Esterline Technologies 8-K Esterline Reports Record Fourth Quarter Results

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 Keogh
	425/453-9400

ESTERLINE REPORTS RECORD FOURTH QUARTER RESULTS

Income from continuing operations $41.4 million, or $1.38 per share, on $404.4 million sales

BELLEVUE, Wash., December 11, 2008 – Esterline Corporation (NYSE: ESLwww.esterline.com), a leading specialty manufacturer serving aerospace/defense markets, today reported fiscal 2008 fourth quarter and full-year results for the period ended October 31, 2008. Net income from continuing operations for the quarter was a record $41.4 million, or $1.38 per diluted share, on sales of $404.4 million. For the same period last year, income from continuing operations was $20.5 million, or $.76 per diluted share, on sales of $355.7 million. (Continuing operations exclude results from Esterline’s Muirhead Aerospace subsidiary, divested on November 3, 2008.)

For the full year ended October 31, 2008, Esterline reported net earnings from continuing operations of $113.5 million, or $3.80 per diluted share, on sales of $1.48 billion, compared with net earnings from continuing operations of $87.8 million, or $3.34 per diluted share, on $1.21 billion in sales in 2007. Full year 2007 results included an after-tax gain of $26.2 million, or $1.00 per diluted share, due to an insurance recovery.

Robert W. Cremin, Esterline CEO, said, “…with strong organic growth we recorded another solid year, benefiting from improved performance across the board in each of our three operating segments.” Cremin said that top-line organic growth was 14% and 17% respectively for the fourth quarter and full year, when compared to same-period 2007 results. He pointed out that fourth quarter earnings were bolstered by the recently strengthening U.S. dollar. Noting that aerospace pricing is primarily denominated in U.S. dollars, Cremin said that with “…nearly half of our manufacturing operations outside the U.S.—most notably in Canada, France and the U.K.—the headwind we faced for most of the year has shifted in our favor.”

-more-

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Fourth quarter 2008 research, development and engineering (R&D) expense totaled $18.7 million, or 4.6% of sales, compared with $19.9 million, or 5.6% of sales, in the same quarter a year ago. Full-year 2008 R&D totaled $86.8 million, or 5.9% of sales, compared with $66.9 million, or 5.5% of sales, last year. Cremin noted that the recent downward trend reflects “…a return to more normalized R&D investment following several years of successful efforts to secure Tier 1 positions on a number of major programs that will fly for decades to come.” He added that, “…for the hundreds of active aircraft platforms flying today, our total dollar content per aircraft is growing steadily due to our constant technology advancements, new products and market share gains.”

Cremin also noted the company’s cash generating capability, pointing out that Esterline retired approximately $64 million in term loans and other debt during the year.

Backlog at fiscal year end was $1.1 billion, ahead of last year by nearly 14%. Orders received in the fourth quarter totaled $469.4 million—up 31% on both a year-over-year and sequential basis. Cremin said he was optimistic about the company’s prospects, and estimated full-year 2009 earnings per share from continuing operations to be in the range of $3.70 to $3.90.

Cremin said, “…our core strategy positions us to perform well no matter where we are in a cycle.” He pointed to Esterline’s diverse product mix, balanced global market position, and underlying entrepreneurial culture as “…key underpinnings of achieving success during difficult market conditions.”

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

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ESTERLINE TECHNOLOGIES CORPORATION

Consolidated Statement of Operations (unaudited)

In thousands, except per share amounts

	Three months ended						Fiscal year ended
	Oct 31, 2008			Oct 26, 2007			Oct 31, 2008			Oct 26, 2007
Segment Sales
Avionics & Controls	$	173,459		$	151,611		$	611,467		$	461,990
Sensors & Systems		89,987			84,363			384,180			316,485
Advanced Materials		140,904			119,721			487,525			428,558
Net Sales		404,350			355,695			1,483,172			1,207,033
Cost of Sales		263,989			242,595			992,853			833,977
		140,361			113,100			490,319			373,056
Expenses
Selling, general and administrative		61,200			58,594			239,282			199,825
Research, development and engineering		18,660			19,883			86,798			66,891
Total Expenses		79,860			78,477			326,080			266,716
Other
Other expense		—			—			86			24
Insurance recovery		—			(153	)		—			(37,467	)
Total Other		—			(153	)		86			(37,443	)
Operating Earnings From Continuing
Operations		60,501			34,776			164,153			143,783
Interest income		(1,077	)		(1,209	)		(4,374	)		(3,095	)
Interest expense		7,405			10,257			29,922			35,300
Gain on derivative financial instrument		—			—			(1,850	)		—
Loss on extinguishment of debt		—			1,100			—			1,100
Other Expense, Net		6,328			10,148			23,698			33,305
Income From Continuing Operations
Before Income Taxes		54,173			24,628			140,455			110,478
Income Tax Expense		12,582			4,123			26,563			22,563
Income From Continuing Operations
Before Minority Interest		41,591			20,505			113,892			87,915
Minority Interest		(154	)		(36	)		(383	)		(153	)
Income From Continuing Operations		41,437			20,469			113,509			87,762
Income From Discontinued Operations,
Net of Tax		2,445			419			7,024			4,522
Net Earnings	$	43,882		$	20,888		$	120,533		$	92,284
Earnings Per Share – Basic:
Continuing Operations	$	1.40		$	.77		$	3.85		$	3.40
Discontinued Operations		.08			.02			.23			.17
Earnings Per Share – Basic	$	1.48		$	.79		$	4.08		$	3.57
Earnings Per Share – Diluted:
Continuing Operations	$	1.38		$	.76		$	3.80		$	3.34
Discontinued Operations		.08			.02			.23			.18
Earnings Per Share – Diluted	$	1.46		$	.78		$	4.03		$	3.52
Weighted Average Number of Shares Outstanding – Basic		29,635			26,484			29,507			25,824
Weighted Average Number of Shares Outstanding – Diluted		29,955			26,940			29,908			26,252

Page 4 of 4 — Esterline Reports Record Fourth Quarter Results

Consolidated Balance Sheet (unaudited)

In thousands

	Oct 31, 2008		Oct 26, 2007
Assets
Current Assets
Cash and cash equivalents	$	160,645	$	147,069
Accounts receivable, net		297,506		262,087
Inventories		261,973		258,176
Income tax refundable		5,567		11,580
Deferred income tax benefits		30,463		37,830
Prepaid expenses		13,040		13,256
Other current assets		897		—
Total Current Assets		770,091		729,998
Property, Plant and Equipment, Net		204,462		217,421
Other Non-Current Assets
Goodwill		576,861		656,865
Intangibles, net		290,440		365,317
Debt issuance costs, net		7,587		9,192
Deferred income tax benefits		50,040		43,670
Other assets		9,601		27,843
	$	1,909,082	$	2,050,306
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	89,807	$	90,257
Accrued liabilities		210,422		187,596
Credit facilities		5,171		8,634
Current maturities of long-term debt		8,388		12,166
Federal and foreign income taxes		4,442		11,247
Total Current Liabilities		318,230		309,900
Long-Term Liabilities
Long-term debt, net of current maturities		388,248		455,002
Deferred income taxes		87,699		123,758
Other liabilities		85,767		36,852
Commitments and Contingencies		—		—
Minority Interest		2,797		2,968
Shareholders’ Equity		1,026,341		1,121,826
	$	1,909,082	$	2,050,306