Esterline Technologies 8-K Results of Operations and Financial Condition

Esterline Corporation 500 108th Avenue NE Suite 1500 Bellevue, WA 98004 Tel: 425-453-9400 Fax: 425-453-2916 www.esterline.com NYSE symbol: ESL News

FOR IMMEDIATE RELEASE

Contact:Brian Keogh425-453-9400

ESTERLINE REPORTS 2Q EARNINGS OF $19.8 MILLION;

$.76 PER SHARE, ON $312.3 MILLION SALES

Revenues up 26%; Earnings up 12% Compared with Last Year

BELLEVUE, Wash., May 31, 2007 — Esterline Corporation (NYSE/ESL www.esterline.com), a leading specialty manufacturer serving aerospace/defense markets, today reported fiscal 2007 second quarter (ended April 27) net earnings of $19.8 million, or $.76 per diluted share, on $312.3 million sales. Year-ago net earnings were $17.7 million, or $.68 per diluted share, on sales of $247.9 million.

Robert W. Cremin, Esterline CEO said, “…we really like the way fiscal 2007 is shaping up.  The 12% earnings improvement in the quarter was particularly gratifying given a more than 50% year-over-year increase in interest expense associated with the financing of the recent CMC acquisition, and the initial impact of acquisition accounting that requires revaluing acquired inventories as of the acquisition date.”

Regarding the acquisition, Cremin said Esterline’s fiscal third quarter will be burdened with the majority of the acquisition accounting costs. However, he said “…the more exposure we have to CMC the more we like it, and more importantly, the combined strength of Esterline’s and CMC’s fourth quarter will absorb the short-term dilution of the CMC acquisition.” Underscoring this performance, the company increased its full-year earnings guidance to a range of $2.50 - $2.60 per share.

Backlog at quarter end totaled $954 million. Cremin said, “…backlog strength is one of the markers we use to judge forward momentum.” He noted that CMC contributed $252 million to backlog in the quarter, and pointed out that “…even without the CMC contribution, Esterline’s backlog grew 7% in the past three months and 11% compared to last year.” He noted that the company’s backlog reflects only fully funded orders with firm release dates.

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Page 2 of 4 — Esterline Reports 2Q07 Earnings

Consolidated gross margin in the quarter was 31.7% compared with 32.6% a year ago. The purchase accounting costs associated with CMC were the primary cause of the change. Selling, general and administrative expenses (SG&A) totaled $50.4 million in the second quarter of 2007, compared with $41.0 million a year ago, again principally due to incremental SG&A expenses from acquisitions. As a percent of sales, SG&A continued to decline, dropping to 16.1% in the second quarter of 2007 compared with 16.5% in the prior-year period.

Research, development and engineering expense during the quarter was $19.1 million, or 6.1% of sales, reflecting CMC’s cockpit integration activity on the T-6 military trainer program, and a spike in activity levels on both the 787 and the A400M as Boeing and Airbus push toward critical program dates. R&D spending is expected to decline during the second half of fiscal 2007.

Interest expense for the second fiscal quarter of 2007 was $8.7 million compared with $5.8 million a year ago, reflecting increased borrowings to finance acquisitions and working capital requirements.

Year-to-date net earnings were $32.6 million, or $1.25 per diluted share, on sales of $569.5 million. For the first six months of fiscal 2006, comparable earnings were $26.0  million, or $1.01 per diluted share, on sales of $453.6 million.

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

EDITOR: See attached Consolidated Statement of Operations and Consolidated Balance Sheet

Page 3 of 4 — Esterline Reports 2Q07 Earnings

ESTERLINE TECHNOLOGIES CORPORATION

Consolidated Statement of Operations

In thousands, except per share amounts

	Three months ended						Six months ended
	April 27			April 28,			April 27,			April 28,
	2007			2006			2007			2006
Segment Sales
Avionics & Controls	$	108,314		$	71,864		$	183,819		$	134,306
Sensors & Systems		98,123			83,177			184,314			156,647
Advanced Materials		105,843			92,898			201,391			162,651
Net Sales		312,280			247,939			569,524			453,604
Cost of Sales		213,418			167,200			396,093			310,006
		98,862			80,739			173,431			143,598
Expenses
Selling, general and administrative		50,401			40,973			92,776			76,863
Research, development and engineering		19,082			12,939			32,633			23,272
Total Expenses		69,483			53,912			125,409			100,135
Other
Other (income) expense		27			(263	)		17			(462	)
Insurance recovery		(2,810	)		--			(4,457	)		--
Total Other		(2,783	)		(263	)		(4,440	)		(462	)
Operating Earnings		32,162			27,090			52,462			43,925
Interest income		(785	)		(998	)		(1,289	)		(1,857	)
Interest expense		8,728			5,790			14,252			10,295
Loss on extinguishment of debt		--			--			--			2,156
Other Expense, Net		7,943			4,792			12,963			10,594
Income Before Income Taxes		24,219			22,298			39,499			33,331
Income Tax Expense		4,494			4,307			6,879			6,863
Income Before Minority Interest		19,725			17,991			32,620			26,468
Minority Interest		35			(332	)		(59	)		(445	)
Net Earnings	$	19,760		$	17,659		$	32,561		$	26,023
Earnings Per Share:
Basic	$	.77		$	.70		$	1.27		$	1.03
Diluted	$	.76		$	.68		$	1.25		$	1.01
Weighted Average Number of Shares Outstanding—Basic		25,590			25,385			25,560			25,361
Weighted Average Number of Shares Outstanding—Diluted		25,997			25,817			25,964			25,780

Page 4 of 4 — Esterline Reports 2Q07 Earnings

Consolidated Balance Sheet
In thousands	April 27,		April 28,
	2007		2006
Assets
Current Assets
Cash and cash equivalents	$	60,662	$	46,256
Cash in escrow		1,275		4,315
Accounts receivable, net		238,878		171,236
Inventories		241,670		168,679
Income tax refundable		14,391		--
Deferred income tax benefits		31,183		26,672
Prepaid expenses		13,366		10,469
Total Current Assets		601,425		427,627
Property, Plant and Equipment, Net		213,840		166,679
Other Non-Current Assets
Goodwill		583,054		360,784
Intangibles, net		374,315		245,845
Debt issuance costs, net		10,418		5,824
Deferred income tax benefits		13,465		17,773
Other assets		29,114		25,555
	$	1,825,631	$	1,250,087
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable	$	79,824	$	59,975
Accrued liabilities		168,311		108,790
Credit facilities		49,573		18,413
Current maturities of long-term debt		8,760		3,077
Federal and foreign income taxes		8,220		5,751
Total Current Liabilities		314,688		196,006
Long-Term Liabilities
Long-term debt, net of current maturities		559,061		279,756
Deferred income taxes		115,708		74,806
Other liabilities		43,956		34,527
Commitments and Contingencies		--		--
Minority Interest		3,283		3,158
Shareholders' Equity		788,935		661,834
	$	1,825,631	$	1,250,087