UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q



|  |  |                                                    
|- |  | ---------------------------------------------------
|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
|  |  | THE SECURITIES EXCHANGE ACT OF 1934                



|                               |  |              
|------------------------------ |  | -------------
|For the quarterly period ended |  | July 31, 2009

OR



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

For the transition period from
 to

Commission file number 1-6357

ESTERLINE TECHNOLOGIES CORPORATION

(Exact name of
registrant as specified in its charter)



|                                                              |  |  |  |                                    
|------------------------------------------------------------- |  |  |  | -----------------------------------
|Delaware                                                      |  |  |  | 13-2595091                         
|(State or other Jurisdictionof incorporation or organization) |  |  |  | (I.R.S. EmployerIdentification No.)

500 108th Avenue N.E., Bellevue, Washington
98004

(Address of principal executive offices) (Zip Code)

Registrants telephone number, including area code 425/453-9400

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.

Yes     X
                    
No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes    
                     
No



---

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                                                                          |  |                               
|------------------------------------------------------------------------- |  | ------------------------------
|Large accelerated filer    x                                              |  | Accelerated filer     ̈        
|Non-accelerated filer       ̈(Do not check if a smaller reporting
company) |  | 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    X

As of
September 3, 2009, 29,756,190 shares of the issuers common stock were outstanding.



2



---

PART I  FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

ESTERLINE
TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEET

As of July 31, 2009 and October 31, 2008

(In thousands, except share amounts)



|                                                                          |  |              |             |                 |   |          
|------------------------------------------------------------------------- |  | ------------ | ----------- | --------------- | - | ---------
|                                                                          |  | July 31,2009 |             | October 31,2008
|ASSETS                                                                    |  |              | (Unaudited) |                 |   |          
|                                                                          |  |             
|Current Assets                                                            |  |              |             |                 |   |          
|Cash and cash equivalents                                                 |  | $            | 148,807     |                 | $ | 160,645  
|Accounts receivable, net of allowances of $5,634 and $5,191               |  |              | 248,476     |                 |   | 297,506  
|Inventories                                                               |  |              |             |                 |   |          
|Raw materials and purchased parts                                         |  |              | 128,175     |                 |   | 110,984  
|Work in process                                                           |  |              | 103,340     |                 |   | 105,586  
|Finished goods                                                            |  |              | 64,883      |                 |   | 45,403   
|                                                                          |  |              |             |                 |   |          
|                                                                          |  |              | 296,398     |                 |   | 261,973  
|                                                                          |  |             
|Income tax refundable                                                     |  |              | 9,453       |                 |   | 5,567    
|Deferred income tax benefits                                              |  |              | 36,266      |                 |   | 37,702   
|Prepaid expenses                                                          |  |              | 17,013      |                 |   | 13,040   
|Other current assets                                                      |  |              | 19,240      |                 |   | 897      
|                                                                          |  |              |             |                 |   |          
|Total Current Assets                                                      |  |              | 775,653     |                 |   | 777,330  
|                                                                          |  |             
|Property, Plant and Equipment                                             |  |              | 488,698     |                 |   | 430,824  
|Accumulated depreciation                                                  |  |              | 244,743     |                 |   | 226,362  
|                                                                          |  |              |             |                 |   |          
|                                                                          |  |              | 243,955     |                 |   | 204,462  
|                                                                          |  |             
|Other Non-Current Assets                                                  |  |              |             |                 |   |          
|Goodwill                                                                  |  |              | 743,864     |                 |   | 576,861  
|Intangibles, net                                                          |  |              | 435,433     |                 |   | 290,440  
|Debt issuance costs, net of accumulated amortization of $7,365 and $6,132 |  |              | 7,612       |                 |   | 7,587    
|Deferred income tax benefits                                              |  |              | 65,518      |                 |   | 55,821   
|Other assets                                                              |  |              | 8,541       |                 |   | 9,601    
|                                                                          |  |              |             |                 |   |          
|                                                                          |  | $            | 2,280,576   |                 | $ | 1,922,102
|                                                                          |  |              |             |                 |   |          



3



---

ESTERLINE TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEET

As of July 31, 2009 and October 31, 2008

(In thousands, except share amounts)



|                                                                                                                              |  |              |             |                 |   |           |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------- | --------------- | - | --------- | -
|                                                                                                                              |  | July 31,2009 |             | October 31,2008 |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                          |  |              | (Unaudited) |                 |   |           |  
|                                                                                                                              |  |             
|Current Liabilities                                                                                                           |  |              |             |                 |   |           |  
|Accounts payable                                                                                                              |  | $            | 70,754      |                 | $ | 89,807    |  
|Accrued liabilities                                                                                                           |  |              | 211,208     |                 |   | 210,422   |  
|Credit facilities                                                                                                             |  |              | 3,798       |                 |   | 5,171     |  
|Current maturities of long-term debt                                                                                          |  |              | 798         |                 |   | 8,388     |  
|Deferred income tax liabilities                                                                                               |  |              | 7,630       |                 |   | 2,889     |  
|Federal and foreign income taxes                                                                                              |  |              | 4,372       |                 |   | 4,442     |  
|                                                                                                                              |  |              |             |                 |   |           |  
|Total Current Liabilities                                                                                                     |  |              | 298,560     |                 |   | 321,119   |  
|                                                                                                                              |  |             
|Long-Term Liabilities                                                                                                         |  |              |             |                 |   |           |  
|Long-term debt, net of current maturities                                                                                     |  |              | 509,776     |                 |   | 388,248   |  
|Deferred income tax liabilities                                                                                               |  |              | 129,006     |                 |   | 97,830    |  
|Pension and post-retirement obligations                                                                                       |  |              | 79,554      |                 |   | 68,966    |  
|Other liabilities                                                                                                             |  |              | 19,003      |                 |   | 16,801    |  
|                                                                                                                              |  |             
|Commitments and Contingencies                                                                                                 |  |              |             |                 |   |           |  
|                                                                                                                              |  |             
|Minority Interest                                                                                                             |  |              | 2,933       |                 |   | 2,797     |  
|                                                                                                                              |  |             
|Shareholders Equity                                                                                                          |  |              |             |                 |   |           |  
|Common stock, par value $.20 per share, authorized 60,000,000 shares, issued and outstanding 29,755,530 and 29,636,481 shares |  |              | 5,951       |                 |   | 5,927     |  
|Additional paid-in capital                                                                                                    |  |              | 502,637     |                 |   | 493,972   |  
|Retained earnings                                                                                                             |  |              | 698,360     |                 |   | 613,063   |  
|Accumulated other comprehensive income (loss)                                                                                 |  |              | 34,796      |                 |   | (86,621   | )
|                                                                                                                              |  |              |             |                 |   |           |  
|Total Shareholders Equity                                                                                                    |  |              | 1,241,744   |                 |   | 1,026,341 |  
|                                                                                                                              |  |              |             |                 |   |           |  
|                                                                                                                              |  | $            | 2,280,576   |                 | $ | 1,922,102 |  
|                                                                                                                              |  |              |             |                 |   |           |  



4



---

ESTERLINE TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

For the Three and Nine Month Periods Ended
July 31, 2009 and August 1, 2008

(Unaudited)

(In thousands, except per share amounts)



|                                                          |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|--------------------------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | ------------ |  | - | ------------- | - |  | - | --------- | -
|                                                          |  | Three Months Ended |         |   | Nine Months Ended |  
|                                                          |  | July 31,2009       |         |   | August 1,2008     |   |         | July 31,2009 |  |   | August 1,2008 |  
|                                                          |  |                    |         |  
|Net Sales                                                 |  | $                  | 361,486 |   |                   | $ | 363,464 |              |  | $ | 1,030,705     |   |  | $ | 1,078,822 |  
|Cost of Sales                                             |  |                    | 244,339 |   |                   |   | 250,106 |              |  |   | 698,808       |   |  |   | 728,864   |  
|                                                          |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|                                                          |  |                    | 117,147 |   |                   |   | 113,358 |              |  |   | 331,897       |   |  |   | 349,958   |  
|Expenses                                                  |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|Selling, general & administrative                         |  |                    | 59,694  |   |                   |   | 60,957  |              |  |   | 174,038       |   |  |   | 178,082   |  
|Research, development & engineering                       |  |                    | 14,868  |   |                   |   | 21,460  |              |  |   | 50,560        |   |  |   | 68,138    |  
|                                                          |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|Total Expenses                                            |  |                    | 74,562  |   |                   |   | 82,417  |              |  |   | 224,598       |   |  |   | 246,220   |  
|Other                                                     |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|Other expense                                             |  |                    | 218     |   |                   |   |        |              |  |   | 7,946         |   |  |   | 86        |  
|                                                          |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|Total Other                                               |  |                    | 218     |   |                   |   |        |              |  |   | 7,946         |   |  |   | 86        |  
|                                                          |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|Operating Earnings From                                   |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|Continuing Operations                                     |  |                    | 42,367  |   |                   |   | 30,941  |              |  |   | 99,353        |   |  |   | 103,652   |  
|                                                          |  |                    |         |  
|Interest income                                           |  |                    | (168    | ) |                   |   | (1,066  | )            |  |   | (949          | ) |  |   | (3,297    | )
|Interest expense                                          |  |                    | 7,024   |   |                   |   | 7,339   |              |  |   | 21,370        |   |  |   | 22,517    |  
|Gain on derivative financial instruments                  |  |                    |        |   |                   |   |        |              |  |   |              |   |  |   | (1,850    | )
|                                                          |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|Other Expense, Net                                        |  |                    | 6,856   |   |                   |   | 6,273   |              |  |   | 20,421        |   |  |   | 17,370    |  
|                                                          |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|                                                          |  |                    |         |  
|Income From Continuing OperationsBefore Income Taxes      |  |                    | 35,511  |   |                   |   | 24,668  |              |  |   | 78,932        |   |  |   | 86,282    |  
|Income Tax Expense                                        |  |                    | 3,009   |   |                   |   | 6,232   |              |  |   | 9,493         |   |  |   | 13,981    |  
|                                                          |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|Income From Continuing OperationsBefore Minority Interest |  |                    | 32,502  |   |                   |   | 18,436  |              |  |   | 69,439        |   |  |   | 72,301    |  
|Minority Interest                                         |  |                    | (24     | ) |                   |   | (36     | )            |  |   | (136          | ) |  |   | (229      | )
|                                                          |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|Income From Continuing Operations                         |  |                    | 32,478  |   |                   |   | 18,400  |              |  |   | 69,303        |   |  |   | 72,072    |  
|                                                          |  |                    |         |  
|Income From DiscontinuedOperations, Net of Tax            |  |                    | 163     |   |                   |   | 2,082   |              |  |   | 15,994        |   |  |   | 4,579     |  
|                                                          |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|                                                          |  |                    |         |  
|Net Earnings                                              |  | $                  | 32,641  |   |                   | $ | 20,482  |              |  | $ | 85,297        |   |  | $ | 76,651    |  
|                                                          |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  



5



---

|                              |  |                    |      |                   |   |              |  |               |      |  |   |     
|----------------------------- |  | ------------------ | ---- | ----------------- | - | ------------ |  | ------------- | ---- |  | - | ----
|                              |  | Three Months Ended |      | Nine Months Ended
|                              |  | July 31,2009       |      | August 1,2008     |   | July 31,2009 |  | August 1,2008
|Earnings Per Share  Basic:   |  |                    |      |                   |   |              |  |               |      |  |   |     
|Continuing operations         |  | $                  | 1.09 |                   | $ | .62          |  | $             | 2.33 |  | $ | 2.45
|Discontinued operations       |  |                    | .01  |                   |   | .07          |  |               | .54  |  |   | .15 
|                              |  |                    |      |                   |   |              |  |               |      |  |   |     
|Earnings Per Share  Basic    |  | $                  | 1.10 |                   | $ | .69          |  | $             | 2.87 |  | $ | 2.60
|                              |  |                    |      |                   |   |              |  |               |      |  |   |     
|                              |  |                    |      |                  
|Earnings Per Share  Diluted: |  |                    |      |                   |   |              |  |               |      |  |   |     
|Continuing operations         |  | $                  | 1.09 |                   | $ | .61          |  | $             | 2.32 |  | $ | 2.41
|Discontinued operations       |  |                    | .00  |                   |   | .07          |  |               | .54  |  |   | .15 
|                              |  |                    |      |                   |   |              |  |               |      |  |   |     
|Earnings Per Share  Diluted  |  | $                  | 1.09 |                   | $ | .68          |  | $             | 2.86 |  | $ | 2.56
|                              |  |                    |      |                   |   |              |  |               |      |  |   |     



6



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ESTERLINE TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

For the Nine Month Periods Ended
July 31, 2009 and August 1, 2008

(Unaudited)

(In thousands)



|                                                          |  |                   |          |   |               |   |         |  
|--------------------------------------------------------- |  | ----------------- | -------- | - | ------------- | - | ------- | -
|                                                          |  | Nine Months Ended |         
|                                                          |  | July 31,2009      |          |   | August 1,2008 |  
|                                                          |  |                  
|Cash Flows Provided (Used) by Operating Activities        |  |                   |          |   |               |   |         |  
|Net earnings                                              |  | $                 | 85,297   |   |               | $ | 76,651  |  
|Minority interest                                         |  |                   | 136      |   |               |   | 229     |  
|Depreciation and amortization                             |  |                   | 49,678   |   |               |   | 49,343  |  
|Deferred income taxes                                     |  |                   | (12,536  | ) |               |   | (19,509 | )
|Share-based compensation                                  |  |                   | 5,529    |   |               |   | 6,518   |  
|Gain on sale of discontinued operation                    |  |                   | (26,481  | ) |               |   |        |  
|Working capital changes, net of effect of acquisitions    |  |                   |          |   |               |   |         |  
|Accounts receivable                                       |  |                   | 73,927   |   |               |   | 12,120  |  
|Inventories                                               |  |                   | (15,106  | ) |               |   | (40,718 | )
|Prepaid expenses                                          |  |                   | (3,296   | ) |               |   | (2,396  | )
|Other current assets                                      |  |                   | (16,777  | ) |               |   |        |  
|Accounts payable                                          |  |                   | (29,193  | ) |               |   | (2,011  | )
|Accrued liabilities                                       |  |                   | 6,733    |   |               |   | 5,702   |  
|Federal and foreign income taxes                          |  |                   | (6,025   | ) |               |   | 6,902   |  
|Other liabilities                                         |  |                   | 8,788    |   |               |   | (2,808  | )
|Other, net                                                |  |                   | (5,855   | ) |               |   | 3,582   |  
|                                                          |  |                   |          |   |               |   |         |  
|                                                          |  |                   | 114,819  |   |               |   | 93,605  |  
|                                                          |  |                  
|Cash Flows Provided (Used) by Investing Activities        |  |                   |          |   |               |   |         |  
|Purchases of capital assets                               |  |                   | (42,538  | ) |               |   | (31,006 | )
|Proceeds from sale of discontinued operation, net of cash |  |                   | 62,944   |   |               |   |        |  
|Proceeds from sale of capital assets                      |  |                   | 569      |   |               |   | 626     |  
|Acquisitions of businesses, net of cash acquired          |  |                   | (255,183 | ) |               |   | 12,033  |  
|                                                          |  |                   |          |   |               |   |         |  
|                                                          |  |                   | (234,208 | ) |               |   | (18,347 | )



7



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ESTERLINE TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

For the Nine Month Periods Ended
July 31, 2009 and August 1, 2008

(Unaudited)

(In thousands)



|                                                               |  |                   |         |   |               |   |         |  
|-------------------------------------------------------------- |  | ----------------- | ------- | - | ------------- | - | ------- | -
|                                                               |  | Nine Months Ended |        
|                                                               |  | July 31,2009      |         |   | August 1,2008 |  
|                                                               |  |                  
|Cash Flows Provided (Used) by Financing Activities             |  |                   |         |   |               |   |         |  
|Proceeds provided by stock issuance under employee stock plans |  |                   | 3,152   |   |               |   | 7,266   |  
|Excess tax benefits from stock options exercised               |  |                   | 8       |   |               |   | 1,932   |  
|Debt and other issuance costs                                  |  |                   | (1,258  | ) |               |   |        |  
|Dividends paid to minority interest                            |  |                   |        |   |               |   | (554    | )
|Net change in credit facilities                                |  |                   | (1,834  | ) |               |   | (134    | )
|Proceeds from issuance of long-term debt                       |  |                   | 125,000 |   |               |   |        |  
|Proceeds from government assistance                            |  |                   | 9,746   |   |               |   |        |  
|Repayment of long-term debt, net                               |  |                   | (34,394 | ) |               |   | (67,687 | )
|                                                               |  |                   |         |   |               |   |         |  
|                                                               |  |                   | 100,420 |   |               |   | (59,177 | )
|                                                               |  |                  
|Effect of Foreign Exchange Rates on Cash                       |  |                   | 7,131   |   |               |   | (598    | )
|                                                               |  |                   |         |   |               |   |         |  
|Net Increase (Decrease) in Cash and Cash Equivalents           |  |                   | (11,838 | ) |               |   | 15,483  |  
|                                                               |  |                  
|Cash and Cash Equivalents  Beginning of Period                |  |                   | 160,645 |   |               |   | 147,069 |  
|                                                               |  |                   |         |   |               |   |         |  
|Cash and Cash Equivalents  End of Period                      |  | $                 | 148,807 |   |               | $ | 162,552 |  
|                                                               |  |                   |         |   |               |   |         |  
|                                                               |  |                  
|Supplemental Cash Flow Information                             |  |                   |         |   |               |   |         |  
|Cash Paid for Interest                                         |  | $                 | 20,654  |   |               | $ | 22,412  |  
|Cash Paid for Taxes                                            |  | $                 | 34,140  |   |               | $ | 27,754  |  



8



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ESTERLINE TECHNOLOGIES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Month Periods Ended
July 31, 2009 and August 1, 2008



|1. | The consolidated balance sheet as of July 31, 2009, the consolidated statement of operations for the three and nine month periods ended July 31, 2009, and
August 1, 2008, and the consolidated statement of cash flows for the nine month periods ended July 31, 2009, and August 1, 2008, are unaudited but, in the opinion of management, all of the necessary adjustments,
consisting of normal recurring accruals, have been made to present fairly the financial statements referred to above in accordance with generally accepted accounting principles for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, the above statements do not include all of the footnotes required for complete financial statements. The results of operations and cash flows for the interim periods presented
are not necessarily indicative of results that can be expected for the full year.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2. | The notes to the consolidated financial statements in the Companys Annual Report on Form 10-K for the fiscal year ended October 31, 2008, provide a summary of
significant accounting policies and additional financial information that should be read in conjunction with this Form 10-Q.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. | The timing of the Companys revenues is impacted by the purchasing patterns of customers and, as a result, revenues are not generated evenly throughout the year. Moreover, the
Companys first fiscal quarter, November through January, includes significant holiday periods in both Europe and North America. The first nine months of fiscal 2009 contained 39 weeks, while the first nine months of fiscal 2008 contained 40
weeks.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. | Basic earnings per share is computed on the basis of the weighted average number of shares outstanding during the year. Diluted earnings per share includes the dilutive effect of
stock options. Common shares issuable from stock options that are excluded from the calculation of diluted earnings per share because they were anti-dilutive were 1,527,422 and 408,803 in the third fiscal quarters of 2009 and 2008, respectively.
Shares used for calculating earnings per share are disclosed in the following table.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                              |  |                    |  |                   |  |              |  |              
|--------------------------------------------- |  | ------------------ |  | ----------------- |  | ------------ |  | -------------
|(In thousands)                                |  | Three Months Ended |  | Nine Months Ended
|                                              |  | July 31,2009       |  | August 1,2008     |  | July 31,2009 |  | August 1,2008
|                                              |  |                    |  |                  
|Shares Used for Basic    Earnings Per Share   |  | 29,736             |  | 29,575            |  | 29,701       |  | 29,466       
|Shares Used for Diluted    Earnings Per Share |  | 29,870             |  | 29,994            |  | 29,855       |  | 29,894       



9



---

|5. | Recent Accounting Pronouncements
|-- | --------------------------------

In June 2009,
the Financial Accounting Standards Board issued Financial Accounting Standard No. 168, FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles  a replacement of FASB Statement
No. 162, (Statement No. 168). The purpose of Statement No. 168 is to provide a single source of authoritative U.S. GAAP and is not intended to modify existing GAAP. Statement No. 168 is effective for the Company in the
fourth quarter of fiscal year 2009. The adoption of Statement No. 168 is not expected to have a material effect on the Companys financial statements.

On December 4, 2007, the Financial Accounting Standards Board issued Financial Accounting Standard No. 141(R), Business Combinations, (Statement No. 141(R)) and Statement No. 160,
Accounting and Reporting of Non-controlling Interest in Consolidated Financial Statements, an amendment of ARB No. 51, (Statement No. 160). These new standards will significantly change the accounting for and reporting of
business combination transactions and non-controlling (minority) interests in consolidated financial statements. Statement No. 141(R) and Statement No. 160 are required to be adopted simultaneously and are effective for fiscal 2010.

The significant changes in the accounting for business combination transactions under Statement No. 141(R) include the following:



| |  |  | Recognize, with certain exceptions, 100% of the fair values of assets acquired, liabilities assumed, and non-controlling interests of acquired businesses.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Measure all acquirer shares issued in consideration for a business combination at fair value on the acquisition date. With the effectiveness of Statement
No. 141(R), the agreement and announcement date measurement principles in EITF Issue 99-12 will be nullified.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Recognize contingent consideration arrangements at their acquisition-date fair values, with subsequent changes in fair value generally reflected in earnings.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | With the one exception described in the last sentence of this section, recognize pre-acquisition gain and loss contingencies at their acquisition-date fair values.
Subsequent accounting for pre-acquisition loss contingencies is based on the greater of acquisition-date fair value or the amount calculated pursuant to FASB Statement No. 5, Accounting for Contingencies, (Statement No. 5).
Subsequent accounting for pre-acquisition gain contingencies is based on the lesser of acquisition-date fair value or the best estimate of the future settlement amount. Adjustments after the acquisition date are made only upon the receipt of new
information on the possible outcome of the contingency, and changes to the measurement of pre-acquisition contingencies are recognized in ongoing results of operations. Absent new information, no adjustments to the acquisition-date fair value are
made until the contingency is resolved. Pre-acquisition contingencies that are both (1) non-
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



10



---

| | contractual and (2) as of the acquisition date are not more likely than not of materializing are not recognized in acquisition accounting
and, instead, are accounted for based on the guidance in Statement No. 5, Accounting for Contingencies.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Capitalize in-process research and development (IPR&D) assets acquired at acquisition date fair value. After acquisition, apply the indefinite-lived impairment
model (lower of basis or fair value) through the development period to capitalized IPR&D without amortization. Charge development costs incurred after acquisition to results of operations. Upon completion of a successful development project,
assign an estimated useful life to the amount then capitalized, amortize over that life, and consider the asset a definite-lived asset for impairment accounting purposes.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Recognize acquisition-related transaction costs as an expense when incurred.
| | - |  | ----------------------------------------------------------------------------



| |  |  | Recognize acquisition-related restructuring cost accruals in acquisition accounting only if the criteria in Statement No. 146 are met as of the acquisition
date. With the effectiveness of Statement No. 141(R), the EITF Issue 95-3 concepts of assessing, formulating, finalizing and committing/communicating that currently pertain to recognition in purchase accounting of an
acquisition-related restructuring plan will be nullified.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Recognize changes in the acquirers income tax valuation allowance resulting from the business combination separately from the business combination as
adjustments to income tax expense. Also, changes after the acquisition date in an acquired entitys valuation allowance or tax uncertainty established at the acquisition date are accounted for as adjustments to income tax expense.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Statement No. 141(R) does not impact the accounting of acquisitions made prior to the effective date of this
statement.

The Company is currently evaluating the impact of Statement No. 141(R) and Statement No. 160 on the Companys
financial statements.



11



---

|6. | The Companys comprehensive income is as follows:
|-- | -------------------------------------------------



|                                                                        |  |                    |         |   |                   |   |        |              |  |   |               |   |  |   |         |  
|----------------------------------------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------ | ------------ |  | - | ------------- | - |  | - | ------- | -
|(In thousands)                                                          |  | Three Months Ended |         |   | Nine Months Ended |  
|                                                                        |  | July 31,2009       |         |   | August 1,2008     |   |        | July 31,2009 |  |   | August 1,2008 |  
|                                                                        |  |                    |         |  
|Net Earnings                                                            |  | $                  | 32,641  |   |                   | $ | 20,482 |              |  | $ | 85,297        |   |  | $ | 76,651  |  
|Change in Fair Value of Derivative Financial Instruments, Net of Tax(1) |  |                    | 15,583  |   |                   |   | (337   | )            |  |   | 25,560        |   |  |   | (3,172  | )
|Adjustment for Minimum Pension Liability, Net of Tax(2)                 |  |                    | (558    | ) |                   |   | (24    | )            |  |   | (327          | ) |  |   | (114    | )
|Foreign Currency Translation Adjustment                                 |  |                    | 97,398  |   |                   |   | (1,508 | )            |  |   | 96,184        |   |  |   | (26,687 | )
|                                                                        |  |                    |         |   |                   |   |        |              |  |   |               |   |  |   |         |  
|Comprehensive Income                                                    |  | $                  | 145,064 |   |                   | $ | 18,613 |              |  | $ | 206,714       |   |  | $ | 46,678  |  
|                                                                        |  |                    |         |   |                   |   |        |              |  |   |               |   |  |   |         |  

(1)Net of tax (expense) benefit of $(7,081) and $81 for the third fiscal quarters of 2009 and 2008, respectively. Net of tax
(expense) benefit of $(11,634) and $1,504 for the first nine months of fiscal 2009 and 2008, respectively.

(2)Net of tax benefit of $191 and $8 for the third fiscal quarters of 2009
and 2008, respectively. Net of tax benefit of $75 and $96 for the first nine months of fiscal 2009 and 2008, respectively.

The
Companys accumulated other comprehensive income (loss) is comprised of the following:



|                                                    |  |              |         |   |                 |   |         |  
|--------------------------------------------------- |  | ------------ | ------- | - | --------------- | - | ------- | -
|(In thousands)                                      |  | July 31,2009 |         |   | October 28,2008 |  
|                                                    |  |             
|Currency translation adjustment                     |  | $            | 56,980  |   |                 | $ | (39,204 | )
|Net unrealized gain (loss) on derivative contracts  |  |              | 12,746  |   |                 |   | (12,814 | )
|Employee benefit plans                              |  |              | (34,930 | ) |                 |   | (34,603 | )
|                                                    |  |              |         |   |                 |   |         |  
|Total accumulated other comprehensive income (loss) |  | $            | 34,796  |   |                 | $ | (86,621 | )
|                                                    |  |              |         |   |                 |   |         |  



|7. | Management expects that demand for U.S. flare countermeasures will be reduced when the Quadrennial Defense Review is issued in February 2010. Management considered this reduction of
demand to be an indicator of impairment which requires the Company to compare undiscounted cash flows to the carrying amount of its long-lived assets. Estimated undiscounted cash flows were in excess of the book value of the assets, and,
accordingly, no impairment was recorded.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|8. | On December 15, 2008, the Company acquired all of the outstanding capital stock of NMC Group, Inc. (NMC) for approximately $90.1 million in cash, including
acquisition costs. NMC designs and manufactures specialized light-weight fasteners principally for commercial aviation applications. The acquisition expands the scale of the Companys existing advanced materials business. NMC is included in the
Advanced Materials segment.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



12



---

The following summarizes the estimated fair value of the assets acquired and liabilities assumed at the
date of acquisition. The allocation of the purchase price was based upon a preliminary valuation analysis. The Company has not finalized the allocation of the purchase price to tangible and intangible assets and tax basis of acquired assets and
liabilities. The Company recorded goodwill of $41.1 million. The amount allocated to goodwill is expected to be deductible for income tax purposes.



|                                                |  |   |       
|----------------------------------------------- |  | - | ------
|(In thousands)                                  |  |  
|As of December 15, 2008                         |  |   |       
|                                                | 
|Current assets                                  |  | $ | 7,925 
|Property, plant and equipment                   |  |   | 3,246 
|Intangible assets subject to amortization       |  |   |       
|Programs (15 year weighted average useful life) |  |   | 39,280
|Goodwill                                        |  |   | 41,073
|Other assets                                    |  |   | 18    
|                                                |  |   |       
|Total assets acquired                           |  |   | 91,542
|                                                | 
|Current liabilities assumed                     |  |   | 1,427 
|                                                |  |   |       
|Net assets acquired                             |  | $ | 90,115
|                                                |  |   |       

On January 26, 2009, the Company acquired all of the outstanding capital stock of Racal
Acoustics Global Ltd. (Racal) for approximately £122.3 million, or $170.9 million in cash, including acquisition costs. Racal develops and manufactures high technology ruggedized personal communication equipment for the defense
and avionics segment. The acquisition expands the scale of the Companys existing avionics and controls business. Racal is included in the Avionics & Controls segment.

The following summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition. The allocation of the
purchase price was based upon a preliminary valuation analysis. The Company has not finalized the allocation of the purchase price to tangible and intangible assets and tax basis of acquired assets and liabilities. The Company recorded goodwill of
$93.5 million. The amount allocated to goodwill is not expected to be deductible for income tax purposes.



13



---

|                                                |  |   |        
|----------------------------------------------- |  | - | -------
|(In thousands)                                  |  |  
|As of January 26, 2009                          |  |   |        
|                                                | 
|Current assets                                  |  | $ | 24,847 
|Property, plant and equipment                   |  |   | 3,091  
|Intangible assets subject to amortization       |  |   |        
|Programs (15 year weighted average useful life) |  |   | 90,045 
|Goodwill                                        |  |   | 93,456 
|                                                |  |   |        
|Total assets acquired                           |  |   | 211,439
|                                                | 
|Liabilities assumed                             |  |   | 40,526 
|                                                |  |   |        
|Net assets acquired                             |  | $ | 170,913
|                                                |  |   |        



|9. | On November 3, 2008, the Company sold U.K.-based Muirhead Aerospace Limited and Traxsys Input Products Limited, which were included in the Sensors & Systems
segment, for approximately £40.0 million or $63.4 million, resulting in an after-tax gain of $16.0 million. As a result, the consolidated income statement presents Muirhead Aerospace Limited and Traxsys Input Products Limited as
discontinued operations.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The operating results of the discontinued operations for the three and nine month periods ended
July 31, 2009 and August 1, 2008 consisted of the following:



|                                                        |  |                    |      |                   |               |   |              |  |               |        |  |   |       
|------------------------------------------------------- |  | ------------------ | ---- | ----------------- | ------------- | - | ------------ |  | ------------- | ------ |  | - | ------
|(In thousands)                                          |  | Three Months Ended |      | Nine Months Ended
|                                                        |  | July 31,2009       |      |                   | August 1,2008 |   | July 31,2009 |  | August 1,2008
|                                                        |  |                    |      |                  
|Sales                                                   |  | $                  |     |                   |               | $ | 18,606       |  | $             |       |  | $ | 49,632
|Income from discontinued operations before income taxes |  |                    |     |                   |               |   | 2,941        |  |               | 26,481 |  |   | 6,378 
|Income tax expense (benefit)                            |  |                    | (163 | )                 |               |   | 859          |  |               | 10,487 |  |   | 1,799 
|                                                        |  |                    |      |                   |               |   |              |  |               |        |  |   |       
|Income from discontinued operations                     |  | $                  | 163  |                   |               | $ | 2,082        |  | $             | 15,994 |  | $ | 4,579 
|                                                        |  |                    |      |                   |               |   |              |  |               |        |  |   |       



|10. | The effective income tax rate for the first nine months of fiscal 2009 was 15.7% (before a $2.9 million tax benefit) compared with 23.0% (before a
$5.9 million tax benefit) for the prior-year period. The $2.9 million tax benefit in the first nine months of fiscal 2009 was the result of five events. The first event was a $2.0 million tax benefit for the reduction of previously
recorded withholding tax liabilities as a result of the enactment of a U.S.-Canadian tax treaty. The second event was the recording of a $1.6 million tax accrual in the first fiscal quarter of 2009 for a potential penalty due to the application
of certain foreign tax laws. The third event was a $0.6 million expense resulting from the reversal of previously recorded tax benefits associated with the implementation of CMCs SADI program. The fourth event was the reversal of the
$1.6 million tax accrual recorded in the first fiscal quarter of 2009 due to the application of certain foreign tax laws. The fifth event was a $1.5 million tax benefit associated with the reconciliation of the prior years U.S.
income tax return to the U.S. income tax provision. The $5.9 million of tax benefit in the first nine months of fiscal
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



14



---

| | 2008 was the result of four events. The first event was the settlement of an examination of the U.S. federal income tax returns for fiscal 2003 through 2005,
which resulted in a $2.8 million reduction of previously estimated income tax liabilities. The second event was the enactment of tax laws reducing the Canadian statutory tax rate, which resulted in a $4.1 million net reduction of deferred
income tax liabilities. The third event was the recognition of $0.7 million of additional income tax liabilities at CMC. The fourth event was a $0.3 million increase of previously estimated tax liabilities due to a reconciliation of the
prior years U.S. income tax return to the U.S. income tax returns provision for income taxes. The effective tax rate differed from the statutory rate in the first nine months of fiscal 2009 and 2008, as both years benefited from various
tax credits and certain foreign interest expense deductions.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company and/or one of its subsidiaries files income tax
returns in the U. S. federal jurisdiction and various states and foreign jurisdictions. The Company and/or one of its subsidiaries are no longer subject to income tax examinations by tax authorities in its major tax jurisdictions as follows:



|                 |  |                                
|---------------- |  | -------------------------------
|Tax Jurisdiction |  | Years No LongerSubject to Audit
|                 | 
|U.S. Federal     |  | 2005 and prior                 
|Canada           |  | 2002 and prior                 
|France           |  | 2004 and prior                 
|Germany          |  | 2003 and prior                 
|United Kingdom   |  | 2003 and prior                 



|11. | As of July 31, 2009, the Company had three share-based compensation plans  an employee stock purchase plan, an employee share-save scheme for U.K. employees, and an
equity incentive plan. The compensation cost that has been charged against income for those plans for the first nine months of fiscal 2009 and 2008 was $5.5 million and $6.5 million, respectively.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During the first nine months of fiscal 2009 and 2008, the Company issued 119,049 and 252,506 shares, respectively, under its employee stock plans. The
Company converted the ESPP to a safe harbor design on December 16, 2008. Under the safe harbor design, shares are purchased by participants at 95% of the market value on the purchase date and, therefore, compensation cost is no
longer recognized for the ESPP.



15



---

The fair value of the awards under the employee stock purchase plan was estimated using a Black-Scholes
pricing model which uses the assumptions noted in the following table:



|                                                           |  |                   |   |  |                   |  
|---------------------------------------------------------- |  | ----------------- | - |  | ----------------- | -
|                                                           |  | Nine Months Ended |  
|                                                           |  | July 31,    2009  |   |  | August 1,    2008 |  
|                                                           |  |                  
|Risk-free interest rate (U.S. Treasury zero coupon issues) |  | 3.32              | % |  | 3.32  5.15       | %
|Expected dividend yield                                    |  |                  |   |  |                  |  
|Expected volatility                                        |  | 33.8              | % |  | 21.4  34.8       | %
|Expected life (months)                                     |  | 6                 |   |  | 6                 |  

In April 2009, the Company offered 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. 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 164,199 options in the nine month period ended July 31, 2009. The weighted-average grant date fair value of options granted during the nine month
period ended July 31, 2009, was $7.49 per share.

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:



|                                                           |  |              |  
|---------------------------------------------------------- |  | ------------ | -
|                                                           |  | July 31,2009 |  
|                                                           | 
|Risk-free interest rate (U.S. Treasury zero coupon issues) |  | 0.58         | %
|Expected dividend yield                                    |  |             |  
|Expected volatility                                        |  | 50.08        | %
|Expected life (years)                                      |  | 3            |  

Under the equity incentive plan, option exercise prices are equal to the fair market value of the
Companys common stock on the date of grant. The Company granted 419,400 options and 376,300 options in the nine month periods ended July 31, 2009 and August 1, 2008, respectively. During the nine month periods ended July
31, 2009, and August 1, 2008, 7,000 and 174,600 option were exercised, respectively. The weighted-average grant date fair value of options granted during the nine month periods ended July 31, 2009, and August 1, 2008, was $15.75
per share and $25.44 per share, respectively.



16



---

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:



|                                                           |  |                   |   |  |               |  
|---------------------------------------------------------- |  | ----------------- | - |  | ------------- | -
|                                                           |  | Nine Months Ended |  
|                                                           |  | July 31,2009      |   |  | August 1,2008 |  
|                                                           |  |                  
|Risk-free interest rate (U.S. Treasury zero coupon issues) |  | 1.43  3.12       | % |  | 3.24  4.53   | %
|Expected dividend yield                                    |  |                  |   |  |              |  
|Expected volatility                                        |  | 36.8  43.1       | % |  | 33.0  42.9   | %
|Expected life (years)                                      |  | 4.5  9.5         |   |  | 2.0  9.5     |  



|12. | The Companys principal pension plans include a U.S. pension plan maintained by Esterline and a non-U.S. plan maintained by CMC. Components of periodic pension cost consisted
of the following:
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                                                                                                                                                                                |  |                    |        |   |                   |   |        |                  |  |   |                   |   |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------ | - | ----------------- | - | ------ | ---------------- |  | - | ----------------- | - |  | - | ------- | -
|(In thousands)                                                                                                                                                                                                                  |  | Three Months Ended |        |   | Nine Months Ended |  
|                                                                                                                                                                                                                                |  | July 31,2009       |        |   | August 1,2008     |   |        | July 31,2009     |  |   | August 1,2008     |  
|Components of Net Periodic    Pension Cost:                                                                                                                                                                                     |  |                    |        |   |                   |   |        |                  |  |   |                   |   |  |   |         |  
|Service cost                                                                                                                                                                                                                    |  | $                  | 1,494  |   |                   | $ | 1,801  |                  |  | $ | 4,413             |   |  | $ | 5,355   |  
|Interest cost                                                                                                                                                                                                                   |  |                    | 4,697  |   |                   |   | 4,334  |                  |  |   | 13,840            |   |  |   | 12,995  |  
|Expected return on plan assets                                                                                                                                                                                                  |  |                    | (3,628 | ) |                   |   | (5,488 | )                |  |   | (10,644           | ) |  |   | (16,663 | )
|Amortization of prior service cost                                                                                                                                                                                              |  |                    | 5      |   |                   |   | 5      |                  |  |   | 9                 |   |  |   | 14      |  
|Amortization of actuarial loss                                                                                                                                                                                                  |  |                    | 1,013  |   |                   |   | 95     |                  |  |   | 3,018             |   |  |   | 240     |  
|                                                                                                                                                                                                                                |  |                    |        |   |                   |   |        |                  |  |   |                   |   |  |   |         |  
|Net Periodic Cost                                                                                                                                                                                                               |  | $                  | 3,581  |   |                   | $ | 747    |                  |  | $ | 10,636            |   |  | $ | 1,941   |  
|                                                                                                                                                                                                                                |  |                    |        |   |                   |   |        |                  |  |   |                   |   |  |   |         |  
|The Companys principal post-retirement plans include
non-U.S. plans, which are non-contributory health care and life insurance plans. The components of expense of these other retirement benefits consisted of the following: | 
|                                                                                                                                                                                                                                |  |                   
|(In thousands)                                                                                                                                                                                                                  |  | Three Months Ended |        |   | Nine Months Ended |  
|                                                                                                                                                                                                                                |  | July 31,    2009   |        |   | August 1,    2008 |   |        | July 31,    2009 |  |   | August 1,    2008 |  
|Components of Net Periodic    Pension Cost:                                                                                                                                                                                     |  |                    |        |   |                   |   |        |                  |  |   |                   |   |  |   |         |  
|Service cost                                                                                                                                                                                                                    |  | $                  | 88     |   |                   | $ | 90     |                  |  | $ | 250               |   |  | $ | 280     |  
|Interest cost                                                                                                                                                                                                                   |  |                    | 175    |   |                   |   | 151    |                  |  |   | 496               |   |  |   | 468     |  
|Amortization of actuarial loss (gain)                                                                                                                                                                                           |  |                    | (21    | ) |                   |   | 3      |                  |  |   | (58               | ) |  |   | 10      |  
|                                                                                                                                                                                                                                |  |                    |        |   |                   |   |        |                  |  |   |                   |   |  |   |         |  
|Net Periodic Cost                                                                                                                                                                                                               |  | $                  | 242    |   |                   | $ | 244    |                  |  | $ | 688               |   |  | $ | 758     |  
|                                                                                                                                                                                                                                |  |                    |        |   |                   |   |        |                  |  |   |                   |   |  |   |         |  

The Company expects to make a $20.0 million contribution to its U.S. pension plan during the
fourth quarter of fiscal 2009 based upon its current funding status.



17



---

|13. | The Company adopted the required portions of Statement of Financial Accounting Standards No. 157, Fair Value Measurements, (Statement No. 157) on
November 1, 2008. Statement No. 157 applies to all assets and liabilities that are being measured and reported at fair value. Statement No. 157 defines fair value 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. Statement No. 157 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. An asset 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 July 31, 2009:



|                                                                                   |  |         |       
|---------------------------------------------------------------------------------- |  | ------- | ------
|(In thousands)                                                                     |  | Level 2
|                                                                                   | 
|Assets:                                                                            |  |         |       
|Derivative contracts                                                               |  | $       | 18,351
|                                                                                   | 
|Liabilities:                                                                       |  |         |       
|Derivative contracts not designated as hedginginstruments under Statement No. 133* |  | $       | 1,672 
|Derivative contracts                                                               |  | $       | 2,063 
|Embedded derivatives                                                               |  | $       | 942   

* Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities (Statement No. 133).

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



18



---

| | 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 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.

The Company adopted Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities, (Statement No. 159) effective November 1, 2008. Statement No. 159 permits entities to elect to measure eligible financial instruments at fair value on an instrument-by-instrument basis. The adoption of
Statement No. 159 had no impact on the consolidated financial position, results of operations or cash flows, as no eligible financial instruments were elected to be measured at fair value under this guidance.



|14. | The Company uses 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 Company does not exclude any amounts from the measure of effectiveness for both fair value and cash flow hedges.

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



19



---

Company does not have any hedges with credit-risk-related contingent features or that required the posting of collateral as of July 31, 2009. 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 July 31, 2009, and October 31, 2008, the Company had outstanding foreign currency forward exchange contracts with notional amounts of $274.8 million and $313.4 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 June 2009, the Company entered into an interest rate swap agreement on the $175.0 million Senior Subordinated Notes due in 2013. The swap agreement exchanged the fixed interest rate of
7.75% for a variable interest rate on the $175.0 million principal amount outstanding. The variable interest rate is based upon LIBOR plus 5.37% and was 5.65% at July 31, 2009. The fair value of the Companys interest rate swap was a
$2,063,000 liability at July 31, 2009, 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. The Company recognized
a net interest receivable of $460,000 at July 31, 2009. A $2.9 million deferred gain on a terminated interest rate swap is being amortized in proportion to the repayment of the underlying debt. The gain will be amortized through 2013.

Embedded Derivative Instruments

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.

Net Investment Hedge

In February 2006, the Company entered into a term loan for £57.0 million. The Company designated the term loan a hedge of the investment in a
certain U.K. business unit. The term loan was fully repaid in June 2009. A cumulative foreign currency loss of $4.8 million resulting from the accounting of the term loan as a net investment hedge will remain in other comprehensive income in
shareholders equity until the hedged investment is disposed of or sold.



20



---

Fair Value of Derivative Instruments

Fair values of derivative instruments in the Consolidated Balance Sheet as of July 31, 2009 are as follows:



|                                           |  |                                           |  |           |       
|------------------------------------------ |  | ----------------------------------------- |  | --------- | ------
|(In thousands)                             |  | Derivatives                              
|                                           |  | Classification                            |  | FairValue
|Foreign currency forwardexchange contracts |  | Other current assets                      |  | $         | 18,351
|Foreign currency forwardexchange contracts |  | Accrued liabilities                       |  | $         | 1,672 
|Embedded derivative instruments            |  | Accrued liabilities                       |  | $         | 942   
|Interest rate swap                         |  | Long-term debt, net of current maturities |  | $         | 2,063 

The effect of derivative instruments on the Consolidated Statement of Operations for the three and
nine months ended July 31, 2009 is as follows:



|                                                            |  |                        |  |                                       |        |   |                 |   |         |  
|----------------------------------------------------------- |  | ---------------------- |  | ------------------------------------- | ------ | - | --------------- | - | ------- | -
|(In thousands)                                              |  |                        |  | Amount of Gain (Loss)at July 31, 2009 |       
|                                                            |  | Location ofGain (Loss) |  | ThreeMonthsEnded                      |        |   | NineMonthsEnded |  
|Fair Value Hedges:                                          |  |                        |  |                                       |        |   |                 |   |         |  
|Interest rate swap contracts                                |  | Interest Expense       |  | $                                     | 621    |   |                 | $ | 863     |  
|Embedded derivatives                                        |  | Sales                  |  |                                       | (2,165 | ) |                 |   | (3,929  | )
|                                                            |  |                        | 
|Cash Flow Hedges:                                           |  |                        |  |                                       |        |   |                 |   |         |  
|Foreign currency forwardexchange contracts:                 |  |                        |  |                                       |        |   |                 |   |         |  
|Amount of gain (loss) recognizedin AOCI (effective portion) |  | AOCI                   |  | $                                     | 22,664 |   |                 | $ | 37,194  |  
|Amount of gain (loss) reclassifiedfrom AOCI into income     |  | Sales                  |  |                                       | (1,338 | ) |                 |   | (12,395 | )
|                                                            |  |                        | 
|Net Investment Hedges:                                      |  |                        |  |                                       |        |   |                 |   |         |  
|U.K. term loan                                              |  | AOCI                   |  | $                                     | (3,058 | ) |                 | $ | (446    | )

During the three and nine month period ended July 31, 2009, the Company recorded gains of
$6.8 million and $5.4 million, respectively, on foreign currency forward exchange contracts that have not been designated as an accounting hedge. These foreign currency exchange gains are included in selling, general and administrative
expense.



21



---

There was no significant impact to the Companys earnings related to the ineffective portion of any
hedging instruments during the three and nine months ended July 31, 2009. 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 the three and nine months ended July 31, 2009.

Cash flow
hedges are designated as fair value hedges once the underlying transaction is recorded on the balance sheet. Amounts included in AOCI are reclassified into earnings when the hedged transaction settles. The Company expects to reclassify approximately
$11.0 million of net gain into earnings over the next 12 months. The maximum duration of a foreign currency cash flow hedge contract at July 31, 2009, is 16 months.



|15. | Segment information:
|--- | --------------------

Business segment information for
continuing operations includes the segments of Avionics & Controls, Sensors & Systems and Advanced Materials.



|                                         |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|---------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | ------------ |  | - | ------------- | - |  | - | --------- | -
|(In thousands)                           |  | Three Months Ended |         |   | Nine Months Ended |  
|                                         |  | July 31,2009       |         |   | August 1,2008     |   |         | July 31,2009 |  |   | August 1,2008 |  
|Sales                                    |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|Avionics & Controls                      |  | $                  | 171,027 |   |                   | $ | 147,926 |              |  | $ | 468,606       |   |  | $ | 438,008   |  
|Sensors & Systems                        |  |                    | 84,460  |   |                   |   | 103,320 |              |  |   | 255,770       |   |  |   | 294,193   |  
|Advanced Materials                       |  |                    | 105,999 |   |                   |   | 112,218 |              |  |   | 306,329       |   |  |   | 346,621   |  
|                                         |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|Total Sales                              |  | $                  | 361,486 |   |                   | $ | 363,464 |              |  | $ | 1,030,705     |   |  | $ | 1,078,822 |  
|                                         |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|                                         |  |                    |         |  
|Income from Continuing Operations        |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|Avionics & Controls                      |  | $                  | 27,076  |   |                   | $ | 9,553   |              |  | $ | 63,236        |   |  | $ | 42,404    |  
|Sensors & Systems                        |  |                    | 6,976   |   |                   |   | 11,992  |              |  |   | 27,127        |   |  |   | 34,827    |  
|Advanced Materials                       |  |                    | 16,101  |   |                   |   | 17,990  |              |  |   | 40,434        |   |  |   | 53,564    |  
|                                         |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|Segment Earnings                         |  |                    | 50,153  |   |                   |   | 39,535  |              |  |   | 130,797       |   |  |   | 130,795   |  
|                                         |  |                    |         |  
|Corporate expense                        |  |                    | (7,568  | ) |                   |   | (8,594  | )            |  |   | (23,498       | ) |  |   | (27,057   | )
|Other expense                            |  |                    | (218    | ) |                   |   |        |              |  |   | (7,946        | ) |  |   | (86       | )
|Interest income                          |  |                    | 168     |   |                   |   | 1,066   |              |  |   | 949           |   |  |   | 3,297     |  
|Interest expense                         |  |                    | (7,024  | ) |                   |   | (7,339  | )            |  |   | (21,370       | ) |  |   | (22,517   | )
|Gain on derivative financial instruments |  |                    |        |   |                   |   |        |              |  |   |              |   |  |   | 1,850     |  
|                                         |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  
|                                         |  | $                  | 35,511  |   |                   | $ | 24,668  |              |  | $ | 78,932        |   |  | $ | 86,282    |  
|                                         |  |                    |         |   |                   |   |         |              |  |   |               |   |  |   |           |  



|16. | The acquisition of Racal was funded from cash proceeds from the sale of U.K.-based Muirhead and Traxsys and the Companys line of credit. Due to holding of
pounds sterling to fund the acquisition during a period of foreign exchange volatility, the Company incurred a $7.9 million foreign currency transaction loss in January 2009, which was recorded in other
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



22



---

| | expense. To facilitate the acquisition of Racal, the Company executed a $159.7 million U.S. dollar-denominated intercompany loan with a wholly owned
subsidiary, of which its functional currency is the pound sterling. The Company was subject to foreign currency exchange risk on this intercompany loan until bank lender approval was secured to convert the intercompany loan to an investment in
subsidiary. On February 24, 2009, lender approval was obtained. From January 30, 2009, to February 24, 2009, the effect of foreign currency changes resulted in a foreign currency loss of $0.1 million on the
intercompany loan. No further foreign currency transaction losses or gains will be recorded, because the intercompany loan was converted to an investment in subsidiary.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|17. | As of June 2009, the Company had repaid the outstanding balance of £21.7 million of the U.K. term loan.
|--- | -------------------------------------------------------------------------------------------------------

In April 2009, the Company amended the credit facility to provide for a $125.0 million term loan. The Company used the proceeds from the loan to
repay its outstanding borrowings under the revolving credit facility and provide enhanced liquidity. Borrowings under the U.S. Term Loan Facility bear interest at a rate equal to either: (a) the LIBOR rate plus 2.50% or (b) the Base
Rate (defined as the higher of Wachovia Bank, National Associations prime rate and the Federal funds rate plus 0.50%) plus 1.50%. The loan is accruing interest at a variable rate based on LIBOR plus 2.5% and was 2.79% on July 31,
2009. The principal amount of the U.S. Term Loan Facility is payable quarterly commencing on March 31, 2010, the first four payments equal to 1.25% of the outstanding balance, the following four payments equal to 2.50%, with a final payment
equal to 85.00% on March 13, 2012.



|18. | Construction costs are being incurred related to the Companys construction of a 216,000 square foot manufacturing facility under a 55-year land lease. During the first nine
months of fiscal 2009, the Company recorded $15.9 million as construction in progress along with a corresponding amount recorded as a capital lease obligation.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|19. | The Company has evaluated subsequent events through the date the Consolidated Financial Statements were issued on September 4, 2009.
|--- | ------------------------------------------------------------------------------------------------------------------------------------



|20. | The following schedules set forth condensed consolidating financial information as required by Rule 3-10 of Securities and Exchange Commission
Regulation S-X as of July 31, 2009, and October 31, 2008, and for the applicable periods ended July 31, 2009, and August 1, 2008, for (a) Esterline Technologies Corporation (the Parent); (b) on
a combined basis, the subsidiary guarantors (Guarantor Subsidiaries) of the Credit Agreement, Senior Subordinated Notes due 2013 (Senior Subordinated Notes) and Senior Notes due 2017 (Senior Notes) which include Advanced Input Devices, Inc.,
Angus Electronics Co., Armtec Countermeasures Co., Armtec Countermeasures TNO Co., Armtec Defense Products Co., AVISTA, Incorporated, BVR Technologies Co., CMC DataComm Inc., CMC Electronics Acton Inc., CMC Electronics Aurora
Inc., EA Technologies Corporation, Equipment Sales Co., Esterline Canadian Holding Corporation, Esterline International Company, Esterline Sensors Services Americas, Inc., Esterline Technologies Holdings Limited, Esterline Technologies Ltd.
(England), H.A. Sales Co., Hauser Inc., Hytek Finishes Co.,
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



23



---

| | Janco Corporation, Kirkhill-TA Co., Korry Electronics Co., Leach Holding Corporation, Leach International Corporation, Leach International Mexico
S. de R.L. de C.V. (Mexico), Leach Technology Group, Inc., Mason Electric Co., MC Tech Co., Memtron Technologies Co., NMC Group, Inc., Norwich Aero Products, Inc., Palomar Products, Inc., Pressure Systems, Inc., Pressure
Systems International, Inc., Racal Acoustics Inc., UMM Electronics Inc., and (c) on a combined basis, the subsidiary non-guarantors (Non-Guarantor Subsidiaries), which include Acoustics Holdco Limited, Auxitrol S.A., BAE Systems
Canada/Air TV LLC, CMC Electronics Inc., CMC Electronics ME Inc., Darchem Engineering Ltd., Darchem Holding Ltd., Esterline Acquisition Ltd., Esterline Canadian Acquisition Corporation, Esterline Canada Limited Partnership, Esterline Foreign Sales
Corporation, Esterline Input Devices Asia Ltd., Esterline Input Devices (Shanghai) Ltd., Esterline Mexico S. de R.L. de C.V., Esterline Sensors Services Asia PTE Ltd., Esterline Technologies Acquisition Ltd., Esterline Technologies Denmark ApS,
Esterline Technologies Europe Limited, Guizhou Leach-Tianyi Aviation Electrical Company Ltd., Leach International Asia-Pacific Ltd., Leach International Europe S.A., Leach International Germany GmbH, Leach International U.K. Ltd., Leach Italia Srl.,
LRE Medical GmbH, Pressure Systems International Ltd., Rag Newco Ltd., Racal Acoustics Global Ltd., Racal Acoustics Group Ltd., Racal Acoustics Holdings Limited, Racal Acoustics Limited, TA Mfg. Ltd., UKCI Limited, Wallop Defence Systems Ltd.,
Wallop Industries Ltd., Weston Aero 2003, and Weston Aerospace Ltd. Muirhead Aerospace Limited (Muirhead), Norcroft Dynamics Ltd. (Norcroft), and Traxsys Input Products Ltd. (Traxsys), were Non-Guarantor Subsidiaries as of
October 31, 2008. As explained in Note 9, Muirhead, Norcroft, and Traxsys were sold on November 3, 2008, and, accordingly, Muirhead, Norcroft, and Traxsys were excluded from the Condensed Consolidating Balance Sheet at
July 31, 2009, and accounted for as a discontinued operation in the Condensed Consolidating Statement of Operations and Cash Flows for the nine month periods ended July 31, 2009, and August 1, 2008. The Guarantor
Subsidiaries are direct and indirect wholly owned subsidiaries of Esterline Technologies Corporation and have fully and unconditionally, jointly and severally, guaranteed the Credit Agreement, the Senior Notes and Senior Subordinated Notes.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



24



---

Condensed Consolidating Balance Sheet as of July 31, 2009



|                                   |  |        |           |   |                       |   |           |                           |  |   |              |   |  |       |            |   |  |   |          
|---------------------------------- |  | ------ | --------- | - | --------------------- | - | --------- | ------------------------- |  | - | ------------ | - |  | ----- | ---------- | - |  | - | ---------
|(In thousands)                     |  |        |           |   |                       |   |           |                           |  |   |              |   |  |      
|                                   |  | Parent |           |   | GuarantorSubsidiaries |   |           | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total
|                                   |  |        |           |   |                      
|Assets                             |  |        |           |   |                       |   |           |                           |  |   |              |   |  |       |            |   |  |   |          
|                                   |  |        |           |   |                      
|Current Assets                     |  |        |           |   |                       |   |           |                           |  |   |              |   |  |       |            |   |  |   |          
|Cash and cash equivalents          |  | $      | 50,196    |   |                       | $ | 2,656     |                           |  | $ | 95,955       |   |  | $     |           |   |  | $ | 148,807  
|Accounts receivable, net           |  |        | 332       |   |                       |   | 108,692   |                           |  |   | 139,452      |   |  |       |           |   |  |   | 248,476  
|Inventories                        |  |        |          |   |                       |   | 132,464   |                           |  |   | 163,934      |   |  |       |           |   |  |   | 296,398  
|Income tax refundable              |  |        |          |   |                       |   | 18,751    |                           |  |   | (9,298       | ) |  |       |           |   |  |   | 9,453    
|Deferred income tax benefits       |  |        | 23,665    |   |                       |   | 114       |                           |  |   | 12,487       |   |  |       |           |   |  |   | 36,266   
|Prepaid expenses                   |  |        | (1        | ) |                       |   | 4,877     |                           |  |   | 12,137       |   |  |       |           |   |  |   | 17,013   
|Other current assets               |  |        |          |   |                       |   | (1        | )                         |  |   | 19,241       |   |  |       |           |   |  |   | 19,240   
|                                  
|Total Current Assets               |  |        | 74,192    |   |                       |   | 267,553   |                           |  |   | 433,908      |   |  |       |           |   |  |   | 775,653  
|                                   |  |        |           |   |                      
|Property, Plant & Equipment, Net   |  |        | 1,608     |   |                       |   | 143,950   |                           |  |   | 98,397       |   |  |       |           |   |  |   | 243,955  
|Goodwill                           |  |        |          |   |                       |   | 251,368   |                           |  |   | 492,496      |   |  |       |           |   |  |   | 743,864  
|Intangibles, Net                   |  |        | 39        |   |                       |   | 102,024   |                           |  |   | 333,370      |   |  |       |           |   |  |   | 435,433  
|Debt Issuance Costs, Net           |  |        | 7,612     |   |                       |   |          |                           |  |   |             |   |  |       |           |   |  |   | 7,612    
|Deferred Income Tax Benefits       |  |        | 29,965    |   |                       |   | 5,903     |                           |  |   | 29,650       |   |  |       |           |   |  |   | 65,518   
|Other Assets                       |  |        | (120      | ) |                       |   | 1,607     |                           |  |   | 7,054        |   |  |       |           |   |  |   | 8,541    
|Amounts Due (To) From Subsidiaries |  |        | 114,567   |   |                       |   |          |                           |  |   |             |   |  |       | (114,567   | ) |  |   |         
|Investment in Subsidiaries         |  |        | 1,618,598 |   |                       |   | 240,362   |                           |  |   | 187,769      |   |  |       | (2,046,729 | ) |  |   |         
|                                  
|Total Assets                       |  | $      | 1,846,461 |   |                       | $ | 1,012,767 |                           |  | $ | 1,582,644    |   |  | $     | (2,161,296 | ) |  | $ | 2,280,576
|                                  



25



---

|                                           |  |        |           |   |                       |   |                           |  |              |           |  |       |            |   |  |   |          
|------------------------------------------ |  | ------ | --------- | - | --------------------- | - | ------------------------- |  | ------------ | --------- |  | ----- | ---------- | - |  | - | ---------
|(In thousands)                             |  |        |           |   |                       |   |                           |  |              |           |  |      
|                                           |  | Parent |           |   | GuarantorSubsidiaries |   | Non-GuarantorSubsidiaries |  | Eliminations |           |  | Total
|                                           |  |        |           |  
|Liabilities and Shareholders Equity       |  |        |           |   |                       |   |                           |  |              |           |  |       |            |  
|                                           |  |        |           |   |                      
|Current Liabilities                        |  |        |           |   |                       |   |                           |  |              |           |  |       |            |   |  |   |          
|Accounts payable                           |  | $      | 408       |   |                       | $ | 22,706                    |  | $            | 47,640    |  | $     |           |   |  | $ | 70,754   
|Accrued liabilities                        |  |        | 12,802    |   |                       |   | 61,052                    |  |              | 137,354   |  |       |           |   |  |   | 211,208  
|Credit facilities                          |  |        |          |   |                       |   |                          |  |              | 3,798     |  |       |           |   |  |   | 3,798    
|Current maturities of long-term debt       |  |        |          |   |                       |   | 333                       |  |              | 465       |  |       |           |   |  |   | 798      
|Deferred income tax liabilities            |  |        | 1,056     |   |                       |   | 1                         |  |              | 6,573     |  |       |           |   |  |   | 7,630    
|Federal and foreign income taxes           |  |        | (8,166    | ) |                       |   | 12,419                    |  |              | 119       |  |       |           |   |  |   | 4,372    
|                                          
|Total Current Liabilities                  |  |        | 6,100     |   |                       |   | 96,511                    |  |              | 195,949   |  |       |           |   |  |   | 298,560  
|                                           |  |        |           |   |                      
|Long-Term Debt, Net                        |  |        | 475,440   |   |                       |   | 24,141                    |  |              | 10,195    |  |       |           |   |  |   | 509,776  
|Deferred Income Tax Liabilities            |  |        | 27,506    |   |                       |   | 5,902                     |  |              | 95,598    |  |       |           |   |  |   | 129,006  
|Pension and Post-Retirement Obligations    |  |        | 10,197    |   |                       |   | 38,753                    |  |              | 30,604    |  |       |           |   |  |   | 79,554   
|Other Liabilities                          |  |        | 8,551     |   |                       |   |                          |  |              | 10,452    |  |       |           |   |  |   | 19,003   
|Amounts Due To (From) Subsidiaries         |  |        | 76,923    |   |                       |   | 17,644                    |  |              | 86,403    |  |       | (180,970   | ) |  |   |         
|Minority Interest                          |  |        |          |   |                       |   |                          |  |              | 2,933     |  |       |           |   |  |   | 2,933    
|Shareholders Equity                       |  |        | 1,241,744 |   |                       |   | 829,816                   |  |              | 1,150,510 |  |       | (1,980,326 | ) |  |   | 1,241,744
|                                          
|Total Liabilities and Shareholders Equity |  | $      | 1,846,461 |   |                       | $ | 1,012,767                 |  | $            | 1,582,644 |  | $     | (2,161,296 | ) |  | $ | 2,280,576
|                                          



26



---

Condensed Consolidating Statement of Operations for the three month period ended July 31, 2009.



|                                                                  |  |        |        |   |                       |   |         |                           |  |   |              |   |  |       |         |   |  |   |         |  
|----------------------------------------------------------------- |  | ------ | ------ | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----- | ------- | - |  | - | ------- | -
|(In thousands)                                                    |  |        |        |   |                       |   |         |                           |  |   |              |   |  |       |        
|                                                                  |  | Parent |        |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |        
|                                                                  |  |        |        |   |                      
|Net Sales                                                         |  | $      |       |   |                       | $ | 192,987 |                           |  | $ | 169,072      |   |  | $     | (573    | ) |  | $ | 361,486 |  
|Cost of Sales                                                     |  |        |       |   |                       |   | 128,943 |                           |  |   | 115,969      |   |  |       | (573    | ) |  |   | 244,339 |  
|                                                                  | 
|                                                                  |  |        |       |   |                       |   | 64,044  |                           |  |   | 53,103       |   |  |       |        |   |  |   | 117,147 |  
|Expenses                                                          |  |        |        |   |                       |   |         |                           |  |   |              |   |  |       |         |   |  |   |         |  
|Selling, general and administrative                               |  |        |       |   |                       |   | 29,534  |                           |  |   | 30,160       |   |  |       |        |   |  |   | 59,694  |  
|Research, development and engineering                             |  |        |       |   |                       |   | 6,828   |                           |  |   | 8,040        |   |  |       |        |   |  |   | 14,868  |  
|                                                                  | 
|Total Expenses                                                    |  |        |       |   |                       |   | 36,362  |                           |  |   | 38,200       |   |  |       |        |   |  |   | 74,562  |  
|Other                                                             |  |        |        |   |                       |   |         |                           |  |   |              |   |  |       |         |   |  |   |         |  
|Other expense (income)                                            |  |        | 288    |   |                       |   | (1      | )                         |  |   | (69          | ) |  |       |        |   |  |   | 218     |  
|                                                                  | 
|Total Other                                                       |  |        | 288    |   |                       |   | (1      | )                         |  |   | (69          | ) |  |       |        |   |  |   | 218     |  
|                                                                  | 
|Operating Earnings From Continuing Operations                     |  |        | (288   | ) |                       |   | 27,683  |                           |  |   | 14,972       |   |  |       |        |   |  |   | 42,367  |  
|                                                                  |  |        |        |   |                      
|Interest income                                                   |  |        | (6,053 | ) |                       |   | (755    | )                         |  |   | (9,530       | ) |  |       | 16,170  |   |  |   | (168    | )
|Interest expense                                                  |  |        | 6,843  |   |                       |   | 6,231   |                           |  |   | 10,120       |   |  |       | (16,170 | ) |  |   | 7,024   |  
|                                                                  | 
|Other Expense, Net                                                |  |        | 790    |   |                       |   | 5,476   |                           |  |   | 590          |   |  |       |        |   |  |   | 6,856   |  
|                                                                  | 
|                                                                  |  |        |        |   |                      
|Income (Loss) From Continuing Operations Before Taxes             |  |        | (1,078 | ) |                       |   | 22,207  |                           |  |   | 14,382       |   |  |       |        |   |  |   | 35,511  |  
|Income Tax Expense (Benefit)                                      |  |        | (266   | ) |                       |   | (392    | )                         |  |   | 3,667        |   |  |       |        |   |  |   | 3,009   |  
|                                                                  | 
|Income (Loss) From Continuing Operations Before Minority Interest |  |        | (812   | ) |                       |   | 22,599  |                           |  |   | 10,715       |   |  |       |        |   |  |   | 32,502  |  
|Minority Interest                                                 |  |        |       |   |                       |   |        |                           |  |   | (24          | ) |  |       |        |   |  |   | (24     | )
|                                                                  | 
|Income (Loss) From Continuing Operations                          |  |        | (812   | ) |                       |   | 22,599  |                           |  |   | 10,691       |   |  |       |        |   |  |   | 32,478  |  
|Income From Discontinued Operations, Net of Tax                   |  |        |       |   |                       |   | 163     |                           |  |   |             |   |  |       |        |   |  |   | 163     |  
|Equity in Net Income of Consolidated Subsidiaries                 |  |        | 33,453 |   |                       |   | 8,073   |                           |  |   | 26           |   |  |       | (41,552 | ) |  |   |        |  
|                                                                  | 
|Net Income (Loss)                                                 |  | $      | 32,641 |   |                       | $ | 30,835  |                           |  | $ | 10,717       |   |  | $     | (41,552 | ) |  | $ | 32,641  |  
|                                                                  | 



27



---

Condensed Consolidating Statement of Operations for the nine month period ended July 31, 2009.



|                                                                  |  |        |         |   |                       |   |         |                           |  |   |              |   |  |       |          |   |  |   |           |  
|----------------------------------------------------------------- |  | ------ | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----- | -------- | - |  | - | --------- | -
|(In thousands)                                                    |  |        |         |   |                       |   |         |                           |  |   |              |   |  |       |         
|                                                                  |  | Parent |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |         
|                                                                  |  |        |         |   |                      
|Net Sales                                                         |  | $      |        |   |                       | $ | 581,569 |                           |  | $ | 450,247      |   |  | $     | (1,111   | ) |  | $ | 1,030,705 |  
|Cost of Sales                                                     |  |        |        |   |                       |   | 387,220 |                           |  |   | 312,699      |   |  |       | (1,111   | ) |  |   | 698,808   |  
|                                                                  | 
|                                                                  |  |        |        |   |                       |   | 194,349 |                           |  |   | 137,548      |   |  |       |         |   |  |   | 331,897   |  
|Expenses                                                          |  |        |         |   |                       |   |         |                           |  |   |              |   |  |       |          |   |  |   |           |  
|Selling, general and administrative                               |  |        |        |   |                       |   | 91,318  |                           |  |   | 82,720       |   |  |       |         |   |  |   | 174,038   |  
|Research, development and engineering                             |  |        |        |   |                       |   | 22,262  |                           |  |   | 28,298       |   |  |       |         |   |  |   | 50,560    |  
|                                                                  | 
|Total Expenses                                                    |  |        |        |   |                       |   | 113,580 |                           |  |   | 111,018      |   |  |       |         |   |  |   | 224,598   |  
|Other                                                             |  |        |         |   |                       |   |         |                           |  |   |              |   |  |       |          |   |  |   |           |  
|Other expense (income)                                            |  |        | 4,202   |   |                       |   | 10,655  |                           |  |   | (6,911       | ) |  |       |         |   |  |   | 7,946     |  
|                                                                  | 
|Total Other                                                       |  |        | 4,202   |   |                       |   | 10,655  |                           |  |   | (6,911       | ) |  |       |         |   |  |   | 7,946     |  
|                                                                  | 
|Operating Earnings From Continuing Operations                     |  |        | (4,202  | ) |                       |   | 70,114  |                           |  |   | 33,441       |   |  |       |         |   |  |   | 99,353    |  
|                                                                  |  |        |         |   |                      
|Interest income                                                   |  |        | (17,260 | ) |                       |   | (2,978  | )                         |  |   | (25,671      | ) |  |       | 44,960   |   |  |   | (949      | )
|Interest expense                                                  |  |        | 20,437  |   |                       |   | 17,468  |                           |  |   | 28,425       |   |  |       | (44,960  | ) |  |   | 21,370    |  
|                                                                  | 
|Other Expense, Net                                                |  |        | 3,177   |   |                       |   | 14,490  |                           |  |   | 2,754        |   |  |       |         |   |  |   | 20,421    |  
|                                                                  | 
|                                                                  |  |        |         |   |                      
|Income (Loss) From Continuing Operations Before Taxes             |  |        | (7,379  | ) |                       |   | 55,624  |                           |  |   | 30,687       |   |  |       |         |   |  |   | 78,932    |  
|Income Tax Expense (Benefit)                                      |  |        | (1,154  | ) |                       |   | 2,350   |                           |  |   | 8,297        |   |  |       |         |   |  |   | 9,493     |  
|                                                                  | 
|Income (Loss) From Continuing Operations Before Minority Interest |  |        | (6,225  | ) |                       |   | 53,274  |                           |  |   | 22,390       |   |  |       |         |   |  |   | 69,439    |  
|Minority Interest                                                 |  |        |        |   |                       |   |        |                           |  |   | (136         | ) |  |       |         |   |  |   | (136      | )
|                                                                  | 
|Income (Loss) From Continuing Operations                          |  |        | (6,225  | ) |                       |   | 53,274  |                           |  |   | 22,254       |   |  |       |         |   |  |   | 69,303    |  
|Income From Discontinued Operations, Net of Tax                   |  |        |        |   |                       |   | 15,994  |                           |  |   |             |   |  |       |         |   |  |   | 15,994    |  
|Equity in Net Income of Consolidated Subsidiaries                 |  |        | 91,522  |   |                       |   | 15,916  |                           |  |   | 5,371        |   |  |       | (112,809 | ) |  |   |          |  
|                                                                  | 
|Net Income (Loss)                                                 |  | $      | 85,297  |   |                       | $ | 85,184  |                           |  | $ | 27,625       |   |  | $     | (112,809 | ) |  | $ | 85,297    |  
|                                                                  | 



28



---

Condensed Consolidating Statement of Cash Flows for the nine month period ended July 31, 2009.



|                                                                           |  |        |         |   |                       |   |         |                           |  |   |              |   |  |       |          |   |  |   |          |  
|-------------------------------------------------------------------------- |  | ------ | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----- | -------- | - |  | - | -------- | -
|(In thousands)                                                             |  |        |         |   |                       |   |         |                           |  |   |              |   |  |       |         
|                                                                           |  | Parent |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |         
|                                                                          
|Cash Flows Provided (Used) by Operating Activities                         | 
|Net earnings (loss)                                                        |  | $      | 85,297  |   |                       | $ | 85,184  |                           |  | $ | 27,625       |   |  | $     | (112,809 | ) |  | $ | 85,297   |  
|Minority interest                                                          |  |        |        |   |                       |   |        |                           |  |   | 136          |   |  |       |         |   |  |   | 136      |  
|Depreciation & amortization                                                |  |        |        |   |                       |   | 22,482  |                           |  |   | 27,196       |   |  |       |         |   |  |   | 49,678   |  
|Deferred income taxes                                                      |  |        | (7,843  | ) |                       |   | (114    | )                         |  |   | (4,579       | ) |  |       |         |   |  |   | (12,536  | )
|Share-based compensation                                                   |  |        |        |   |                       |   | 2,880   |                           |  |   | 2,649        |   |  |       |         |   |  |   | 5,529    |  
|Gain on sale of discontinued operation                                     |  |        |        |   |                       |   | (26,481 | )                         |  |   |             |   |  |       |         |   |  |   | (26,481  | )
|Working capital changes, net of effect of acquisitions Accounts receivable |  |        | (127    | ) |                       |   | 21,495  |                           |  |   | 52,559       |   |  |       |         |   |  |   | 73,927   |  
|Inventories                                                                |  |        |        |   |                       |   | (345    | )                         |  |   | (14,761      | ) |  |       |         |   |  |   | (15,106  | )
|Prepaid expenses                                                           |  |        | 27      |   |                       |   | (201    | )                         |  |   | (3,122       | ) |  |       |         |   |  |   | (3,296   | )
|Other current assets                                                       |  |        |        |   |                       |   | 1       |                           |  |   | (16,778      | ) |  |       |         |   |  |   | (16,777  | )
|Accounts payable                                                           |  |        | (102    | ) |                       |   | (8,091  | )                         |  |   | (21,000      | ) |  |       |         |   |  |   | (29,193  | )
|Accrued liabilities                                                        |  |        | (4,057  | ) |                       |   | (8,422  | )                         |  |   | 19,212       |   |  |       |         |   |  |   | 6,733    |  
|Federal & foreign income taxes                                             |  |        | (12,188 | ) |                       |   | 4,887   |                           |  |   | 1,276        |   |  |       |         |   |  |   | (6,025   | )
|Other liabilities                                                          |  |        | 2,084   |   |                       |   | 6,578   |                           |  |   | 126          |   |  |       |         |   |  |   | 8,788    |  
|Other, net                                                                 |  |        | 49      |   |                       |   | 224     |                           |  |   | (6,128       | ) |  |       |         |   |  |   | (5,855   | )
|                                                                           | 
|                                                                           |  |        | 63,140  |   |                       |   | 100,077 |                           |  |   | 64,411       |   |  |       | (112,809 | ) |  |   | 114,819  |  
|                                                                          
|Cash Flows Provided (Used) by Investing Activities                         | 
|Purchases of capital assets                                                |  |        | (177    | ) |                       |   | (26,886 | )                         |  |   | (15,475      | ) |  |       |         |   |  |   | (42,538  | )
|Proceeds from sale of discontinued operation, net of cash                  |  |        |        |   |                       |   | 62,944  |                           |  |   |             |   |  |       |         |   |  |   | 62,944   |  
|Proceeds from sale of capital assets                                       |  |        |        |   |                       |   | 395     |                           |  |   | 174          |   |  |       |         |   |  |   | 569      |  
|Acquisitions of businesses, net of cash acquired                           |  |        |        |   |                       |   | (89,789 | )                         |  |   | (165,394     | ) |  |       |         |   |  |   | (255,183 | )
|                                                                           | 
|                                                                           |  |        | (177    | ) |                       |   | (53,336 | )                         |  |   | (180,695     | ) |  |       |         |   |  |   | (234,208 | )



29



---

|                                                               |  |        |          |   |                       |   |         |                           |  |   |              |   |       |   |         |  |   |         |  
|-------------------------------------------------------------- |  | ------ | -------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - | ----- | - | ------- |  | - | ------- | -
|(In thousands)                                                 |  |        |          |   |                       |   |         |                           |  |   |              |   |       |  
|                                                               |  | Parent |          |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   | Total |  
|                                                              
|Cash Flows Provided (Used) by Financing Activities             | 
|Proceeds provided by stock issuance under employee stock plans |  |        | 3,152    |   |                       |   |        |                           |  |   |             |   |       |   |        |  |   | 3,152   |  
|Excess tax benefits from stock options exercised               |  |        | 8        |   |                       |   |        |                           |  |   |             |   |       |   |        |  |   | 8       |  
|Debt and other issuance costs                                  |  |        | (1,258   | ) |                       |   |        |                           |  |   |             |   |       |   |        |  |   | (1,258  | )
|Net change in credit facilities                                |  |        |         |   |                       |   |        |                           |  |   | (1,834       | ) |       |   |        |  |   | (1,834  | )
|Proceeds from issuance of long-term debt                       |  |        | 125,000  |   |                       |   |        |                           |  |   |             |   |       |   |        |  |   | 125,000 |  
|Proceeds from government assistance                            |  |        |         |   |                       |   |        |                           |  |   | 9,746        |   |       |   |        |  |   | 9,746   |  
|Repayment of long-term debt                                    |  |        | (32,858  | ) |                       |   | (574    | )                         |  |   | (962         | ) |       |   |        |  |   | (34,394 | )
|Net change in intercompany financing                           |  |        | (187,694 | ) |                       |   | (65,235 | )                         |  |   | 140,120      |   |       |   | 112,809 |  |   |        |  
|                                                               | 
|                                                               |  |        | (93,650  | ) |                       |   | (65,809 | )                         |  |   | 147,070      |   |       |   | 112,809 |  |   | 100,420 |  
|                                                               |  |        |          |   |                      
|Effect of Foreign Exchange Rates on Cash                       |  |        | (1       | ) |                       |   | (189    | )                         |  |   | 7,321        |   |       |   |        |  |   | 7,131   |  
|                                                               | 
|                                                               |  |        |          |   |                      
|Net Increase (Decrease) in Cash and Cash Equivalents           |  |        | (30,688  | ) |                       |   | (19,257 | )                         |  |   | 38,107       |   |       |   |        |  |   | (11,838 | )
|Cash and Cash Equivalents  Beginning of Period                |  |        | 80,884   |   |                       |   | 21,913  |                           |  |   | 57,848       |   |       |   |        |  |   | 160,645 |  
|                                                               | 
|Cash and Cash Equivalents End of Period                       |  | $      | 50,196   |   |                       | $ | 2,656   |                           |  | $ | 95,955       |   |       | $ |        |  | $ | 148,807 |  
|                                                               | 



30



---

Condensed Consolidating Balance Sheet as of October 31, 2008



|                                   |  |        |           |                       |   |         |                           |  |   |              |   |  |       |            |   |  |   |          
|---------------------------------- |  | ------ | --------- | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----- | ---------- | - |  | - | ---------
|(In thousands)                     |  |        |           |                       |   |         |                           |  |   |              |   |  |      
|                                   |  | Parent |           | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total
|                                   |  |        |           |                       |  
|Assets                             |  |        |           |                       |   |         |                           |  |   |              |   |  |       |            |   |  |   |          
|                                   |  |        |           |                       |  
|Current Assets                     |  |        |           |                       |   |         |                           |  |   |              |   |  |       |            |   |  |   |          
|Cash and cash equivalents          |  | $      | 80,884    |                       | $ | 21,913  |                           |  | $ | 57,848       |   |  | $     |           |   |  | $ | 160,645  
|Accounts receivable, net           |  |        | 205       |                       |   | 127,583 |                           |  |   | 169,718      |   |  |       |           |   |  |   | 297,506  
|Inventories                        |  |        |          |                       |   | 127,216 |                           |  |   | 134,757      |   |  |       |           |   |  |   | 261,973  
|Income tax refundable              |  |        |          |                       |   | 13,664  |                           |  |   | (8,097       | ) |  |       |           |   |  |   | 5,567    
|Deferred income tax benefits       |  |        | 30,034    |                       |   | (1      | )                         |  |   | 7,669        |   |  |       |           |   |  |   | 37,702   
|Prepaid expenses                   |  |        | 26        |                       |   | 4,584   |                           |  |   | 8,430        |   |  |       |           |   |  |   | 13,040   
|Other current assets               |  |        |          |                       |   |        |                           |  |   | 897          |   |  |       |           |   |  |   | 897      
|                                  
|Total Current Assets               |  |        | 111,149   |                       |   | 294,959 |                           |  |   | 371,222      |   |  |       |           |   |  |   | 777,330  
|                                   |  |        |           |                       |  
|Property, Plant & Equipment, Net   |  |        | 1,821     |                       |   | 112,782 |                           |  |   | 89,859       |   |  |       |           |   |  |   | 204,462  
|Goodwill                           |  |        |          |                       |   | 209,605 |                           |  |   | 367,256      |   |  |       |           |   |  |   | 576,861  
|Intangibles, Net                   |  |        |          |                       |   | 70,013  |                           |  |   | 220,427      |   |  |       |           |   |  |   | 290,440  
|Debt Issuance Costs, Net           |  |        | 7,587     |                       |   |        |                           |  |   |             |   |  |       |           |   |  |   | 7,587    
|Deferred Income Tax Benefits       |  |        | 18,082    |                       |   | 5,810   |                           |  |   | 31,929       |   |  |       |           |   |  |   | 55,821   
|Other Assets                       |  |        | 1,490     |                       |   | 1,857   |                           |  |   | 6,254        |   |  |       |           |   |  |   | 9,601    
|Amounts Due To (From) Subsidiaries |  |        |          |                       |   | 62,609  |                           |  |   |             |   |  |       | (62,609    | ) |  |   |         
|Investment in Subsidiaries         |  |        | 1,422,684 |                       |   | 221,267 |                           |  |   | 126,657      |   |  |       | (1,770,608 | ) |  |   |         
|                                  
|Total Assets                       |  | $      | 1,562,813 |                       | $ | 978,902 |                           |  | $ | 1,213,604    |   |  | $     | (1,833,217 | ) |  | $ | 1,922,102
|                                  



31



---

|                                           |  |        |           |                       |   |                           |  |   |              |   |  |       |            |   |  |   |          
|------------------------------------------ |  | ------ | --------- | --------------------- | - | ------------------------- |  | - | ------------ | - |  | ----- | ---------- | - |  | - | ---------
|(In thousands)                             |  |        |           |                       |   |                           |  |   |              |   |  |      
|                                           |  | Parent |           | GuarantorSubsidiaries |   | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total
|                                           |  |        |           |                      
|Liabilities and Shareholders Equity       |  |        |           |                       |   |                           |  |   |              |   |  |       |            |  
|                                           |  |        |           |                       |  
|Current Liabilities                        |  |        |           |                       |   |                           |  |   |              |   |  |       |            |   |  |   |          
|Accounts payable                           |  | $      | 510       |                       | $ | 30,077                    |  | $ | 59,220       |   |  | $     |           |   |  | $ | 89,807   
|Accrued liabilities                        |  |        | 14,796    |                       |   | 68,924                    |  |   | 126,702      |   |  |       |           |   |  |   | 210,422  
|Credit facilities                          |  |        |          |                       |   |                          |  |   | 5,171        |   |  |       |           |   |  |   | 5,171    
|Current maturities of long-term debt       |  |        | 6,983     |                       |   | 740                       |  |   | 665          |   |  |       |           |   |  |   | 8,388    
|Deferred income tax liabilities            |  |        | 2,889     |                       |   |                          |  |   |             |   |  |       |           |   |  |   | 2,889    
|Federal and foreign income taxes           |  |        | 4,022     |                       |   | 730                       |  |   | (310         | ) |  |       |           |   |  |   | 4,442    
|                                          
|Total Current Liabilities                  |  |        | 29,200    |                       |   | 100,471                   |  |   | 191,448      |   |  |       |           |   |  |   | 321,119  
|                                           |  |        |           |                       |  
|Long-Term Debt, Net                        |  |        | 379,493   |                       |   | 8,408                     |  |   | 347          |   |  |       |           |   |  |   | 388,248  
|Deferred Income Tax Liabilities            |  |        | 28,152    |                       |   | 6,042                     |  |   | 63,636       |   |  |       |           |   |  |   | 97,830   
|Pension and Post-Retirement Obligations    |  |        | 8,890     |                       |   | 32,018                    |  |   | 28,058       |   |  |       |           |   |  |   | 68,966   
|Other Liabilities                          |  |        | 7,774     |                       |   |                          |  |   | 9,027        |   |  |       |           |   |  |   | 16,801   
|Amounts Due To (From) Subsidiaries         |  |        | 82,963    |                       |   |                          |  |   | 129,217      |   |  |       | (212,180   | ) |  |   |         
|Minority Interest                          |  |        |          |                       |   |                          |  |   | 2,797        |   |  |       |           |   |  |   | 2,797    
|Shareholders Equity                       |  |        | 1,026,341 |                       |   | 831,963                   |  |   | 789,074      |   |  |       | (1,621,037 | ) |  |   | 1,026,341
|                                          
|Total Liabilities and Shareholders Equity |  | $      | 1,562,813 |                       | $ | 978,902                   |  | $ | 1,213,604    |   |  | $     | (1,833,217 | ) |  | $ | 1,922,102
|                                          



32



---

Condensed Consolidating Statement of Operations for the three month period ended August 1, 2008.



|                                                                  |  |        |        |   |                       |   |         |                           |  |   |              |   |  |       |         |   |  |   |         |  
|----------------------------------------------------------------- |  | ------ | ------ | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----- | ------- | - |  | - | ------- | -
|(In thousands)                                                    |  |        |        |   |                       |   |         |                           |  |   |              |   |  |       |        
|                                                                  |  | Parent |        |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |        
|                                                                  |  |        |        |   |                      
|Net Sales                                                         |  | $      |       |   |                       | $ | 206,802 |                           |  | $ | 162,356      |   |  | $     | (5,694  | ) |  | $ | 363,464 |  
|Cost of Sales                                                     |  |        |       |   |                       |   | 138,093 |                           |  |   | 117,707      |   |  |       | (5,694  | ) |  |   | 250,106 |  
|                                                                  | 
|                                                                  |  |        |       |   |                       |   | 68,709  |                           |  |   | 44,649       |   |  |       |        |   |  |   | 113,358 |  
|Expenses                                                          |  |        |        |   |                       |   |         |                           |  |   |              |   |  |       |         |   |  |   |         |  
|Selling, general and administrative                               |  |        |       |   |                       |   | 29,845  |                           |  |   | 31,112       |   |  |       |        |   |  |   | 60,957  |  
|Research, development and engineering                             |  |        |       |   |                       |   | 6,121   |                           |  |   | 15,339       |   |  |       |        |   |  |   | 21,460  |  
|                                                                  | 
|Total Expenses                                                    |  |        |       |   |                       |   | 35,966  |                           |  |   | 46,451       |   |  |       |        |   |  |   | 82,417  |  
|Other                                                             |  |        |        |   |                       |   |         |                           |  |   |              |   |  |       |         |   |  |   |         |  
|Other expense (income)                                            |  |        |       |   |                       |   |        |                           |  |   |             |   |  |       |        |   |  |   |        |  
|                                                                  | 
|Total Other                                                       |  |        |       |   |                       |   |        |                           |  |   |             |   |  |       |        |   |  |   |        |  
|                                                                  | 
|Operating Earnings From Continuing Operations                     |  |        |       |   |                       |   | 32,743  |                           |  |   | (1,802       | ) |  |       |        |   |  |   | 30,941  |  
|                                                                  |  |        |        |   |                      
|Interest income                                                   |  |        | (5,478 | ) |                       |   | (950    | )                         |  |   | (9,651       | ) |  |       | 15,013  |   |  |   | (1,066  | )
|Interest expense                                                  |  |        | 7,155  |   |                       |   | 5,377   |                           |  |   | 9,820        |   |  |       | (15,013 | ) |  |   | 7,339   |  
|                                                                  | 
|Other Expense, Net                                                |  |        | 1,677  |   |                       |   | 4,427   |                           |  |   | 169          |   |  |       |        |   |  |   | 6,273   |  
|                                                                  | 
|                                                                  |  |        |        |   |                      
|Income (Loss) From Continuing Operations Before Taxes             |  |        | (1,677 | ) |                       |   | 28,316  |                           |  |   | (1,971       | ) |  |       |        |   |  |   | 24,668  |  
|Income Tax Expense (Benefit)                                      |  |        | (401   | ) |                       |   | 7,335   |                           |  |   | (702         | ) |  |       |        |   |  |   | 6,232   |  
|                                                                  | 
|Income (Loss) From Continuing Operations Before Minority Interest |  |        | (1,276 | ) |                       |   | 20,981  |                           |  |   | (1,269       | ) |  |       |        |   |  |   | 18,436  |  
|Minority Interest                                                 |  |        |       |   |                       |   |        |                           |  |   | (36          | ) |  |       |        |   |  |   | (36     | )
|                                                                  | 
|Income (Loss) From Continuing Operations                          |  |        | (1,276 | ) |                       |   | 20,981  |                           |  |   | (1,305       | ) |  |       |        |   |  |   | 18,400  |  
|Income From Discontinued Operations, Net of Tax                   |  |        |       |   |                       |   |        |                           |  |   | 2,082        |   |  |       |        |   |  |   | 2,082   |  
|Equity in Net Income of Consolidated Subsidiaries                 |  |        | 21,758 |   |                       |   | 5,924   |                           |  |   | (704         | ) |  |       | (26,978 | ) |  |   |        |  
|                                                                  | 
|Net Income (Loss)                                                 |  | $      | 20,482 |   |                       | $ | 26,905  |                           |  | $ | 73           |   |  | $     | (26,978 | ) |  | $ | 20,482  |  
|                                                                  | 



33



---

Condensed Consolidating Statement of Operations for the nine month period ended August 1, 2008.



|                                                                  |  |        |         |   |                       |   |         |                           |  |   |              |   |  |       |         |   |  |   |           |  
|----------------------------------------------------------------- |  | ------ | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----- | ------- | - |  | - | --------- | -
|(In thousands)                                                    |  |        |         |   |                       |   |         |                           |  |   |              |   |  |       |        
|                                                                  |  | Parent |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |        
|                                                                  |  |        |         |   |                      
|Net Sales                                                         |  | $      |        |   |                       | $ | 622,597 |                           |  | $ | 474,744      |   |  | $     | (18,519 | ) |  | $ | 1,078,822 |  
|Cost of Sales                                                     |  |        |        |   |                       |   | 419,088 |                           |  |   | 328,295      |   |  |       | (18,519 | ) |  |   | 728,864   |  
|                                                                  | 
|                                                                  |  |        |        |   |                       |   | 203,509 |                           |  |   | 146,449      |   |  |       |        |   |  |   | 349,958   |  
|Expenses                                                          |  |        |         |   |                       |   |         |                           |  |   |              |   |  |       |         |   |  |   |           |  
|Selling, general and administrative                               |  |        |        |   |                       |   | 89,485  |                           |  |   | 88,597       |   |  |       |        |   |  |   | 178,082   |  
|Research, development and engineering                             |  |        |        |   |                       |   | 19,133  |                           |  |   | 49,005       |   |  |       |        |   |  |   | 68,138    |  
|                                                                  | 
|Total Expenses                                                    |  |        |        |   |                       |   | 108,618 |                           |  |   | 137,602      |   |  |       |        |   |  |   | 246,220   |  
|Other                                                             |  |        |         |   |                       |   |         |                           |  |   |              |   |  |       |         |   |  |   |           |  
|Other (income) expense                                            |  |        | 90      |   |                       |   | 1       |                           |  |   | (5           | ) |  |       |        |   |  |   | 86        |  
|                                                                  | 
|Total Other                                                       |  |        | 90      |   |                       |   | 1       |                           |  |   | (5           | ) |  |       |        |   |  |   | 86        |  
|                                                                  | 
|Operating Earnings From Continuing Operations                     |  |        | (90     | ) |                       |   | 94,890  |                           |  |   | 8,852        |   |  |       |        |   |  |   | 103,652   |  
|                                                                  |  |        |         |   |                      
|Interest income                                                   |  |        | (16,571 | ) |                       |   | (2,860  | )                         |  |   | (30,618      | ) |  |       | 46,752  |   |  |   | (3,297    | )
|Interest expense                                                  |  |        | 21,675  |   |                       |   | 16,478  |                           |  |   | 31,116       |   |  |       | (46,752 | ) |  |   | 22,517    |  
|Gain on derivative financial instruments                          |  |        | (1,850  | ) |                       |   |        |                           |  |   |             |   |  |       |        |   |  |   | (1,850    | )
|                                                                  | 
|Other Expense, Net                                                |  |        | 3,254   |   |                       |   | 13,618  |                           |  |   | 498          |   |  |       |        |   |  |   | 17,370    |  
|                                                                  | 
|                                                                  |  |        |         |   |                      
|Income (Loss) From Continuing Operations Before Taxes             |  |        | (3,344  | ) |                       |   | 81,272  |                           |  |   | 8,354        |   |  |       |        |   |  |   | 86,282    |  
|Income Tax Expense (Benefit)                                      |  |        | (783    | ) |                       |   | 16,523  |                           |  |   | (1,759       | ) |  |       |        |   |  |   | 13,981    |  
|                                                                  | 
|Income (Loss) From Continuing Operations Before Minority Interest |  |        | (2,561  | ) |                       |   | 64,749  |                           |  |   | 10,113       |   |  |       |        |   |  |   | 72,301    |  
|Minority Interest                                                 |  |        |        |   |                       |   |        |                           |  |   | (229         | ) |  |       |        |   |  |   | (229      | )
|                                                                  | 
|Income (Loss) From Continuing Operations                          |  |        | (2,561  | ) |                       |   | 64,749  |                           |  |   | 9,884        |   |  |       |        |   |  |   | 72,072    |  
|Income From Discontinued Operations, Net of Tax                   |  |        |        |   |                       |   |        |                           |  |   | 4,579        |   |  |       |        |   |  |   | 4,579     |  
|Equity in Net Income of Consolidated Subsidiaries                 |  |        | 79,212  |   |                       |   | 15,969  |                           |  |   | (2,124       | ) |  |       | (93,057 | ) |  |   |          |  
|                                                                  | 
|Net Income (Loss)                                                 |  | $      | 76,651  |   |                       | $ | 80,718  |                           |  | $ | 12,339       |   |  | $     | (93,057 | ) |  | $ | 76,651    |  
|                                                                  | 



34



---

Condensed Consolidating Statement of Cash Flows for the nine month period ended August 1, 2008.



|                                                                          |  |        |         |   |                       |   |         |                           |  |   |              |   |  |       |         |   |  |   |         |  
|------------------------------------------------------------------------- |  | ------ | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----- | ------- | - |  | - | ------- | -
|(In thousands)                                                            |  |        |         |   |                       |   |         |                           |  |   |              |   |  |       |        
|                                                                          |  | Parent |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |        
|                                                                          |  |        |        
|Cash Flows Provided (Used) by Operating Activities                        |  |        |         |   |                       |   |         |                           |  |   |              |   | 
|Net earnings (loss)                                                       |  | $      | 76,651  |   |                       | $ | 80,718  |                           |  | $ | 12,339       |   |  | $     | (93,057 | ) |  | $ | 76,651  |  
|Minority interest                                                         |  |        |        |   |                       |   |        |                           |  |   | 229          |   |  |       |        |   |  |   | 229     |  
|Depreciation & amortization                                               |  |        |        |   |                       |   | 21,036  |                           |  |   | 28,307       |   |  |       |        |   |  |   | 49,343  |  
|Deferred income taxes                                                     |  |        | 405     |   |                       |   | 3       |                           |  |   | (19,917      | ) |  |       |        |   |  |   | (19,509 | )
|Share-based compensation                                                  |  |        |        |   |                       |   | 3,633   |                           |  |   | 2,885        |   |  |       |        |   |  |   | 6,518   |  
|Working capital changes, net of effect of acquisitionsAccounts receivable |  |        | (273    | ) |                       |   | 11,400  |                           |  |   | 993          |   |  |       |        |   |  |   | 12,120  |  
|Inventories                                                               |  |        |        |   |                       |   | (11,356 | )                         |  |   | (29,362      | ) |  |       |        |   |  |   | (40,718 | )
|Prepaid expenses                                                          |  |        | 1       |   |                       |   | 363     |                           |  |   | (2,760       | ) |  |       |        |   |  |   | (2,396  | )
|Accounts payable                                                          |  |        | (1,067  | ) |                       |   | (1,979  | )                         |  |   | 1,035        |   |  |       |        |   |  |   | (2,011  | )
|Accrued liabilities                                                       |  |        | (5,451  | ) |                       |   | 9,010   |                           |  |   | 2,143        |   |  |       |        |   |  |   | 5,702   |  
|Federal & foreign income taxes                                            |  |        | 18,984  |   |                       |   | (1,931  | )                         |  |   | (10,151      | ) |  |       |        |   |  |   | 6,902   |  
|Other liabilities                                                         |  |        | (11,365 | ) |                       |   | (1,517  | )                         |  |   | 10,074       |   |  |       |        |   |  |   | (2,808  | )
|Other, net                                                                |  |        | 523     |   |                       |   | (895    | )                         |  |   | 3,954        |   |  |       |        |   |  |   | 3,582   |  
|                                                                          | 
|                                                                          |  |        | 78,408  |   |                       |   | 108,485 |                           |  |   | (231         | ) |  |       | (93,057 | ) |  |   | 93,605  |  
|                                                                          |  |        |        
|Cash Flows Provided (Used) by Investing Activities                        |  |        |         |   |                       |   |         |                           |  |   |              |   | 
|Purchases of capital assets                                               |  |        | (358    | ) |                       |   | (12,583 | )                         |  |   | (18,065      | ) |  |       |        |   |  |   | (31,006 | )
|Proceeds from sale of capital assets                                      |  |        |        |   |                       |   | 506     |                           |  |   | 120          |   |  |       |        |   |  |   | 626     |  
|Acquisitions of businesses, net of cash acquired                          |  |        |        |   |                       |   |        |                           |  |   | 12,033       |   |  |       |        |   |  |   | 12,033  |  
|                                                                          | 
|                                                                          |  |        | (358    | ) |                       |   | (12,077 | )                         |  |   | (5,912       | ) |  |       |        |   |  |   | (18,347 | )



35



---

|                                                               |  |        |         |   |                       |   |         |                           |  |   |              |   |       |   |        |  |   |         |  
|-------------------------------------------------------------- |  | ------ | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - | ----- | - | ------ |  | - | ------- | -
|(In thousands)                                                 |  |        |         |   |                       |   |         |                           |  |   |              |   |       |  
|                                                               |  | Parent |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   | Total |  
|                                                               |  |        |        
|Cash Flows Provided (Used) by Financing Activities             |  |        |         |   |                       |   |         |                           |  |   |              |  
|Proceeds provided by stock issuance under employee stock plans |  |        | 7,266   |   |                       |   |        |                           |  |   |             |   |       |   |       |  |   | 7,266   |  
|Excess tax benefits from stock options exercised               |  |        | 1,932   |   |                       |   |        |                           |  |   |             |   |       |   |       |  |   | 1,932   |  
|Dividends paid to minority interest                            |  |        |        |   |                       |   |        |                           |  |   | (554         | ) |       |   |       |  |   | (554    | )
|Net change in credit facilities                                |  |        |        |   |                       |   |        |                           |  |   | (134         | ) |       |   |       |  |   | (134    | )
|Repayment of long-term debt                                    |  |        | (66,899 | ) |                       |   | (857    | )                         |  |   | 69           |   |       |   |       |  |   | (67,687 | )
|Net change in intercompany financing                           |  |        | (19,602 | ) |                       |   | (96,030 | )                         |  |   | 22,575       |   |       |   | 93,057 |  |   |        |  
|                                                               | 
|                                                               |  |        | (77,303 | ) |                       |   | (96,887 | )                         |  |   | 21,956       |   |       |   | 93,057 |  |   | (59,177 | )
|                                                               |  |        |         |   |                      
|Effect of Foreign Exchange Rates on Cash                       |  |        | (3      | ) |                       |   | (196    | )                         |  |   | (399         | ) |       |   |       |  |   | (598    | )
|                                                               | 
|                                                               |  |        |         |   |                      
|Net Increase (Decrease) in Cash and Cash Equivalents           |  |        | 744     |   |                       |   | (675    | )                         |  |   | 15,414       |   |       |   |       |  |   | 15,483  |  
|Cash and Cash Equivalents  Beginning of Period                |  |        | 89,275  |   |                       |   | 1,502   |                           |  |   | 56,292       |   |       |   |       |  |   | 147,069 |  
|                                                               | 
|Cash and Cash Equivalents End of Period                       |  | $      | 90,019  |   |                       | $ | 827     |                           |  | $ | 71,706       |   |       | $ |       |  | $ | 162,552 |  
|                                                               | 



36



---

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

Overview

We operate our businesses in three segments: Avionics & Controls, Sensors &
Systems and Advanced Materials.

The Avionics & Controls segment includes avionics systems, control systems, interface technologies and
communication systems capabilities. Avionics systems designs and develops cockpit systems integration and avionics solutions for commercial and military applications. Control systems designs and manufactures technology interface systems for military
and commercial aircraft and land- and sea-based military vehicles. Interface technologies manufactures and develops custom control panels, input systems for medical, industrial, military and gaming industries. Communication systems designs and
manufactures military audio and data products for severe battlefield environments. In addition, communication systems designs and manufactures communication control systems to enhance security and aural clarity in military applications.

The Sensors & Systems segment includes power systems and advanced sensors capabilities. Power systems develops and manufactures electrical power switching
and other related systems, principally for aerospace and defense customers. 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 electronic warfare countermeasure devices
for military customers. Sales in all segments include domestic, international, defense and commercial customers.

Our current business and strategic plan
focuses on the continued development of our products principally for aerospace and defense markets. We are concentrating our efforts to expand our capabilities in these markets and 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 November 3, 2008, we sold Muirhead Aerospace (Muirhead) and Traxsys Input Products Limited (Traxsys) for $63.4
million, which resulted in an after tax gain of $16.0 million. Muirhead and Traxsys were included in the Sensors & Systems segment. The results of Muirhead and Traxsys are accounted for as discontinued operations in the consolidated
income statement.



37



---

On December 15, 2008, we acquired NMC Group, Inc. (NMC), which designs and manufactures specialized
light-weight fasteners principally for commercial aviation applications. NMC is included in our Advanced Materials segment.

On January 26, 2009,
we acquired Racal Acoustics Global Ltd. (Racal), which develops and manufactures high technology ruggedized personal communication equipment for the defense and avionics segment. Racal is included in our Avionics & Controls segment.

During the first nine months of fiscal 2009, our operating results have been affected by volatility in foreign currency exchange rates, reductions in our
after-market spares sales due to reduced air traffic and operating losses at our flare countermeasure units. In addition, the first nine months of fiscal 2009 contained 39 weeks, while the first nine months of fiscal 2008 contained 40 weeks. While
our operating results were impacted by these factors, we have benefited from significantly improved results at our avionics systems operations and consistent results at our control systems, power systems, and combustible ordnance operations. These
operations benefited from continued demand for defense applications, reduced research and development expenditures and increased funding from customers and governments as well as effective cost control.

Income from continuing operations was $69.3 million, or $2.32 per diluted share, compared with $72.1 million, or $2.41 per diluted share, in the prior-year
period. Income from continuing operations for the first nine months of fiscal 2009 was impacted by a foreign currency loss of $7.9 million or $1.7 million after tax, or $0.06 per diluted share, relating to the pound sterling-denominated
funding of our acquisition of Racal in January 2009.

The effective income tax rate for the first nine months of fiscal 2009 was 15.7% (before a
$2.9 million tax benefit or $0.10 per diluted share) compared with 23.0% (before a $5.9 million tax benefit or $0.20 per diluted share) for the prior-year period.

Income from discontinued operations was $0.54 per diluted share, compared with $0.15 per diluted share in the prior-year period, reflecting the gain on sale of our U.K.-based Muirhead and Traxsys subsidiaries in
November 2008. Net income was $85.3 million, or $2.86 per diluted share, compared with net income of $76.7 million, or $2.56 per diluted share, in the prior-year period.



38



---

Results of Operations

Three Month Period Ended July 31, 2009 Compared with Three Month Period Ended August 1, 2008

Sales for the third
fiscal quarter decreased 0.5% compared with the prior-year period. Sales by segment were as follows:

(In thousands)

|                    |  |                                        |              |                    |               |  |   |        
|------------------- |  | -------------------------------------- | ------------ | ------------------ | ------------- |  | - | -------
|                    |  | Incr./(Decr.)from
prior    year period |              | Three Months Ended
|                    |  |                                        | July 31,2009 |                    | August 1,2008
|                    |  |                                        |             
|Avionics & Controls |  | 15.6%                                  |              | $                  | 171,027       |  | $ | 147,926
|Sensors & Systems   |  | (18.3)%                                |              |                    | 84,460        |  |   | 103,320
|Advanced Materials  |  | (5.5)%                                 |              |                    | 105,999       |  |   | 112,218
|                    |  |                                        |              |                    |               |  |   |        
|Total Net Sales     |  |                                        |              | $                  | 361,486       |  | $ | 363,464
|                    |  |                                        |              |                    |               |  |   |        

The 15.6% increase in sales of Avionics & Controls was principally due to incremental sales from the
Racal acquisition and increased sales volumes of avionics systems for military aviation. These increases were partially offset by lower sales of cockpit controls for commercial aviation OEM and after-market customers. Stronger sales of interface
technologies devices to the gaming industry offset weakness in the medical market.

The 18.3% decrease in sales of Sensors & Systems mainly
reflected the effect of exchange rates and the strong U.S. dollar. Sales in the third fiscal quarter of 2009 reflected a weaker pound sterling and euro relative to the U.S. dollar. The average exchange rate from the pound sterling to the U.S. dollar
decreased from 1.98 in the third fiscal quarter of 2008 to 1.62 in the third fiscal quarter of 2009. The average exchange rate from the euro to the U.S. dollar decreased from 1.56 in the third fiscal quarter of 2008 to 1.40 in the third fiscal
quarter of 2009. Additionally, sales were impacted by lower sales of temperature sensors for commercial and general aviation OEM and after-market customers. Sales of power system devices declined in comparison to the prior-year period due to lower
demand from business jet customers and a delay in the issuance of an Airworthiness Directive by the FAA.

The 5.5% decrease in sales of Advanced Materials
principally reflected the effect of exchange rates on our U.K.-based thermally engineered component operation, lower commercial aircraft build rates, and weakened industrial commercial demand for engineered materials. Additionally, sales at our U.S.
flare countermeasure operations decreased over the prior-year period, reflecting a one-month factory shutdown resulting from an incident in a cross blending facility. The factory resumed operations in August 2009. Sales at our U.K. flare
countermeasure operations were weaker than expected in the third fiscal quarter of 2009 due to delayed shipments to international customers which may be postponed until early fiscal 2010. Sales at our combustible ordnance operation were even with
the prior-year period.

Overall, gross margin as a percentage of sales was 32.4%, compared to 31.2% in the same period a year ago.



39



---

Avionics & Controls segment gross margin was 35.7% and 29.3% for the third fiscal quarter of 2009 and 2008,
respectively. Gross margin for the third fiscal quarter of 2008 reflected a $5.0 million increase in the estimate to complete on certain firm fixed-price long-term contracts for the development and manufacture of cockpit avionics systems in the
third fiscal quarter of 2008. Avionics systems gross margins for the third fiscal quarter of 2009 were impacted by a $1.9 million charge from mark-to-market accounting for embedded derivatives arising from backlog denominated in other than the
functional currency of the cockpit avionics systems unit or its customer. Gross margin improved at our control systems operations due to an emphasis on cost control measures.

Sensors & Systems segment gross margin was 31.3% and 35.1% for the third fiscal quarter of 2009 and 2008, respectively. The decrease in gross margin principally reflects lower sales of temperature sensors to
the after-market and OEM customers, the impact of starting up a manufacturing facility in Mexico, and higher warranty costs. In addition, gross margins were impacted by the delay in shipping certain commercial power system devices as referred to
above.

Advanced Materials segment gross margin was 28.0% compared to 30.1% for the same period one year ago. The decrease in gross margin mainly reflects
decreased sales of U.S. flare countermeasure devices due to the incident referred to above, which resulted in a low recovery of fixed costs. This decrease in gross margin at our U.S. flare countermeasure operations was partially offset by improved
gross margin at our U.K. flare countermeasure operations resulting from the shipment of a distributed component to an international customer. Gross margin on engineered materials decreased due to a lower recovery of fixed costs as a result of
decreased sales to commercial aviation and industrial commercial customers. Management reduced the workforce at its elastomer operations during the third fiscal quarter of 2009 and took further actions subsequent to quarter end. Gross margin was
also impacted by reduced sales of thermally engineered components for naval and industrial gas turbine applications.

Selling, general and administrative
expenses (which include corporate expenses) totaled $59.7 million, or 16.5% of sales, and $61.0 million, or 16.8% of sales, for the third fiscal quarter of 2009 and 2008, respectively. The decrease in the amount of selling, general and
administrative expenses was due principally to reduced incentive compensation expense, lower professional fees, and the effect of foreign exchange rates at our non-U.S. operations. These decreases were principally offset by a $2.8 million
increase in pension expense.

Research, development and engineering spending was $14.9 million, or 4.1% of sales, for the third fiscal quarter of 2009
compared with $21.5 million, or 5.9% of sales, for the third fiscal quarter of 2008. The decrease in research, development and engineering principally reflected lower spending on the development of the integrated cockpit system for the T-6B
military trainer and certain cockpit avionics systems and the A400M development, as well as increased customer funding of certain development costs, assistance from the Province of Québec, and the effect of foreign exchange rates.



40



---

Segment earnings (operating earnings excluding corporate expenses and other income or expense) for the third fiscal
quarter of 2009 were $50.2 million, or 13.9% of sales, compared with $39.5 million, or 10.9% of sales, for the third fiscal quarter of 2008.

Avionics & Controls segment earnings were $27.1 million, or 15.8% of sales, in the third fiscal quarter of 2009 and $9.6 million, or 6.5% of sales, in the third fiscal quarter of 2008, principally reflecting a significant
improvement in our avionics systems operations, a solid contribution from our Racal acquisition and our control systems operations. Our avionics systems operation results reflected improved gross margin and lower research and development spending
and assistance from the Province of Québec in the amount of $2.4 million. The assistance from the Province of Québec was received during the third fiscal quarter of 2009 and is retroactive to October 31, 2007, and,
accordingly, approximately $2.2 million represents assistance for research, development and engineering expense incurred prior to May 2, 2009. In addition, control systems operations benefited from cost control and reductions in the
workforce. As indicated above, our avionics systems operations were impacted by an unfavorable estimate to complete adjustment on long-term contracts in the prior-year period. Interface technologies operations earnings were down slightly against the
prior-year period, primarily reflecting lower earnings from a new product development with introductory pricing for a limited number of shipments and reduced earnings from our medical business. Our interface technologies operations have also
benefited from cost control and reductions in the workforce.

Sensors & Systems segment earnings were $7.0 million, or 8.3% of sales, for the
third fiscal quarter of 2009 compared with $12.0 million, or 11.6% of sales, for the third fiscal quarter of 2008. The decrease in earnings principally reflected the results of our advanced sensors operations due to lower sales volumes and
start-up costs in Mexico. Power systems operations earnings were consistent with the prior-year period. Power systems operations benefited from lower research and development expenses and higher customer funding of research and development.

Advanced Materials segment earnings were $16.1 million, or 15.2% of sales, for the third fiscal quarter of 2009 compared with $18.0 million, or
16.0% of sales, for the third fiscal quarter of 2008, principally reflecting lower earnings from our engineered materials and U.S. flare countermeasure operations. Engineered materials operations were impacted by lower demand from commercial
aviation and industrial commercial customers. Flare countermeasure operations were impacted by lower requirements, a delayed shipment, and the one-month factory shutdown due to the incident in the cross blending facility. Our thermally engineered
material operations were impacted by lower sales but benefited from the effects of foreign currency rate changes on forward contracts and cost control actions.

Interest expense for the third fiscal quarter of 2009 was $7.0 million compared with $7.3 million for the third fiscal quarter of 2008, reflecting the repayment of our U.K. term loan and lower interest rates.

The effective income tax rate for the third fiscal quarter of 2009 was 17.5% (before a $3.2 million discrete tax benefit) compared with 24.0% (before a
$0.3 million discrete tax expense) for the prior-year period. The $3.2 million tax benefit in the third fiscal quarter of 2009



41



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was related to a $1.6 million reversal of previously recorded expense due to the application of certain foreign tax laws, and a $1.6 million tax benefit
associated with the reconciliation of the prior years income tax returns to the provision for income taxes. The $0.3 million tax expense in the third fiscal quarter of 2008 was related to a reconciliation of the prior years income
tax returns to the provision for income taxes. The effective tax rate differed from the statutory rate in the third fiscal quarters of 2009 and 2008, as both years benefited from various tax credits and certain foreign interest expense deductions.

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. We use forward contracts to hedge our foreign currency exchange risk. To the extent that these hedges qualify under Statement No. 133, 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 customer. 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 the three-month period ended July 31, 2009 and August 1, 2008 are as follows:



|                                                           |  |                    |        |   |               |   |      
|---------------------------------------------------------- |  | ------------------ | ------ | - | ------------- | - | -----
|(In thousands)                                             |  | Three Months Ended
|                                                           |  | July 31,2009       |        |   | August 1,2008
|                                                           |  |                   
|Forward foreign currency contracts  gain                  |  | $                  | 6,777  |   |               | $ | 282  
|Forward foreign currency contract  reclassified from AOCI |  |                    | (1,338 | ) |               |   | 858  
|Embedded derivatives  gain (loss)                         |  |                    | (2,165 | ) |               |   | 220  
|Revaluation of monetary assets/liabilities  gain (loss)   |  |                    | (3,377 | ) |               |   | 107  
|                                                           |  |                    |        |   |               |   |      
|Total                                                      |  | $                  | (103   | ) |               | $ | 1,467
|                                                           |  |                    |        |   |               |   |      



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Nine Month Period Ended July 31, 2009 Compared with Nine Month Period Ended August 1, 2008

Sales for the first nine months decreased 4.5% compared with the prior-year period. Sales by segment were as follows:

(In thousands)

|                    |  |                                    |              |                   |               |  |   |          
|------------------- |  | ---------------------------------- | ------------ | ----------------- | ------------- |  | - | ---------
|                    |  | Incr./(Decr.)from prioryear period |              | Nine Months Ended
|                    |  |                                    | July 31,2009 |                   | August 1,2008
|                    |  |                                    |             
|Avionics & Controls |  | 7.0%                               |              | $                 | 468,606       |  | $ | 438,008  
|Sensors & Systems   |  | (13.1)%                            |              |                   | 255,770       |  |   | 294,193  
|Advanced Materials  |  | (11.6)%                            |              |                   | 306,329       |  |   | 346,621  
|                    |  |                                    |              |                   |               |  |   |          
|Total Net Sales     |  |                                    |              | $                 | 1,030,705     |  | $ | 1,078,822
|                    |  |                                    |              |                   |               |  |   |          

The 7.0% increase in sales of Avionics & Controls was principally due to the acquisition of Racal.
Avionics & Controls sales benefited from strong demand for avionics systems, but were partially offset by weak commercial aviation demand impacting OEM and aftermarket spares sales and the decrease in the number of weeks contained in the
first nine month period of fiscal 2009 compared to the prior-year period.

The 13.1% decrease in sales of Sensors & Systems mainly reflected the
effect of exchange rates at our non-U.S. operations, lower sales of temperature and pressure sensors, certain power systems devices, and the decrease in the number of weeks contained in the first nine month period of fiscal 2009 compared to the
prior-year period. Sales in the first nine months of fiscal 2009 reflected a weaker pound sterling and euro relative to the U.S. dollar. The average exchange rate from the pound sterling to the U.S. dollar decreased from 2.00 in the first nine
months of fiscal 2008 to 1.52 in the first nine months of fiscal 2009. The average exchange rate from the euro to the U.S. dollar decreased from 1.52 in the first nine months of fiscal 2008 to 1.34 in the first nine months of fiscal 2009.

The 11.6% decrease in sales of Advanced Materials principally reflected lower sales of flare countermeasure devices, decreased sales of thermally
engineered components and elastomer components, and one less week in the first nine months of fiscal 2009 compared to the prior-year period. The decrease in flare countermeasures sales related to lower demand and the timing of receiving orders and
scheduling shipments of our international customers. The decrease in sales of thermally engineered components reflected the weakening of the pound sterling as described above. The decrease in sales at our engineered materials operations was
principally due to lower demand from commercial aviation and industrial commercial customers. These decreases in sales were partially offset by increased sales of combustible ordnance and incremental sales from the acquisition of NMC in December
2008.

Overall, gross margin as a percentage of sales was 32.2% and 32.4% for the first nine months of fiscal 2009 and 2008, respectively.

Avionics & Controls segment gross margin was 34.8% and 33.5% for the first nine months of fiscal 2009 and 2008, respectively. The increase in gross margin
reflected incremental gross margin from our Racal acquisition and improved gross margin at our secure communications systems operation.



43



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Sensors & Systems segment gross margin was 33.0% and 35.8% for the first nine months of fiscal 2009 and 2008,
respectively. The decrease in gross margin was due to lower after-market sales and certain higher margin power distribution devices for commercial aviation applications, partially offset by a retroactive price adjustment on certain temperature and
pressure sensors and the impact of exchange rates, as well as improved gross margin on certain power distribution devices for defense applications.

Advanced Materials segment gross margin was 27.6% compared with 28.2% for the same period one year ago. The decrease in Advanced Materials gross margin reflected strong gross margins at our combustible ordnance and thermally engineered
components operations, offset by lower gross margins at our U.K. flare countermeasure and engineered materials operations, reflecting lower sales volumes and a decreased recovery of fixed overhead expenses.

Selling, general and administrative expenses (which include corporate expenses) totaled $174.0 million, or 16.9% of sales, and $178.1 million, or 16.5% of
sales, for the first nine months of fiscal 2009 and 2008, respectively. The decrease in selling, general and administrative expense principally reflects lower incentive compensation expense and the effect of changes in foreign currency exchange
rates, partially offset by an increase of $8.7 million in pension cost.

Research, development and engineering spending was $50.6 million, or 4.9% of
sales, for the first nine months of fiscal 2009 compared with $68.1 million, or 6.3% of sales, for the first nine months of fiscal 2008. The decrease in research, development and engineering principally reflected increased customer funding and
governmental assistance on certain development programs, lower spending on the integrated cockpit system for the T-6B military trainer, the A400M and 787 programs, and the effect of translating our non-U.S. units from their functional currency to
the U.S. dollar as the Canadian dollar, euro and pound sterling weakened against the U.S. dollar. Fiscal 2009 research, development and engineering spending is expected to be about 4.9% of sales.

Segment earnings (operating earnings excluding corporate expenses and other income or expense) for the first nine months of fiscal 2009 totaled $130.8 million, or
12.7% of sales, compared with $130.8 million, or 12.1% of sales, for the first nine months in fiscal 2008.

Avionics & Controls segment
earnings were $63.2 million, or 13.5% of sales, in the first nine months of fiscal 2009 and $42.4 million, or 9.7% of sales, in the first nine months of fiscal 2008, principally reflecting significantly improved earnings at avionics
systems. Our avionics systems operations were profitable in the first nine month period of fiscal 2009 and incurred an operating loss in the first nine month period of fiscal 2008. The improvement in operating earnings principally reflected lower
research, development and engineering expenses for the T-6B military trainer and assistance from the Province of Québec in the amount of $2.4 million. The assistance agreement with the Province of Québec was signed in July 2009.
The assistance from the Province of Québec is retroactive to October 31, 2007, and, accordingly, approximately $1.6 million



44



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represents assistance for research, development and engineering expense incurred prior to November 1, 2008. During the first nine months of fiscal 2008,
the Canadian dollar strengthened against the U.S. dollar, which adversely impacted operating results, as approximately 80% of avionics systems sales are denominated in the U.S. dollar. Earnings of our interface technologies operations decreased from
the prior-year period, primarily reflecting lower earnings from a new product development with introductory pricing for a limited number of shipments and reduced earnings from our medical business. Racal contributed strong earnings during the first
nine months of fiscal 2009. Control systems operations earnings increased slightly against the prior-year period, reflecting cost reductions and strong earnings from sales of military applications.

Sensors & Systems segment earnings were $27.1 million, or 10.6% of sales, for the first nine months of fiscal 2009 compared with $34.8 million, or
11.8% of sales, for the first nine months of fiscal 2008. The decrease in segment earnings as a percent of sales principally reflects lower gross margins at our temperature and pressure sensor operations and start-up costs incurred establishing a
manufacturing operation in Mexico. Lower gross margins at our power distribution operations were substantially offset by decreased research, engineering and development due to increased governmental assistance and customer development funding and
decreased A400M program development expenses.

Advanced Materials segment earnings were $40.4 million, or 13.2% of sales, for the first nine months of
fiscal 2009 compared with $53.6 million, or 15.5% of sales, for the first nine months of fiscal 2008, principally reflecting lower earnings from our engineered materials, countermeasure flare, and metal finishing operations. As stated above,
one of our U.S. flare countermeasure units was closed for one month due to an incident in the cross blending facility. Additionally, sales at our U.K. flare countermeasure operations were weaker than expected in the third fiscal quarter of 2009 due
to delayed shipments to international customers which may be postponed until early fiscal 2010. Our U.K. and U.S. flare countermeasure operations incurred operating losses in the first nine months of fiscal 2009 and 2008. Management expects that
demand for U.S. flare countermeasures will be reduced when the Quadrennial Defense Review is issued in February 2010. We considered this reduction of demand to be an indicator of impairment which requires the Company to compare undiscounted cash
flows to the carrying amount of its long-lived assets. Estimated undiscounted cash flows were in excess of the book value of the assets, and, accordingly, no impairment was recorded. The decrease in earnings at our engineered materials operations
principally reflected lower sales volumes and gross margin due to sales mix and a decreased recovery of fixed costs. The decrease in earnings of our metal finishing operations resulted from decreased sales and gross profit principally due to the
effects of the strike at Boeing and the downturn in commercial aviation.

On January 26, 2009, we acquired Racal for £122.3 million or
$170.9 million. Racal develops and manufactures high technology ruggedized personal communication equipment for the defense market segment. The acquisition was funded with cash proceeds from the sale of U.K.-based Muirhead and Traxsys and our
line of credit. To facilitate the acquisition of Racal, we executed a $159.7 million U.S. dollar-denominated intercompany loan with a wholly owned subsidiary, for which its functional currency is the pound sterling. Due to our holding of pounds
sterling to fund the acquisition during a period of foreign exchange volatility, we incurred a



45



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$7.9 million foreign currency transaction loss in January 2009, which was recorded in other expense. We were subject to foreign currency exchange risk
on this intercompany loan until bank lender approval was secured to convert the intercompany loan to an investment in subsidiary. On February 24, 2009, lender approval was obtained.

Interest expense for the first nine months of fiscal 2009 was $21.4 million compared with $22.5 million for the first nine months of fiscal 2008, reflecting
lower borrowings during most of the first nine months of fiscal 2009.

The effective income tax rate for the first nine months of fiscal 2009 was 15.7%
(before a $2.9 million tax benefit) compared with 23.0% (before a $5.9 million tax benefit) for the prior-year period. The $2.9 million tax benefit in the first nine months of fiscal 2009 was the result of five events. The first event
was a $2.0 million tax benefit for the reduction of previously recorded withholding tax liabilities as a result of the enactment of a U.S.-Canadian tax treaty. The second event was the recording of a $1.6 million tax accrual recorded in
the first fiscal quarter of 2009 for a potential penalty due to the application of certain foreign tax laws. The third event was a $0.6 million expense resulting from the reversal of previously recorded tax benefits associated with the
implementation of CMCs SADI program. The fourth event was the reversal of the $1.6 million tax accrual recorded in the first fiscal quarter of 2009 due to the application of certain foreign tax laws. The fifth event was a
$1.5 million tax benefit associated with the reconciliation of the prior years U.S. income tax return to the U.S. income tax provision. The $5.9 million of tax benefit in the first nine months of fiscal 2008 was the result of four
events. The first event was the settlement of an examination of the U.S. federal income tax returns for fiscal 2003 through 2005, which resulted in a $2.8 million reduction of previously estimated income tax liabilities. The second event was
the enactment of tax laws reducing the Canadian statutory tax rate, which resulted in a $4.1 million net reduction of deferred income tax liabilities. The third event was the recognition of $0.7 million of additional income tax liabilities
at CMC. The fourth event was a $0.3 million increase of previously estimated tax liabilities due to a reconciliation of the prior years U.S. income tax return to the U.S. income tax returns provision for income taxes. The effective
tax rate differed from the statutory rate in the first nine months of fiscal 2009 and 2008, as both years benefited from various tax credits and certain foreign interest expense deductions.

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. We
use forward contracts to hedge our foreign currency exchange risk. To the extent that these hedges qualify under Statement No. 133, 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 customer. 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 the nine month period ended July 31, 2009, and August 1, 2008, are as follows:



46



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|                                                           |  |                   |         |   |               |   |      
|---------------------------------------------------------- |  | ----------------- | ------- | - | ------------- | - | -----
|(In thousands)                                             |  | Nine Months Ended
|                                                           |  | July 31,2009      |         |   | August 1,2008
|                                                           |  |                  
|Forward foreign currency contracts  gain                  |  | $                 | 5,367   |   |               | $ | 1,211
|Forward foreign currency contract  reclassified from AOCI |  |                   | (12,395 | ) |               |   | 4,048
|Embedded derivatives  gain (loss)                         |  |                   | (3,929  | ) |               |   | 1,167
|Revaluation of monetary assets/liabilities  gain (loss)   |  |                   | (8,423  | ) |               |   | 120  
|                                                           |  |                   |         |   |               |   |      
|Total                                                      |  | $                 | (19,380 | ) |               | $ | 6,546
|                                                           |  |                   |         |   |               |   |      

New orders for the first nine months of fiscal 2009 were $1.0 billion compared with $1.1 billion for the
same period in fiscal 2008. Orders in the first nine months of fiscal 2009 include $41.0 million in backlog acquired from the Racal and NMC acquisitions. New orders declined by $179.9 million if Racal and NMC acquired backlog is excluded.
The decline in new orders principally reflects the effect of exchange rates, the timing of receiving orders and a decrease in commercial aviation demand. Backlog was $1.1 billion at the end of the third quarter of fiscal 2009 compared with
$1.0 billion at the end of the prior-year period and $1.1 billion at the end of fiscal 2008.



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Liquidity and Capital Resources

Cash and cash equivalents at July 31, 2009, totaled $148.8 million, a decrease of $11.8 million from October 31, 2008. Net working capital
increased to $477.1 million at July 31, 2009, from $456.2 million at October 31, 2008. Sources and uses of cash flows from operating activities principally consist of cash received from the sale of products and cash
payments for material, labor and operating expenses. Cash flows provided by operating activities were $114.8 million and $93.6 million in the first nine months of fiscal 2009 and 2008, respectively. The increase principally reflected
increased income from continuing operations, increased cash receipts from customers and advanced payments on long-term contracts. The increase in cash flows from operations was partially offset by increased payments for income taxes.

Cash flows used by investing activities were $234.2 million and $18.3 million in the first nine months of fiscal 2009 and 2008, respectively. Cash flows used
by investing activities in the first nine months of fiscal 2009 primarily reflected approximately $255.2 million for the acquisitions of NMC and Racal, and $42.5 million in purchases of capital assets, partially offset by proceeds from the
sale of Muirhead and Traxsys of $62.9 million. Cash flows used by investing activities in the prior-year period included $31.0 million in purchases of capital assets.

Cash flows provided by financing activities were $100.4 million in the first nine months of fiscal 2009. Cash flows used by financing activities were $59.2 million in the first nine months of fiscal 2008.
The increase principally reflected a $125.0 million term loan due in 2012 to finance the Racal acquisition, and $35.4 million in repayments on our U.K. term loan. The prior-year period mainly included $66.9 million in repayments on
our U.K. term loan.

On December 15, 2008, the Company acquired all of the outstanding capital stock of NMC Group, Inc. (NMC) for approximately
$90.1 million in cash, including acquisition costs. The acquisition was funded from existing cash.

On January 26, 2009, the Company
acquired all of the outstanding capital stock of Racal Acoustics Global Ltd. (Racal) for approximately $170.9 million in cash, including acquisition costs. Racal develops and manufactures high technology ruggedized personal communication
equipment for the defense and avionics segment. The acquisition was funded from proceeds from the sale of Muirhead and Traxsys and our credit facility.

Capital expenditures, consisting of machinery, equipment and computers, are anticipated to be approximately $84.0 million during fiscal 2009, including $18.5 million to be incurred under a capitalized lease obligation related to
the construction of a new facility for Korry Electronics (Korry). Capital expenditures were $40.7 million in fiscal 2008. The increase in capital expenditures reflects the construction of a new facility for Korry and a replacement facility at
our Wallop unit. Capital expenditures for the first nine months of fiscal 2009 totaled $58.4 million, including $15.9 million in costs incurred under Korrys capitalized lease obligation. Capital expenditures for the first nine months
of fiscal 2009 were primarily for machinery and equipment, construction in process, and enhancements to information systems.



48



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In April 2009, we amended the credit facility to provide for a $125.0 million term loan. The Company used the
proceeds from the loan to repay its outstanding borrowings under the revolving credit facility and provide enhanced liquidity. Borrowings under the U.S. Term Loan Facility bear interest at a rate equal to either: (a) the LIBOR rate plus 2.50%
or (b) the Base Rate (defined as the higher of Wachovia Bank, National Associations prime rate and the Federal funds rate plus 0.50%) plus 1.50%. The loan is accruing interest at a variable rate based on LIBOR plus 2.5% and
was 2.79% on July 31, 2009. The principal amount of the U.S. Term Loan Facility is payable quarterly commencing on March 31, 2010, the first four payments equal to 1.25% of the outstanding balance, the following four payments equal to
2.50%, with a final payment equal to 85.00% on March 13, 2012.

Total debt at July 31, 2009, was $514.4 million and consisted of
$175.0 million of Senior Notes due in 2017, $172.9 million of Senior Subordinated Notes due in 2013, $125.0 million under our U.S. term loan, $2.5 million of deferred gain on a terminated interest rate swap, and
$39.0 million of various foreign currency debt agreements and other debt agreements, including capital lease obligations.

We plan to make a
$20.0 million contribution to our U.S. pension plan during the fourth quarter of fiscal 2009 based upon its current funding status.

We believe cash
on hand and funds generated from operations are adequate to service operating cash requirements and capital expenditures through July 2010.



49



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Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements. 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 statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risk
factors set forth in Forward-Looking Statements and Risk Factors in our Annual Report on Form 10-K for the fiscal year ended October 31, 2008, that may cause our or the industrys actual results,
performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. You should not place undue reliance on these forward-looking statements. Although we
believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance or achievements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such
forward-looking statements. The forward-looking statements included or incorporated by reference into this report are made only as of the date hereof. We do not undertake and specifically decline any obligation to update any such statements or to
publicly announce the results of any revisions to any such statements to reflect future events or developments.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

There have been no significant changes in our exposure to market risk during the first nine months of fiscal 2009. A discussion of our exposure to market risk is provided in the Companys Annual Report on Form 10-K for the fiscal year
ended October 31, 2008.



|Item 4. | 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 July 31, 2009. Based upon that evaluation, they concluded as of July 31, 2009,
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 July 31, 2009, 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 to our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required
disclosure.

During the time period covered by this report, there were no significant changes in our internal control over financial reporting that
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



50



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PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

From time to time we are involved
in legal proceedings arising in the ordinary course of business. We believe 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.



|Item 6. | Exhibits
|------- | --------



|     |  |                                                                                                                                                                
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|11   |  | Schedule setting forth computation of basic and diluted earnings per common share for the three and nine month periods ended July 31, 2009, and August 1, 2008.
|     | 
|31.1 |  | Certification of Chief Executive Officer.                                                                                                                      
|     | 
|31.2 |  | Certification of Chief Financial Officer.                                                                                                                      
|     | 
|32.1 |  | Certification (of Robert W. Cremin) 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.                 



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



|                         |  |  |  |                                    |  |                                                                                                                               
|------------------------ |  |  |  | ---------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------
|                         |  |  |  | ESTERLINE TECHNOLOGIES CORPORATION
|                         |  |  |  | (Registrant)                      
|                         |  |  | 
|Dated: September 4, 2009 |  |  |  | By:                                |  | /s/ Robert D. George                                                                                                          
|                         |  |  |  |                                    |  | Robert D. George                
Vice President, Chief Financial Officer,Secretary and Treasurer (Principal Financial Officer)



52