##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 Amendment
No. 1
 FORM 10-Q/A
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended July 29, 2005
 OR
 o
    
    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
  Delaware
    
    13-2595091(State or other Jurisdiction
of incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 500
108th
Avenue N.E., Bellevue, Washington 98004  (Address of principal executive offices)(Zip Code)
 425/453-9400
  þ o
  þ o
  o þ




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##### Table of Contents



Explanatory Note
    All information contained in this Amendment is as of the original filing date of the Form 10-Q for
the three and nine month periods ended July 29, 2005 and does not reflect any subsequent
information or events other than as described above. We are not required to update and have not
updated the forward-looking statements previously included in the Form 10-Q filed on September 2,
2005 for events or operations subsequent to September 2, 2005.




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TABLE OF CONTENTS  PART 1  FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 1. Legal ProceedingsItem 5. OtherItem 6. ExhibitsSIGNATURESEXHIBIT 11EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2    Table of Contents  
 PART
I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 July 29,
    
    
    October 29,2005
    
    
    2004(Restated)
    
    
    (Restated)(Unaudited)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    80,339
    
    
    $
    29,479Cash in escrow
    
    
    11,744
    
    
    
    8,511Short-term investments
    
    
    75,205
    
    
    
    Accounts receivable, net of allowances
of $4,052 and $3,687
    
    
    134,861
    
    
    
    132,206InventoriesRaw materials and purchased parts
    
    
    69,044
    
    
    
    58,736Work in process
    
    
    49,605
    
    
    
    43,326Finished goods
    
    
    17,502
    
    
    
    16,992136,151
    
    
    
    119,054Deferred income tax benefits
    
    
    25,952
    
    
    
    23,499Prepaid expenses
    
    
    6,981
    
    
    
    9,441Other current assets
    
    
    288
    
    
    
    435Total Current Assets
    
    
    471,521
    
    
    
    322,625Property, Plant and Equipment
    
    
    276,825
    
    
    
    275,437Accumulated depreciation
    
    
    140,466
    
    
    
    130,302136,359
    
    
    
    145,135Other Non-Current AssetsGoodwill
    
    
    260,396
    
    
    
    247,817Intangibles, net
    
    
    169,252
    
    
    
    169,876Debt issuance costs, net of accumulated
amortization of $1,433 and $928
    
    
    5,312
    
    
    
    5,818Deferred income tax benefits
    
    
    11,897
    
    
    
    11,216Other assets
    
    
    25,284
    
    
    
    32,861$
    1,080,021
    
    
    $
    935,348
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July 29,
    
    
    October 29,2005
    
    
    2004(Restated)
    
    
    (Restated)(Unaudited)LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    42,007
    
    
    $
    37,867Accrued liabilities
    
    
    101,148
    
    
    
    97,038Credit facilities
    
    
    2,301
    
    
    
    6,977Current maturities of long-term debt
    
    
    30,913
    
    
    
    1,031Federal and foreign income taxes
    
    
    4,269
    
    
    
    6,678Total Current Liabilities
    
    
    180,638
    
    
    
    149,591Long-Term LiabilitiesLong-term debt, net of current maturities
    
    
    217,207
    
    
    
    249,056Deferred income taxes
    
    
    45,936
    
    
    
    43,443Other liabilities
    
    
    27,764
    
    
    
    29,852Commitments and Contingencies
    
    
    
    
    
    
    Minority Interest
    
    
    2,548
    
    
    
    2,378Shareholders EquityCommon stock, par value $.20 per share,
authorized 60,000,000 shares, issued and
outstanding 25,310,524 and 21,319,698 shares
    
    
    5,062
    
    
    
    4,264Additional paid-in capital
    
    
    261,563
    
    
    
    144,879Retained earnings
    
    
    329,980
    
    
    
    287,344Accumulated other comprehensive income
    
    
    9,323
    
    
    
    24,541Total Shareholders Equity
    
    
    605,928
    
    
    
    461,028$
    1,080,021
    
    
    $
    935,348
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Three Months Ended
    
    
    Nine Months EndedJuly 29,
    
    
    July 30,
    
    
    July 29,
    
    
    July 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)Net Sales
    
    $
    209,873
    
    
    $
    147,424
    
    
    $
    611,257
    
    
    $
    423,264Cost of Sales
    
    
    144,180
    
    
    
    101,562
    
    
    
    418,926
    
    
    
    290,22665,693
    
    
    
    45,862
    
    
    
    192,331
    
    
    
    133,038ExpensesSelling, general & administrative
    
    
    36,927
    
    
    
    28,458
    
    
    
    103,372
    
    
    
    85,805Research, development &
engineering
    
    
    11,003
    
    
    
    5,915
    
    
    
    30,116
    
    
    
    17,353Total Expenses
    
    
    47,930
    
    
    
    34,373
    
    
    
    133,488
    
    
    
    103,158Operating Earnings FromContinuing Operations
    
    
    17,763
    
    
    
    11,489
    
    
    
    58,843
    
    
    
    29,880Other (income) expense
    
    
    272
    
    
    
    1
    
    
    
    338
    
    
    
    (574
    )Interest income
    
    
    (1,187
    )
    
    
    (450
    )
    
    
    (2,747
    )
    
    
    (1,047
    )Interest expense
    
    
    4,654
    
    
    
    4,410
    
    
    
    13,433
    
    
    
    12,865Other Expense, Net
    
    
    3,739
    
    
    
    3,961
    
    
    
    11,024
    
    
    
    11,244Income From Continuing Operations
Before Income Taxes
    
    
    14,024
    
    
    
    7,528
    
    
    
    47,819
    
    
    
    18,636Income Tax Expense
    
    
    2,043
    
    
    
    2,192
    
    
    
    11,981
    
    
    
    3,642Income From Continuing Operations
Before Minority Interest
    
    
    11,981
    
    
    
    5,336
    
    
    
    35,838
    
    
    
    14,994Minority Interest
    
    
    (122
    )
    
    
    
    
    
    
    (170
    )
    
    
    Income From Continuing Operations
    
    
    11,859
    
    
    
    5,336
    
    
    
    35,668
    
    
    
    14,994Income From Discontinued
Operations, Net of Tax
    
    
    3
    
    
    
    576
    
    
    
    6,968
    
    
    
    1,710Net Earnings
    
    $
    11,862
    
    
    $
    5,912
    
    
    $
    42,636
    
    
    $
    16,704
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Three Months Ended
    
    
    Nine Months EndedJuly 29,
    
    
    July 30,
    
    
    July 29,
    
    
    July 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)Earnings Per Share  Basic:Continuing operations
    
    $
    .47
    
    
    $
    .25
    
    
    $
    1.44
    
    
    $
    .71Discontinued operations
    
    
    
    
    
    
    .03
    
    
    
    .28
    
    
    
    .08Earnings per share  basic
    
    $
    .47
    
    
    $
    .28
    
    
    $
    1.72
    
    
    $
    .79Earnings Per Share  Diluted:Continuing operations
    
    $
    .46
    
    
    $
    .25
    
    
    $
    1.42
    
    
    $
    .70Discontinued operations
    
    
    
    
    
    
    .02
    
    
    
    .27
    
    
    
    .08Earnings per share  diluted
    
    $
    .46
    
    
    $
    .27
    
    
    $
    1.69
    
    
    $
    .78
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Nine Months EndedJuly 29,
    
    
    July 30,2005
    
    
    2004(Restated)
    
    
    (Restated)Cash Flows Provided (Used) by Operating ActivitiesNet earnings
    
    $
    42,636
    
    
    $
    16,704Minority interest
    
    
    170
    
    
    
    Depreciation and amortization
    
    
    26,808
    
    
    
    24,241Deferred income taxes
    
    
    39
    
    
    
    (122
    )Stock-based compensation
    
    
    4,073
    
    
    
    3,984Gain on sale of discontinued operations
    
    
    (9,456
    )
    
    
    Loss on sale of building
    
    
    59
    
    
    
    Gain on sale of land
    
    
    
    
    
    
    (577
    )Working capital changes, net of effect of acquisitionsAccounts receivable
    
    
    (2,728
    )
    
    
    6,051Inventories
    
    
    (17,628
    )
    
    
    (8,411
    )Prepaid expenses
    
    
    2,291
    
    
    
    (608
    )Other current assets
    
    
    147
    
    
    
    Accounts payable
    
    
    4,985
    
    
    
    682Accrued liabilities
    
    
    1,870
    
    
    
    (6,615
    )Federal and foreign income taxes
    
    
    (1,987
    )
    
    
    3,539Other liabilities
    
    
    (928
    )
    
    
    Other, net
    
    
    (2,492
    )
    
    
    27347,859
    
    
    
    39,141Cash Flows Provided (Used) by Investing ActivitiesPurchases of capital assets
    
    
    (14,921
    )
    
    
    (17,603
    )Proceeds from sale of discontinued operations
    
    
    21,421
    
    
    
    Proceeds from sale of building
    
    
    2,319
    
    
    
    Proceeds from sale of land
    
    
    
    
    
    
    1,179Escrow deposit
    
    
    (4,207
    )
    
    
    Proceeds from sale of capital assets
    
    
    1,065
    
    
    
    409Proceeds from sale of short-term investments
    
    
    
    
    
    
    12,797Purchase of short-term investments
    
    
    (75,205
    )
    
    
    Acquisitions of businesses, net of cash acquired
    
    
    (33,088
    )
    
    
    (6,882
    )(102,616
    )
    
    
    (10,100
    )
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Nine Months EndedJuly 29,
    
    
    July 30,2005
    
    
    2004(Restated)
    
    
    (Restated)Cash Flows Provided (Used) by Financing ActivitiesProceeds provided by stock issuance under
employee stock plans
    
    
    4,919
    
    
    
    2,697Proceeds provided by sale of common stock
    
    
    108,490
    
    
    
    Net change in credit facilities
    
    
    (4,557
    )
    
    
    329Repayment of long-term debt, net
    
    
    (1,807
    )
    
    
    (29,991
    )Debt and other issuance costs
    
    
    
    
    
    
    (268
    )107,045
    
    
    
    (27,233
    )Effect of Foreign Exchange Rates on Cash
    
    
    (1,428
    )
    
    
    (2,324
    )Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    50,860
    
    
    
    (516
    )Cash and Cash Equivalents  Beginning of Period
    
    
    29,479
    
    
    
    131,363Cash and Cash Equivalents  End of Period
    
    $
    80,339
    
    
    $
    130,847Supplemental Cash Flow InformationCash Paid for Interest
    
    $
    16,593
    
    
    $
    17,217Cash Paid for Taxes
    
    $
    11,946
    
    
    $
    39
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1.
    
    The consolidated balance sheet as of July 29, 2005, the consolidated statement of operations
for the three and nine month periods ended July 29, 2005 and July 30, 2004, and the
consolidated statement of cash flows for the nine month periods ended July 29, 2005 and July
30, 2004 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/A for the fiscal year ended October 29, 2004 provide a summary of significant accounting
policies and additional financial information that should be read in conjunction with this
Form 10-Q/A.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 vacation periods
in both Europe and North America.4.
    
    Basic earnings per share is computed on the basis of the weighted average number of shares
outstanding during the period. Diluted earnings per share includes the dilutive effect of
stock options. The weighted average number of shares outstanding used to compute basic
earnings per share was 25,236,676 and 21,202,000 for the three month periods ended July 29,
2005 and July 30, 2004, respectively. The weighted average number of shares outstanding used
to compute diluted earnings per share was 25,618,519 and 21,535,000 for the three month
periods ended July 29, 2005 and July 30, 2004, respectively. The weighted average number of
shares outstanding used to compute basic earnings per share was 24,796,955 and 21,156,000 for
the nine month periods ended July 29, 2005, and July 30, 2004, respectively. The weighted
average number of shares outstanding used to compute diluted earnings per share was 25,174,537
and 21,489,000 for the nine month periods ended July 29, 2005 and July 30, 2004, respectively.5.
    
    Restatement of Stock Option AccountingThe Company has restated its financial statements to account for the Companys non-qualified
stock option plan using variable accounting because grantees were permitted to exercise stock
options by surrendering stock under the grant to pay for the exercise price and statutory taxes.
The Company previously accounted for these stock option grants as fixed
 9




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Three Months Ended
    
    Three Months EndedJuly 29, 2005
    
    July 30, 2004As
    
    As
    
    As
    
    AsReported
    
    Restated
    
    Reported
    
    RestatedSelling, General &
Administrative Expenses
    
    $
    33,534
    
    
    $
    36,927
    
    
    $
    25,934
    
    
    $
    28,458Income From Continuing Operations
    
    
    14,167
    
    
    
    11,859
    
    
    
    7,073
    
    
    
    5,336Net income
    
    
    14,170
    
    
    
    11,862
    
    
    
    7,649
    
    
    
    5,912Earnings Per Share  BasicContinuing operations
    
    $
    .56
    
    
    $
    .47
    
    
    $
    .33
    
    
    $
    .25Earnings per share  basic
    
    
    .56
    
    
    
    .47
    
    
    
    .36
    
    
    
    .28Earnings Per Share  DilutedContinuing operations
    
    $
    .55
    
    
    $
    .46
    
    
    $
    .33
    
    
    $
    .25Earnings per share  diluted
    
    
    .55
    
    
    
    .46
    
    
    
    .36
    
    
    
    .27Deferred Income Tax Benefits
    
    $
    23,307
    
    
    $
    25,952
    
    
    $
    15,477
    
    
    $
    18,070Shareholders Equity
    
    $
    603,283
    
    
    $
    605,928
    
    
    $
    425,274
    
    
    $
    427,867
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Nine Months Ended
    
    Nine Months EndedJuly 29, 2005
    
    July 30, 2004As
    
    As
    
    As
    
    AsReported
    
    Restated
    
    Reported
    
    RestatedSelling,
General and
Administrative Expenses
    
    $
    99,299
    
    
    $
    103,372
    
    
    $
    81,821
    
    
    $
    85,805Income From Continuing Operations
    
    
    38,475
    
    
    
    35,668
    
    
    
    17,729
    
    
    
    14,994Net Income
    
    
    45,443
    
    
    
    42,636
    
    
    
    19,439
    
    
    
    16,704Earnings Per Share  BasicContinuing operations
    
    $
    1.55
    
    
    $
    1.44
    
    
    $
    .84
    
    
    $
    .71Earnings per share  basic
    
    
    1.83
    
    
    
    1.72
    
    
    
    .92
    
    
    
    .79Earnings Per Share  DilutedContinuing operations
    
    $
    1.53
    
    
    $
    1.42
    
    
    $
    .82
    
    
    $
    .70Earnings per share  diluted
    
    
    1.81
    
    
    
    1.69
    
    
    
    .90
    
    
    
    .78Deferred Income Tax Benefits
    
    $
    23,307
    
    
    $
    25,952
    
    
    $
    15,477
    
    
    $
    18,070Shareholders Equity
    
    
    603,283
    
    
    
    605,928
    
    
    
    425,274
    
    
    
    427,867
 6.
    
    In December 2004, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123R, Share-Based Payment (Statement No. 123R), which is effective
for the Company no later than the beginning of its first fiscal quarter of 2006. Management
intends to comply with the standard at the beginning of the Companys first fiscal quarter of
2006; however, management does not believe that the impact would be materially different from
the above pro forma disclosures under Note 10.
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7.
    
    The Companys comprehensive income (loss) is as follows:
 (In thousands)
    
    Three Months Ended
    
    
    Nine Months EndedJuly 29,
    
    
    July 30,
    
    
    July 29,
    
    
    July 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Restated)
    
    (Restated)
    
    (Restated)
    
    (Restated)Net Earnings
    
    $
    11,862
    
    
    $
    5,912
    
    
    $
    42,636
    
    
    $
    16,704Change in Fair Value of Derivative
Financial Instruments, Net of Tax
    
    
    (783
    )
    
    
    (83
    )
    
    
    652
    
    
    
    407Foreign Currency Translation Adj.
    
    
    (19,323
    )
    
    
    3,445
    
    
    
    (15,870
    )
    
    
    8,006Comprehensive Income (Loss)
    
    $
    (8,244
    )
    
    $
    9,274
    
    
    $
    27,418
    
    
    $
    25,117
 8.
    
    On January 28, 2005, the Company completed the sale of the outstanding stock of its wholly
owned subsidiary Fluid Regulators Corporation (Fluid Regulators), which was included in the
Companys Sensors & Systems segment, for approximately $23.7 million. As a result of the
sale, the Company recorded a gain of $7.0 million, net of tax of $2.4 million. Sales and net
earnings for Fluid Regulators were $3.2 million and $0.1 million, respectively, during the
three month period ended July 30, 2004. Sales and net earnings for Fluid Regulators were $3.5
million and $0.3 million, respectively, during the nine month period ended July 29, 2005 and
$9.8 million and $0.9 million, respectively, during the nine month period ended July 30, 2004.On July 25, 2002, the Board of Directors adopted a formal plan for the sale of the assets and
operations of its former Automation segment. On July 23, 2003, the Company sold the assets of
its Excellon Automation subsidiary. On August 31, 2004, the Company sold the stock of W. A.
Whitney for $10.0 million in cash. Upon the final disposition of its discontinued Automation
operations in the fourth fiscal quarter of 2004, the Company recorded an $8.0 million gain, net
of $4.5 million in tax, including the reversal of estimated reserves which were recognizable
upon sale of the business. Sales of W. A. Whitney were $5.4 million and $15.6 million for the
three month and nine month period ended July 30, 2004, respectively.On May 13, 2005, management closed a small unit in the Companys Other segment and incurred
$0.4 million in severance, net of $0.2 million in tax, in the second quarter of fiscal 2005.The dispositions and closure described above are reported as discontinued operations and the
consolidated financial statements for all prior periods have been adjusted to reflect this
presentation.9.
    
    The effective tax rate for the first nine months of fiscal 2005 was 29.2% (before a $2.0
million reduction of previously estimated tax liabilities), compared with 29.7% (before a $1.9
million reduction of previously estimated tax liabilities) for the first
nine months of fiscal 2004. The effective tax rate differed from the statutory rate, as both
years benefited
 12




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from various tax credits and benefits. The $2.0 million reduction of
previously estimated tax liabilities in the first nine months of fiscal 2005 was due to the
expiration of the statute of limitations and adjustments resulting from a reconciliation of
U.S. and non-U.S. tax returns to the provision for income taxes. The $1.9 million reduction of
previously estimated tax liabilities in the first nine months of fiscal 2004 was the result of
receiving a Notice of Proposed Adjustment (NOPA) from the Internal Revenue Service covering the
audit of research and development tax credits for fiscal years 1997 through 1999. Due to the
NOPA and the expectation of a similar result for fiscal years 2000 through 2003, management
revised the Companys estimated liability for income taxes as of January 30, 2004.10.
    
    The Company accounts for its stock-based compensation plans in accordance with Accounting
Principles Board Opinion No. 25. The variable method of accounting is used to account for
stock option plans where the option holders are permitted to exercise options by surrendering
the option subject to the grant in payment of the exercise price of the option and the related
statutory taxes. No compensation cost is recognized at the grant date because the exercise
price of all stock option grants is equal to the market price of the Companys common stock as
of the date of the grant. However, subsequent changes in the market price of the Companys
common stock to the date of exercise or forfeiture results in a change in measure of
compensation cost. The following table illustrates the effect on net income and earnings per
share as if the Company had applied the fair value recognition provisions of Statement of
Financial Accounting Standards No. 123 (FAS 123 Adjustment), Accounting for Stock-Based
Compensation (Statement No. 123):
 (In thousands, except per share amounts)
    
    Three Months Ended
    
    
    Nine Months EndedJuly 29,
    
    
    July 30,
    
    
    July 29,
    
    
    July 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Restated)
    
    (Restated)
    
    (Restated)
    
    (Restated)Net earnings, as reported
    
    $
    11,862
    
    
    $
    5,912
    
    
    $
    42,636
    
    
    $
    16,704Stock-based compensation costs,
net of income tax included in
net earnings as reported
    
    
    2,250
    
    
    
    1,709
    
    
    
    2,707
    
    
    
    2,679Stock-based compensation cost,
net of income tax under the fair
value method of accounting
    
    
    (736
    )
    
    
    (476
    )
    
    
    (1,653
    )
    
    
    (1,311
    )Pro forma net earnings
    
    $
    13,376
    
    
    $
    7,145
    
    
    $
    43,690
    
    
    $
    18,072Basic earnings per share, as reported
    
    $
    .47
    
    
    $
    .28
    
    
    $
    1.72
    
    
    $
    .79Add: FAS 123 Adjustment
    
    
    .06
    
    
    
    .06
    
    
    
    .04
    
    
    
    .06Pro forma basic earnings per share
    
    $
    .53
    
    
    $
    .34
    
    
    $
    1.76
    
    
    $
    .85Diluted earnings per share,
as reported
    
    $
    .46
    
    
    $
    .27
    
    
    $
    1.69
    
    
    $
    .78Add: FAS 123 Adjustment
    
    
    .06
    
    
    
    .06
    
    
    
    .04
    
    
    
    .06Pro forma diluted earnings per share
    
    $
    .52
    
    
    $
    .33
    
    
    $
    1.73
    
    
    $
    .84
 13




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##### Table of Contents



11.
    
    The Companys pension plans principally include a U.S. pension plan maintained by Esterline and
U.S. and non-U.S. plans maintained by Leach Holding Corporation (Leach). Components of net
periodic pension cost consisted of the following:
 (In thousands)
    
    Three Months Ended
    
    
    Nine Months EndedJuly 29,
    
    
    July 30,
    
    
    July 29,
    
    
    July 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Components of Net Periodic Pension CostService cost
    
    $
    400
    
    
    $
    753
    
    
    $
    2,533
    
    
    $
    2,567Interest cost
    
    
    2,599
    
    
    
    1,422
    
    
    
    7,307
    
    
    
    4,883Expected return on plan assets
    
    
    (2,946
    )
    
    
    (1,871
    )
    
    
    (8,856
    )
    
    
    (6,348
    )Amortization of prior
service cost
    
    
    5
    
    
    
    4
    
    
    
    14
    
    
    
    12Amortization of actuarial loss
    
    
    600
    
    
    
    92
    
    
    
    934
    
    
    
    389Net Periodic Cost
    
    $
    658
    
    
    $
    400
    
    
    $
    1,932
    
    
    $
    1,503
 During the third fiscal quarter of 2005, the Company made a
$4.7 million contribution to the
U.S. pension plan maintained by Leach.12.
    
    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 EndedJuly 29,
    
    
    July 30,
    
    
    July 29,
    
    
    July 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Restated)
    
    (Restated)
    
    (Restated)
    
    (Restated)Net SalesAvionics & Controls
    
    $
    66,990
    
    
    $
    48,705
    
    
    $
    192,835
    
    
    $
    147,313Sensors & Systems
    
    
    80,953
    
    
    
    41,788
    
    
    
    239,868
    
    
    
    116,212Advanced Materials
    
    
    61,930
    
    
    
    56,931
    
    
    
    178,554
    
    
    
    159,739Total Net Sales
    
    $
    209,873
    
    
    $
    147,424
    
    
    $
    611,257
    
    
    $
    423,264Segment EarningsAvionics & Controls
    
    $
    9,173
    
    
    $
    6,650
    
    
    $
    27,776
    
    
    $
    21,766Sensors & Systems
    
    
    8,670
    
    
    
    3,018
    
    
    
    26,233
    
    
    
    3,511Advanced Materials
    
    
    6,394
    
    
    
    6,547
    
    
    
    21,622
    
    
    
    17,850Total Segment Earnings
    
    
    24,237
    
    
    
    16,215
    
    
    
    75,631
    
    
    
    43,127Corporate expense
    
    
    (6,474
    )
    
    
    (4,726
    )
    
    
    (16,788
    )
    
    
    (13,247
    )Other income (expense)
    
    
    (272
    )
    
    
    (1
    )
    
    
    (338
    )
    
    
    574Interest income
    
    
    1,187
    
    
    
    450
    
    
    
    2,747
    
    
    
    1,047Interest expense
    
    
    (4,654
    )
    
    
    (4,410
    )
    
    
    (13,433
    )
    
    
    (12,865
    )$
    14,024
    
    
    $
    7,528
    
    
    $
    47,819
    
    
    $
    18,636
 14




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##### Table of Contents



13.
    
    On June 3, 2005, the Company acquired all of the outstanding capital stock of Palomar Products,
Inc. (Palomar), a $25 million (estimated annual sales) California-based manufacturer of secure
military communications products, for approximately $29 million in cash, including the
estimated change in net equity value from December 31, 2004 to closing. A purchase price
adjustment is payable to the seller contingent upon achievement of financial results through
December 31, 2005, as described in the Stock Purchase Agreement. Palomars products extend the
Companys avionics and controls product lines. Palomar is included in the Avionics & Controls
segment and the results of its operations were included from the effective date of the
acquisition.14.
    
    On November 24, 2004, the Company completed a public offering of 3.7 million shares of common
stock, including shares sold under the underwriters over-allotment option, priced at $31.25
per share, generating net proceeds of approximately $109 million, of which $5.0 million was
used to pay off existing credit facilities. The funds provide additional financial resources
for acquisitions and general corporate purposes. The Company issued 303,826 and 233,137
shares under its employee stock plans during the nine month periods ended July 29, 2005 and
July 30, 2004, respectively.15.
    
    The following schedules set forth condensed consolidating financial information as required
by Rule 3-10 of Securities and Exchange Commission Regulation S-X for the periods ended July
29, 2005, and July 30, 2004, for (a) Esterline Technologies Corporation (the Parent); (b) on a
combined basis, the subsidiary guarantors (Guarantor Subsidiaries) of the Senior Subordinated
Notes which include Advanced Input Devices, Inc., Amtech Automated Manufacturing Technology,
Angus Electronics Co., Armtec Countermeasures Co., Armtec Defense Products Co., Auxitrol Co.,
AVISTA, Incorporated, Boyar-Schultz Corporation, BVR Technologies Co., Equipment Sales Co., EA
Technologies Corporation, Esterline Technologies Holdings Limited, H.A. Sales Co., Hauser
Inc., Hytek Finishes Co., Janco Corporation, Kirkhill-TA Co., Korry Electronics Co., Leach
Holding Corporation, Leach International Corporation, Leach Technology Group, Inc., Mason
Electric Co., MC Tech Co., Memtron Technologies Co., Norwich Aero Products, Inc., Palomar
Products, Inc., Pressure Systems, Inc., Pressure Systems International, Inc., Surftech
Finishes Co., UMM Electronics Inc., and (c) on a combined basis, the subsidiary non-guarantors
(Non-Guarantor Subsidiaries), which include Advanced Input Devices Ltd. (England), Auxitrol
S.A., Auxitrol Technologies S.A., Auxitrol Asia PTE Ltd., Esterline Input Devices Asia Ltd.,
Esterline Input Devices Ltd. (China), Esterline Technologies DK Aps (Denmark), Esterline
Technologies Ltd. (England), Esterline Technologies Ltd. (Hong Kong), Excellon Europa GmbH,
Excellon France S.A.R.L., Guizhou Leach-Tianyi Aviation Electrical Company Ltd. (China), Leach
International Asia-Pacific Ltd. (Hong Kong), Leach International Europe S.A. (France), Leach
International Germany GmbH (Germany), Leach International Mexico S. de R.L. de C.V. (Mexico),
Leach International U.K. (England), LRE Medical GmbH (Germany), Muirhead Aerospace Ltd.,
Norcroft Dynamics Ltd., Pressure Systems International Ltd., TA Mfg. Limited, Weston Aero Ltd. (England), and Weston Aerospace Ltd. (England). The guarantor
subsidiaries are direct and indirect wholly-owned subsidiaries of Esterline Technologies and
have fully and unconditionally, jointly and severally, guaranteed the Senior Subordinated
Notes.
 15




---



##### Table of Contents



Condensed Consolidating Balance Sheet as of July 29, 2005.
 (In thousands)(Restated)Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalAssetsCurrent AssetsCash and cash equivalents
    
    $
    39,299
    
    
    $
    3,089
    
    
    $
    37,951
    
    
    $
    
    
    
    $
    80,339Cash in escrow
    
    
    11,744
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,744Short-term investments
    
    
    75,205
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,205Accounts receivable, net
    
    
    503
    
    
    
    82,866
    
    
    
    51,492
    
    
    
    
    
    
    
    134,861Inventories
    
    
    
    
    
    
    90,497
    
    
    
    45,654
    
    
    
    
    
    
    
    136,151Deferred income tax benefits
    
    
    24,798
    
    
    
    52
    
    
    
    1,102
    
    
    
    
    
    
    
    25,952Prepaid expenses
    
    
    189
    
    
    
    4,355
    
    
    
    2,437
    
    
    
    
    
    
    
    6,981Other current assets
    
    
    
    
    
    
    288
    
    
    
    
    
    
    
    
    
    
    
    288Total Current Assets
    
    
    151,738
    
    
    
    181,147
    
    
    
    138,636
    
    
    
    
    
    
    
    471,521Property, Plant & Equipment, Net
    
    

    2,385
    
    
    
    95,046
    
    
    
    38,928
    
    
    
    
    
    
    
    136,359Goodwill
    
    
    
    
    
    
    191,339
    
    
    
    69,057
    
    
    
    
    
    
    
    260,396Intangibles, Net
    
    
    141
    
    
    
    84,378
    
    
    
    84,733
    
    
    
    
    
    
    
    169,252Debt Issuance Costs, Net
    
    
    5,312
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,312Deferred Income Tax Benefits
    
    
    11,130
    
    
    
    
    
    
    
    767
    
    
    
    
    
    
    
    11,897Other Assets
    
    
    3,111
    
    
    
    17,616
    
    
    
    4,557
    
    
    
    
    
    
    
    25,284Amounts Due
(To) From Subsidiaries
    
    
    148,791
    
    
    
    43,357
    
    
    
    
    
    
    
    (192,148
    )
    
    
    Investment in Subsidiaries
    
    
    599,916
    
    
    
    120
    
    
    
    (119
    )
    
    
    (599,917
    )
    
    
    Total Assets
    
    $
    922,524
    
    
    $
    613,003
    
    
    $
    336,559
    
    
    $
    (792,065
    )
    
    $
    1,080,021
 16




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##### Table of Contents



(In thousands)(Restated)Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalLiabilities and Shareholders EquityCurrent LiabilitiesAccounts payable
    
    $
    217
    
    
    $
    16,700
    
    
    $
    25,090
    
    
    $
    
    
    
    $
    42,007Accrued liabilities
    
    
    30,015
    
    
    
    46,471
    
    
    
    24,662
    
    
    
    
    
    
    
    101,148Credit facilities
    
    
    
    
    
    
    
    
    
    
    2,301
    
    
    
    
    
    
    
    2,301Current maturities of
long-term debt
    
    
    30,000
    
    
    
    
    
    
    
    913
    
    
    
    
    
    
    
    30,913Federal and foreign
income taxes
    
    
    (73
    )
    
    
    133
    
    
    
    4,209
    
    
    
    
    
    
    
    4,269Total Current Liabilities
    
    
    60,159
    
    
    
    63,304
    
    
    
    57,175
    
    
    
    
    
    
    
    180,638Long-Term Debt, Net
    
    
    215,340
    
    
    
    
    
    
    
    1,867
    
    
    
    
    
    
    
    217,207Deferred Income Taxes
    
    
    30,944
    
    
    
    (9
    )
    
    
    15,001
    
    
    
    
    
    
    
    45,936Other Liabilities
    
    

    10,153

    
    
    
    11,056
    
    
    

    6,555
    
    
    
    

    
    
    
    27,764Minority Interest
    
    
    
    
    
    
    
    
    
    
    2,548
    
    
    
    
    
    
    
    2,548Amounts Due To (From)
Subsidiaries
    
    
    
    
    
    
    
    
    
    
    189,140
    
    
    
    (189,140
    )
    
    
    Shareholders Equity
    
    
    605,928
    
    
    
    538,652
    
    
    
    64,273
    
    
    
    (602,925
    )
    
    
    605,928Total Liabilities and
Shareholders Equity
    
    $
    922,524
    
    
    $
    613,003
    
    
    $
    336,559
    
    
    $
    (792,065
    )
    
    $
    1,080,021
 17




---



##### Table of Contents



Condensed Consolidating Statement of Operations for the three month period ended July 29,
2005.
 (In thousands)(Restated)Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalNet Sales
    
    $
    
    
    
    $
    144,356
    
    
    $
    69,612
    
    
    $
    (4,095
    )
    
    $
    209,873Cost of Sales
    
    
    
    
    
    
    100,845
    
    
    
    47,430
    
    
    
    (4,095
    )
    
    
    144,180
    
    
    
    43,511
    
    
    
    22,182
    
    
    
    
    
    
    
    65,693ExpensesSelling, general
and administrative
    
    
    
    
    
    
    25,067
    
    
    
    11,860
    
    
    
    
    
    
    
    36,927Research, development
and engineering
    
    
    
    
    
    
    4,721
    
    
    
    6,282
    
    
    
    
    
    
    
    11,003Total Expenses
    
    
    
    
    
    
    29,788
    
    
    
    18,142
    
    
    
    
    
    
    
    47,930Operating Earnings From
Continuing Operations
    
    
    
    
    
    
    13,723
    
    
    
    4,040
    
    
    
    
    
    
    
    17,763Other expense
    
    
    
    
    
    
    59
    
    
    
    213
    
    
    
    
    
    
    
    272Interest income
    
    
    (3,994
    )
    
    
    (690
    )
    
    
    (709
    )
    
    
    4,206
    
    
    
    (1,187
    )Interest expense
    
    
    4,592
    
    
    
    1,042
    
    
    
    3,226
    
    
    
    (4,206
    )
    
    
    4,654Other Expense, Net
    
    
    598
    
    
    
    411
    
    
    
    2,730
    
    
    
    
    
    
    
    3,739Income (Loss) From Continuing
Operations Before Taxes
    
    
    (598
    )
    
    
    13,312
    
    
    
    1,310
    
    
    
    
    
    
    
    14,024Income Tax Expense (Benefit)
    
    
    (273
    )
    
    
    1,990
    
    
    
    326
    
    
    
    
    
    
    
    2,043Income (Loss) From
Continuing Operations
Before Minority Interest
    
    
    (325
    )
    
    
    11,322
    
    
    
    984
    
    
    
    
    
    
    
    11,981Minority Interest
    
    
    
    
    
    
    
    
    
    
    (122
    )
    
    
    
    
    
    
    (122
    )Income (Loss) From
Continuing Operations
    
    
    (325
    )
    
    
    11,322
    
    
    
    862
    
    
    
    
    
    
    
    11,859Income From Discontinued
Operations, Net of Tax
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3Equity in Net Income of
Consolidated Subsidiaries
    
    
    12,187
    
    
    
    
    
    
    
    
    
    
    
    (12,187
    )
    
    
    Net Income (Loss)
    
    $
    11,862
    
    
    $
    11,325
    
    
    $
    862
    
    
    $
    (12,187
    )
    
    $
    11,862
 18




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##### Table of Contents



Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalNet Sales
    
    $
    
    
    
    $
    410,850
    
    
    $
    213,458
    
    
    $
    (13,051
    )
    
    $
    611,257Cost of Sales
    
    
    
    
    
    
    288,009
    
    
    
    143,968
    
    
    
    (13,051
    )
    
    
    418,926
    
    
    
    122,841
    
    
    
    69,490
    
    
    
    
    
    
    
    192,331ExpensesSelling, general
and administrative
    
    
    
    
    
    
    67,489
    
    
    
    35,883
    
    
    
    
    
    
    
    103,372Research, development
and engineering
    
    
    
    
    
    
    12,443
    
    
    
    17,673
    
    
    
    
    
    
    
    30,116Total Expenses
    
    
    
    
    
    
    79,932
    
    
    
    53,556
    
    
    
    
    
    
    
    133,488Operating Earnings From
Continuing Operations
    
    
    
    
    
    
    42,909
    
    
    
    15,934
    
    
    
    
    
    
    
    58,843Other expense
    
    
    50
    
    
    
    75
    
    
    
    213
    
    
    
    
    
    
    
    338Interest income
    
    
    (11,574
    )
    
    
    (2,386
    )
    
    
    (1,983
    )
    
    
    13,196
    
    
    
    (2,747
    )Interest expense
    
    
    13,573
    
    
    
    3,607
    
    
    
    9,449
    
    
    
    (13,196
    )
    
    
    13,433Other Expense, Net
    
    
    2,049
    
    
    
    1,296
    
    
    
    7,679
    
    
    
    
    
    
    
    11,024Income (Loss) From Continuing
Operations Before Taxes
    
    
    (2,049
    )
    
    
    41,613
    
    
    
    8,255
    
    
    
    
    
    
    
    47,819Income Tax Expense (Benefit)
    
    
    (699
    )
    
    
    10,268
    
    
    
    2,412
    
    
    
    
    
    
    
    11,981Income (Loss) From
Continuing Operations
Before Minority Interest
    
    
    (1,350
    )
    
    
    31,345
    
    
    
    5,843
    
    
    
    
    
    
    
    35,838Minority Interest
    
    
    
    
    
    
    
    
    
    
    (170
    )
    
    
    
    
    
    
    (170
    )Income (Loss) From
Continuing Operations
    
    
    (1,350
    )
    
    
    31,345
    
    
    
    5,673
    
    
    
    
    
    
    
    35,668Income From Discontinued
Operations, Net of Tax
    
    
    
    
    
    
    6,968
    
    
    
    
    
    
    
    
    
    
    
    6,968Equity in Net Income of
Consolidated Subsidiaries
    
    
    43,986
    
    
    
    
    
    
    
    
    
    
    
    (43,986
    )
    
    
    Net Income (Loss)
    
    $
    42,636
    
    
    $
    38,313
    
    
    $
    5,673
    
    
    $
    (43,986
    )
    
    $
    42,636
 19




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##### Table of Contents



Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalCash Flows Provided (Used)
by Operating ActivitiesNet earnings (loss)
    
    $
    42,636
    
    
    $
    38,313
    
    
    $
    5,673
    
    
    $
    (43,986
    )
    
    $
    42,636Minority interest
    
    
    
    
    
    
    
    
    
    
    170
    
    
    
    
    
    
    
    170Depreciation & amortization
    
    
    
    
    
    
    16,557
    
    
    
    10,251
    
    
    
    
    
    
    
    26,808Deferred income taxes
    
    
    3,713
    
    
    
    (61
    )
    
    
    (3,613
    )
    
    
    
    
    
    
    39Stock-based compensation
    
    
    
    
    
    
    3,300
    
    
    
    773
    
    
    
    
    
    
    
    4,073Gain on sale of discontinued
operations
    
    
    
    
    
    
    (9,456
    )
    
    
    
    
    
    
    
    
    
    
    (9,456
    )Loss on sale of building
    
    
    
    
    
    
    59
    
    
    
    
    
    
    
    
    
    
    
    59Working capital changes, net of
effect of acquisitions
Accounts receivable
    
    
    1,718
    
    
    
    2,804
    
    
    
    (7,250
    )
    
    
    
    
    
    
    (2,728
    )Inventories
    
    
    
    
    
    
    (12,693
    )
    
    
    (4,935
    )
    
    
    
    
    
    
    (17,628
    )Prepaid expenses
    
    
    164
    
    
    
    (777
    )
    
    
    2,904
    
    
    
    
    
    
    
    2,291Other current assets
    
    
    147
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    147Accounts payable
    
    
    (303
    )
    
    
    (539
    )
    
    
    5,827
    
    
    
    
    
    
    
    4,985Accrued liabilities
    
    
    1,109
    
    
    
    509
    
    
    
    252
    
    
    
    
    
    
    
    1,870Federal & foreign income taxes
    
    
    (3,069
    )
    
    
    58
    
    
    
    1,024
    
    
    
    
    
    
    
    (1,987
    )Other liabilities
    
    
    5,870
    
    
    
    (1,991
    )
    
    
    (4,807
    )
    
    
    
    
    
    
    (928
    )Other, net
    
    
    (321
    )
    
    
    (5,541
    )
    
    
    3,370
    
    
    
    
    
    
    
    (2,492
    )51,664
    
    
    
    30,542
    
    
    
    9,639
    
    
    
    (43,986
    )
    
    
    47,859Cash Flows Provided (Used)
by Investing ActivitiesPurchases of capital assets
    
    
    (325
    )
    
    
    (10,119
    )
    
    
    (4,477
    )
    
    
    
    
    
    
    (14,921
    )Proceeds from sale of
discontinued operations
    
    
    
    
    
    
    21,421
    
    
    
    
    
    
    
    
    
    
    
    21,421Proceeds from sale of building
    
    
    
    
    
    
    2,319
    
    
    
    
    
    
    
    
    
    
    
    2,319Escrow deposit
    
    
    (4,207
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,207
    )Proceeds from sale of
capital assets
    
    
    61
    
    
    
    727
    
    
    
    277
    
    
    
    
    
    
    
    1,065Purchase of short-term investments
    
    
    (75,205
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75,205
    )Acquisitions of businesses, net
    
    
    
    
    
    
    (33,088
    )
    
    
    
    
    
    
    
    
    
    
    (33,088
    )(79,676
    )
    
    
    (18,740
    )
    
    
    (4,200
    )
    
    
    
    
    
    
    (102,616
    )
 20




---



##### Table of Contents



Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalCash Flows Provided (Used)
by Financing ActivitiesProceeds provided by stock
issuance under employee
stock plans
    
    
    4,919
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,919Proceeds provided by sale
of common stock
    
    
    108,490
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108,490Net change in credit facilities
    
    
    (5,000
    )
    
    
    
    
    
    
    443
    
    
    
    
    
    
    
    (4,557
    )Repayment of long-term debt
    
    
    (1,429
    )
    
    
    (57
    )
    
    
    (321
    )
    
    
    
    
    
    
    (1,807
    )Investment in subsidiaries
    
    
    (46,528
    )
    
    
    (11,093
    )
    
    
    13,635
    
    
    
    43,986
    
    
    
    60,452
    
    
    
    (11,150
    )
    
    
    13,757
    
    
    
    43,986
    
    
    
    107,045Effect of Foreign Exchange
Rates on Cash
    
    
    
    
    
    
    84
    
    
    
    (1,512
    )
    
    
    
    
    
    
    (1,428
    )Net Increase in Cash
and Cash Equivalents
    
    
    32,440
    
    
    
    736
    
    
    
    17,684
    
    
    
    
    
    
    
    50,860Cash and Cash Equivalents
 Beginning of Year
    
    
    6,859
    
    
    
    2,353
    
    
    
    20,267
    
    
    
    
    
    
    
    29,479Cash and Cash Equivalents
 End of Year
    
    $
    39,299
    
    
    $
    3,089
    
    
    $
    37,951
    
    
    $
    
    
    
    $
    80,339
 21




---



##### Table of Contents



Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalAssetsCurrent AssetsCash and cash equivalents
    
    $
    6,859
    
    
    $
    2,353
    
    
    $
    20,267
    
    
    $
    
    
    
    $
    29,479Cash in escrow
    
    
    8,511
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,511Accounts receivable, net
    
    
    2,221
    
    
    
    83,115
    
    
    
    46,870
    
    
    
    
    
    
    
    132,206Inventories
    
    
    
    
    
    
    76,168
    
    
    
    42,886
    
    
    
    
    
    
    
    119,054Deferred income tax benefits
    
    
    40,630
    
    
    
    
    
    
    
    (17,131
    )
    
    
    
    
    
    
    23,499Prepaid expenses
    
    
    353
    
    
    
    3,598
    
    
    
    5,490
    
    
    
    
    
    
    
    9,441Other current assets
    
    
    147
    
    
    
    288
    
    
    
    
    
    
    
    
    
    
    
    435Total Current Assets
    
    
    58,721
    
    
    
    165,522
    
    
    
    98,382
    
    
    
    
    
    
    
    322,625Property, Plant & Equipment, Net
    
    
    2,369
    
    
    
    99,360
    
    
    
    43,406
    
    
    
    
    
    
    
    145,135Goodwill
    
    
    
    
    
    
    175,607
    
    
    
    72,210
    
    
    
    
    
    
    
    247,817Intangibles, Net
    
    
    141
    
    
    
    77,160
    
    
    
    92,575
    
    
    
    
    
    
    
    169,876Debt Issuance Costs, Net
    
    
    5,818
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,818Deferred Income Tax Benefits
    
    
    11,216
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,216Other Assets
    
    
    9,780
    
    
    
    18,309
    
    
    
    4,772
    
    
    
    
    
    
    
    32,861Amounts Due (To) From
Subsidiaries
    
    
    152,346
    
    
    
    36,188
    
    
    
    
    
    
    
    (188,534
    )
    
    
    Investment in Subsidiaries
    
    
    558,234
    
    
    
    
    
    
    
    92
    
    
    
    (558,326
    )
    
    
    Total Assets
    
    $
    798,625
    
    
    $
    572,146
    
    
    $
    311,437
    
    
    $
    (746,860
    )
    
    $
    935,348
 22




---



##### Table of Contents



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalLiabilities and Shareholders EquityCurrent LiabilitiesAccounts payable
    
    $
    520
    
    
    $
    16,814
    
    
    $
    20,533
    
    
    $
    
    
    
    $
    37,867Accrued liabilities
    
    
    29,880
    
    
    
    41,466
    
    
    
    25,692
    
    
    
    
    
    
    
    97,038Credit facilities
    
    
    5,000
    
    
    
    
    
    
    
    1,977
    
    
    
    
    
    
    
    6,977Current maturities of
long-term debt
    
    
    
    
    
    
    50
    
    
    
    981
    
    
    
    
    
    
    
    1,031Federal and foreign
income taxes
    
    
    2,996
    
    
    
    75
    
    
    
    3,607
    
    
    
    
    
    
    
    6,678Total Current Liabilities
    
    
    38,396
    
    
    
    58,405
    
    
    
    52,790
    
    
    
    
    
    
    
    149,591Long-Term Debt, Net
    
    
    246,769
    
    
    
    7
    
    
    
    2,280
    
    
    
    
    
    
    
    249,056Deferred Income Taxes
    
    
    43,149
    
    
    
    
    
    
    
    294
    
    
    
    
    
    
    
    43,443Other Liabilities
    
    
    9,283
    
    
    
    13,840
    
    
    
    6,729
    
    
    
    
    
    
    
    29,852Amounts Due To (From)
Subsidiaries
    
    
    
    
    
    
    
    
    
    
    186,310
    
    
    
    (186,310
    )
    
    
    Minority Interest
    
    
    
    
    
    
    
    
    
    
    2,378
    
    
    
    
    
    
    
    2,378Shareholders Equity
    
    
    461,028
    
    
    
    499,894
    
    
    
    60,656
    
    
    
    (560,550
    )
    
    
    461,028Total Liabilities and
Shareholders Equity
    
    $
    798,625
    
    
    $
    572,146
    
    
    $
    311,437
    
    
    $
    (746,860
    )
    
    $
    935,348
 23




---



##### Table of Contents



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalNet Sales
    
    $
    
    
    
    $
    112,200
    
    
    $
    35,499
    
    
    $
    (275
    )
    
    $
    147,424Cost of Sales
    
    
    
    
    
    
    79,328
    
    
    
    22,509
    
    
    
    (275
    )
    
    
    101,562
    
    
    
    32,872
    
    
    
    12,990
    
    
    
    
    
    
    
    45,862ExpensesSelling, general
and administrative
    
    
    
    
    
    
    19,723
    
    
    
    8,735
    
    
    
    
    
    
    
    28,458Research, development
and engineering
    
    
    
    
    
    
    2,651
    
    
    
    3,264
    
    
    
    
    
    
    
    5,915Total Expenses
    
    
    
    
    
    
    22,374
    
    
    
    11,999
    
    
    
    
    
    
    
    34,373Operating Earnings From
Continuing Operations
    
    
    
    
    
    
    10,498
    
    
    
    991
    
    
    
    
    
    
    
    11,489Other expense
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Interest income
    
    
    (1,504
    )
    
    
    (628
    )
    
    
    (212
    )
    
    
    1,894
    
    
    
    (450
    )Interest expense
    
    
    4,334
    
    
    
    626
    
    
    
    1,344
    
    
    
    (1,894
    )
    
    
    4,410Other (Income) Expense, Net
    
    
    2,830
    
    
    
    (1
    )
    
    
    1,132
    
    
    
    
    
    
    
    3,961Income (Loss) From Continuing
Operations Before Taxes
    
    
    (2,830
    )
    
    
    10,499
    
    
    
    (141
    )
    
    
    
    
    
    
    7,528Income Tax Expense (Benefit)
    
    
    (836
    )
    
    
    2,896
    
    
    
    132
    
    
    
    
    
    
    
    2,192Income (Loss) From
Continuing Operations
    
    
    (1,994
    )
    
    
    7,603
    
    
    
    (273
    )
    
    
    
    
    
    
    5,336Income From Discontinued
Operations, Net of Tax
    
    
    
    
    
    
    576
    
    
    
    
    
    
    
    
    
    
    
    576Equity in Net Income of
Consolidated Subsidiaries
    
    
    7,906
    
    
    
    
    
    
    
    
    
    
    
    (7,906
    )
    
    
    Net Income (Loss)
    
    $
    5,912
    
    
    $
    8,179
    
    
    $
    (273
    )
    
    $
    (7,906
    )
    
    $
    5,912
 24




---



##### Table of Contents



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalNet Sales
    
    $
    
    
    
    $
    325,909
    
    
    $
    98,091
    
    
    $
    (736
    )
    
    $
    423,264Cost of Sales
    
    
    
    
    
    
    228,966
    
    
    
    61,996
    
    
    
    (736
    )
    
    
    290,226
    
    
    
    96,943
    
    
    
    36,095
    
    
    
    
    
    
    
    133,038ExpensesSelling, general
and administrative
    
    
    
    
    
    
    57,785
    
    
    
    28,020
    
    
    
    
    
    
    
    85,805Research, development
and engineering
    
    
    
    
    
    
    7,077
    
    
    
    10,276
    
    
    
    
    
    
    
    17,353Total Expenses
    
    
    
    
    
    
    64,862
    
    
    
    38,296
    
    
    
    
    
    
    
    103,158Operating Earnings (Loss) From
Continuing Operations
    
    
    
    
    
    
    32,081
    
    
    
    (2,201
    )
    
    
    
    
    
    
    29,880Other (income) expense
    
    
    
    
    
    
    (577
    )
    
    
    3
    
    
    
    
    
    
    
    (574
    )Interest income
    
    
    (4,476
    )
    
    
    (1,886
    )
    
    
    (352
    )
    
    
    5,667
    
    
    
    (1,047
    )Interest expense
    
    
    12,629
    
    
    
    1,876
    
    
    
    4,027
    
    
    
    (5,667
    )
    
    
    12,865Other (Income) Expense, Net
    
    
    8,153
    
    
    
    (587
    )
    
    
    3,678
    
    
    
    
    
    
    
    11,244Income (Loss) From Continuing
Operations Before Taxes
    
    
    (8,153
    )
    
    
    32,668
    
    
    
    (5,879
    )
    
    
    
    
    
    
    18,636Income Tax Expense (Benefit)
    
    
    (2,406
    )
    
    
    7,493
    
    
    
    (1,445
    )
    
    
    
    
    
    
    3,642Income (Loss) From
Continuing Operations
    
    
    (5,747
    )
    
    
    25,175
    
    
    
    (4,434
    )
    
    
    
    
    
    
    14,994Income From Discontinued
Operations, Net of Tax
    
    
    
    
    
    
    1,710
    
    
    
    
    
    
    
    
    
    
    
    1,710Equity in Net Income of
Consolidated Subsidiaries
    
    
    22,451
    
    
    
    
    
    
    
    
    
    
    
    (22,451
    )
    
    
    Net Income (Loss)
    
    $
    16,704
    
    
    $
    26,885
    
    
    $
    (4,434
    )
    
    $
    (22,451
    )
    
    $
    16,704
 25




---



##### Table of Contents



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalCash Flows Provided (Used)
by Operating ActivitiesNet earnings (loss)
    
    $
    16,704
    
    
    $
    26,885
    
    
    $
    (4,434
    )
    
    $
    (22,451
    )
    
    $
    16,704Depreciation & amortization
    
    
    
    
    
    
    18,399
    
    
    
    5,842
    
    
    
    
    
    
    
    24,241Deferred income taxes
    
    
    (193
    )
    
    
    (1
    )
    
    
    72
    
    
    
    
    
    
    
    (122
    )Stock-based compensation
    
    
    
    
    
    
    3,004
    
    
    
    980
    
    
    
    
    
    
    
    3,984Gain on sale of land
    
    
    
    
    
    
    (577
    )
    
    
    
    
    
    
    
    
    
    
    (577
    )Working capital changes, net of
effect of acquisitions
Accounts receivable
    
    
    (91
    )
    
    
    4,497
    
    
    
    1,645
    
    
    
    
    
    
    
    6,051Inventories
    
    
    
    
    
    
    (6,503
    )
    
    
    (1,908
    )
    
    
    
    
    
    
    (8,411
    )Prepaid expenses
    
    
    73
    
    
    
    139
    
    
    
    (820
    )
    
    
    
    
    
    
    (608
    )Accounts payable
    
    
    (121
    )
    
    
    98
    
    
    
    705
    
    
    
    
    
    
    
    682Accrued liabilities
    
    
    (4,464
    )
    
    
    (3,898
    )
    
    
    1,747
    
    
    
    
    
    
    
    (6,615
    )Federal & foreign income taxes
    
    
    4,124
    
    
    
    (102
    )
    
    
    (483
    )
    
    
    
    
    
    
    3,539Other, net
    
    
    (234
    )
    
    
    (1,411
    )
    
    
    1,918
    
    
    
    
    
    
    
    27315,798
    
    
    
    40,530
    
    
    
    5,264
    
    
    
    (22,451
    )
    
    
    39,141Cash Flows Provided (Used)
by Investing ActivitiesPurchases of capital assets
    
    
    (399
    )
    
    
    (15,416
    )
    
    
    (1,788
    )
    
    
    
    
    
    
    (17,603
    )Proceeds from sale of land
    
    
    
    
    
    
    1,179
    
    
    
    
    
    
    
    
    
    
    
    1,179Proceeds from sale of
capital assets
    
    
    23
    
    
    
    273
    
    
    
    113
    
    
    
    
    
    
    
    409Proceeds from sale of
short-term investments
    
    
    12,797
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,797Acquisitions of businesses, net
    
    
    
    
    
    
    (6,633
    )
    
    
    (249
    )
    
    
    
    
    
    
    (6,882
    )12,421
    
    
    
    (20,597
    )
    
    
    (1,924
    )
    
    
    
    
    
    
    (10,100
    )Cash Flows Provided (Used)
by Financing ActivitiesProceeds provided by stock
issuance under employee
stock plans
    
    
    2,697
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,697Debt issuance costs
    
    
    (268
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (268
    )Net change in credit facilities
    
    
    
    
    
    
    
    
    
    
    329
    
    
    
    
    
    
    
    329Repayment of long-term debt
    
    
    (29,615
    )
    
    
    (57
    )
    
    
    (319
    )
    
    
    
    
    
    
    (29,991
    )Investment in subsidiaries
    
    
    (5,530
    )
    
    
    (22,297
    )
    
    
    5,376
    
    
    
    22,451
    
    
    
    (32,716
    )
    
    
    (22,354
    )
    
    
    5,386
    
    
    
    22,451
    
    
    
    (27,233
    )
 26




---



##### Table of Contents



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalEffect of Foreign Exchange
Rates on Cash
    
    
    (742
    )
    
    
    12
    
    
    
    (1,594
    )
    
    
    
    
    
    
    (2,324
    )Net Increase (Decrease) in Cash
and Cash Equivalents
    
    
    (5,239
    )
    
    
    (2,409
    )
    
    
    7,132
    
    
    
    
    
    
    
    (516
    )Cash and Cash Equivalents
 Beginning of Year
    
    
    109,834
    
    
    
    3,030
    
    
    
    18,499
    
    
    
    
    
    
    
    131,363Cash and Cash Equivalents
 End of Year
    
    $
    104,595
    
    
    $
    621
    
    
    $
    25,631
    
    
    $
    
    
    
    $
    130,847
 27




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
 Overview
      28




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##### Table of Contents



29




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##### Table of Contents



Results of Continuing Operations
 Three Month Period Ended July 29, 2005 Compared to Three Month Period Ended July 30, 2004
  (In thousands)
    
    
    Incr./(Decr.)

    
    Three Months Endedfrom prior

    
    July 29,
    
    
    July 30,year period

    
    2005
    
    
    2004Avionics & Controls
    
    
    37.5
    %
    
    $
    66,990
    
    
    $
    48,705Sensors & Systems
    
    
    93.7
    %
    
    
    80,953
    
    
    
    41,788Advanced Materials
    
    
    8.8
    %
    
    
    61,930
    
    
    
    56,931Total Net Sales
    
    
    
    
    
    $
    209,873
    
    
    $
    147,424
    30
    Table of Contents       31




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##### Table of Contents



Nine Month Period Ended July 29, 2005 Compared to Nine Month Period Ended July 30, 2004
  (In thousands)
    
    
    Incr./(Decr.)

    
    Nine Months Endedfrom prior

    
    July 29,
    
    
    July 30,year period

    
    2005
    
    
    2004Avionics & Controls
    
    
    30.9
    %
    
    $
    192,835
    
    
    $
    147,313Sensors & Systems
    
    
    106.4
    %
    
    
    239,868
    
    
    
    116,212Advanced Materials
    
    
    11.8
    %
    
    
    178,554
    
    
    
    159,739Total Net Sales
    
    
    
    
    
    $
    611,257
    
    
    $
    423,264
 32




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##### Table of Contents



33
    Table of Contents        34
    Table of Contents  35
    Table of Contents  Liquidity and Capital Resources
   36
    Table of Contents    Forward-Looking Statements
  37    Table of Contents  Item 4. Controls and Procedures
   38
    Table of Contents  PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 5. Other
  
 Item 6.
    
    Exhibits10.16k
    
    Esterline Technologies Corporation Long Term Incentive Plan.11
    
    
    Schedule setting forth computation of basic and diluted
earnings per common share for the three and nine month periods ended July 29,
2005 and July 30, 2004.31.1
    
    
    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.
 
 
    
    Previously filed. 39
    Table of Contents  SIGNATURES
  ESTERLINE TECHNOLOGIES CORPORATION(Registrant)Dated: January 6, 2006
    By:
    /s/ Robert D. GeorgeRobert D. GeorgeVice President, Chief Financial Officer,
     
      Secretary and Treasurer
        (Principal Financial Officer) 40