisition in fiscal 2015. Acquisition related costs of $3.4 million were recognized as selling, general and administrative expense in fiscal 2015. The DAT acquisition contributed $155.7 million and $82.5 million in sales and $2.6 million in operating earnings and $16.0 million in operating losses in fiscal 2016 and 2015, respectively. The Company financed the acquisition primarily using international cash reserves, with the balance funded by borrowings under its existing credit facility. The DAT business develops and manufactures visualization solutions for ~~harsh environments serving~~a variety of demanding defense and commercial aerospace ~~defense & space, power generation, rail,~~applications and ~~industrial equipment markets. Souriau~~ is included in ~~the Sensors~~our Avionics & ~~Systems~~Controls segment.

The following summarizes the allocation of the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition. The fair value adjustment for inventory was ~~$41.7~~$7.0 million, which ~~has been~~was recognized as cost of goods sold over ~~4.5~~eight months, the estimated inventory turnover. ~~Acquisition-related costs~~The fair value of ~~$9.2 million have been recognized as selling, general~~acquired programs represented the value of visualization solutions sold under long-term supply agreements with aerospace companies, military contractors, and ~~administrative expense in fiscal 2011.~~OEM manufacturers using similar technology. The valuation of the program included the values of program-specific technology, the backlog of contracts, and the relationship with customers which lead to potential future contracts. The valuation of the programs was based upon the discounted cash flow at a market-based discount rate. The purchase price includes the value ~~of future development~~ of existing technologies, the introduction of new technologies, and the addition of new customers. These factors resulted in recording goodwill of ~~$378.3~~$46.6 million. ~~The~~A substantial portion of the amount allocated to goodwill is ~~not~~ deductible for income tax ~~purposes.~~

~~In Thousands~~

~~As of July 26, 2011~~purpose.

Current assets
   $       228,199
Property, plant and equipment
   91,843
Intangible assets subject to amortization

Programs (15 year weighted average useful life)
   224,296
Trade name (10 year weighted average useful life)
   45,709
Goodwill
   378,256
Other assets
   6,900


Total assets acquired
   975,203
Current liabilities assumed
   110,596
Long-term liabilities assumed
   129,533
Noncontrolling interest
   8,369


Net assets acquired
   $ 726,705

In Thousands
As of January 31, 2015

Current assets	$	82,319
Property, plant and equipment		6,206
Intangible assets subject to amortization
Programs (15 year average useful life)		56,455
Programs (3 year average useful life)		677
Trade name (3 year average useful life)		226
Goodwill		46,618
Other assets		3,401
Total assets acquired		195,902

Current liabilities assumed		34,006
Long-term liabilities assumed		5,921
Net assets acquired	$	155,975

~~Pro Forma Financial Information~~

The following pro forma financial information shows the results of continuing operations for the year ended October 28, 2011, as though the acquisition of Souriau had occurred at the beginning of the fiscal year. The pro forma financial information includes, where applicable, adjustments for: (i) the amortization of acquired intangible assets, (ii) additional interest expense on acquisition-related borrowings and (iii) the income tax effect on the pro forma adjustments. The pro forma financial information below is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved had the acquisition been completed as of the date indicated above or the results that may be obtained in the future.

In Thousands    2011
Pro forma net sales
   $     1,972,079
Pro forma net income
   $ 159,353
Basic earnings per share as reported
   $ 4.36
Pro forma basic earnings per share
   $ 5.22
Diluted earnings per share as reported
   $ 4.27
Pro forma diluted earnings per share
   $ 5.12

On December ~~30, 2010,~~20, 2013, the Company acquired ~~Eclipse Electronic Systems, Inc. (Eclipse)~~Sunbank Family of Companies, LLC (Sunbank) for ~~$123.8~~$51.7 million. The purchase price includes cash of $14.0 million in contingent consideration, which was deposited in an escrow account and will be paid to the seller if certain performance objectives are met over the three-year period. The estimated fair value of the contingent consideration was $13.4 million at the date of acquisition. On February 2, 2012, the Company paid the initial $5.0 million of three installments totaling $14.0 million of contingent consideration. As of October 26, 2012, the estimated fair value of the contingent consideration was $9.0 million. EclipseSunbank is a ~~designer and~~ manufacturer of ~~embedded communication intercept receivers for signal intelligence applications. Eclipse~~electrical cable accessories, connectors and flexible conduit systems. Sunbank is included in the ~~Avionics~~Sensors & ~~Controls~~Systems segment.

The following summarizes the allocation of the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition. The purchase price includes the value of future development of existing technologies, the introduction of new technologies, and the addition of new customers. These factors resulted in recording goodwill of $67.4 million. The amount allocated to goodwill is not deductible for income tax purposes.

~~In Thousands~~

~~As of December 30, 2010~~


~~Current assets~~	$	~~31,827~~
~~Property, plant and equipment~~		~~2,154~~
~~Intangible assets subject to amortization~~
~~Technology (9 year weighted average useful life)~~		~~53,200~~
~~Goodwill~~		~~67,378~~

~~Total assets acquired~~		~~154,559~~

~~Current liabilities assumed~~		~~35,740~~
~~Long-term liabilities assumed~~		~~8,350~~

~~Net assets acquired~~	$	~~110,469~~

The above acquisitions were accounted for under the purchase method of accounting, and the results of operations were included from the effective date of each acquisition.

NOTE 16: ~~Accumulated Other Comprehensive Loss~~Restructuring

On December 5, 2013, the Company announced the acceleration of its plans to consolidate certain facilities and create cost efficiencies through shared services in sales, general and administrative and support functions. The costs are mainly for exit and relocation of facilities, losses on the write off of certain property, plant and equipment, and severance.

In fiscal 2016, restructuring expense totaled $8.7 million, as more fully described in the following table:

In Thousands			Write Off of
	Exit &		Property,
	Relocation		Plant &
	of Facilities		Equipment		Severance		Total

Cost of sales	$	3,364	$	336	$	150	$	3,850
Restructuring charges		4,369		-		504		4,873
Total	$	7,733	$	336	$	654	$	8,723

In fiscal 2015, restructuring expense totaled $11.7 million, as more fully described in the following table:

In Thousands			Write Off of
	Exit &		Property,
	Relocation		Plant &
	of Facilities		Equipment		Severance		Total

Cost of sales	$	4,274	$	115	$	694	$	5,083
Restructuring charges		4,524		542		1,573		6,639
Total	$	8,798	$	657	$	2,267	$	11,722

For fiscal 2015, unaudited and recast restructuring expense totaled $14.6 million, as more fully described in the following table:

In Thousands			Write Off of
	Exit &		Property,
	Relocation		Plant &
	of Facilities		Equipment		Severance		Total

Cost of sales	$	5,486	$	265	$	687	$	6,438
Restructuring charges		5,496		595		2,052		8,143
Total	$	10,982	$	860	$	2,739	$	14,581

The ~~components~~Company has recorded an accrued liability of ~~Accumulated Other Comprehensive Loss:~~$1.9 million and $2.8 million for these activities as of September 30, 2016, and October 2, 2015, respectively.

In Thousands    2012 2011
Unrealized gain on derivative contracts
   $             2,181    $             5,738
Tax effect
   (558 ) (1,716 )

   1,623    4,022
Pension and post-retirement obligations
   (150,106 ) (114,773 )
Tax effect
   50,927    39,302

   (99,179 ) (75,471 )
Currency translation adjustment
   12,272    68,637

Accumulated other comprehensive loss
   $       (85,284 ) $       (2,812 )

NOTE 17: ~~Business Segment Information~~Discontinued Operations

~~The~~In the fourth quarter of fiscal 2014, the Company’s ~~businesses are organized and managed in three reporting segments: Avionics & Controls, Sensors &~~board of directors approved the plan to sell certain non-core business units including Eclipse Electronic Systems, and Advanced Materials. Operating segments within each reporting segment are aggregated. Operations within the Avionics & Controls segment focus on integrated cockpit systems, technology interface systems for commercial and military aircraft, and similar devices for land- and sea-based military vehicles, secure communication systems, military audio and data products,Inc. (Eclipse), a manufacturer of embedded communication intercept receivers ~~specialized medical equipment~~for signal intelligence applications; Wallop Defence Systems, Ltd. (Wallop), a manufacturer of flare countermeasure devices; Pacific Aerospace and ~~other industrial applications. Sensors & Systems includes operations that produce high-precision temperature~~Electronics Inc. (PA&E), a manufacturer of hermetically sealed electrical connectors; a small distribution business; and ~~pressure sensors, electrical power switching, electrical interconnection systems,~~a small manufacturing business. These businesses were not separate reporting units as defined under U.S. GAAP, and ~~other related systems principally~~there was no indicator of impairment requiring an impairment test of their corresponding reporting units’ goodwill or these businesses’ long-lived assets. Based upon the estimated fair values, the Company incurred an estimated after-tax loss of $8.4 million, $30.8 million and $49.5 million in fiscal 2016, 2015 and 2014, respectively, on the assets held for ~~aerospace and defense customers. The Advanced Materials segment focuses on thermally engineered components for critical aerospace applications, high-performance elastomer products~~sale in discontinued operations. Principle assumptions used in measuring the estimated after-tax loss included estimated selling price of the discontinued business, discount rates, industry growth rates, and pricing of comparable transactions in the market. The additional losses on the assets were due to either the finalization of the selling prices of the assets disposed or to update the estimated fair values of the assets which continued to be held for sale. The estimated fair values were impacted by current market conditions for the sale transactions based mainly upon the status of negotiations with the potential buyers.

On June 5, 2015, the Company sold Eclipse for $7.9 million and retained ownership of the land, building and building improvements, which are held for sale. In addition, on July 20, 2015, the Company sold PA&E for $22.3 million.

On May 4, 2016, the Company sold certain assets of Wallop for 2.5 million British pounds and deferred compensation up to a ~~wide range~~maximum payment of ~~commercial aerospace~~9 million British pounds. The deferred compensation is payable based upon receipt of acceptable orders during a three-year period ending May 3, 2019, and ~~military applications,~~is equal to the amount of the acceptable order times a specified percentage ranging from 26.5% to 31%. The earn-out payment is estimated to be 5.8 million British pounds at September 30, 2016.

On June 6, 2016, the Company entered into an agreement to sell Wallop’s naval business for 1.25 million euros, a contingent payment for 1.25 million euros and ~~combustible ordnance and warfare countermeasure devices. All segments include sales to domestic, international, defense and commercial customers.~~

~~Geographic sales information~~deferred compensation. Deferred compensation is based ~~on product origin.~~ upon the receipt of certain acceptable orders by October 31, 2019, and is equal to the amount of the order times 10%. Closing is contingent upon actions by third parties, including agreements to novate and enter into new supply contracts with, the buyer and customer validation of a specific raw material essential for the end products delivered to the customer.

The Company ~~evaluates these segments based on segment profits prior~~recorded an expense related to ~~net interest, other income/expense, corporate expenses~~environmental remediation at a previously sold business for which the Company provided indemnification of $0.8 million in fiscal 2016, $2.1 million in fiscal 2015, and ~~federal/foreign income taxes.~~

$0.8 million in fiscal 2014. The liability for this environmental obligation was $0.8 million and $1.6 million at September 30, 2016, and October 2, 2015, respectively. Remediation costs paid in fiscal 2016, 2015 and 2014 were $1.5 million, $2.0 million and $0.7 million, respectively.

~~Details~~The results of ~~the Company’s~~discontinued operations ~~by business segment~~ for the last three fiscal years were as follows:

In Thousands    2012 2011 2010
Sales

Avionics & Controls
   $ 790,015    $ 841,939    $ 790,016
Sensors & Systems
   702,394    414,609    298,559
Advanced Materials
   499,909    461,437    438,026

   $     1,992,318    $     1,717,985    $     1,526,601

Income From Continuing Operations

Avionics & Controls¹
   $ 54,917    $ 135,187    $ 125,888
Sensors & Systems
   70,890    22,536    33,894
Advanced Materials
   93,546    82,307    68,785

Segment Earnings
   219,353    240,030    228,567
Corporate expense
   (43,201 ) (48,969 ) (40,399 )
Gain on settlement of contingency
   11,891    0    0
Other income (expense)
   1,263    6,853    8
Loss on extinguishment of debt
   0    (831 ) (1,206 )
Interest income
   465    1,615    960
Interest expense
   (46,238 ) (40,216 ) (33,181 )

   $ 143,533    $ 158,482    $ 154,749

Identifiable Assets

Avionics & Controls
   $ 1,261,300    $ 1,333,735    $ 1,253,605
Sensors & Systems
   1,204,073    1,349,776    432,099
Advanced Materials
   558,058    563,662    607,040
Corporate²
   203,686    131,413    294,994

   $ 3,227,117    $ 3,378,586    $ 2,587,738

Capital Expenditures³

Avionics & Controls³
   $ 14,356    $ 22,369    $ 11,892
Sensors & Systems
   18,788    10,469    8,021
Advanced Materials
   14,783    16,341    25,309
Discontinued Operations
   0    0    123
Corporate
   1,519    328    195

   $ 49,446    $ 49,507    $ 45,540

Depreciation and Amortization

Avionics & Controls
   $ 40,096    $ 38,391    $ 32,841
Sensors & Systems
   40,333    20,523    13,264
Advanced Materials
   24,666    23,439    22,914
Discontinued Operations
   0    0    583
Corporate
   2,697    2,305    2,515

   $ 107,792    $ 84,658    $ 72,117

	Avionics &			Sensors &			Advanced
In Thousands	Controls			Systems			Materials			Other			Total

2016
Net Sales	$	17,572		$	-		$	5,222		$	-		$	22,794

Operating earnings (loss)		1,350			(379	)		(15,761	)		(788	)		(15,578	)
Tax expense (benefit)		1,487			(83	)		(1,448	)		(268	)		(312	)
Income (loss) from discontinued operations	$	(137	)	$	(296	)	$	(14,313	)	$	(520	)	$	(15,266	)

Included in Operating Earnings (Loss):
Loss on net assets held for sale	$	(2,457	)	$	-		$	(5,991	)	$	-		$	(8,448	)

¹	~~Fiscal 2012 includes a $52.2 million impairment charge against Racal Acoustics’ goodwill.~~

²	~~Primarily cash and deferred tax assets (see Note 10).~~

³	~~Excludes capital expenditures accounted for as a capitalized lease obligation of $8,139 in fiscal 2010.~~

	Avionics &			Sensors &			Advanced
In Thousands	Controls			Systems			Materials			Other			Total

2015 (Unaudited, Recast)
Net Sales	$	47,603		$	21,221		$	14,407		$	-		$	83,231

Operating earnings (loss)		(24,004	)		3,458			(22,424	)		(2,261	)		(45,231	)
Tax expense (benefit)		(2,948	)		814			(2,456	)		(322	)		(4,912	)
Income (loss) from discontinued operations	$	(21,056	)	$	2,644		$	(19,968	)	$	(1,939	)	$	(40,319	)

Included in Operating Earnings (Loss):
Loss on net assets held for sale	$	(16,763	)	$	(622	)	$	(13,407	)	$	-		$	(30,792	)

~~The Company’s operations by geographic area for the last three fiscal years were as follows:~~

In Thousands    2012 2011 2010
Sales¹

Domestic

Unaffiliated customers – U.S.
   $       813,375    $       747,021    $       666,645
Unaffiliated customers – export
   197,142    171,416    147,008
Intercompany
   35,779    32,197    25,491

   1,046,296    950,634    839,144
Canada

Unaffiliated customers
   267,304    317,924    287,365
Intercompany
   2,844    5,318    4,490

   270,148    323,242    291,855
France

Unaffiliated customers
   410,766    160,993    98,641
Intercompany
   41,454    17,724    12,104

   452,220    178,717    110,745
United Kingdom

Unaffiliated customers
   235,699    228,383    255,313
Intercompany
   19,305    23,563    12,232

   255,004    251,946    267,545
All Other Foreign

Unaffiliated customers
   68,032    92,248    71,629
Intercompany
   37,683    29,640    14,533

   105,715    121,888    86,162
Eliminations
   (137,065 ) (108,442 ) (68,850 )

   $ 1,992,318    $ 1,717,985    $ 1,526,601

In Thousands    2012 2011 2010
Segment Earnings²

Domestic
   $ 172,046    $ 178,145    $ 132,966
Canada
   33,777    38,027    35,583
France
   33,152    (7,615 ) 16,096
United Kingdom
   (29,237 ) 24,305    39,250
All other foreign
   9,615    7,168    4,672

   $ 219,353    $ 240,030    $ 228,567

Identifiable Assets³

Domestic
   $ 1,015,994    $ 947,896    $ 756,043
Canada
   576,053    583,042    638,199
France
   836,578    1,050,999    214,669
United Kingdom
   477,214    582,436    614,523
All other foreign
   117,592    82,800    69,310

   $ 3,023,431    $ 3,247,173    $ 2,292,744

	Avionics &			Sensors &			Advanced
In Thousands	Controls			Systems			Materials			Other			Total

2015
Net Sales	$	40,835		$	18,684		$	12,883		$	-		$	72,402

Operating earnings (loss)		(24,591	)		3,041			(17,588	)		(2,120	)		(41,258	)
Tax expense (benefit)		(3,002	)		626			(1,104	)		(725	)		(4,205	)
Income (loss) from discontinued operations	$	(21,589	)	$	2,415		$	(16,484	)	$	(1,395	)	$	(37,053	)

Included in Operating Earnings (Loss):
Loss on net assets held for sale	$	(18,864	)	$	(229	)	$	(12,061	)	$	-		$	(31,154	)

¹	~~Based on country from which the sale originated and the sale was recorded.~~

²	~~Before corporate expense, shown on page 72.~~

³	~~Excludes corporate, shown on page 72.~~

The Company’s foreign operations consist of manufacturing facilities located in Canada, China, the Dominican Republic, France, Germany, India, Mexico, Morocco, and the United Kingdom, and include sales and service operations located in Brazil, China, and Singapore. Intercompany sales are at prices comparable with sales to unaffiliated customers. U.S. government sales as a percent of Advanced Materials and Avionics & Controls sales were 19.4% and 5.4%, respectively, in fiscal 2012 and 7.0% of consolidated sales. In fiscal 2011, the U.S. government sales as a percent of Advanced Materials and Avionics & Controls sales were 19.9% and 3.8%, respectively, and 7.0% of consolidated sales. In fiscal 2010, U.S. government sales as a percent of Advanced Materials and Avionics & Controls sales were 25.2% and 5.9%, respectively, and 10.0% of consolidated sales.

~~Product lines contributing sales of 10% or more of total sales in any of the last three fiscal years were as follows:~~

	Avionics &			Sensors &			Advanced
In Thousands	Controls			Systems			Materials			Other			Total

2014
Net Sales	$	55,447		$	22,479		$	25,886		$	-		$	103,812

Operating earnings (loss)		(24,035	)		(12,856	)		(29,945	)		(845	)		(67,681	)
Tax expense (benefit)		(1,935	)		(523	)		(2,316	)		(296	)		(5,070	)
Income (loss) from discontinued operations	$	(22,100	)	$	(12,333	)	$	(27,629	)	$	(549	)	$	(62,611	)

Included in Operating Earnings (Loss):
Loss on net assets held for sale	$	(18,489	)	$	(12,675	)	$	(18,308	)	$	-		$	(49,472	)

   2012 2011 2010
Connectors
   17 % 5 % 0%
Avionics
   11 % 16 % 17%

~~NOTE 18:~~ ~~Quarterly Financial Data (Unaudited)~~

~~The following is a summary of unaudited quarterly financial information:~~

In Thousands, Except Per Share Amounts
Fiscal Year 2012    Fourth Third Second First
Net sales
   $       530,656    $       485,949    $       504,831    $        470,882
Gross margin
   204,253    172,096    184,523    158,081
Income from
continuing operations
   61,660 ¹ (17,104 ) ^2,3,4 45,191 ⁵ 22,788 ⁶
Income from
discontinued operations
   0    0    0    0

Net earnings
   $ 61,660    $ (17,104 ) $ 45,191    $ 22,788

Earnings per share – basic

Continuing operations
   $ 2.00    $ (.55 ) $ 1.47    $ .74
Discontinued operations
�� .00    .00    .00    .00

Earnings per share – basic
   $ 2.00    $ (.55 ) $ 1.47    $ .74

Earnings per share – diluted

Continuing operations
   $ 1.97    $ (.55 ) $ 1.44    $ .73
Discontinued operations
   .00    .00    .00    .00

Earnings per share – diluted⁹
   $ 1.97    $ (.55 ) $ 1.44    $ .73

Fiscal Year 2011    Fourth Third Second First
Net sales
   $       502,397    $       409,512    $       435,277    $       370,799
Gross margin
   153,112    143,539    160,947    132,122
Income from
continuing operations
   19,412 ^7,8,9,10 37,741 ¹¹ 45,951 ¹² 29,983
Income from
discontinued operations
   28    (46 ) (37 ) 8

Net earnings
   $ 19,440    $ 37,695    $ 45,914    $ 29,991

Earnings per share – basic

Continuing operations
   $ .64    $ 1.23    $ 1.51    $ .99
Discontinued operations
   .00    .00    .00    .00

Earnings per share – basic
   $ .64    $ 1.23    $ 1.51    $ .99

Earnings per share – diluted

Continuing operations
   $ .62    $ 1.21    $ 1.47    $ .97
Discontinued operations
   .00    .00    .00    .00

Earnings per share – diluted¹³
   $ .62    $ 1.21    $ 1.47    $ .97

¹	~~Included a $1.4 million release of valuation allowance related to foreign tax credits as a result of finalizing a tax examination.~~

²	~~Included a $52.2 million goodwill impairment charge related to Racal Acoustics.~~

³	~~Included a $2.9 million reduction of net deferred income tax liabilities as a result of the enactment of tax laws reducing the U.K. statutory income tax rate.~~

⁴	~~Included a $1.7 million tax benefit as a result of reconciling the prior year’s U.S. income tax return to the U.S. income tax provision and settlement of tax examinations.~~

⁵	~~Included a $9.5 million gain on settlement of a contingency, net of tax.~~

⁶	~~Included $2.3 million of discrete tax benefits due to a change in French tax laws associated with the holding company structure and the financing of the Souriau acquisition.~~

⁷	~~Included a $2.0 million gain on sale of an engineered materials facility, net of tax.~~

⁸

Included $16.4 million in acquisition-related accounting charges, net of tax. The operating loss at Souriau accounted for $14.3 million, net of tax, and was principally due to the adjustment of inventory to fair value. Approximately $1.3 million, net of tax, was due to the adjustment of Eclipse inventory to fair value. Approximately $0.9 million, net of tax, was due to Souriau acquisition-related expenses.

⁹

Included a $2.6 million charge for contract assertions, net of tax. Approximately $1.3 million, net of tax, was due to a charge at control systems for engineering costs not probable of recovery from the customer. Approximately $1.0 million, net of tax, was principally due to the write off of accounts receivable related to a manufacturing license at defense technologies. Approximately $0.4 million, net of tax, was due to a late delivery penalty at engineered materials.

¹⁰	Included $1.2 million in working capital charges, net of tax. Approximately $0.7 million, net of tax, was due to an inventory and trade accounts receivable write off at advanced sensors. Approximately $0.5 million, net of tax, was due to an inventory write off at defense technologies.

¹¹	Included a $5.2 million benefit as a result of the release of tax reserves for uncertain tax positions associated with losses on the disposition of assets. This release resulted from the expiration of a statute of limitations.

¹²	~~Included a $3.1 million reduction of valuation allowances related to net operating losses and foreign tax credits that were generated in prior years.~~

¹³	The sum of the quarterly per share amounts may not equal per share amounts reported for year-to-date periods. This is due to changes in the number of weighted average shares outstanding and the effects of rounding for each period.

~~NOTE 19:~~ ~~Guarantors~~

The following schedules set forth condensed consolidating financial information as required by Rule 3-10 of Securities and Exchange Commission Regulation S-X for fiscal 2012, 2011, and 2010 for (a) Esterline Technologies Corporation (the Parent); (b) on a combined basis, the current subsidiary guarantors (Guarantor Subsidiaries) of the secured credit facility, Senior Notes due 2017, and Senior Notes due 2020; and (c) on a combined basis, the subsidiaries that are not guarantors of the secured credit facility, Senior Notes due 2017, and Senior Notes due 2020 (Non-Guarantor Subsidiaries). The Guarantor Subsidiaries previously guaranteed the Senior Subordinated Notes due 2013 that were repurchased or otherwise redeemed in August 2010. The Guarantor Subsidiaries are direct and indirect wholly-owned subsidiaries of Esterline Technologies Corporation and have fully and unconditionally, jointly and severally, guaranteed the secured credit facility, the Senior Notes due 2017, and the Senior Notes due 2020.

~~Condensed Consolidating Balance Sheet as of October 26, 2012~~

In Thousands    Parent Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries    Eliminations Total
Assets

Current Assets

Cash and cash equivalents
   $ 16,770    $ 1,324    $ 142,581       $ 0    $ 160,675
Cash in escrow
   5,016    0    0       0    5,016
Accounts receivable, net
   181    140,631    242,550       0    383,362
Inventories
   0    159,573    250,264       0    409,837
Income tax refundable
   0    4,832    0       0    4,832
Deferred income tax benefits
   22,874    105    23,021       0    46,000
Prepaid expenses
   76    5,391    15,873       0    21,340
Other current assets
   134    552    3,945       0    4,631

Total Current Assets
   45,051    312,408    678,234       0    1,035,693
Property, Plant &
Equipment, Net
   2,811    161,998    191,592       0    356,401
Goodwill
   0    314,641    784,321       0    1,098,962
Intangibles, Net
   0    126,142    482,903       0    609,045
Debt Issuance Costs, Net
   7,508    0    1,310       0    8,818
Deferred Income Tax
Benefits
   36,610    (283 ) 61,625       0    97,952
Other Assets
   8,082    1,561    10,603       0    20,246
Amounts Due From (To)
Subsidiaries
   0    491,143    0       (491,143 ) 0
Investment in Subsidiaries
   2,457,859    1,179,938    170,223       (3,808,020 ) 0

Total Assets
   $ 2,557,921    $ 2,587,548    $ 2,380,811       $ (4,299,163 ) $ 3,227,117

Liabilities and Shareholders’ Equity

Current Liabilities

Accounts payable
   $ 1,944    $ 26,351    $ 80,394       $ 0    $ 108,689
Accrued liabilities
   17,495    79,103    172,955       0    269,553
Credit facilities
   0    0    0       0    0
Current maturities of
long-term debt
   0    174    10,436       0    10,610
Deferred income tax
liabilities
   213    (1 ) 4,913       0    5,125
Federal and foreign
income taxes
   (3,418 ) (23,822 ) 29,609       0    2,369

Total Current Liabilities
   16,234    81,805    298,307       0    396,346
Credit Facilities
   240,000    0    0       0    240,000
Long-Term Debt, Net
   429,152    44,107    124,801       0    598,060
Deferred Income Tax
Liabilities
   46,730    (7 ) 158,475       0    205,198
Pension and Post-Retirement
Obligations
   20,507    54,886    56,681       0    132,074
Other Liabilities
   5,189    4,194    25,521       0    34,904
Amounts Due To (From)
Subsidiaries
   179,574    0    369,962       (549,536 ) 0
Shareholders’ Equity
   1,620,535    2,402,563    1,347,064       (3,749,627 ) 1,620,535

Total Liabilities and
Shareholders’ Equity
   $ 2,557,921    $ 2,587,548    $ 2,380,811       $ (4,299,163 ) $ 3,227,117

~~Condensed Consolidating Statement of Operations for the fiscal year ended October 26, 2012~~

In Thousands    Parent Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations Total
Net Sales
   $                  0    $        920,027    $        1,076,296    $         (4,005 ) $     1,992,318
Cost of Sales
   0    569,181    708,189    (4,005 ) 1,273,365

   0    350,846    368,107    0    718,953
Expenses

Selling, general
and administrative
   0    146,761    236,126    0    382,887
Research, development
and engineering
   0    50,372    57,373    0    107,745
Gain on settlement of
contingency
   0    0    (11,891 ) 0    (11,891 )
Goodwill impairment
   0    0    52,169    0    52,169
Other income
   0    0    (1,263 ) 0    (1,263 )

Total Expenses
   0    197,133    332,514    0    529,647
Operating Earnings from
Continuing Operations
   0    153,713    35,593    0    189,306
Interest income
   (14,178 ) (16,141 ) (60,299 ) 90,153    (465 )
Interest expense
   34,948    27,210    74,233    (90,153 ) 46,238
Loss on extinguishment of debt
   0    0    0    0    0

Income (Loss) from Continuing
Operations Before Taxes
   (20,770 ) 142,644    21,659    0    143,533
Income Tax Expense (Benefit)
   (5,591 ) 32,314    3,235    0    29,958

Income (Loss) From Continuing
Operations Including
Noncontrolling Interests
   (15,179 ) 110,330    18,424    0    113,575
Income Attributable to
Noncontrolling Interests
   0    0    (1,040 ) 0    (1,040 )

Income (Loss) From Continuing
Operations Attributable to
Esterline, Net of Tax
   (15,179 ) 110,330    17,384    0    112,535
Income From Discontinued

Operations Attributable to

Esterline, Net of Tax
   0    0    0    0    0
Equity in Net Income of
Consolidated Subsidiaries
   127,714    17,659    (145 ) (145,228 ) 0

Net Earnings (Loss) Attributable
to Esterline
   $        112,535    $        127,989    $        17,239    $      (145,228 ) $       112,535

~~Condensed Consolidating Statement of Cash Flows for the fiscal year ended October 26, 2012~~

In Thousands    Parent Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Total
Cash Flows Provided (Used)
by Operating Activities

Net earnings (loss) including
noncontrolling interests
   $ 113,575    $ 127,989    $ 17,239    $ (145,228 ) $ 113,575
Depreciation & amortization
   0    39,405    68,387    0    107,792
Deferred income taxes
   18,013    (20,600 ) (22,823 ) 0    (25,410 )
Share-based compensation
   0    4,246    5,297    0    9,543
Gain on sale of discontinued
operations
   0    0    0    0    0
Gain on sale of capital assets
   0    (410 ) (534 ) 0    (944 )
Gain on settlement of contingency
   0    0    (11,891 ) 0    (11,891 )
Goodwill impairment
   0    0    52,169    0    52,169
Working capital changes, net
of effect of acquisitions

Accounts receivable
   (23 ) (2,704 ) (19,654 ) 0    (22,381 )
Inventories
   0    (15,707 ) (3,596 ) 0    (19,303 )
Prepaid expenses
   (17 ) (385 ) (2,104 ) 0    (2,506 )
Other current assets
   6    (208 ) (800 ) 0    (1,002 )
Accounts payable
   1,132    (174 ) (7,440 ) 0    (6,482 )
Accrued liabilities
   (1,929 ) (156 ) 16,964    0    14,879
Federal & foreign
income taxes
   (4,345 ) (3,497 ) 4,984    0    (2,858 )
Other liabilities
   (20,618 ) 12,196    (6,280 ) 0    (14,702 )
Other, net
   (1,418 ) 580    4,530    0    3,692

   104,376    140,575    94,448    (145,228 ) 194,171
Cash Flows Provided (Used)
by Investing Activities

Purchases of capital assets
   (1,503 ) (23,553 ) (24,390 ) 0    (49,446 )
Escrow deposit
   0    0    0    0    0
Proceeds from sale of
discontinued operations, net
   0    0    0    0    0
Proceeds from sale of
capital assets
   0    410    534    0    944
Acquisitions of businesses,
net of cash acquired
   0    0    0    0    0

   (1,503 ) (23,143 ) (23,856 ) 0    (48,502 )

~~Condensed Consolidating Statement~~Assets and Liabilities Held for Sale within the Consolidated Balance Sheet at September 30, 2016, are comprised of ~~Cash Flows for~~ the ~~fiscal year ended October 26, 2012~~following:

In Thousands    Parent Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations    Total
Cash Flows Provided (Used)
by Financing Activities

Proceeds provided by stock
issuance under employee
stock plans
   7,658    0    0    0       7,658
Excess tax benefits from
stock option exercises
   382    0    0    0       382
Proceeds from credit facilities
   0    0    0    0       0
Repayment of long-term
debt and credit facilities
   (120,000 ) (405 ) (72,740 ) 0       (193,145 )
Proceeds from issuance of
long-term debt
   0    0    0    0       0
Proceeds from government
assistance
   0    0    17,285    0       17,285
Dividends paid to
noncontrolling interest
   0    0    0    0       0
Debt and other issuance costs
   0    0    0    0       0
Net change in intercompany
financing
   (24,731 ) (129,158 ) 8,661    145,228       0

   (136,691 ) (129,563 ) (46,794 ) 145,228       (167,820 )
Effect of Foreign Exchange Rates
on Cash and Cash Equivalents
   751    5    (2,965 ) 0       (2,209 )

Net Increase (Decrease) in
Cash and Cash Equivalents
   (33,067 ) (12,126 ) 20,833    0       (24,360 )
Cash and Cash Equivalents
– Beginning of Year
   49,837    13,450    121,748    0       185,035

Cash and Cash Equivalents
– End of Year
   $ 16,770    $ 1,324    $ 142,581    $ 0       $ 160,675

	Avionics &			Sensors &		Advanced
In Thousands	Controls			Systems		Materials		Total

Accounts receivable, net	$	2,588		$	-	$	4,093	$	6,681
Inventories		8,070			-		398		8,468
Prepaid expenses		127			-		103		230
Income tax refundable		-			-		71		71
Current Assets of Businesses Held for Sale	$	10,785		$	-	$	4,665	$	15,450

Net Property, plant and equipment	$	5,368		$	-	$	2,869	$	8,237
Intangibles, net		-			-		1,856		1,856
Deferred income tax benefits (liabilities)		(392	)		-		400		8
Other assets		-			-		1,299		1,299
Non-Current Assets of Businesses Held for Sale	$	4,976		$	-	$	6,424	$	11,400

Accounts payable	$	441		$	-	$	1,463	$	1,904
Accrued liabilities		7,000			-		1,909		8,909
Current Liabilities of Businesses Held for Sale	$	7,441		$	-	$	3,372	$	10,813

Other liabilities	$	-		$	-	$	320	$	320
Non-Current Liabilities of Businesses Held for Sale	$	-		$	-	$	320	$	320

Net Assets of Businesses Held for Sale	$	8,320		$	-	$	7,397	$	15,717

Assets and Liabilities Held for Sale within the Consolidated Balance Sheet at October 2, 2015, are comprised of the following:

	Avionics &			Sensors &		Advanced
In Thousands	Controls			Systems		Materials		Total

Accounts receivable, net	$	5,360		$	-	$	1,546	$	6,906
Inventories		14,763			-		5,841		20,604
Prepaid expenses		156			-		185		341
Current Assets of Businesses Held for Sale	$	20,279		$	-	$	7,572	$	27,851

Net Property, plant and equipment	$	5,474		$	-	$	12,199	$	17,673
Intangibles, net		945			-		4,928		5,873
Deferred income tax benefits (liabilities)		(147	)		-		-		(147	)
Other assets		-			-		1,518		1,518
Non-Current Assets of Businesses Held for Sale	$	6,272		$	-	$	18,645	$	24,917

Accounts payable	$	1,878		$	-	$	4,837	$	6,715
Accrued liabilities		8,340			-		2,051		10,391
Current Liabilities of Businesses Held for Sale	$	10,218		$	-	$	6,888	$	17,106

Deferred income tax liabilities	$	-		$	-	$	194	$	194
Other liabilities		2,215			-		-		2,215
Non-Current Liabilities of Businesses Held for Sale	$	2,215		$	-	$	194	$	2,409

Net Assets of Businesses Held for Sale	$	14,118		$	-	$	19,135	$	33,253

~~Condensed Consolidating Balance Sheet as of October 28, 2011~~

In Thousands    Parent Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries    Eliminations Total
Assets

Current Assets

Cash and cash equivalents
   $ 49,837    $ 13,450    $ 121,748       $ 0    $ 185,035
Cash in escrow
   5,011    0    0       0    5,011
Accounts receivable, net
   158    137,927    231,741       0    369,826
Inventories
   0    143,866    258,682       0    402,548
Income tax refundable
   0    0    2,857       0    2,857
Deferred income tax benefits
   25,585    1,574    21,092       0    48,251
Prepaid expenses
   59    5,006    14,180       0    19,245
Other current assets
   140    344    6,056       0    6,540

Total Current Assets
   80,790    302,167    656,356       0    1,039,313
Property, Plant &

Equipment, Net
   1,109    161,297    206,010       0    368,416
Goodwill
   0    313,788    849,937       0    1,163,725
Intangibles, Net
   0    140,590    553,325       0    693,915
Debt Issuance Costs, Net
   9,033    0    1,662       0    10,695
Deferred Income Tax

Benefits
   27,925    125    51,555       0    79,605
Other Assets
   10,307    2,321    10,289       0    22,917
Amounts Due From (To)

Subsidiaries
   350,407    482,330    0       (832,737 ) 0
Investment in Subsidiaries
   1,953,823    624,856    321,170       (2,899,849 ) 0

Total Assets
   $   2,433,394    $ 2,027,474    $ 2,650,304       $ (3,732,586 ) $   3,378,586

Liabilities and Shareholders’ Equity

Current Liabilities

Accounts payable
   $ 812    $ 26,525    $ 92,551       $ 0    $ 119,888
Accrued liabilities
   18,587    79,524    172,311       0    270,422
Credit facilities
   0    0    5,000       0    5,000
Current maturities of
long-term debt
   0    211    11,384       0    11,595
Deferred income tax
liabilities
   238    (1 ) 9,301       0    9,538
Federal and foreign
income taxes
   (1,326 ) (25,185 ) 28,429       0    1,918

Total Current Liabilities
   18,311    81,074    318,976       0    418,361
Credit Facilities
   360,000    0    0       0    360,000
Long-Term Debt, Net
   426,354    44,289    189,385       0    660,028
Deferred Income Tax
Liabilities
   32,959    21,971    183,779       0    238,709
Pension and Post-Retirement
Obligations
   17,849    38,335    51,693       0    107,877
Other Liabilities
   4,003    8,549    7,141       0    19,693
Amounts Due To (From)
Subsidiaries
   0    0    444,820       (444,820 ) 0
Shareholders’ Equity
   1,573,918    1,833,256    1,454,510       (3,287,766 ) 1,573,918

Total Liabilities and
Shareholders’ Equity
   $   2,433,394    $ 2,027,474    $ 2,650,304       $ (3,732,586 ) $ 3,378,586

~~Condensed Consolidating Statement of Operations for the fiscal year ended October 28, 2011~~

In Thousands    Parent Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Total
Net Sales
   $ 0    $ 880,711    $ 840,130    $ (2,856 ) $ 1,717,985
Cost of Sales
   0    563,033    568,088    (2,856 ) 1,128,265

   0    317,678    272,042    0    589,720
Expenses

Selling, general
and administrative
   0    120,548    183,606    0    304,154
Research, development
and engineering
   0    39,352    55,153    0    94,505
Gain on settlement of
contingency
   0    0    0    0    0
Goodwill impairment
   0    0    0    0    0
Other (income) expense
   0    38    (6,891 ) 0    (6,853 )

Total Expenses
   0    159,938    231,868    0    391,806
Operating Earnings from

Continuing Operations
   0    157,740    40,174    0    197,914
Interest income
   (15,461 ) (4,702 ) (45,411 ) 63,959    (1,615 )
Interest expense
   33,270    22,178    48,727    (63,959 ) 40,216
Loss on extinguishment of debt
   831    0    0    0    831

Income (Loss) from Continuing

Operations Before Taxes
   (18,640 ) 140,264    36,858    0    158,482
Income Tax Expense (Benefit)
   (4,274 ) 21,322    7,890    0    24,938

Income (Loss) From Continuing

Operations Including

Noncontrolling Interests
   (14,366 ) 118,942    28,968    0    133,544
Income Attributable to

Noncontrolling Interests
   0    0    (457 ) 0    (457 )

Income (Loss) From Continuing

Operations Attributable to

Esterline, Net of Tax
   (14,366 ) 118,942    28,511    0    133,087
Income From Discontinued

Operations Attributable to

Esterline, Net of Tax
   0    (47 ) 0    0    (47 )
Equity in Net Income of

Consolidated Subsidiaries
   147,406    16,523    13,103    (177,032 ) 0

Net Earnings (Loss)

Attributable to Esterline
   $ 133,040    $ 135,418    $ 41,614    $ (177,032 ) $ 133,040

~~Condensed Consolidating Statement of Cash Flows for the fiscal year ended October 28, 2011~~

In Thousands    Parent Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Total
Cash Flows Provided (Used)
by Operating Activities

Net earnings (loss) including
noncontrolling interests
   $ 133,497    $ 135,418    $ 41,614    $ (177,032 ) $ 133,497
Depreciation & amortization
   0    35,616    49,042    0    84,658
Deferred income taxes
   11,438    707    (24,490 ) 0    (12,345 )
Share-based compensation
   0    3,617    4,346    0    7,963
Gain on sale of
discontinued operations
   0    0    0    0    0
Gain on sale of capital assets
   0    (3,605 ) (79 ) 0    (3,684 )
Gain on settlement of contingency
   0    0    0    0    0
Goodwill impairment
   0    0    0    0    0
Working capital changes, net
of effect of acquisitions

Accounts receivable
   116    1,768    21,927    0    23,811
Inventories
   0    (8,452 ) 8,467    0    15
Prepaid expenses
   (10 ) 722    (45 ) 0    667
Other current assets
   (140 ) (300 ) (2,135 ) 0    (2,575 )
Accounts payable
   (132 ) (2,219 ) (591 ) 0    (2,942 )
Accrued liabilities
   362    (6,253 ) (4,618 ) 0    (10,509 )
Federal & foreign
income taxes
   11,949    (6,050 ) (6,715 ) 0    (816 )
Other liabilities
   (16,200 ) (3,996 ) (2,787 ) 0    (22,983 )
Other, net
   8,164    (19,245 ) 8,753    0    (2,328 )

   149,044    127,728    92,689    (177,032 ) 192,429
Cash Flows Provided (Used)
by Investing Activities

Purchases of capital assets
   (328 ) (22,724 ) (26,455 ) 0    (49,507 )
Escrow deposit
   (14,033 ) 0    0    0    (14,033 )
Proceeds from sale of
discontinued operations, net
   0    0    0    0    0
Proceeds from sale of
capital assets
   0    6,541    2,912    0    9,453
Acquisitions of businesses,
net of cash acquired
   0    (106,059 ) (708,875 ) 0    (814,934 )

   (14,361 ) (122,242 ) (732,418 ) 0    (869,021 )

~~Condensed Consolidating Statement of Cash Flows for the fiscal year ended October 28, 2011~~

In Thousands    Parent Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations    Total
Cash Flows Provided (Used)
by Financing Activities

Proceeds provided by stock
issuance under employee
stock plans
   13,253    0    0    0       13,253
Excess tax benefits from
stock option exercises
   1,830    0    0    0       1,830
Proceeds from credit facilities
   395,000    0    5,014    0       400,014
Repayment of long-term debt
and credit facilities
   (155,313 ) (321 ) (9,282 ) 0       (164,916 )
Proceeds from issuance
of long-term debt
   0    0    176,875    0       176,875
Proceeds from government
assistance
   0    0    15,000    0       15,000
Dividends paid to
noncontrolling interest
   0    0    (238 ) 0       (238 )
Debt and other issuance costs
   (3,640 ) 0    (1,758 ) 0       (5,398 )
Net change in intercompany
financing
   (541,098 ) 5,972    358,094    177,032       0

   (289,968 ) 5,651    543,705    177,032       436,420
Effect of Foreign Exchange Rates
on Cash and Cash Equivalents
   72    (4 ) 3,019    0       3,087

Net Increase (Decrease) in

Cash and Cash Equivalents
   (155,213 ) 11,133    (93,005 ) 0       (237,085 )
Cash and Cash Equivalents

– Beginning of Year
   205,050    2,317    214,753    0       422,120

Cash and Cash Equivalents

– End of Year
   $ 49,837    $ 13,450    $ 121,748    $ 0       $ 185,035

~~Condensed Consolidating Statement of Operations for the fiscal year ended October 29, 2010~~

In Thousands    Parent Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Total
Net Sales
   $ 0    $ 788,677    $ 738,811    $ (887 ) $ 1,526,601
Cost of Sales
   0    520,739    490,538    (887 ) 1,010,390

   0    267,938    248,273    0    516,211
Expenses

Selling, general
and administrative
   0    121,115    137,175    0    258,290
Research, development
and engineering
   0    29,385    40,368    0    69,753
Gain on settlement of
contingency
   0    0    0    0    0
Goodwill impairment
   0    0    0    0    0
Other (income) expense
   0    (12 ) 4    0    (8 )

Total Expenses
   0    150,488    177,547    0    328,035
Operating Earnings from

Continuing Operations
   0    117,450    70,726    0    188,176
Interest income
   (15,838 ) (2,516 ) (38,172 ) 55,566    (960 )
Interest expense
   28,948    20,023    39,776    (55,566 ) 33,181
Loss on extinguishment of debt
   1,206    0    0    0    1,206

Income (Loss) from Continuing

Operations Before Taxes
   (14,316 ) 99,943    69,122    0    154,749
Income Tax Expense (Benefit)
   (3,286 ) 22,752    5,038    0    24,504

Income (Loss) From Continuing

Operations Including

Noncontrolling Interests
   (11,030 ) 77,191    64,084    0    130,245
Income Attributable to

Noncontrolling Interests
   0    0    (206 ) 0    (206 )

Income (Loss) From Continuing

Operations Attributable to

Esterline, Net of Tax
   (11,030 ) 77,191    63,878    0    130,039
Income From Discontinued

Operations Attributable to

Esterline, Net of Tax
   9,545    2,336    0    0    11,881
Equity in Net Income of

Consolidated Subsidiaries
   143,405    36,860    3,395    (183,660 ) 0

Net Earnings (Loss)

Attributable to Esterline
   $ 141,920    $ 116,387    $ 67,273    $ (183,660 ) $ 141,920

~~Condensed Consolidating Statement of Cash Flows for the fiscal year ended October 29, 2010~~

In Thousands    Parent Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Total
Cash Flows Provided (Used)
by Operating Activities

Net earnings (loss) including
noncontrolling interests
   $ 141,920    $ 116,387    $ 67,479    $ (183,660 ) $ 142,126
Depreciation & amortization
   0    32,390    39,727    0    72,117
Deferred income tax
   994    27    (11,018 ) 0    (9,997 )
Share-based compensation
   0    3,306    3,828    0    7,134
Gain on sale of discontinued operations
   (14,625 ) 0    0    0    (14,625 )
Gain on sale of capital assets
   0    0    0    0    0
Gain on settlement of contingency
   0    0    0    0    0
Goodwill impairment
   0    0    0    0    0
Working capital changes, net
of effect of acquisitions

Accounts receivable
   (274 ) (13,793 ) (25,097 ) 0    (39,164 )
Inventories
   0    1,483    9,251    0    10,734
Prepaid expenses
   (49 ) (854 ) 2,017    0    1,114
Other current assets
   0    (1 ) 2,286    0    2,285
Accounts payable
   366    6,043    (5,553 ) 0    856
Accrued liabilities
   5,637    12,968    2,698    0    21,303
Federal & foreign
income taxes
   (777 ) (19,136 ) 13,306    0    (6,607 )
Other liabilities
   6,138    (6,550 ) (7,159 ) 0    (7,571 )
Other, net
   (8,173 ) 10,872    (2,603 ) 0    96

   131,157    143,142    89,162    (183,660 ) 179,801
Cash Flows Provided (Used) by Investing Activities

Purchases of capital assets
   (182 ) (18,920 ) (26,438 ) 0    (45,540 )
Escrow deposit
   0    0    0    0    0
Proceeds from sale of
discontinued operations,
net of cash
   24,994    0    0    0    24,994
Proceeds from sale of
capital assets
   0    488    107    0    595
Acquisitions of businesses,
net of cash acquired
   0    (360 ) (408 ) 0    (768 )

   24,812    (18,792 ) (26,739 ) 0    (20,719 )

~~Condensed Consolidating Statement of Cash Flows for the fiscal year ended October 29, 2010~~

In Thousands    Parent Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations    Total
Cash Flows Provided (Used)
by Financing Activities

Proceeds provided by stock
issuance under employee
stock plans
   13,654    0    0    0       13,654
Excess tax benefits from
stock option exercises
   3,488    0    0    0       3,488
Proceeds from credit facilities
   0    0    (4,015 ) 0       (4,015 )
Repayment of long-term debt
and credit facilities
   (182,029 ) (385 ) (668 ) 0       (183,082 )
Proceeds from issuance of
long-term debt
   250,000    0    0    0       250,000
Proceeds from government
assistance
   0    0    9,168    0       9,168
Dividends paid to
noncontrolling interest
   0    0    (234 ) 0       (234 )
Debt and other issuance costs
   (4,719 ) 0    0    0       (4,719 )
Net change in intercompany
financing
   (79,220 ) (126,284 ) 21,844    183,660       0

   1,174    (126,669 ) 26,095    183,660       84,260
Effect of Foreign Exchange Rates
on Cash and Cash Equivalents
   0    15    1,969    0       1,984

Net Increase (Decrease) in

Cash and Cash Equivalents
   157,143    (2,304 ) 90,487    0       245,326
Cash and Cash Equivalents

– Beginning of Year
   47,907    4,621    124,266    0       176,794

Cash and Cash Equivalents

– End of Year
   $ 205,050    $ 2,317    $ 214,753    $ 0       $ 422,120

~~Report of Independent Registered Public Accounting Firm~~

~~The Board of Directors and Shareholders~~

~~Esterline Technologies Corporation~~

We have audited the accompanying consolidated balance sheets of Esterline Technologies Corporation as of October 26, 2012 and October 28, 2011, and the related consolidated statements of operations, shareholders’ equity and comprehensive income (loss), noncontrolling interests and cash flows for each of the three years in the period ended October 26, 2012. Our audits also included the financial statement schedule listed in the Index at Item 15(a)(2). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Esterline Technologies Corporation at October 26, 2012 and October 28, 2011, and the consolidated results of its operations and its cash flows for each of the three years in the period ended October 26, 2012, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 10 to the financial statements, in 2010 the Company changed its method of accounting for business combination transactions upon the adoption of Financial Accounting Standards Board ASC Topic 805.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Esterline Technologies Corporation’s internal control over financial reporting as of October 26, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated December 21, 2012 expressed an unqualified opinion thereon.

~~/s/ Ernst & Young LLP~~

~~Seattle, Washington~~

~~December 21, 2012~~

~~Report of Independent Registered Public Accounting Firm~~

~~The Board of Directors and Shareholders~~

~~Esterline Technologies Corporation~~

We have audited Esterline Technologies Corporation’s internal control over financial reporting as of October 26, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Esterline Technologies Corporation’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~In our opinion, Esterline Technologies Corporation maintained, in all material respects, effective internal control over financial reporting as of October 26, 2012, based on the COSO criteria.~~

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying consolidated balances sheets of Esterline Technologies Corporation as of October 26, 2012 and October 28, 2011, and the related consolidated statements of operations, shareholders’ equity and comprehensive income (loss), noncontrolling interests and cash flows for each of the three years in the period ended October 26, 2012 of Esterline Technologies Corporation and our report dated December 21, 2012 expressed an unqualified opinion thereon.

~~/s/ Ernst & Young LLP~~

~~Seattle, Washington~~

~~December 21, 2012~~

~~Item 9. Changes~~NOTE 18: Business Segment Information

The Company’s businesses are organized and managed in three reporting segments: Avionics & Controls, Sensors & Systems and ~~Disagreements with Accountants~~Advanced Materials. Operating segments within each reporting segment are aggregated. Operations within the Avionics & Controls segment focus on ~~Accounting~~integrated cockpit systems, technology interface systems for commercial and ~~Financial Disclosure~~military aircraft, and similar devices for land- and sea-based military vehicles, visualization solutions for defense and commercial applications, secure communication systems, military audio and data products, specialized medical equipment and other industrial applications. Sensors & Systems includes operations that produce high-precision temperature and pressure sensors, electrical power switching, electrical interconnection systems, and other related systems principally for aerospace and defense customers. The Advanced Materials segment focuses on thermally engineered components for critical aerospace applications, high-performance elastomer products used in a wide range of commercial aerospace and military applications, and combustible ordnance and warfare countermeasure devices. All segments include sales to domestic, international, defense and commercial customers.

Geographic sales information is based on product origin. The Company evaluates these segments based on segment profits prior to net interest, other income/expense, corporate expenses and federal/foreign income taxes.

Details of the Company’s operations by business segment for the last three fiscal years were as follows:

										Eleven
										Months
	Twelve Months Ended									Ended
In Thousands	2016			2015			2014			2015
				(Unaudited) (Recast)
Sales
Avionics & Controls	$	860,494		$	826,044		$	766,838		$	727,801
Sensors & Systems		696,032			714,965			771,369			633,446
Advanced Materials		436,105			461,784			491,264			413,202
	$	1,992,631		$	2,002,793		$	2,029,471		$	1,774,449

Earnings from Continuing Operations
Avionics & Controls	$	78,356		$	93,225		$	119,649		$	65,910
Sensors & Systems		87,768			84,235			86,101			71,787
Advanced Materials		74,515			91,334			104,833			80,951
Segment Earnings		240,639			268,794			310,583			218,648

Corporate expense		(70,480	)		(82,131	)		(68,297	)		(74,166	)
Other income		-			12,503			-			12,503
Interest income		367			632			555			578
Interest expense		(30,091	)		(33,114	)		(33,010	)		(30,090	)
Loss on extinguishment of debt		-			(11,451	)		(533	)		(11,451	)
	$	140,435		$	155,233		$	209,298		$	116,022

							Eleven
							Months
	Twelve Months Ended						Ended
In Thousands	2016		2015		2014		2015
			(Unaudited) (Recast)
Capital Expenditures
Avionics & Controls ¹	$	36,423	$	14,537	$	9,312	$	13,074
Sensors & Systems ²		14,319		21,766		21,070		19,489
Advanced Materials ³		15,868		16,309		13,629		14,324
Discontinued Operations		-		789		1,199		542
Corporate		1,862		2,006		468		1,912
	$	68,472	$	55,407	$	45,678	$	49,341

Depreciation and Amortization
Avionics & Controls	$	38,909	$	38,070	$	35,604	$	33,415
Sensors & Systems		40,399		41,200		43,507		37,250
Advanced Materials		18,691		19,708		20,217		17,474
Discontinued Operations		12		1,877		14,588		496
Corporate		2,247		2,502		2,111		1,940
	$	100,258	$	103,357	$	116,027	$	90,575

In Thousands	2016		2015		2014
Identifiable Assets
Avionics & Controls	$	1,304,860	$	1,276,678	$	1,125,850
Sensors & Systems		1,140,624		1,116,282		1,240,153
Advanced Materials		498,442		493,968		498,984
Discontinued Operations		29,488		57,095		212,712
Corporate ⁴		58,617		56,465		115,768
	$	3,032,031	$	3,000,488	$	3,193,467

¹	Excludes capital expenditures accounted for as a capitalized lease obligation of $2.8 million in fiscal 2014.

²	Excludes capital expenditures accounted for as a capitalized lease obligation of $8.0 million in fiscal 2016.

³	Excludes capital expenditures accounted for as a capitalized lease obligation of $3.3 million in fiscal 2016.

⁴	Primarily cash and deferred tax assets (see Note 10).

The Company’s operations by geographic area for the last three fiscal years were as follows:

~~None.~~

	Twelve			Eleven			Twelve
	Months			Months			Months
	Ended			Ended			Ended
In Thousands	2016			2015			2014

Sales ¹
Domestic
Unaffiliated customers - U.S.	$	838,259		$	706,586		$	763,345
Unaffiliated customers - export		172,209			168,459			218,955
Intercompany		77,472			58,039			32,515
		1,087,940			933,084			1,014,815
Canada
Unaffiliated customers		182,690			173,394			231,937
Intercompany		3,378			4,013			7,544
		186,068			177,407			239,481
France
Unaffiliated customers		398,909			364,882			460,836
Intercompany		51,461			42,903			60,763
		450,370			407,785			521,599
United Kingdom
Unaffiliated customers		237,134			242,077			266,570
Intercompany		25,100			23,769			22,846
		262,234			265,846			289,416
All other Foreign
Unaffiliated customers		163,430			119,051			87,828
Intercompany		167,565			125,386			42,686
		330,995			244,437			130,514

Eliminations		(324,976	)		(254,110	)		(166,354	)
	$	1,992,631		$	1,774,449		$	2,029,471

	Twelve		Eleven			Twelve
	Months		Months			Months
	Ended		Ended			Ended
In Thousands	2016		2015			2014
Segment Earnings ²
Domestic	$	135,107	$	121,052		$	178,029
Canada		7,670		19,133			33,599
France		61,381		51,599			50,750
United Kingdom		25,646		28,826			38,686
All other foreign		10,835		(1,962	)		9,519
	$	240,639	$	218,648		$	310,583

	2016		2015			2014
Identifiable Assets ³
Domestic	$	1,055,567	$	933,631		$	1,028,879
Canada		452,466		458,635			514,520
France		770,625		747,660			839,467
United Kingdom		394,811		501,969			555,620
All other foreign		299,945		302,128			139,213
	$	2,973,414	$	2,944,023		$	3,077,699

¹	Based on country from which the sale originated and the sale was recorded.

²	Before corporate expense, shown on page 80.

³	Excludes corporate, shown on page 81.

The Company’s foreign operations consist of manufacturing facilities located in Belgium, Canada, China, the Dominican Republic, France, Germany, India, Mexico, Morocco, and the United Kingdom, and include sales and service operations located in Brazil, China, and Singapore. Intercompany sales are at prices comparable with sales to unaffiliated customers. U.S. government sales as a percent of Advanced Materials and Avionics & Controls sales were 9.8% and 2.0%, respectively, in fiscal 2016 and 3.1% of consolidated sales. In fiscal 2015, the U.S. government sales as a percent of Advanced Materials and Avionics & Controls sales were 9.9% and 1.1%, respectively, and 2.9% of consolidated sales. In fiscal 2014, the U.S. government sales as a percent of Advanced Materials and Avionics & Controls sales were 14.7% and 1.7%, respectively, and 4.0% of consolidated sales.

Product lines contributing sales of 10% or more of total sales in any of the last three fiscal years were as follows:

	2016			2015			2014

Connectors		16	%		16	%		18	%
Avionics		9	%		10	%		10	%

NOTE 19: Quarterly Financial Data (Unaudited)

The following is a summary of unaudited quarterly financial information:

In Thousands, Except Per Share Amounts

Fiscal Year 2016	Fourth		Third			Second			First

Net sales	$	543,752	$	517,092		$	490,310		$	441,477
Gross profit		193,769		173,584			156,173			137,719

Earnings from continuing operations		52,045		38,046			16,996			9,864
Earnings (Loss) from discontinued operations		227		(8,690	)		(2,023	)		(4,780	)
Net earnings	$	52,272	$	29,356		$	14,973		$	5,084

Earnings (loss) per share - basic
Continuing operations	$	1.77	$	1.30		$	0.58		$	0.33
Discontinued operations		0.01		(0.30	)		(0.07	)		(0.16	)
Earnings (loss) per share - basic	$	1.78	$	1.00		$	0.51		$	0.17

Earnings (loss) per share - diluted
Continuing operations	$	1.75	$	1.28		$	0.57		$	0.33
Discontinued operations		0.01		(0.29	)		(0.07	)		(0.16	)
Earnings (loss) per share - diluted	$	1.76	$	0.99		$	0.50		$	0.17

Fiscal Year 2015
(Recast)	Fourth			Third			Second			First

Net sales	$	545,249		$	484,723		$	468,210		$	504,611
Gross profit		185,840			165,290			150,017			178,241

Earnings from continuing operations		40,267			28,222			24,931			34,475
Loss from discontinued operations		(19,285	)		(558	)		(14,600	)		(5,876	)
Net earnings	$	20,982		$	27,664		$	10,331		$	28,599

Earnings (loss) per share - basic
Continuing operations	$	1.36		$	0.92		$	0.80		$	1.09
Discontinued operations		(0.65	)		(0.02	)		(0.47	)		(0.19	)
Earnings (loss) per share - basic	$	0.71		$	0.90		$	0.33		$	0.90

Earnings (loss) per share - diluted
Continuing operations	$	1.34		$	0.90		$	0.79		$	1.06
Discontinued operations		(0.64	)		(0.02	)		(0.46	)		(0.18	)
Earnings (loss) per share - diluted	$	0.70		$	0.88		$	0.33		$	0.88

Fiscal Year 2015	Fourth			Third			Second			First

Net sales	$	349,627		$	490,022		$	494,042		$	440,758
Gross profit		114,165			168,606			162,590			144,032

Earnings from continuing operations		20,704			29,868			21,498			24,595
Loss from discontinued operations		(17,718	)		(1,371	)		(1,688	)		(16,276	)
Net earnings	$	2,986		$	28,497		$	19,810		$	8,319

Earnings (loss) per share - basic
Continuing operations	$	0.70		$	0.99		$	0.69		$	0.77
Discontinued operations		(0.60	)		(0.05	)		(0.05	)		(0.51	)
Earnings (loss) per share - basic	$	0.10		$	0.94		$	0.64		$	0.26

Earnings (loss) per share - diluted
Continuing operations	$	0.69		$	0.96		$	0.68		$	0.77
Discontinued operations		(0.59	)		(0.04	)		(0.05	)		(0.51	)
Earnings (loss) per share - diluted	$	0.10		$	0.92		$	0.63		$	0.26

The sum of the quarterly per share amounts may not equal per share amounts reported for year-to-date periods. This is due to changes in the number of weighted average shares outstanding and the effects of rounding for each period.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Esterline Technologies Corporation

We have audited the accompanying consolidated balance sheets of Esterline Technologies Corporation as of September 30, 2016, and October 2, 2015, and the related consolidated statements of operations, comprehensive income (loss), cash flows, shareholders' equity, and noncontrolling interests for the twelve months ended September 30, 2016, the eleven months ended October 2, 2015, and the twelve months ended October 31, 2014. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Esterline Technologies Corporation at September 30, 2016, and October 2, 2015, and the consolidated results of its operations and its cash flows for the twelve months ended September 30, 2016, the eleven months ended October 2, 2015, and the twelve months ended October 31, 2014, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Esterline Technologies Corporation's internal control over financial reporting as of September 30, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated November 23, 2016, expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Seattle, Washington

November 23, 2016

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Esterline Technologies Corporation

We have audited Esterline Technologies Corporation’s internal control over financial reporting as of September 30, 2016, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Esterline Technologies Corporation’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

In our opinion, Esterline Technologies Corporation maintained, in all material respects, effective internal control over financial reporting as of September 30, 2016, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying consolidated balances sheets of Esterline Technologies Corporation as of September 30, 2016, and October 2, 2015, and the related consolidated statements of operations, comprehensive income (loss), cash flows, shareholders’ equity, and noncontrolling interests for the twelve months ended September 30, 2016, the eleven months ended October 2, 2015, and the twelve months ended October 31, 2014, of Esterline Technologies Corporation and our report dated November 23, 2016, expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Seattle, Washington

November 23, 2016

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

Our principal executive and financial officers evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~October 26, 2012.~~September 30, 2016. Based upon that evaluation, they concluded as of ~~October 26, 2012,~~September 30, 2016, that our disclosure controls and procedures were effective to ensure that information we are required to disclose in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within time periods specified in Securities and Exchange Commission rules and forms. In addition, our principal executive and financial officers concluded as of ~~October 26, 2012,~~September 30, 2016, that our disclosure controls and procedures are also effective to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control ~~Over~~over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control system over financial reporting is designed by, or under the supervision of, our chief executive officer and chief financial officer, and is effected by our board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

(i)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the assets of the company;

(ii)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles and that transactions are made only in ~~accordance~~accordance with the authorization of our management and directors; and

(iii)provide reasonable assurance regarding prevention or timely detection of unauthorized transactions that could have a material effect on the financial statements.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in condition, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of Esterline’s internal control over financial reporting as of ~~October 26, 2012.~~September 30, 2016. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated ~~Framework.~~Framework (2013 framework). Based on management’s assessment and those criteria, our management concluded that our internal control over financial reporting was effective as of ~~October 26, 2012.~~September 30, 2016.

Our independent registered public accounting firm, Ernst & Young LLP, has issued an audit report on the effectiveness of internal control over financial reporting. This report appears on page ~~88.~~86.

		/s/ Curtis C. Reusser
		~~/s/ R. Bradley Lawrence~~ Curtis C. Reusser
		~~R. Bradley Lawrence~~
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)


		/s/ Robert D. George
		Robert D. George
		Executive Vice President, Chief Financial Officer, ~~Vice President, and~~
		and Corporate Development
(Principal Financial Officer)



		/s/ Gary J. Posner
		Gary J. Posner
		Corporate Controller and Chief Accounting Officer
		(Principal Accounting Officer)

Changes in Internal Control Over Financial Reporting

During the three months ended ~~October 26, 2012,~~September 30, 2016, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors and Executive Officers of the Registrant

We hereby incorporate by reference the information set forth under “Election of Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Code of Ethics,” “Other Information as to Directors – Board and Board Committees,” and “Other Information as to Directors – Director Nominations and Qualifications” in the definitive form of the Company’s Proxy Statement, relating to its Annual Meeting of Shareholders to be held on ~~March 6, 2013.~~February 9, 2017.

Information regarding our executive officers required by this item appears in Item 1 of this report under “Executive Officers of the Registrant.”

Item 11. Executive Compensation

We hereby incorporate by reference the information set forth under “Other Information as to Directors – Director Compensation,” “Executive Compensation – Compensation Discussion and Analysis,” “Compensation Committee Report” and “Compensation Committee Interlocks and Insider Participation” in the definitive form of the Company’s Proxy Statement, relating to its Annual Meeting of Shareholders to be held on ~~March 6, 2013.~~February 9, 2017.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

We hereby incorporate by reference the information set forth under “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in the definitive form of the Company’s Proxy Statement, relating to its Annual Meeting of Shareholders to be held on ~~March 6, 2013.~~February 9, 2017.

Item 13. Certain Relationships and Related Transactions, and Director Independence

We hereby incorporate by reference the information set forth under “Certain Relationships and Related Transactions” and “Other Information as to Directors – Board and Board Committees” in the definitive form of the Company’s Proxy Statement, relating to its Annual Meeting of Shareholders to be held on ~~March 6, 2013.~~February 9, 2017.

Item 14. Independent Registered Public Accounting Firm Fees and Services

We hereby incorporate by reference the information set forth under “Independent Registered Public Accounting Firm’s Fees” in the definitive form of the Company’s Proxy Statement relating to the Annual Meeting of Shareholders to be held on ~~March 6, 2013.~~

February 9, 2017.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)(1) Financial Statements.

Our Consolidated Financial Statements are as set forth under Item 8 of this report on Form 10-K.

(a)(2) Financial Statement Schedules.

~~The following consolidated financial statement schedule of the Company is included as follows:~~

~~ESTERLINE TECHNOLOGIES CORPORATION AND SUBSIDIARIES~~

~~SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS~~

~~(In Thousands)~~

Reserve for Doubtful
Accounts Receivable


Balance at
Beginning
of Year



Charged
to Costs &
Expenses

      Other ¹ Deductions ²

Balance
at End
of Year



Fiscal Years

2012
   $ 7,063       $ 4,343       $ 0    $ (2,377 ) $ 9,029






2011
   $ 4,865       $ 1,407       $ 1,081    $ (290 ) $ 7,063






2010
   $ 5,297       $ 644       $ 0    $ (1,076 ) $ 4,865

¹	~~Acquisition-related addition.~~

²	~~Uncollectible accounts written off, net of recoveries.~~

All ~~other~~ schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

(a)(3) Exhibits.

See Exhibit Index on pages ~~95-99.~~

93-97.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


ESTERLINE TECHNOLOGIES CORPORATION
(Registrant)
By
By		/s/ Robert D. George
		Robert D. George
		Executive Vice President,
		Chief Financial Officer, and
		~~Vice President, and~~ Corporate Development
		~~Corporate Development~~
		(Principal Financial Officer)

Dated: ~~December 21, 2012~~November 23, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


/s/ ~~R. Bradley Lawrence~~Curtis C. Reusser	Chairman, President and Chief	~~December 21, 2012~~ November 23, 2016
(~~R. Bradley Lawrence)~~Curtis C. Reusser)	~~Chief~~ Executive Officer	~~Date~~
	(Principal Executive Officer)	Date

/s/ Robert D. George	Executive Vice President, Chief Financial ~~Officer, Vice President~~	~~December 21, 2012~~ November 23, 2016
(Robert D. George)	Officer, and Corporate Development	~~Date~~
	(Principal Financial Officer)	Date

/s/ Gary J. Posner	Corporate Controller and Chief	~~December 21, 2012~~ November 23, 2016
(Gary J. Posner)	~~Chief~~ Accounting Officer	~~Date~~
	(Principal Accounting Officer)	Date

/s/ ~~Robert W. Cremin~~Michael J. Cave	Director	~~December 21, 2012~~ November 23, 2016
(~~Robert W. Cremin)~~Michael J. Cave)		Date

/s/ Delores M. Etter	Director	~~December 21, 2012~~ November 23, 2016
(Delores M. Etter)		Date

/s/ Anthony P. Franceschini	Director	~~December 21, 2012~~ November 23, 2016
(Anthony P. Franceschini)		Date

/s/ Paul V. Haack	Director	~~December 21, 2012~~ November 23, 2016
(Paul V. Haack)		Date

/s/ Mary L. Howell

Director

~~December 21, 2012~~

November 23, 2016

(Mary L. Howell)

Date


/s/ Scott E. Kuechle	Director	~~December 21, 2012~~ November 23, 2016
(Scott E. Kuechle)		Date

/s/ ~~Jerry D. Leitman~~Nils E. Larsen	Director	~~December 21, 2012~~ November 23, 2016
(~~Jerry D. Leitman)~~Nils E. Larsen)		Date

/s/ James J. Morris	Director	~~December 21, 2012~~ November 23, 2016
(James J. Morris)		Date

/s/ Gary E. Pruitt	Director	~~December 21, 2012~~ November 23, 2016
(Gary E. Pruitt)		Date

Exhibit
~~/s/ H. Jay Winship~~	~~Director~~	~~December 21, 2012~~
~~(H. Jay Winship)~~			~~Date~~


~~Exhibit~~ Number		Exhibit Index

3.1			Restated Certificate of Incorporation for Esterline Technologies Corporation, dated June 6, 2002. (Incorporated by reference to Exhibit 3.1 to the ~~Company’s~~Company's Quarterly Report on Form 10-Q for the quarter ended April 26, 2002 [Commission File Number 1-6357], with Form of Certificate of Designation, dated December 11, 2002.) (Incorporated by reference to Exhibit 4.1 to ~~Esterline’s~~Esterline's Registration of Securities on Form 8-A filed December 12, 2002 [Commission File Number 1-6357].)

3.2			Amended and Restated By-laws of the Company, effective ~~December 13, 2012.~~June 5, 2014. (Incorporated by reference to Exhibit 3.1 to the ~~Company’s~~Company's Current Report on Form 8-K filed on ~~December 18, 2012~~June 9, 2014 [Commission File Number 1-6357].)

4.1			Indenture dated April 8, 2015, relating to ~~Esterline Technologies Corporation’s 6.625%~~TA Mfg Limited's 3.625% Senior Notes due ~~2017, dated as of March 1, 2007. (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on March 7, 2007 [Commission File Number 1-6357].)~~

~~4.2~~	Supplemental Indenture, relating to Esterline Technologies Corporation’s 6.625% Senior Notes due 2017, dated as of July 26, 2007. (Incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-4/A filed on August 6, 2007 [Commission File Number 333-144161].)

~~4.3~~	~~Indenture relating to Esterline Technologies Corporation’s 7% Senior Notes due 2020, dated as of August 2, 2010.~~2023. (Incorporated by reference to Exhibit 4.1 to the ~~Company’s~~Company's Current Report on Form 8-K filed on ~~August 2, 2010~~April 8, 2015 [Commission File Number 1-6357].)

~~4.4~~ 10.1		Supplemental Indenture, relating to Esterline Technologies Corporation’s 7% Senior Notes due 2020, dated as of August 2, 2010. (Incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on August 2, 2010 [Commission File Number 1-6357].)
*
~~10.1~~	~~Third Amendment to Credit Agreement, dated as of July 20, 2011, among~~ Esterline Technologies Corporation the Guarantors, Wells Fargo Bank, National Association, as Administrative Agent, and the lenders and other parties thereto. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 26, 2011 [Commission File Number 1-6357].)Fiscal Year 2017 Annual Incentive Compensation Plan.

10.2* 10.2		~~Summary of Non-Employee Director Compensation for Services on the Board of Directors of~~ *	Esterline Technologies ~~Corporation. (Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q~~Corporation Long-Term Incentive Performance Share Plan, for ~~the quarter ended January 29, 2010 [Commission File Number 1-6357].)~~fiscal years 2017 – 2019.

10.3* 10.3		*	Esterline Technologies Corporation Supplemental Retirement Income Plan. (Incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the year ended October 27, 2006 [Commission File Number 1-6357].)

10.4* 10.4		*	Esterline Technologies Corporation Fiscal Year 2016 Annual Incentive Compensation Plan. (Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended January 1, 2016 [Commission File Number 1-6357].)

10.5		*	Esterline Technologies Corporation Long-Term Incentive ~~Plan.~~Performance Share Plan, for fiscal years 2016 – 2018. (Incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended January 1, 2016 [Commission File Number 1-6357].)

10.6		*	Esterline Technologies Corporation Long-Term Incentive Plan, for fiscal years 2015 – 2017. (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 1, 2015 [Commission File Number 1-6357].)

10.7		*	Esterline Technologies Corporation Long-Term Incentive Plan, for fiscal years 2014 – 2016. (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended January ~~27, 2012~~31, 2014 [Commission File Number 1-6357].)

10.5* 10.8		Esterline Technologies Corporation Fiscal Year 2012 Annual Incentive Compensation Plan. (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended January 27, 2012 [Commission File Number 1-6357].)
*
10.6*	Esterline Technologies Supplemental Executive Retirement and Deferred Compensation Plan. (Incorporated by reference to Exhibit 10.43 to the Company’s Annual Report on Form 10-K for the year ended October 27, 2006 [Commission File Number 1-6357].)

10.7* 10.9		*	Esterline Technologies Corporation 2002 Employee Stock Purchase Plan, as amended on ~~March 3, 2010. (Incorporated by reference to Annex B of the Registrant’s Definitive Proxy Statement on Schedule 14A, filed on January~~November 22, ~~2010 [Commission File Number 1-6357].)~~

2016.


~~Exhibit~~ ~~Number~~		~~Exhibit Index~~

10.8* 10.10		*	Esterline Technologies Corporation 2004 Equity Incentive Plan, as amended on March 3, 2010. (Incorporated by reference to Annex A of the Registrant’s Definitive Proxy Statement on Schedule 14A, filed on January 22, 2010 [Commission File Number 1-6357].)

10.9*	10.11		*	Esterline Technologies Corporation 2013 Equity Incentive Plan, as amended and restated effective September 17, 2015. (Incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the year ended October 2, 2015 [Commission File Number 1-6357].)

	10.12		*	Form of Global Stock Option Agreement for Esterline Technologies Corporation Amended and Restated ~~1997 Stock Option~~2004 Equity Incentive Plan. (Incorporated by reference to Exhibit ~~99.1 to the Company’s Registration Statement on Form S-8 filed March 14, 2003 [Commission File Number 333-103846].)~~

10.10*		~~Form of Stock Option Agreement. (Incorporated by reference to Exhibit 10.36a~~10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended January ~~28, 2005~~25, 2013 [Commission File Number 1-6357].)

10.11*	10.13	~~Executive Officer Termination Protection Agreement.~~	*	Form of Restricted Stock Unit Option Agreement for Esterline Technologies Corporation Amended and Restated 2004 Equity Incentive Plan. (Incorporated by reference to Exhibit ~~10.19~~10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended January 25, 2013 [Commission File Number 1-6357].)

Exhibit
Number				Exhibit Index

	10.14		*	Form of Global Stock Option Agreement for Esterline Technologies Corporation 2013 Equity Incentive Plan (dated November 2016).

	10.15		*	Form of Restricted Stock Unit Options Agreement for Esterline Technologies Corporation 2013 Equity Incentive Plan.

	10.16		*	Form of Global Stock Option Agreement for Esterline Technologies Corporation 2013 Equity Incentive Plan. (Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 1, 2015 [Commission File Number 1-6357].)

	10.17		*	Form of Restricted Stock Unit Options Agreement for Esterline Technologies Corporation 2013 Equity Incentive Plan. (Incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 1, 2015 [Commission File Number 1-6357].)

	10.18		*	Restricted Stock Unit Agreement between Robert D. George and Esterline Technologies Corporation dated September 11, 2013. (Incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended October ~~28, 2005~~25, 2013 [Commission File Number 1-6357].)

10.12*	10.19		*	Restricted Stock Unit Agreement between Albert S. Yost and Esterline Technologies Corporation dated September 11, 2013. (Incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the year ended October 25, 2013 [Commission File Number 1-6357].)

	10.20		*	Restricted Stock Unit Agreement between Curtis C. Reusser and Esterline Technologies Corporation dated October 28, 2013. (Incorporated b reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the year ended October 31, 2014 [Commission File Number 1-6357].)

	10.21		*	Executive Officer Amended and Restated Termination Protection Agreement. (Incorporated by reference to Exhibit 10.19 of the Company's Annual Repor on Form 10-K for the year ended October 2, 2015 [Commission File Number 1-6357].)

	10.22		*	Offer Letter from Esterline Technologies Corporation to Frank Houston dated March 4, 2005. (Incorporated by reference to Exhibit 10.19e to the Company’s Current Report on Form 8-K ~~dated~~filed on March ~~29,~~31, 2005 [Commission File Number 1-6357].)

10.13*	10.23	Offer Letter from Esterline Technologies Corporation to Brad Lawrence dated December 11, 2006. (Incorporated by reference to Exhibit 10.19f to the Company’s Current Report on Form 8-K dated January 23, 2007 [Commission File Number 1-6357].)

10.14* *		Offer Memo from Esterline Technologies Corporation to Alain Durand dated June 14, 2011. (Incorporated by reference to Exhibit 10.3 to the Company’s ~~Current~~Quarterly Report on Form ~~8-K dated March 2,~~10-Q for the quarter ended January 27, 2012 [Commission File Number 1-6357].)

~~10.15~~	10.24		*	Relocation Agreement Between Alain M. Durand and Esterline Technologies Corporation dated June 19, 2014. (Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended January 30, 2015 [Commission File Number 1-6357].)

	10.25		*	Retirement Transition Agreement and Release between Esterline Technologies Corporation and Frank Houston effective August 14, 2015. (Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on August 13, 2015 [Commission File Number 1-6357].)

	10.26		*	Transition Agreement and Release between Esterline Technologies Corporation and Alain Durand effective August 14, 2015. (Incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on August 13, 2015 [Commission File Number 1-6357].)

	10.27		*	Offer Letter from Esterline Technologies Corporation to Paul Benson, dated November 6, 2014. (Incorporate by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended January 1, 2016 [Commission File Number 1-6357].)

	10.28		*	Offer Letter from Esterline Technologies Corporation to Roger Ross dated July 27, 2015. (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on August 13, 2015 [Commission File Number 1-6357].)

	10.29		*	Promotion Letter from Esterline Technologies Corporation to Marcia Mason dated August 1, 2012. (Incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended January 25, 2013 [Commission File Number 1-6357].)

Exhibit
Number				Exhibit Index

	10.30		*	Promotion Letter from Esterline Technologies Corporation to Albert Yost dated November 16, 2009. (Incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended January 25, 2013 [Commission File Number 1-6357].)

	10.31		*	Offer Letter from Esterline Technologies Corporation to Curtis C. Reusser dated September 11, 2013. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 12, 2013 [Commission File Number 1-6357].)

	10.32			Agreement for Lease for 4 & 5 Eastbrook Day Centre, Eastbrook Trading Centre among Sheldon Friendly Society, Darchem Engineering Limited and Esterline Technologies Corporation, dated ~~December 13, 2012,~~as of March 10, 2016. (Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 1, 2016 [Commission File Number 1-6357].)

	10.33			Deed, by and among, Sheldon Friendly Society, Darchem Engineering Limited, and Darchem Holdings Limited dated March 25, 2008. (Incorporate by reference to Exhibit 10.50 to the Company's Annual Report on Form 10-K for the year ended October 2, 2015 [Commission File Number 1-6357].)

	10.34			Seventh Amendment dated as of April 9, 2015, among Esterline Technologies Corporation, ~~Relational Investors,~~the foreign borrowers party thereto, the subsidiary guarantors party thereto, Wells Fargo Bank, National Association, as Administrative Agent, and the lenders thereto. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 13, 2015 [Commission File Number 1-6357].)

	10.35			Agreement, dated October 18, 2016, among Esterline Technologies Corporation, First Pacific Advisors, LLC and the other parties named in the Letter Agreement. (Incorporated by reference to Exhibit ~~99.1~~10.1 to the Company's Current Report on 8-K dated October 18, 2016 [Commission File Number 1-6357].)

	10.36			Consent Agreement between Esterline Technologies Corporation and the U.S. Department of State Bureau of Political Military Affairs filed on March 6, 2014. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated ~~December 18, 2012~~March 5, 2014 [Commission File Number 1-6357].)

~~10.16~~	10.37	~~Real Property Lease~~		Amended and ~~Sublease,~~Restated Master Acquisiton Agreement by and among Barco NV, Barco Inc., Barco Integrated Solutions NV and Esterline Technologies Corporation dated ~~June 28, 1996, between 810 Dexter L.L.C. and Korry Electronics Co.~~as of November 14, 2014. (Incorporated by reference to Exhibit ~~10.22~~10.48 to the ~~Company’s~~Company's Annual Report on Form 10-K for the year ended October ~~28, 2005~~31, 2014 [Commission File Number 1-6357].)

~~10.17~~		Industrial Lease dated July 17, 1984, between 901 Dexter Associates and Korry Electronics Co., First Amendment to Lease dated May 10, 1985, Second Amendment to Lease dated June 20, 1986, Third Amendment to Lease dated September 1, 1987, and Notification of Option Exercise dated January 7, 1991, relating to the manufacturing facility of Korry Electronics at 901 Dexter Avenue N., Seattle, Washington. (Incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended October 28, 2005 [Commission File Number 1-6357].)

~~10.18~~		Fourth Amendment dated July 27, 1994, to Industrial Lease dated July 17, 1984 between Houg Family Partnership, as successor to 901 Dexter Associates, and Korry Electronics Co. (Incorporated by reference to Exhibit 10.4a to the Company’s Annual Report on Form 10-K for the year ended October 28, 2005 [Commission File Number 1-6357].)

~~10.19~~		Industrial Lease dated July 17, 1984, between 801 Dexter Associates and Korry Electronics Co., First Amendment to Lease dated May 10, 1985, Second Amendment to Lease dated June 20, 1986, Third Amendment to Lease dated September 1, 1987, and Notification of Option Exercise dated January 7, 1991, relating to the manufacturing facility of Korry Electronics at 801 Dexter Avenue N., Seattle, Washington. (Incorporated by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the year ended October 28, 2005 [Commission File Number 1-6357].)


~~Exhibit~~ ~~Number~~		~~Exhibit Index~~

~~10.20~~ 10.38		Fourth Amendment dated March 28, 1994, to Industrial Lease dated July 17, 1984, between Michael Maloney and the Bancroft & Maloney general partnership, as successor to 801 Dexter Associates, and Korry Electronics Co. (Incorporated by reference to Exhibit 10.5a to the Company’s Annual Report on Form 10-K for the year ended October 28, 2005 [Commission File Number 1-6357].)

~~10.21~~		Property lease between Slibail Immobilier and Norbail Immobilier and Auxitrol S.A., dated April 29, 1997, relating to the manufacturing facility of Auxitrol at 5, allée Charles Pathé, 18941 Bourges Cedex 9, France, effective on the construction completed date (December 5, 1997). (Incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the year ended October 28, 2005 [Commission File Number 1-6357].)

~~10.22~~	10.39		Industrial and Build-to-Suit Purchase and Sale Agreement between The Newhall Land and Farming Company, Esterline Technologies Corporation and TA Mfg. Co., dated February 13, 1997, including Amendments, relating to premises located at 28065 West Franklin Parkway, Valencia, CA. (Incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the year ended October 28, 2005 [Commission File Number 1-6357].)

~~10.23~~	10.40		Lease Agreement, dated as of February 27, 1998, between Glacier Partners and Advanced Input Devices, Inc., as amended by Lease Amendment #1, dated February 27, 1998. (Incorporated by reference to Exhibit 10.31 to the Company’s Annual Report on Form 10-K for the year ended October 27, 2000 [Commission File Number 1-6357].)

~~10.24~~	10.41		Lease Amendment #2 between Glacier Partners and Advanced Input Devices, Inc., dated July 2, 2002, and Lease Amendment #3 between Glacier Partners and Advanced Input Devices, Inc., dated September 18, 2009. (Incorporated by reference to Exhibit 10.4 to the ~~Company’s~~Company's Annual Report on Form 10-K for the year ended October 30, 2009 [Commission File Number 1-6357].)

Exhibit
Number		Exhibit Index
~~10.25~~
	10.42	Lease Agreement, dated as of August 6, 2003, by and between the Prudential Insurance Company of America and Mason Electric Co., relating to premises located at Sylmar, California. (Incorporated by reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-K for the year ended October 31, 2003 [Commission File Number 1-6357].)

~~10.26~~	10.43	Occupation Lease of Buildings known as Phases 3 and 4 on the Solartron Site at Victoria Road, Farnborough, Hampshire between J Sainsbury Developments Limited and Weston Aerospace Limited, dated July 21, 2000. (Incorporated by reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K for the year ended October 31, 2003 [Commission File Number 1-6357].)

~~10.27~~	10.44	Lease Agreement dated as of March 19, 1969, as amended, between Leach Corporation and Gin Gor Ju, Trustee of Ju Family Trust, relating to premises located in Orange County. (Incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the year ended October 29, 2004 [Commission File Number 1-6357].)

~~10.28~~	10.45	Lease Agreement, dated November 29, 2005, between Lordbay Investments Limited, Darchem Engineering Limited and Darchem Holdings Limited relating to premises located at Units 4 and 5 Eastbrook Road, London Borough of Gloucestershire Gloucester. (Incorporated by reference to Exhibit 10.38 to the Company’s Quarterly Report on Form 10-Q for the quarter ended April 28, 2006 [Commission File Number 1-6357].)

~~10.29~~	10.46	Amendment No. 1 dated as of November 23, 2005, to Lease Agreement dated as of March 1, 1994, between Highland Industrial Park, Inc. and Armtec Countermeasures Company. (Incorporated by reference to Exhibit 10.41 to the Company’s Quarterly Report on Form 10-Q for the quarter ended April 28, 2006 [Commission File Number 1-6357].)


~~Exhibit~~ ~~Number~~		~~Exhibit Index~~

~~10.30~~ 10.47		Lease Agreement dated November 4, 2002, between American Ordnance LLC and FR Countermeasures, relating to premises located at 25A Ledbetter Gate Road, Milan, Tennessee. (Incorporated by reference to Exhibit 10.44 to the Company’s Annual Report on Form 10-K for the year ended October 27, 2006 [Commission File Number 1-6357].)

~~10.31~~		Lease Agreement between Capstone PF LLC and Korry Electronics Co. dated as of March 26, 2008. (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 2, 2008 [Commission File Number 1-6357].)

~~10.32~~	10.48		Exhibit C to Lease Agreement between Capstone PF LLC and Korry Electronics Co. dated as of March 26, 2008. (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended August 1, 2008 [Commission File Number 1-6357].)

~~10.33~~	10.49	First Amendment to Building Lease and Sublease, dated June 25, 2008, between Capstone PF LLC and Korry Electronics Co. (Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended August 1, 2008 [Commission File Number 1-6357].)

~~10.34~~		Second Amendment to Building Lease and Sublease, dated July 30, 2008, between Capstone PF LLC and Korry Electronics Co. (Incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended August 1, 2008 [Commission File Number 1-6357].)

~~10.35~~	10.50		Subordination, Nondisturbance and Attornment Agreement and Estoppel Certificate, dated July 30, 2008, between Keybank National Association and Korry Electronics Co. (Incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended August 1, 2008 [Commission File Number 1-6357].)

~~10.36~~	10.51		Lease Extension Agreement between Weir Redevelopment Company and Kirkhill TA dated October 30, 2009. (Incorporated by reference to Exhibit 10.4 to the ~~Company’s~~Company's Quarterly Report on Form 10-Q for the quarter ended January 29, 2010 [Commission File Number 1-6357].)

~~10.37~~	10.52		First and Second Amendment to Office Lease Agreement between City Center Bellevue Property LLC, a Delaware limited partnership, and Esterline Technologies Corporation, a Delaware corporation, dated April 14, 2011, and May 4, 2011. (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 29, 2011 [Commission File Number 1-6357].)

~~10.38~~	10.53	~~Agreement~~	First Amendment to Lease between The Prudential Insurance Company of ~~purchase~~America and ~~sale and joint escrow instruction between Kirkhill-TA~~Mason Electric, Co.~~, a California corporation, and Absolute Screen Print, Inc., a California corporation,~~ dated ~~August 11, 2011.~~July 29, 2004. (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended July ~~29, 2011~~26, 2013 [Commission File Number 1-6357].)

~~10.39~~	10.54	~~Agreement for the sale~~	Second Amendment to Lease between Sylmar Cascades Properties, L.P. and ~~purchase of the entire issued share capital of Muirhead Aerospace Limited between Esterline Technologies Limited, Esterline Technologies Corporation, EMA Holding UK Limited, and Ametek, Inc.~~Mason Electric, Co. dated ~~November 3, 2008.~~January 19, 2007. (Incorporated by reference to Exhibit ~~10.33 to the Company’s Annual Report on Form 10-K for the year ended October 28, 2011 [Commission File Number 1-6357].)~~

~~10.40~~		Stock Purchase Agreement between NMC Group, Inc. and Esterline Technologies Corporation dated November 17, 2008. (Incorporated by reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-K for the year ended October 29, 2010 [Commission File Number 1-6357].)

~~10.41~~		~~Share Sale and Purchase Agreement Relating to Racal Acoustics Global Limited dated December 21, 2008. (Incorporated by reference to Exhibit 10.5~~10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~January 30, 2009~~July 26, 2013 [Commission File Number 1-6357].)

9896

Exhibit
~~Exhibit~~ Number			Exhibit Index

~~10.42~~	10.55	~~Stock Purchase Agreement by~~	Third Amendment to Lease between Sylmar Cascades Properties, L.P. and ~~between Measurement Specialties, Inc., Pressure Systems, Inc. and Esterline Technologies Corporation~~Mason Electric, Co. dated September 8, 2010, relating to the sale of all issued and outstanding shares of Pressure Systems, Inc. (Incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the year ended October 29, 2010 [Commission File Number 1-6357].)

~~10.43~~		~~Stock Purchase Agreement By and Among Eclipse Electronic Systems, Inc., Its Shareholders, and Esterline Technologies Corporation dated as of December 28, 2010.~~January 1, 2013. (Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~January 28, 2011~~July 26, 2013 [Commission File Number 1-6357].)

~~10.44~~	10.56	~~Share Purchase~~	Third Amendment to Office Lease Agreement between ~~FCPR Sagard, FCPR Sagard Connecteurs, Individuals, The Mezzanine Sellers as Sellers~~City Center Bellevue Property LLC, a Delaware limited partnership, and Esterline Technologies Corporation, ~~as Buyer,~~a Delaware corporation, dated ~~May 23, 2011.~~August 19, 2013. (Incorporated by reference to Exhibit ~~10.1~~10.49 to the ~~Company’s Quarterly~~Company's Annual Report on Form ~~10-Q~~10-K for the ~~quarter~~year ended ~~April 29, 2011~~October 2, 2015 [Commission File Number 1-6357].)

~~11.1~~	10.57		Lease Agreement between Industrias Asociados Maquiladoras, S.A. de C.V. and Sunbank de Mexico, S. de R.L. de C.V. dated as of September 1, 2015, as amended by the First Addendum dated September 19, 2015, the Second Addendum dated May 5, 2016, and the Third Addendum dated May 23, 2016.

	10.58		Lease Agreement between Mex-Industrial Assets, S. de R.L. de C.V. and Esterline Mexico, S. de R.L. de C.V. dated June 4, 2014, as amended by the Amendment dated December 2, 2015, the Second Amendment dated June 1, 2016, and the Third Amendment dated November 3, 2016.

	10.59		Lease Agreement between Industrias Asociados Maquiladoras, S.A. de C.V. and Esterline Mexico, S. de R.L. de C.V. dated October 8, 2007, as amended by the First Amendment dated December 1, 2012.

	10.60		Lease Agreement between Inmobiliaria Promotora S.A. de C.V. (f/k/a Promotora Industrial Tijuana, S.A. de C.V.) and Leach International de Mexico, S. de R.L. de C.V. dated June 1, 2000, as amended by the First Addendum dated April 17, 2001, the Second Addendum dated March 23, 2005, and the Third Amendment dated October 8, 2014.

11.1			Schedule setting forth computation of earnings per share for the five fiscal years ended ~~October 26, 2012.~~September 30, 2016.

12.1			Statement of Computation of Ratio of Earnings to Fixed Charges.

21.1			List of subsidiaries.

23.1			Consent of Independent Registered Public Accounting Firm.

31.1			Certification of Chief Executive Officer.

31.2			Certification of Chief Financial Officer.

32.1			Certification (of ~~R. Bradley Lawrence)~~Curtis C. Reusser) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2			Certification (of Robert D. George) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS			XBRL Instance Document

101.SCH			XBRL Taxonomy Extension Schema

101.CAL			XBRL Taxonomy Extension Calculation Linkbase

101.DEF			XBRL Taxonomy Extension Definition Linkbase

101.LAB			XBRL Taxonomy Extension Label Linkbase

101.PRE			XBRL Taxonomy Extension Presentation Linkbase

*	* Indicates management contract or compensatory plan or arrangement.

9997

Delaware		13-2595091
~~Delaware~~		~~13-2595091~~
(State or other jurisdiction		~~(I.R.S. Employer~~
of incorporation or organization)		(I.R.S. Employer Identification No.)

Title of each class
		Name of each exchange on which registered
~~Title of each class~~		~~on which registered~~
Common Stock ($.20 par value)		New York Stock Exchange

Large accelerated filer	☑	Accelerated filer	☐

Non-accelerated filer	☐(Do not check if a smaller reporting company)	Smaller reporting company	☐


Name		Position with the Company		Age
~~R. Bradley Lawrence~~
Curtis C. Reusser	Chairman, President and Chief Executive Officer		65	56
Robert D. George		Executive Vice President, Chief Financial Officer and Corporate Development	60
Paul P. Benson	Executive Vice President and
		~~Corporate Development~~		56
~~Alain M. Durand~~ Chief Human Resources Officer		~~Group Vice President~~		45
~~C. Thomas Heine~~		~~Vice President, Human Resources~~		64
~~Frank E. Houston~~52		~~Senior Group Vice President~~		61
Marcia J. Mason		Executive Vice President and General Counsel ~~and~~	64
Roger A. Ross	Executive Vice President ~~Administration~~and President, Sensors & Systems		60	48
Albert S. Yost		~~Group~~ Executive Vice President and ~~Treasurer~~President, Advanced Materials and Avionics & Controls		47	51


	Long-Term Debt – Variable Rate
		Principal	Average
Maturing in:		Amount	Rates	¹

2013	$	8,089	*
2014		8,089	*
2015		8,089	*
2016		295,973	*
2017		0	*
2018 and thereafter		0	*

Total	$	320,240


Fair Value at
10/26/2012	$	320,240


	Long-Term Debt – Fixed Rate			Long-Term Debt – Variable Rate
								Average
		Principal	Average		Notional	Average		Receive
Maturing in:		Amount	Rates		Amount	Pay Rate	¹	Rate

2013	$	0	6.625%	$	0	*		6.625%
2014		0	6.625%		0	*		6.625%
2015		0	6.625%		0	*		6.625%
2016		0	6.625%		0	*		6.625%
2017		100,000	6.625%		100,000	*		6.625%
2018 and thereafter		0	0.0%		0	*		0.0%

Total	$	100,000		$	100,000


Fair Value at
10/26/2012	$	103,630		$	2,207


In Thousands	Avionics & Controls			Sensors & Systems			Advanced Materials			Total

Balance, October 29, 2010	$	438,339		$	87,389		$	214,002		$	739,730
Goodwill from acquisitions		67,613			343,053			0			410,666
Foreign currency translation adjustment		7,556			5,203			570			13,329


Balance, October 28, 2011		513,508			435,645			214,572			1,163,725
Sale of product line		(523	)		0			0			(523	)
Goodwill adjustments		(234	)		24,280			0			24,046
Goodwill impairment		(52,169	)		0			0			(52,169	)
Foreign currency translation adjustment		(4,490	)		(31,505	)		(122	)		(36,117	)

Balance, October 26, 2012	$	456,092		$	428,420		$	214,450		$	1,098,962


Fiscal Year

2013	$	53,226
2014		53,432
2015		52,223
2016		51,841
2017		50,883


	Esterline Defined Benefit Pension Plans						CMC Defined Benefit Pension Plans
	2012			2011			2012			2011

Principal assumptions as of fiscal year end:
Discount Rate		3.85	%		5.0	%		4.35	%		5.0	%
Rate of increase in future compensation levels		4.5	%		4.5	%		3.1	%		3.1	%
Assumed long-term rate of return on plan assets		7.0	%		7.5	%		6.5 – 6.75	%		7.0	%

	Esterline Post-Retirement Benefit Plans						CMC Post-Retirement Benefit Plans
	2012			2011			2012			2011
Principal assumptions as of fiscal year end:
Discount Rate		3.85	%		5.0	%		4.35	%		5.0	%
Initial weighted average health care trend rate		6.0	%		6.0	%		3.7	%		3.7	%
Ultimate weighted average health care trend rate		6.0	%		6.0	%		3.2	%		3.2	%


In Thousands	Location of Gain (Loss)	2012			2011

Fair Value Hedges:
Interest rate swap contracts	Interest Expense	$	2,388		$	2,547
Embedded derivatives	Sales	$	433		$	929

Cash Flow Hedges:
Foreign currency forward exchange contracts:
Amount of (loss) gain recognized in AOCI (effective portion)	AOCI	$	(4,343	)	$	(18,307	)
Amount of gain (loss) reclassified from AOCI into income	Sales	$	784		$	10,092

Net Investment Hedges:
Euro term loan	AOCI	$	14,812		$	5,054


		Total		Less than 1 year		1-3 years		4-5 years		After 5 years

Purchase obligations	$	653,641	$	613,759	$	29,484	$	5,764	$	4,634


Current assets	$	228,199
Property, plant and equipment		91,843
Intangible assets subject to amortization
Programs (15 year weighted average useful life)		224,296
Trade name (10 year weighted average useful life)		45,709
Goodwill		378,256
Other assets		6,900

Total assets acquired		975,203

Current liabilities assumed		110,596
Long-term liabilities assumed		129,533
Noncontrolling interest		8,369

Net assets acquired	$	726,705


In Thousands	2011

Pro forma net sales	$	1,972,079
Pro forma net income	$	159,353

Basic earnings per share as reported	$	4.36
Pro forma basic earnings per share	$	5.22

Diluted earnings per share as reported	$	4.27
Pro forma diluted earnings per share	$	5.12


In Thousands, Except Per Share Amounts

Fiscal Year 2012		Fourth			Third			Second			First

Net sales		$	530,656		$	485,949		$	504,831		$	470,882
Gross margin			204,253			172,096			184,523			158,081

Income from continuing operations			61,660	¹		(17,104	) ^2,3,4		45,191	⁵		22,788	⁶
Income from discontinued operations			0			0			0			0

Net earnings		$	61,660		$	(17,104	)	$	45,191		$	22,788


Earnings per share – basic
Continuing operations		$	2.00		$	(.55	)	$	1.47		$	.74
Discontinued operations	��		.00			.00			.00			.00

Earnings per share – basic		$	2.00		$	(.55	)	$	1.47		$	.74


Earnings per share – diluted
Continuing operations		$	1.97		$	(.55	)	$	1.44		$	.73
Discontinued operations			.00			.00			.00			.00

Earnings per share – diluted⁹		$	1.97		$	(.55	)	$	1.44		$	.73


Fiscal Year 2011		Fourth			Third			Second			First

Net sales		$	502,397		$	409,512		$	435,277		$	370,799
Gross margin			153,112			143,539			160,947			132,122

Income from continuing operations			19,412	^7,8,9,10		37,741	¹¹		45,951	¹²		29,983
Income from discontinued operations			28			(46	)		(37	)		8

Net earnings		$	19,440		$	37,695		$	45,914		$	29,991


Earnings per share – basic
Continuing operations		$	.64		$	1.23		$	1.51		$	.99
Discontinued operations			.00			.00			.00			.00

Earnings per share – basic		$	.64		$	1.23		$	1.51		$	.99


Earnings per share – diluted
Continuing operations		$	.62		$	1.21		$	1.47		$	.97
Discontinued operations			.00			.00			.00			.00

Earnings per share – diluted¹³		$	.62		$	1.21		$	1.47		$	.97


In Thousands	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Total

Assets

Current Assets
Cash and cash equivalents	$	16,770		$	1,324		$	142,581	$	0		$	160,675
Cash in escrow		5,016			0			0		0			5,016
Accounts receivable, net		181			140,631			242,550		0			383,362
Inventories		0			159,573			250,264		0			409,837
Income tax refundable		0			4,832			0		0			4,832
Deferred income tax benefits		22,874			105			23,021		0			46,000
Prepaid expenses		76			5,391			15,873		0			21,340
Other current assets		134			552			3,945		0			4,631

Total Current Assets		45,051			312,408			678,234		0			1,035,693

Property, Plant & Equipment, Net		2,811			161,998			191,592		0			356,401
Goodwill		0			314,641			784,321		0			1,098,962
Intangibles, Net		0			126,142			482,903		0			609,045
Debt Issuance Costs, Net		7,508			0			1,310		0			8,818
Deferred Income Tax Benefits		36,610			(283	)		61,625		0			97,952
Other Assets		8,082			1,561			10,603		0			20,246
Amounts Due From (To) Subsidiaries		0			491,143			0		(491,143	)		0
Investment in Subsidiaries		2,457,859			1,179,938			170,223		(3,808,020	)		0

Total Assets	$	2,557,921		$	2,587,548		$	2,380,811	$	(4,299,163	)	$	3,227,117


Liabilities and Shareholders’ Equity

Current Liabilities
Accounts payable	$	1,944		$	26,351		$	80,394	$	0		$	108,689
Accrued liabilities		17,495			79,103			172,955		0			269,553
Credit facilities		0			0			0		0			0
Current maturities of long-term debt		0			174			10,436		0			10,610
Deferred income tax liabilities		213			(1	)		4,913		0			5,125
Federal and foreign income taxes		(3,418	)		(23,822	)		29,609		0			2,369

Total Current Liabilities		16,234			81,805			298,307		0			396,346

Credit Facilities		240,000			0			0		0			240,000
Long-Term Debt, Net		429,152			44,107			124,801		0			598,060
Deferred Income Tax Liabilities		46,730			(7	)		158,475		0			205,198
Pension and Post-Retirement Obligations		20,507			54,886			56,681		0			132,074
Other Liabilities		5,189			4,194			25,521		0			34,904
Amounts Due To (From) Subsidiaries		179,574			0			369,962		(549,536	)		0
Shareholders’ Equity		1,620,535			2,402,563			1,347,064		(3,749,627	)		1,620,535

Total Liabilities and Shareholders’ Equity	$	2,557,921		$	2,587,548		$	2,380,811	$	(4,299,163	)	$	3,227,117


Reserve for Doubtful Accounts Receivable		Balance at Beginning of Year		Charged to Costs & Expenses		Other	¹		Deductions	²		Balance at End of Year

Fiscal Years

2012	$	7,063	$	4,343	$	0		$	(2,377	)	$	9,029


2011	$	4,865	$	1,407	$	1,081		$	(290	)	$	7,063


2010	$	5,297	$	644	$	0		$	(1,076	)	$	4,865