##### 



Financial
Highlights
  2004
    
    
    2003For Fiscal Years
    
    (Restated)
    
    
    (Restated)Operating ResultsNet sales
    
    $
    628,169
    
    
    $
    562,454Segment earnings
    
    
    69,299
    
    
    
    67,233Income from continuing operations
    
    
    30,402
    
    
    
    28,643Income (loss) from discontinued operations, net of tax
    
    
    9,181
    
    
    
    (5,808
    )Net earnings
    
    
    39,583
    
    
    
    22,835Earnings
(loss) per share  diluted:Continuing operations
    
    
    1.41
    
    
    
    1.36Discontinued operations
    
    
    .43
    
    
    
    (.28
    )Earnings per share
    
    
    1.84
    
    
    
    1.08Weighted
average shares outstanding  diluted
    
    
    21,539
    
    
    
    21,105Financial PositionTotal assets
    
    $
    935,348
    
    
    $
    802,827Property, plant and equipment, net
    
    
    145,135
    
    
    
    117,090Long-term debt, net
    
    
    249,056
    
    
    
    246,792Shareholders equity
    
    
    461,028
    
    
    
    396,069
 1




---



##### 



Managements Discussion and Analysis of Financial Condition and Results of Continuing Operations
 OVERVIEW
     2




---



##### 



Results of Continuing Operations
 Fiscal 2004 Compared with Fiscal 2003
  Increase (Decrease)Dollars In Thousands
    
    From Prior Year
    
    
    2004
    
    
    2003Avionics & Controls
    
    
    5.7
    %
    
    $
    209,498
    
    
    $
    198,249Sensors & Systems
    
    
    32.5
    %
    
    
    194,803
    
    
    
    146,976Advanced Materials
    
    
    3.1
    %
    
    
    223,344
    
    
    
    216,655Other
    
    
    (8.7
    )%
    
    
    524
    
    
    
    574Total
    
    
    
    
    
    $
    628,169
    
    
    $
    562,454
      3




---



##### 



4




---



##### 



5




---



##### 



6




---



##### 



Fiscal 2003 Compared with Fiscal 2002
  Increase (Decrease)Dollars In Thousands
    
    From Prior Year
    
    
    2003
    
    
    2002Avionics & Controls
    
    
    15.5
    %
    
    $
    198,249
    
    
    $
    171,709Sensors & Systems
    
    
    40.1
    %
    
    
    146,976
    
    
    
    104,942Advanced Materials
    
    
    37.7
    %
    
    
    216,655
    
    
    
    157,384Other
    
    
    (25.8
    )%
    
    
    574
    
    
    
    774Total
    
    
    
    
    
    $
    562,454
    
    
    $
    434,809
      7




---



##### 



8




---



##### 



9




---



##### 



10




---



##### 



Liquidity and Capital Resources
 Working Capital and Statement of Cash Flows
  Capital Expenditures
  Debt Financing
  11




---



##### 



Pension Obligations
   2004
    
    2003Principal assumptions as of fiscal year end:Discount Rate
    
    
    6.0
    %
    
    
    6.5
    %Rate of increase in future compensation levels
    
    
    4.5
    %
    
    
    4.5
    %Assumed long-term rate of return on plan assets
    
    
    8.5
    %
    
    
    8.5
    %
  Research and Development Expense
  Acquisitions
  12




---



##### 



Equity Offering
  13




---



##### 



Contractual Obligations
  Less than
    
    
    1-3
    
    
    4-5
    
    
    After 5In Thousands
    
    Total
    
    
    1 year
    
    
    years
    
    
    years
    
    
    yearsLong-term debt
    
    $
    250,087
    
    
    $
    2,800
    
    
    $
    31,265
    
    
    $
    40,875
    
    
    $
    175,147Credit facilities
    
    
    6,977
    
    
    
    6,977
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    53,995
    
    
    
    8,945
    
    
    
    16,063
    
    
    
    11,581
    
    
    
    17,406Purchase obligationsNot recorded on balance sheet
    
    
    70,187
    
    
    
    63,118
    
    
    
    6,360
    
    
    
    709
    
    
    
    Pension(1)
    
    
    2,400
    
    
    
    2,400
    
    
    
    
    
    
    
    
    
    
    
    Recorded on balance sheet
    
    
    134,905
    
    
    
    134,905
    
    
    
    
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    518,551
    
    
    $
    219,145
    
    
    $
    53,688
    
    
    $
    53,165
    
    
    $
    192,553
 
 (1)
    
    Our pension plan funding policy is consistent with the minimum funding requirements
of ERISA. This table reflects the amount of our expected pension funding under our U.S. plans
in fiscal 2005. Seasonality
  Disclosures About Market Risk
 Interest Rate Risks
  14




---



##### 



Long-term Debt  Fixed Rate
    
    
    Interest Rate SwapPrincipal
    
    
    Average
    
    
    Notional
    
    
    Average
    
    
    AverageMaturing in:
    
    Amount
    
    
    Rates
    
    
    Amount
    
    
    Pay Rate(1)
    
    
    Receive Rate2005
    
    $
    1,031
    
    
    
    7.4
    %
    
    $
    
    
    
    
    *
    
    
    
    7.75
    %2006
    
    
    30,763
    
    
    
    6.4
    %
    
    
    
    
    
    
    *
    
    
    
    7.75
    %2007
    
    
    502
    
    
    
    7.0
    %
    
    
    
    
    
    
    *
    
    
    
    7.75
    %2008
    
    
    438
    
    
    
    7.0
    %
    
    
    
    
    
    
    *
    
    
    
    7.75
    %2009
    
    
    40,437
    
    
    
    6.8
    %
    
    
    
    
    
    
    *
    
    
    
    7.75
    %Thereafter
    
    
    175,147
    
    
    
    7.75
    %
    
    
    75,000
    
    
    
    *
    
    
    
    7.75
    %Total
    
    $
    248,318
    
    
    
    
    
    
    $
    75,000Fair Value at
10/29/2004
    
    $
    271,069
    
    
    
    
    
    
    $
    1,769
 
 (1)
    
    The average pay rate is LIBOR plus 2.56%. Currency Risks
   15




---



##### 



Firmly Committed Sales Contracts
Operations with Foreign Functional Currency
 Principal Amount by Expected Maturity
Average Foreign Currency Exchange Rate (USD/Foreign Currency)
  Euro
    
    U.K. PoundFirmly Committed
    
    Firmly CommittedSales Contracts
    
    Sales ContractsFiscal Years
    
    United States Dollar
    
    United States Dollar2005
    
    $
    18,199
    
    
    $
    10,8162006
    
    
    5,205
    
    
    
    1012007
    
    
    5,452
    
    
    
    1492008
    
    
    3
    
    
    
    2009
    
    
    2
    
    
    
    Total
    
    $
    28,861
    
    
    $
    11,066
 16




---



##### 



Derivative Contracts
Operations with Foreign Functional Currency
 Notional Amount by Expected Maturity
Average Foreign Currency Exchange Rate (USD/Foreign Currency) 1
   United States DollarFiscal Years
    
    Notional Amount
    
    
    Avg. Contract Rate2005
    
    $
    13,340
    
    
    
    1.2042006
    
    
    1,700
    
    
    
    1.218Total
    
    $
    15,040Fair Value at 10/29/2004
    
    $
    855
  United States DollarFiscal Years
    
    Notional Amount
    
    
    Avg. Contract Rate2005
    
    $
    10,575
    
    
    
    1.7822006
    
    
    900
    
    
    
    1.754Total
    
    $
    11,475Fair Value at 10/29/2004
    
    $
    241
 
 1
    
    The Company has no derivative contracts after fiscal 2006. 17




---



##### 



Critical Accounting Policies
  Revenue Recognition
  Allowance for Doubtful Accounts
  Inventories
  Goodwill and Intangible Assets in Business Combinations
  18




---



##### 



Impairment of Goodwill and Intangible Assets
      19




---



##### 



Impairment of Long-lived Assets
  Contingencies
  Income Taxes
  Recent Accounting Pronouncements
  20




---



##### 



21




---



##### 



Selected Financial Data
 2004
    
    2003
    
    2002
    
    2001
    
    2000For Fiscal Years
    
    (Restated)
    
    (Restated)
    
    (Restated)
    
    (Restated)
    
    (Restated)Operating Results1Net sales
    
    $
    628,169
    
    
    $
    562,454
    
    
    $
    434,809
    
    
    $
    430,923
    
    
    $
    372,551Cost of sales
    
    
    426,612
    
    
    
    383,825
    
    
    
    293,236
    
    
    
    269,582
    
    
    
    229,516Selling, general
and administrative
    
    
    122,015
    
    
    
    109,225
    
    
    
    83,797
    
    
    
    74,718
    
    
    
    90,868Research, development
and engineering
    
    
    27,715
    
    
    
    19,524
    
    
    
    15,433
    
    
    
    14,232
    
    
    
    12,431Other income
    
    
    (509
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss (gain) on sale
of product line
    
    
    (3,434
    )
    
    
    66
    
    
    
    
    
    
    
    
    
    
    
    (2,591
    )Insurance settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,631
    )
    
    
    Loss (gain) on derivative
financial instruments
    
    
    
    
    
    
    (2,676
    )
    
    
    1
    
    
    
    (786
    )
    
    
    Interest income
    
    
    (1,964
    )
    
    
    (868
    )
    
    
    (1,814
    )
    
    
    (3,307
    )
    
    
    (2,205
    )Interest expense
    
    
    17,339
    
    
    
    11,995
    
    
    
    7,122
    
    
    
    7,663
    
    
    
    8,124Income from
continuing operations
before income taxes
    
    
    40,395
    
    
    
    41,363
    
    
    
    37,034
    
    
    
    73,452
    
    
    
    36,408Income tax expense
    
    
    9,971
    
    
    
    12,720
    
    
    
    8,782
    
    
    
    26,720
    
    
    
    12,623Income from
continuing operations
    
    
    30,402
    
    
    
    28,643
    
    
    
    28,252
    
    
    
    46,732
    
    
    
    23,785Income (loss) from
discontinued
operations, net of tax
    
    
    9,181
    
    
    
    (5,808
    )
    
    
    (25,039
    )
    
    
    (9,780
    )
    
    
    3,043Cumulative effect of a
change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    (7,574
    )
    
    
    (403
    )
    
    
    Net earnings (loss)
    
    
    39,583
    
    
    
    22,835
    
    
    
    (4,361
    )
    
    
    36,549
    
    
    
    26,828Earnings (loss) per
share  diluted:Continuing
operations
    
    $
    1.41
    
    
    $
    1.36
    
    
    $
    1.34
    
    
    $
    2.34
    
    
    $
    1.35Discontinued
operations
    
    
    .43
    
    
    
    (.28
    )
    
    
    (1.19
    )
    
    
    (.49
    )
    
    
    .17Cumulative effect
of a change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    (.36
    )
    
    
    (.02
    )
    
    
    Earnings (loss) per
share  diluted
    
    
    1.84
    
    
    
    1.08
    
    
    
    (.21
    )
    
    
    1.83
    
    
    
    1.52
 22




---



##### 



Selected Financial Data
 2004
    
    2003
    
    2002
    
    2001
    
    2000For Fiscal Years
    
    (Restated)
    
    (Restated)
    
    (Restated)
    
    (Restated)
    
    (Restated)Financial StructureTotal assets
    
    $
    935,348
    
    
    $
    802,827
    
    
    $
    573,678
    
    
    $
    561,306
    
    
    $
    478,812Long-term debt, net
    
    
    249,056
    
    
    
    246,792
    
    
    
    102,133
    
    
    
    102,125
    
    
    
    108,172Shareholders equity
    
    
    461,028
    
    
    
    396,069
    
    
    
    357,164
    
    
    
    351,793
    
    
    
    254,168Weighted average shares
outstanding  diluted
    
    
    21,539
    
    
    
    21,105
    
    
    
    21,021
    
    
    
    20,014
    
    
    
    17,654
 1
    
    Operating results and balance sheet items for 2000 through 2004 have been restated as
explained in Note 2 to the Companys financial statements to account for the Companys stock
option plan under variable accounting. In addition, operating results for 2004 through 2000
and balance sheet items for 2003 through 2002 reflect the segregation of continuing operations
from discontinued operations. See Note 3 to the Consolidated Financial Statements. 2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000For Fiscal Years
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)Other Selected Data2EBITDA from continuing
operations
    
    $
    85,523
    
    
    $
    75,401
    
    
    $
    61,891
    
    
    $
    83,562
    
    
    $
    66,669Capital expenditures
    
    
    22,065
    
    
    
    17,068
    
    
    
    15,129
    
    
    
    15,758
    
    
    
    15,489Interest expense
    
    
    17,339
    
    
    
    11,995
    
    
    
    7,122
    
    
    
    7,663
    
    
    
    8,124Stock option expense
(income)
    
    
    4,326
    
    
    
    1,428
    
    
    
    4,711
    
    
    
    (6,385
    )
    
    
    8,900Depreciation and
amortization from
continuing operations
    
    
    29,370
    
    
    
    24,093
    
    
    
    14,837
    
    
    
    17,556
    
    
    
    18,033
 
 2
    
    EBITDA from continuing operations is a measurement not calculated in accordance with
GAAP. We define EBITDA from continuing operations as operating earnings from continuing
operations plus stock option expense and depreciation and amortization (excluding amortization
of debt issuance cost). We do not intend EBITDA from continuing operations to represent cash
flows from continuing operations or any other items calculated in accordance with GAAP, or as
an indicator of Esterlines operating performance. Our definition of EBITDA from continuing
operations may not be comparable with EBITDA from continuing operations as defined by other
companies. We believe EBITDA is commonly used by financial analysts and others in the
aerospace and defense industries and thus provides useful information to investors. Our
management and certain financial creditors use EBITDA as one measure of our leverage capacity
and debt servicing ability, and is shown here with respect to Esterline for comparative
purposes. EBITDA is not necessarily indicative of amounts that may 23




---



##### 



be available for discretionary uses by us. The following table reconciles operating earnings from continuing
operations to EBITDA from continuing operations.  2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000For Fiscal Years
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)Operating earnings
from continuing
operations
    
    $
    51,827
    
    
    $
    49,880
    
    
    $
    42,343
    
    
    $
    72,391
    
    
    $
    39,736Stock option expense
(income)
    
    
    4,326
    
    
    
    1,428
    
    
    
    4,711
    
    
    
    (6,385
    )
    
    
    8,900Depreciation and
amortization from
continuing
operations
    
    
    29,370
    
    
    
    24,093
    
    
    
    14,837
    
    
    
    17,556
    
    
    
    18,033EBITDA from
continuing
operations
    
    $
    85,523
    
    
    $
    75,401
    
    
    $
    61,891
    
    
    $
    83,562
    
    
    $
    66,669
 24




---



##### 



Market Price of Esterline Common Stock
 2004
    
    2003For Fiscal Years
    
    High
    
    Low
    
    High
    
    LowQuarterFirst
    
    $
    29.55
    
    
    $
    21.71
    
    
    $
    19.90
    
    
    $
    15.58Second
    
    
    29.80
    
    
    
    23.00
    
    
    
    18.10
    
    
    
    14.70Third
    
    
    31.70
    
    
    
    22.52
    
    
    
    19.35
    
    
    
    15.80Fourth
    
    
    34.19
    
    
    
    27.83
    
    
    
    22.79
    
    
    
    17.40
    25




---



##### 



Consolidated Statement of Operations
 
 2004
    
    
    2003
    
    
    2002(Restated)
    
    
    (Restated)
    
    
    (Restated)Net Sales
    
    $
    628,169
    
    
    $
    562,454
    
    
    $
    434,809Cost of Sales
    
    
    426,612
    
    
    
    383,825
    
    
    
    293,236201,557
    
    
    
    178,629
    
    
    
    141,573ExpensesSelling, general and administrative
    
    
    122,015
    
    
    
    109,225
    
    
    
    83,797Research, development
and engineering
    
    
    27,715
    
    
    
    19,524
    
    
    
    15,433Total Expenses
    
    
    149,730
    
    
    
    128,749
    
    
    
    99,230Operating
Earnings From Continuing Operations
    
    
    51,827
    
    
    
    49,880
    
    
    
    42,343Other income
    
    
    (509
    )
    
    
    
    
    
    
    Loss (gain) on sale of product line
    
    
    (3,434
    )
    
    
    66
    
    
    
    Loss (gain) on derivative
financial instruments
    
    
    
    
    
    
    (2,676
    )
    
    
    1Interest income
    
    
    (1,964
    )
    
    
    (868
    )
    
    
    (1,814
    )Interest expense
    
    
    17,339
    
    
    
    11,995
    
    
    
    7,122Other Expense, Net
    
    
    11,432
    
    
    
    8,517
    
    
    
    5,309Income From Continuing Operations
Before Income Taxes
    
    
    40,395
    
    
    
    41,363
    
    
    
    37,034Income Tax Expense
    
    
    9,971
    
    
    
    12,720
    
    
    
    8,782Income From Continuing Operations Before
Minority Interest
    
    
    30,424
    
    
    
    28,643
    
    
    
    28,252Minority Interest
    
    
    (22
    )
    
    
    
    
    
    
    Income From Continuing Operations
    
    
    30,402
    
    
    
    28,643
    
    
    
    28,252Income (Loss) From Discontinued Operations,
Net of Tax
    
    
    9,181
    
    
    
    (5,808
    )
    
    
    (25,039
    )Earnings
Before Cumulative Effect of a Change in Accounting Principle
    
    
    39,583
    
    
    
    22,835
    
    
    
    3,213Cumulative Effect of a Change in
Accounting Principle, Net of Tax
    
    
    
    
    
    
    
    
    
    
    (7,574
    )Net Earnings (Loss)
    
    $
    39,583
    
    
    $
    22,835
    
    
    $
    (4,361
    )
 26




---



##### 



Consolidated Statement of Operations
 
 2004
    
    
    2003
    
    
    2002(Restated)
    
    
    (Restated)
    
    
    (Restated)Earnings (Loss) Per Share  Basic:Continuing operations
    
    $
    1.43
    
    
    $
    1.37
    
    
    $
    1.36Discontinued operations
    
    
    .44
    
    
    
    (.28
    )
    
    
    (1.21
    )Earnings per share before
cumulative effect of a change in
accounting principle
    
    
    1.87
    
    
    
    1.09
    
    
    
    .15Cumulative effect of a change
in accounting principle
    
    
    
    
    
    
    
    
    
    
    (.36
    )Earnings (Loss) Per Share  Basic
    
    $
    1.87
    
    
    $
    1.09
    
    
    $
    (.21
    )Earnings (Loss) Per Share  Diluted:Continuing operations
    
    $
    1.41
    
    
    $
    1.36
    
    
    $
    1.34Discontinued operations
    
    
    .43
    
    
    
    (.28
    )
    
    
    (1.19
    )Earnings per share before
cumulative effect of a change in
accounting principle
    
    
    1.84
    
    
    
    1.08
    
    
    
    .15Cumulative effect of a change
in accounting principle
    
    
    
    
    
    
    
    
    
    
    (.36
    )Earnings (Loss) Per Share  Diluted
    
    $
    1.84
    
    
    $
    1.08
    
    
    $
    (.21
    )
  27




---



##### 



Consolidated Balance Sheet
  2004
    
    
    2003(Restated)
    
    
    (Restated)AssetsCurrent AssetsCash and cash equivalents
    
    $
    29,479
    
    
    $
    131,363Cash in escrow
    
    
    8,511
    
    
    
    4,536Short-term investments
    
    
    
    
    
    
    12,797Accounts receivable, net of allowances
of $3,687 and $2,669
    
    
    132,206
    
    
    
    98,395Inventories
    
    
    119,054
    
    
    
    76,345Income tax refundable
    
    
    
    
    
    
    7,677Deferred income tax benefits
    
    
    23,499
    
    
    
    18,726Prepaid expenses
    
    
    9,441
    
    
    
    7,030Other current assets
    
    
    435
    
    
    
    Total Current Assets
    
    
    322,625
    
    
    
    356,869Property, Plant and EquipmentLand
    
    
    17,341
    
    
    
    15,589Buildings
    
    
    80,998
    
    
    
    59,995Machinery and equipment
    
    
    177,098
    
    
    
    151,297275,437
    
    
    
    226,881Accumulated depreciation
    
    
    130,302
    
    
    
    109,791145,135
    
    
    
    117,090Other Non-Current AssetsGoodwill
    
    
    247,817
    
    
    
    185,353Intangibles, net
    
    
    169,876
    
    
    
    114,930Debt issuance costs, net of accumulated
amortization of $928 and $244
    
    
    5,818
    
    
    
    6,301Deferred income tax benefits
    
    
    11,216
    
    
    
    Other assets
    
    
    32,861
    
    
    
    22,284Total Assets
    
    $
    935,348
    
    
    $
    802,827
  28




---



##### 



2004
    
    
    2003(Restated)
    
    
    (Restated)Liabilities and Shareholders EquityCurrent LiabilitiesAccounts payable
    
    $
    37,867
    
    
    $
    23,273Accrued liabilities
    
    
    97,038
    
    
    
    74,991Credit facilities
    
    
    6,977
    
    
    
    2,312Current maturities of long-term debt
    
    
    1,031
    
    
    
    30,473Federal and foreign income taxes
    
    
    6,678
    
    
    
    1,184Total Current Liabilities
    
    
    149,591
    
    
    
    132,233Long-Term LiabilitiesLong-term debt, net of current maturities
    
    
    249,056
    
    
    
    246,792Deferred income taxes
    
    
    43,443
    
    
    
    27,325Other liabilities
    
    
    29,852
    
    
    
    Commitments and Contingencies
    
    
    
    
    
    
    Net Liabilities of Discontinued Operations
    
    
    
    
    
    
    408Minority Interest
    
    
    2,378
    
    
    
    Shareholders EquityCommon stock, par value $.20 per share,
authorized 60,000,000 shares, issued and
outstanding 21,319,698 and 21,062,999 shares
    
    
    4,264
    
    
    
    4,213Additional paid-in capital
    
    
    144,879
    
    
    
    137,797Retained earnings
    
    
    287,344
    
    
    
    247,761Accumulated other comprehensive income
    
    
    24,541
    
    
    
    6,298Total Shareholders Equity
    
    
    461,028
    
    
    
    396,069Total Liabilities and Shareholders Equity
    
    $
    935,348
    
    
    $
    802,827
  29




---



##### 



Consolidated Statement of Cash Flows
 
 2004
    
    
    2003
    
    
    2002(Restated)
    
    
    (Restated)
    
    
    (Restated)Cash Flows Provided (Used)
by Operating ActivitiesNet earnings (loss)
    
    $
    39,583
    
    
    $
    22,835
    
    
    $
    (4,361
    )Minority interest
    
    
    22
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    31,145
    
    
    
    26,215
    
    
    
    17,563Deferred income tax (benefit)
    
    
    3,264
    
    
    
    9,235
    
    
    
    (1,947
    )Stock-based compensation
    
    
    4,326
    
    
    
    1,428
    
    
    
    4,711Loss (gain) on disposal and holding period
loss on discontinued operations
    
    
    (12,521
    )
    
    
    9,282
    
    
    
    22,718Gain on sale of land
    
    
    (892
    )
    
    
    
    
    
    
    Loss (gain) on sale of product line
    
    
    (3,434
    )
    
    
    66
    
    
    
    Working capital changes, net of
effect of acquisitionsAccounts receivable
    
    
    (9,032
    )
    
    
    (9,516
    )
    
    
    5,544Inventories
    
    
    (9,095
    )
    
    
    6,322
    
    
    
    2,936Prepaid expenses
    
    
    (659
    )
    
    
    117
    
    
    
    (457
    )Accounts payable
    
    
    2,600
    
    
    
    (4,396
    )
    
    
    5,049Accrued liabilities
    
    
    10,240
    
    
    
    4,926
    
    
    
    1,914Federal and foreign income taxes
    
    
    8,951
    
    
    
    (923
    )
    
    
    (10,197
    )Other liabilities
    
    
    4,359
    
    
    
    
    
    
    
    Other, net
    
    
    (5,530
    )
    
    
    197
    
    
    
    9,48363,327
    
    
    
    65,788
    
    
    
    52,956Cash Flows Provided (Used)
by Investing ActivitiesPurchases of capital assets
    
    
    (22,126
    )
    
    
    (17,130
    )
    
    
    (15,709
    )Proceeds from sale of discontinued operations
    
    
    10,000
    
    
    
    3,850
    
    
    
    Proceeds from sale of product line
    
    
    3,475
    
    
    
    5,630
    
    
    
    Proceeds from sale of land
    
    
    1,654
    
    
    
    
    
    
    
    Escrow deposit
    
    
    (12,500
    )
    
    
    (1,036
    )
    
    
    (3,500
    )Capital dispositions
    
    
    778
    
    
    
    766
    
    
    
    559Purchase of short-term investments
    
    
    
    
    
    
    (12,797
    )
    
    
    Sale of short-term investments
    
    
    12,797
    
    
    
    
    
    
    
    Acquisitions of businesses,
net of cash acquired
    
    
    (138,811
    )
    
    
    (111,735
    )
    
    
    (124,649
    )(144,733
    )
    
    
    (132,452
    )
    
    
    (143,299
    )
 30




---



##### 



2004
    
    
    2003
    
    
    2002(Restated)
    
    
    (Restated)
    
    
    (Restated)Cash Flows Provided (Used)
by Financing ActivitiesProceeds provided by stock issuance
under employee stock plans
    
    
    2,807
    
    
    
    2,424
    
    
    
    Net change in credit facilities
    
    
    4,122
    
    
    
    2,279
    
    
    
    (1,960
    )Repayment of long-term debt, net
    
    
    (29,429
    )
    
    
    (732
    )
    
    
    (6,346
    )Debt and other issuance costs
    
    
    (268
    )
    
    
    (7,735
    )
    
    
    Proceeds from note issuance
    
    
    
    
    
    
    175,000
    
    
    
    (22,768
    )
    
    
    171,236
    
    
    
    (8,306
    )Effect of foreign exchange rates on cash
    
    
    2,290
    
    
    
    4,280
    
    
    
    1,220Net increase (decrease) in
cash and cash equivalents
    
    
    (101,884
    )
    
    
    108,852
    
    
    
    (97,429
    )Cash and cash equivalents  beginning of year
    
    
    131,363
    
    
    
    22,511
    
    
    
    119,940Cash and cash equivalents  end of year
    
    $
    29,479
    
    
    $
    131,363
    
    
    $
    22,511Supplemental Cash Flow InformationCash paid for interest
    
    $
    17,394
    
    
    $
    6,945
    
    
    $
    7,247Cash paid (refunded) for taxes
    
    
    (1,909
    )
    
    
    (558
    )
    
    
    7,296
  31




---



##### 



Consolidated Statement of Shareholders
Equity and Comprehensive Income
 
 2004
    
    
    2003
    
    
    2002(Restated)
    
    
    (Restated)
    
    
    (Restated)Common Stock, Par Value $.20 Per ShareBeginning of year
    
    $
    4,213
    
    
    $
    4,157
    
    
    $
    4,143Shares issued under stock option plans
    
    
    51
    
    
    
    56
    
    
    
    14End of year
    
    
    4,264
    
    
    
    4,213
    
    
    
    4,157Additional Paid-in CapitalBeginning of year
    
    
    137,797
    
    
    
    134,001
    
    
    
    129,491Shares issued under stock option plans
    
    
    2,756
    
    
    
    2,368
    
    
    
    (201
    )Stock-based compensation expense
    
    
    4,326
    
    
    
    1,428
    
    
    
    4,711End of year
    
    
    144,879
    
    
    
    137,797
    
    
    
    134,001Retained EarningsBeginning of year
    
    
    247,761
    
    
    
    224,926
    
    
    
    229,287Net earnings (loss)
    
    
    39,583
    
    
    
    22,835
    
    
    
    (4,361
    )End of year
    
    
    287,344
    
    
    
    247,761
    
    
    
    224,926Accumulated Other Comprehensive Gain (Loss)Beginning of year
    
    
    6,298
    
    
    
    (5,920
    )
    
    
    (11,128
    )Change in fair value of derivative
financial instruments, net of tax
    
    
    581
    
    
    
    61
    
    
    
    (67
    )Adjustment for supplemental executive
pension liability, net of tax
    
    
    (850
    )
    
    
    
    
    
    
    Foreign currency translation adjustment
    
    
    18,512
    
    
    
    12,157
    
    
    
    5,275End of year
    
    
    24,541
    
    
    
    6,298
    
    
    
    (5,920
    )Total Shareholders Equity
    
    $
    461,028
    
    
    $
    396,069
    
    
    $
    357,164Comprehensive IncomeNet earnings (loss)
    
    $
    39,583
    
    
    $
    22,835
    
    
    $
    (4,361
    )Change in fair value of derivative
financial instruments, net of tax
    
    
    581
    
    
    
    61
    
    
    
    (67
    )Adjustment for supplemental executive
pension liability, net of tax
    
    
    (850
    )
    
    
    
    
    
    
    Foreign currency translation adjustment
    
    
    18,512
    
    
    
    12,157
    
    
    
    5,275Comprehensive Income
    
    $
    57,826
    
    
    $
    35,053
    
    
    $
    847
  32




---



##### 



Notes to Consolidated Financial Statements
 Accounting Policies
 Nature of Operations
  Principles of Consolidation and Basis of Presentation
  Management Estimates
  Revenue Recognition
  Financial Instruments
 Fair Value of Financial Instruments
  33




---



##### 



Foreign Currency Exchange Risk Management
  Interest Rate Risk Management
  Foreign Currency Translation
  34




---



##### 



Cash Equivalents and Cash in Escrow
  Short-term Investments
  Accounts Receivable
  Inventories
  Property, Plant and Equipment, and Depreciation
  Debt Issuance Costs
  35




---



##### 



Long-lived Assets
  Goodwill and Intangibles
    Environmental
  Stock-based Compensation
  36




---



##### 



2004
    
    
    2003
    
    
    2002(Restated)
    
    
    (Restated)
    
    
    (Restated)Net earnings (loss) as reported
    
    $
    39,583
    
    
    $
    22,835
    
    
    $
    (4,361
    )Stock-based compensation cost,
net of income tax included in
net earnings (loss) as reported
    
    
    2,906
    
    
    
    1,061
    
    
    
    2,995Stock-based compensation cost,
net of income tax under the fair
value method of accounting
    
    
    (1,784
    )
    
    
    (1,295
    )
    
    
    (1,285
    )Pro forma net earnings (loss)
    
    
    40,705
    
    
    
    22,601
    
    
    
    (2,651
    )Basic earnings (loss) per share as reported
    
    $
    1.87
    
    
    $
    1.09
    
    
    $
    (.21
    )Pro forma basic earnings (loss) per share
    
    
    1.92
    
    
    
    1.08
    
    
    
    (.13
    )Diluted earnings (loss) per share as reported
    
    $
    1.84
    
    
    $
    1.08
    
    
    $
    (.21
    )Pro forma diluted earnings (loss) per share
    
    
    1.89
    
    
    
    1.07
    
    
    
    (.13
    )
  2004
    
    
    2003
    
    
    2002(Restated)
    
    
    (Restated)
    
    
    (Restated)Volatility
    
    
    47.1
    %
    
    
    48.5
    %
    
    
    47.5
    %Risk-free interest rate
    
    
    3.12  3.84
    %
    
    
    2.88  3.94
    %
    
    
    2.79  4.03
    %Expected life (years)
    
    
    58
    
    
    
    58
    
    
    
    58Dividends
    
    
    
    
    
    
    
    
    
    
    
 37




---



##### 



Product Warranties
  Earnings Per Share
  Recent Accounting Pronouncements
  38




---



##### 



Restatement, Stock Option Accounting
    2004
    
    2003
    
    2002As
    
    As
    
    As
    
    As
    
    As
    
    AsReported
    
    Restated
    
    Reported
    
    Restated
    
    Reported
    
    RestatedSelling, general &
administrative
expenses
    
    $
    117,689
    
    
    $
    122,015
    
    
    $
    107,797
    
    
    $
    109,225
    
    
    $
    79,086
    
    
    $
    83,797Income from
continuing
operations
    
    
    33,374
    
    
    
    30,402
    
    
    
    29,741
    
    
    
    28,643
    
    
    
    31,284
    
    
    
    28,252Net income (loss)
    
    
    42,555
    
    
    
    39,583
    
    
    
    23,933
    
    
    
    22,835
    
    
    
    (1,329
    )
    
    
    (4,361
    )Income (loss) from
continuing
operations
per shareBasic
    
    $
    1.57
    
    
    $
    1.43
    
    
    $
    1.42
    
    
    $
    1.37
    
    
    $
    1.51
    
    
    $
    1.36Diluted
    
    $
    1.55
    
    
    $
    1.41
    
    
    $
    1.41
    
    
    $
    1.36
    
    
    $
    1.49
    
    
    $
    1.34Net income (loss) per shareBasic
    
    $
    2.01
    
    
    $
    1.87
    
    
    $
    1.15
    
    
    $
    1.09
    
    
    $
    (.07
    )
    
    $
    (.21
    )Diluted
    
    $
    1.98
    
    
    $
    1.84
    
    
    $
    1.13
    
    
    $
    1.08
    
    
    $
    (.06
    )
    
    $
    (.21
    )Deferred income tax
benefits
    
    $
    20,984
    
    
    $
    23,499
    
    
    $
    16,529
    
    
    $
    18,726
    
    
    $
    25,069
    
    
    $
    27,792Shareholders Equity
    
    $
    458,513
    
    
    $
    461,028
    
    
    $
    393,872
    
    
    $
    396,069
    
    
    $
    354,441
    
    
    $
    357,164
 39




---



##### 



Accounting Changes
  40




---



##### 



Discontinued Operations
    2004
    
    
    2003
    
    
    2002Income (loss) before taxes
    
    $
    1,824
    
    
    $
    
    
    
    $
    (16,343
    )Tax expense (benefit)
    
    
    657
    
    
    
    
    
    
    
    (6,071
    )Net income (loss)
    
    
    1,167
    
    
    
    
    
    
    
    (10,272
    )Gain (loss) on disposal,
including tax expense (benefit)
of $4,507, $(3,474) and $(7,951)
    
    
    8,014
    
    
    
    (5,808
    )
    
    
    (14,767
    )Income (loss) from discontinued operations
    
    $
    9,181
    
    
    $
    (5,808
    )
    
    $
    (25,039
    )
 41




---



##### 



Inventories
  In Thousands
    
    2004
    
    
    2003Raw materials and purchased parts
    
    $
    58,736
    
    
    $
    38,678Work in process
    
    
    43,326
    
    
    
    26,855Finished goods
    
    
    16,992
    
    
    
    10,812$
    119,054
    
    
    $
    76,345
 42




---



##### 



Goodwill
   Avionics &
    
    Sensors &
    
    AdvancedControls
    
    Systems
    
    Materials
    
    TotalBalance, October 25, 2002
    
    $
    56,711
    
    
    $
    18,376
    
    
    $
    82,919
    
    
    $
    158,006Goodwill from acquisitions
    
    
    
    
    
    
    24,698
    
    
    
    
    
    
    
    24,698Purchase price allocation adjustment
    
    
    477
    
    
    
    
    
    
    
    446
    
    
    
    923Foreign currency translation adjustment
    
    
    420
    
    
    
    1,306
    
    
    
    
    
    
    
    1,726Balance, October 31, 2003
    
    $
    57,608
    
    
    $
    44,380
    
    
    $
    83,365
    
    
    $
    185,353Goodwill from acquisitions
    
    
    20,505
    
    
    
    38,997
    
    
    
    100
    
    
    
    59,602Foreign currency translation adjustment
    
    
    
    
    
    
    2,862
    
    
    
    
    
    
    
    2,862Balance, October 29, 2004
    
    $
    78,113
    
    
    $
    86,239
    
    
    $
    83,465
    
    
    $
    247,817
  43




---



##### 



Intangible Assets
   2004
    
    2003Weighted
    
    Gross
    
    
    
    
    
    GrossAverage Years
    
    Carrying
    
    Accum.
    
    Carrying
    
    Accum.Useful Life
    
    Amount
    
    Amort.
    
    Amount
    
    Amort.Amortized Intangible AssetsPrograms
    
    
    18
    
    
    $
    134,657
    
    
    $
    12,698
    
    
    $
    100,020
    
    
    $
    5,803Core technology
    
    
    16
    
    
    
    8,979
    
    
    
    1,465
    
    
    
    8,709
    
    
    
    827Patents and other
    
    
    7
    
    
    
    35,488
    
    
    
    17,611
    
    
    
    21,462
    
    
    
    16,448Total
    
    
    
    
    
    $
    179,124
    
    
    $
    31,774
    
    
    $
    130,191
    
    
    $
    23,078Indefinite-lived Intangible AssetsTrademark
    
    
    
    
    
    $
    22,526
    
    
    
    
    
    
    $
    7,817
   In ThousandsFiscal Year2005
    
    $
    10,5012006
    
    
    10,2832007
    
    
    10,0962008
    
    
    9,8362009
    
    
    9,090
 44




---



##### 



Accrued Liabilities
  In Thousands
    
    2004
    
    
    2003Payroll and other compensation
    
    $
    39,316
    
    
    $
    30,091Casualty and medical
    
    
    11,940
    
    
    
    9,348Interest
    
    
    6,338
    
    
    
    7,667Warranties
    
    
    6,633
    
    
    
    5,387State and other tax accruals
    
    
    9,001
    
    
    
    6,623Acquisition related payments
    
    
    8,510
    
    
    
    1,005Other
    
    
    15,300
    
    
    
    14,870$
    97,038
    
    
    $
    74,991
 Other Liabilities
  In Thousands
    
    2004
    
    
    2003Pension obligation
    
    $
    24,852
    
    
    $
    Acquisition related payments
    
    
    5,000
    
    
    
    $
    29,852
    
    
    $
    
 45




---



##### 



Retirement Benefits
     2004
    
    2003Principal assumptions as of fiscal year end:Discount Rate
    
    
    6.0
    %
    
    
    6.5
    %Rate of increase in future compensation levels
    
    
    4.5
    %
    
    
    4.5
    %Assumed long-term rate of return on plan assets
    
    
    8.5
    %
    
    
    8.5
    %
  46




---



##### 



ActualPlan assets allocation as of fiscal year end:
    
    Target
    
    
    2004
    
    
    2003Equity securities
    
    
    65-75
    %
    
    
    67.4
    %
    
    
    69.9
    %Debt securities
    
    
    25-35
    %
    
    
    32.6
    %
    
    
    30.1
    %Total
    
    
    
    
    
    
    100.0
    %
    
    
    100.0
    %
  In Thousands
    
    2004
    
    
    2003
    
    
    2002Components of Net Periodic CostService cost
    
    $
    3,838
    
    
    $
    3,524
    
    
    $
    2,744Interest cost
    
    
    7,618
    
    
    
    7,088
    
    
    
    6,822Expected return on plan assets
    
    
    (9,766
    )
    
    
    (8,416
    )
    
    
    (9,819
    )Amortization of transition asset
    
    
    
    
    
    
    77
    
    
    
    81Amortization of prior service cost
    
    
    19
    
    
    
    18
    
    
    
    68Amortization of actuarial loss
    
    
    468
    
    
    
    1,596
    
    
    
    122Net periodic cost
    
    $
    2,177
    
    
    $
    3,887
    
    
    $
    18
 47




---



##### 



In Thousands
    
    2004
    
    
    2003Benefit ObligationBeginning balance
    
    $
    114,196
    
    
    $
    107,337Service cost
    
    
    3,838
    
    
    
    3,524Interest cost
    
    
    7,620
    
    
    
    7,088Actuarial loss
    
    
    7,300
    
    
    
    3,194Acquisitions
    
    
    40,542
    
    
    
    Amendments
    
    
    
    
    
    
    (487
    )Benefits paid
    
    
    (7,168
    )
    
    
    (6,460
    )Ending balance
    
    $
    166,328
    
    
    $
    114,196Plan Assets  Fair ValueBeginning balance
    
    $
    115,202
    
    
    $
    102,107Actual gain on plan assets
    
    
    14,577
    
    
    
    19,519Acquisitions
    
    
    19,141
    
    
    
    Company contributions
    
    
    559
    
    
    
    36Benefits paid
    
    
    (7,168
    )
    
    
    (6,460
    )Ending balance
    
    $
    142,311
    
    
    $
    115,202Reconciliation of Funded Status to Net Amount RecognizedFunded status  plan assets relative to benefit obligation
    
    $
    (24,017
    )
    
    $
    1,006Unrecognized net actuarial loss
    
    
    17,910
    
    
    
    15,838Unrecognized prior service costs (benefit)
    
    
    (12
    )
    
    
    6Unrecognized net loss
    
    
    (31
    )
    
    
    Net amount recognized
    
    $
    (6,150
    )
    
    $
    16,850Amount Recognized in the Consolidated Balance SheetPrepaid benefit cost
    
    $
    17,647
    
    
    $
    18,980Accrued benefit liability
    
    
    (25,277
    )
    
    
    (2,130
    )Intangible assets
    
    
    141
    
    
    
    Accumulated other comprehensive income
    
    
    1,339
    
    
    
    Net amount recognized
    
    $
    (6,150
    )
    
    $
    16,850
  48




---



##### 



In Thousands2005
    
    $
    9,8402006
    
    
    10,5882007
    
    
    11,0372008
    
    
    11,6162009
    
    
    12,0462010-2014
    
    
    65,590
  49




---



##### 



Income Taxes
  2004
    
    
    2003
    
    
    2002In Thousands
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)CurrentU.S. Federal
    
    $
    8,214
    
    
    $
    10,325
    
    
    $
    7,397State
    
    
    1,000
    
    
    
    600
    
    
    
    (123
    )Foreign
    
    
    284
    
    
    
    2,230
    
    
    
    3,4239,498
    
    
    
    13,155
    
    
    
    10,697DeferredU.S. Federal
    
    
    3,705
    
    
    
    (1,435
    )
    
    
    (1,561
    )State
    
    
    847
    
    
    
    (180
    )
    
    
    (28
    )Foreign
    
    
    (4,079
    )
    
    
    1,180
    
    
    
    (326
    )473
    
    
    
    (435
    )
    
    
    (1,915
    )Income tax expense
    
    $
    9,971
    
    
    $
    12,720
    
    
    $
    8,782
  2004
    
    
    2003
    
    
    2002In Thousands
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)U.S.
    
    $
    34,111
    
    
    $
    34,654
    
    
    $
    27,355Foreign
    
    
    6,284
    
    
    
    6,709
    
    
    
    9,679Income from continuing operations,
before income taxes
    
    $
    40,395
    
    
    $
    41,363
    
    
    $
    37,034
 50




---



##### 



2004
    
    
    2003In Thousands
    
    (Restated)
    
    
    (Restated)Reserves and liabilities
    
    $
    12,667
    
    
    $
    13,896Tax credit carryforwards
    
    
    2,116
    
    
    
    NOL carryforwards
    
    
    13,677
    
    
    
    Employee benefits
    
    
    3,740
    
    
    
    3,281Non-qualified stock options
    
    
    2,515
    
    
    
    2,197Other
    
    
    1,158
    
    
    
    Total deferred tax assets
    
    
    35,873
    
    
    
    19,374Depreciation and amortization
    
    
    (14,851
    )
    
    
    (13,061
    )Intangibles and amortization
    
    
    (25,310
    )
    
    
    (6,875
    )Retirement benefits
    
    
    (4,440
    )
    
    
    (6,194
    )Other
    
    
    
    
    
    
    (1,843
    )Total deferred tax liabilities
    
    
    (44,601
    )
    
    
    (27,973
    )Net deferred tax liabilities
    
    $
    (8,728
    )
    
    $
    (8,599
    )
    51




---



##### 



2004
    
    
    2003
    
    
    2002(Restated)
    
    
    (Restated)
    
    
    (Restated)U.S. statutory income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income taxes
    
    
    1.6
    
    
    
    0.9
    
    
    
    (0.2
    )Foreign taxes
    
    
    (5.6
    )
    
    
    (0.7
    )
    
    
    0.5Export sales benefit
    
    
    (1.6
    )
    
    
    (2.0
    )
    
    
    (2.7
    )Pass-through entities
    
    
    6.6
    
    
    
    
    
    
    
    Foreign tax credits
    
    
    (5.4
    )
    
    
    
    
    
    
    Research & development credits
    
    
    (4.2
    )
    
    
    (5.0
    )
    
    
    (8.0
    )Tax accrual adjustment
    
    
    (2.0
    )
    
    
    2.1
    
    
    
    (0.4
    )Other, net
    
    
    0.3
    
    
    
    0.5
    
    
    
    (0.5
    )Effective income tax rate
    
    
    24.7
    %
    
    
    30.8
    %
    
    
    23.7
    %
   52




---



##### 



Debt
  In Thousands
    
    2004
    
    
    20037.75% Senior Subordinated Notes, due June 2013
    
    $
    175,000
    
    
    $
    175,0006.77% Senior Notes, due November 2008
    
    
    40,000
    
    
    
    40,0006.40% Senior Notes, due November 2005
    
    
    30,000
    
    
    
    30,0006.00% Senior Notes, due November 2003
    
    
    
    
    
    
    30,000Other
    
    
    3,318
    
    
    
    2,500248,318
    
    
    
    277,500Fair value of interest rate swap agreement
    
    
    1,769
    
    
    
    (235
    )Less current maturities
    
    
    1,031
    
    
    
    30,473Carrying amount of long-term debt
    
    $
    249,056
    
    
    $
    246,792
   54




---



##### 



2005
    
    $
    1,0312006
    
    
    30,7632007
    
    
    5022008
    
    
    4382009
    
    
    40,4372010 and thereafter
    
    
    175,147$
    248,318
  2004
    
    
    2003Outstanding
    
    
    Interest
    
    
    Outstanding
    
    
    InterestIn Thousands
    
    Borrowings
    
    
    Rate
    
    
    Borrowings
    
    
    RateU.S.
    
    $
    5,000
    
    
    
    3.46
    %
    
    $
    
    
    
    
    Foreign
    
    
    1,977
    
    
    
    2.72
    %
    
    
    2,312
    
    
    
    3.01
    %$
    6,977
    
    
    
    
    
    
    $
    2,312
    55




---



##### 



Commitments and Contingencies
   
 2005
    
    $
    8,9452006
    
    
    8,5052007
    
    
    7,5582008
    
    
    6,1372009
    
    
    5,4442010 and thereafter
    
    
    17,406$
    53,995
   56




---



##### 



Employee Stock Plans
      2004
    
    
    2003
    
    
    2002Weighted
    
    
    
    
    

    Weighted
    
    
    
    
    
    
    WeightedShares
    
    
    Average
    
    
    Shares
    
    
    Average
    
    
    Shares
    
    
    AverageSubject to
    
    
    Exercise
    
    
    Subject to
    
    
    Exercise
    
    
    Subject to
    
    
    ExerciseOption
    
    
    Price
    
    
    Option
    
    
    Price
    
    
    Option
    
    
    PriceOutstanding,
beginning of year
    
    
    1,497,750
    
    
    $
    16.25
    
    
    
    1,618,125
    
    
    $
    14.85
    
    
    
    1,483,750
    
    
    $
    13.71Granted
    
    
    229,000
    
    
    
    25.09
    
    
    
    245,000
    
    
    
    18.68
    
    
    
    260,000
    
    
    
    17.71Exercised
    
    
    (278,250
    )
    
    
    12.53
    
    
    
    (264,000
    )
    
    
    8.83
    
    
    
    (103,750
    )
    
    
    4.94Cancelled
    
    
    (10,500
    )
    
    
    21.99
    
    
    
    (101,375
    )
    
    
    19.05
    
    
    
    (21,875
    )
    
    
    18.46Outstanding,
end of year
    
    
    1,438,000
    
    
    $
    18.34
    
    
    
    1,497,750
    
    
    $
    16.25
    
    
    
    1,618,125
    
    
    $
    14.85Exercisable,
end of year
    
    
    877,750
    
    
    $
    16.39
    
    
    
    942,375
    
    
    $
    14.94
    
    
    
    1,052,500
    
    
    $
    13.20
 57




---



##### 



Options Outstanding
    
    
    Options ExercisableWeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedRange
of
    
    
    
    
    
    Remaining
    
    
    Average
    
    
    
    
    
    
    AverageExercise
Prices
    
    Shares
    
    
    Life (years)
    
    
    Price
    
    
    Shares
    
    
    Price$     6.44  11.69
    
    
    242,000
    
    
    
    3.44
    
    
    $
    10.92
    
    
    
    242,000
    
    
    $
    10.9213.25  16.75
    
    
    285,500
    
    
    
    5.30
    
    
    
    14.87
    
    
    
    221,500
    
    
    
    14.5917.90  19.63
    
    
    308,250
    
    
    
    6.42
    
    
    
    18.40
    
    
    
    173,250
    
    
    
    18.5919.65  22.31
    
    
    289,500
    
    
    
    6.51
    
    
    
    20.56
    
    
    
    176,500
    
    
    
    20.7422.60  29.00
    
    
    312,750
    
    
    
    8.53
    
    
    
    25.12
    
    
    
    64,500
    
    
    
    25.27
 58




---



##### 



Capital Stock
     59




---



##### 



Acquisitions and Divestitures
 Acquisitions
     
 Current Assets
    
    $
    52,814Property, plant and equipment
    
    
    24,569Intangible assets subject to amortizationPrograms (20 year weighted average useful life)
    
    
    30,117Patents (15 year weighted average useful life)
    
    
    2,235Leasehold interest (64 year remaining term of lease)
    
    
    4,300Other (10 year useful life)
    
    
    4,72141,373Trade names (not subject to amortization)
    
    
    13,720Deferred income tax benefits
    
    
    11,216Goodwill
    
    
    53,232Other assets
    
    
    4,798Total assets acquired
    
    
    201,722
 60




---



##### 



Current liabilities assumed
    
    
    20,731Long-term debt
    
    
    2,192Pension and other liabilities
    
    
    20,144Deferred tax liabilities
    
    
    9,278Minority interest
    
    
    2,356Net assets acquired
    
    $
    147,021
     61




---



##### 



Current Assets
    
    $
    16,838Property, plant and equipment
    
    
    13,020Intangible assets subject to amortizationPrograms (20 year weighted average useful life)
    
    
    42,677Patents (15 year weighted average useful life)
    
    
    2,799Other (10 year useful life)
    
    
    1,42846,904Trade names (not subject to amortization)
    
    
    7,191Goodwill
    
    
    22,919Other assets
    
    
    487Total assets acquired
    
    
    107,359Current liabilities assumed
    
    
    7,840Deferred tax liabilities
    
    
    4,934Net assets acquired
    
    $
    94,585
    62




---



##### 



Current assets
    
    $
    11,231Property, plant and equipment
    
    
    9,123Intangible assets subject to amortizationPrograms (17 year weighted average useful life)
    
    
    38,221Patents (10 year useful life)
    
    
    94139,162Goodwill
    
    
    15,106Total assets acquired
    
    
    74,622Current liabilities assumed
    
    
    3,197Net assets acquired
    
    $
    71,425
   
 Current assets
    
    $
    9,442Property, plant and equipment
    
    
    5,313Intangible assets subject to amortizationCore technology (15 year useful life)
    
    
    5,949Programs (9 year weighted average useful life)
    
    
    9,85515,804Goodwill
    
    
    7,942Total assets acquired
    
    
    38,501Current liabilities assumed
    
    
    864Net assets acquired
    
    $
    37,637
 63




---



##### 



Divestitures
  64




---



##### 



Business Segment Information
   65




---



##### 



2004
    
    
    2003
    
    
    2002In Thousands
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)SalesAvionics & Controls
    
    $
    209,498
    
    
    $
    198,249
    
    
    $
    171,709Sensors & Systems
    
    
    194,803
    
    
    
    146,976
    
    
    
    104,942Advanced Materials
    
    
    223,344
    
    
    
    216,655
    
    
    
    157,384Other
    
    
    524
    
    
    
    574
    
    
    
    774$
    628,169
    
    
    $
    562,454
    
    
    $
    434,809Income From Continuing OperationsAvionics & Controls
    
    $
    32,077
    
    
    $
    29,507
    
    
    $
    26,362Sensors & Systems
    
    
    9,791
    
    
    
    9,876
    
    
    
    12,176Advanced Materials
    
    
    28,004
    
    
    
    28,671
    
    
    
    21,670Other
    
    
    (573
    )
    
    
    (821
    )
    
    
    (1,420
    )Segment Earnings
    
    
    69,299
    
    
    
    67,233
    
    
    
    58,788Corporate expense
    
    
    (17,472
    )
    
    
    (17,353
    )
    
    
    (16,445
    )Gain (loss) on sale of product line
    
    
    3,943
    
    
    
    (66
    )
    
    
    Gain (loss) on derivative
financial instruments
    
    
    
    
    
    
    2,676
    
    
    
    (1
    )Interest income
    
    
    1,964
    
    
    
    868
    
    
    
    1,814Interest expense
    
    
    (17,339
    )
    
    
    (11,995
    )
    
    
    (7,122
    )$
    40,395
    
    
    $
    41,363
    
    
    $
    37,034Identifiable AssetsAvionics & Controls
    
    $
    198,142
    
    
    $
    144,492
    
    
    $
    145,296Sensors & Systems
    
    
    374,123
    
    
    
    219,247
    
    
    
    98,624Advanced Materials
    
    
    267,811
    
    
    
    262,001
    
    
    
    257,408Other
    
    
    2
    
    
    
    2
    
    
    
    2Discontinued operations
    
    
    
    
    
    
    
    
    
    
    13,576Corporate1
    
    
    95,270
    
    
    
    177,085
    
    
    
    58,772$
    935,348
    
    
    $
    802,827
    
    
    $
    573,678Capital ExpendituresAvionics & Controls
    
    $
    6,483
    
    
    $
    2,744
    
    
    $
    1,980Sensors & Systems
    
    
    3,600
    
    
    
    3,232
    
    
    
    4,432Advanced Materials
    
    
    11,492
    
    
    
    8,857
    
    
    
    8,497Other
    
    
    
    
    
    
    
    
    
    
    Discontinued operations
    
    
    61
    
    
    
    62
    
    
    
    580Corporate
    
    
    490
    
    
    
    2,235
    
    
    
    220$
    22,126
    
    
    $
    17,130
    
    
    $
    15,709
 66




---



##### 



In Thousands
    
    2004
    
    
    2003
    
    
    2002Depreciation and AmortizationAvionics & Controls
    
    $
    5,525
    
    
    $
    4,964
    
    
    $
    4,060Sensors & Systems
    
    
    10,954
    
    
    
    6,449
    
    
    
    3,083Advanced Materials
    
    
    12,394
    
    
    
    11,982
    
    
    
    7,156Other
    
    
    
    
    
    
    
    
    
    
    4Discontinued operations
    
    
    835
    
    
    
    1,789
    
    
    
    2,726Corporate
    
    
    1,437
    
    
    
    1,031
    
    
    
    534$
    31,145
    
    
    $
    26,215
    
    
    $
    17,563
 1
    
    Primarily cash, prepaid pension expense (see Note 9) and deferred tax assets (see Note 10).
  In Thousands
    
    2004
    
    
    2003
    
    
    2002SalesDomesticUnaffiliated
customers  U.S.
    
    $
    383,561
    
    
    $
    377,947
    
    
    $
    294,693Unaffiliated
customers  export
    
    
    88,989
    
    
    
    62,077
    
    
    
    51,044Intercompany
    
    
    3,549
    
    
    
    1,720
    
    
    
    1,816476,099
    
    
    
    441,744
    
    
    
    347,553FranceUnaffiliated customers
    
    
    58,788
    
    
    
    54,857
    
    
    
    54,944Intercompany
    
    
    5,050
    
    
    
    3,182
    
    
    
    3,65263,838
    
    
    
    58,039
    
    
    
    58,596United KingdomUnaffiliated customers
    
    
    90,531
    
    
    
    61,998
    
    
    
    20,354Intercompany
    
    
    2,406
    
    
    
    65
    
    
    
    92,937
    
    
    
    62,063
    
    
    
    20,354All Other ForeignUnaffiliated customers
    
    
    6,300
    
    
    
    5,575
    
    
    
    13,774Intercompany
    
    
    938
    
    
    
    1,280
    
    
    
    4177,238
    
    
    
    6,855
    
    
    
    14,191Eliminations
    
    
    (11,943
    )
    
    
    (6,247
    )
    
    
    (5,885
    )$
    628,169
    
    
    $
    562,454
    
    
    $
    434,809
 67




---



##### 



2004
    
    
    2003
    
    
    2002In Thousands
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)Segment Earnings1Domestic
    
    $
    64,153
    
    
    $
    60,531
    
    
    $
    48,767France
    
    
    227
    
    
    
    4,539
    
    
    
    7,435United Kingdom
    
    
    4,745
    
    
    
    2,861
    
    
    
    2,025All other foreign
    
    
    174
    
    
    
    (698
    )
    
    
    561$
    69,299
    
    
    $
    67,233
    
    
    $
    58,788Identifiable Assets2Domestic
    
    $
    432,365
    
    
    $
    448,780
    
    
    $
    420,895France
    
    
    197,431
    
    
    
    42,828
    
    
    
    46,683United Kingdom
    
    
    202,411
    
    
    
    133,309
    
    
    
    35,583All other foreign
    
    
    7,871
    
    
    
    825
    
    
    
    11,745$
    840,078
    
    
    $
    625,742
    
    
    $
    514,906
 1
    
    Before corporate expense, shown on page 63.2
    
    Excludes corporate, shown on page 63.
   2004
    
    
    2003
    
    
    2002Elastomeric products
    
    
    16
    %
    
    
    18
    %
    
    
    20
    %Sensors
    
    
    21
    %
    
    
    16
    %
    
    
    16
    %Aerospace switches and indicators
    
    
    13
    %
    
    
    15
    %
    
    
    17
    %Combustible ordnance components
    
    
    8
    %
    
    
    10
    %
    
    
    11
    %
 68




---



##### 



Quarterly Financial Data (Unaudited)
   Fourth
    
    
    Third
    
    
    Second
    
    
    FirstFiscal Year 2004
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)Net sales
    
    $
    194,763
    
    
    $
    150,614
    
    
    $
    150,194
    
    
    $
    132,598Gross margin
    
    
    64,106
    
    
    
    47,145
    
    
    
    50,304
    
    
    
    40,002Income from continuing operations 1
    
    
    14,996 2
    
    
    
    5,286
    
    
    
    9,714
    
    
    
    406 3Income from discontinued operations,
net of tax
    
    
    7,883
    
    
    
    626
    
    
    
    672
    
    
    
    Net earnings
    
    $
    22,879 2
    
    
    $
    5,912
    
    
    $
    10,386
    
    
    $
    406 3Earnings per share  basicContinuing operations
    
    $
    .70
    
    
    $
    .25
    
    
    $
    .46
    
    
    $
    .02Discontinued operations 4
    
    
    .37
    
    
    
    .03
    
    
    
    .03
    
    
    
    Earnings per share  basic 4
    
    $
    1.07
    
    
    $
    .28
    
    
    $
    .49
    
    
    $
    .02Earnings per share  dilutedContinuing operations 4
    
    $
    .69
    
    
    $
    .25
    
    
    $
    .45
    
    
    $
    .02Discontinued operations 4
    
    
    .37
    
    
    
    .03
    
    
    
    .03
    
    
    
    Earnings per share  diluted 4
    
    $
    1.06
    
    
    $
    .28
    
    
    $
    .48
    
    
    $
    .02
 69




---



##### 



Fourth
    
    
    Third
    
    
    
    
    
    
    Second
    
    
    
    
    
    
    FirstFiscal Year 2003
    
    (Restated)
    
    
    (Restated)
    
    
    
    
    
    
    (Restated)
    
    
    
    
    
    
    (Restated)Net sales
    
    $
    160,326
    
    
    $
    140,518
    
    
    
    
    
    
    $
    135,281
    
    
    
    
    
    
    $
    126,329Gross margin
    
    
    53,680
    
    
    
    45,706
    
    
    
    
    
    
    
    40,570
    
    
    
    
    
    
    
    38,673Income from continuing operations 1
    
    
    8,731
    
    
    
    8,188
    5
    
    
    
    
    
    
    5,683
    6
    
    
    
    
    
    
    6,041Loss from discontinued operations,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,808
    )
    
    
    
    
    
    
    Net earnings
    
    $
    8,731
    
    
    $
    8,188
    5
    
    
    
    
    
    $
    (125
    )6
    
    
    
    
    
    $
    6,041Earnings per
share  basicContinuing operations
    
    $
    .41
    
    
    $
    .39
    
    
    
    
    
    
    $
    .27
    
    
    
    
    
    
    $
    .29Discontinued operations 4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (.28
    )
    
    
    
    
    
    
    Earnings per
share  basic 4
    
    $
    .41
    
    
    $
    .39
    
    
    
    
    
    
    $
    (.01
    )
    
    
    
    
    
    $
    .29Earnings per
share  dilutedContinuing operations 4
    
    $
    .41
    
    
    $
    .38
    
    
    
    
    
    
    $
    .27
    
    
    
    
    
    
    $
    .28Discontinued operations 4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (.28
    )
    
    
    
    
    
    
    Earnings per
share  diluted 4
    
    $
    .41
    
    
    $
    .38
    
    
    
    
    
    
    $
    (.01
    )
    
    
    
    
    
    $
    .28
 1
    
    The effects of stock options expense, net of tax, are included in income from continuing operations and presented below:
 Fourth
    
    
    Third
    
    
    Second
    
    
    FirstFiscal Year 2004
    
    $
    (237
    )
    
    $
    (1,737
    )
    
    $
    474
    
    
    $
    (1,472
    )Fiscal Year 2003
    
    $
    (681
    )
    
    $
    (256
    )
    
    $
    (359
    )
    
    $
    198
 2
    
    Included a $3.4 million gain on the sale of a product line in the Sensors & Systems
segment.3
    
    Included $4.5 million in legal, severance and early retirement expense in the
Sensors & Systems segment. Included a $1.9 million reduction of previously estimated tax
liabilities associated with the receipt of a NOPA from the Internal Revenue Service.4
    
    The sum of the quarterly per share amounts may not equal per share amounts reported
for year-to-date periods. This is due to changes in the number of weighted average shares
outstanding and the effects of rounding for each period.5
    
    Included the $2.7 million foreign currency gain recorded upon
settlement of foreign currency forward contracts used to hedge the U.K. £55.0 million cash
price for the Weston Group. Included $929,000 in severance incurred in connection with the
closing of facilities and termination of affected employees of a product line in the Sensors
& Systems segment.6
    
    Included an $863,000 gain on the sale of a product line in the Sensors & Systems
segment.
 70




---



##### 



Guarantors
  71




---



##### 



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
 72




---



##### 



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
 73




---



##### 



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalNet Sales
    
    $
    
    
    
    $
    475,626
    
    
    $
    155,073
    
    
    $
    (2,530
    )
    
    $
    628,169Cost of Sales
    
    
    
    
    
    
    328,307
    
    
    
    100,835
    
    
    
    (2,530
    )
    
    
    426,612
    
    
    
    147,319
    
    
    
    54,238
    
    
    
    
    
    
    
    201,557ExpensesSelling, general
and administrative
    
    
    
    
    
    
    82,307
    
    
    
    39,708
    
    
    
    
    
    
    
    122,015Research, development
and engineering
    
    
    
    
    
    
    12,134
    
    
    
    15,581
    
    
    
    
    
    
    
    27,715Total Expenses
    
    
    
    
    
    
    94,441
    
    
    
    55,289
    
    
    
    
    
    
    
    149,730Operating Earnings from
Continuing Operations
    
    
    
    
    
    
    52,878
    
    
    
    (1,051
    )
    
    
    
    
    
    
    51,827Gain on sale of business
    
    
    (1,700
    )
    
    
    
    
    
    
    (1,734
    )
    
    
    
    
    
    
    (3,434
    )Interest income
    
    
    (14,316
    )
    
    
    (3,017
    )
    
    
    (828
    )
    
    
    16,197
    
    
    
    (1,964
    )Interest expense
    
    
    17,010
    
    
    
    3,275
    
    
    
    13,251
    
    
    
    (16,197
    )
    
    
    17,339Other expense (income)
    
    
    (520
    )
    
    
    (239
    )
    
    
    250
    
    
    
    
    
    
    
    (509
    )Other Expense, Net
    
    
    474
    
    
    
    19
    
    
    
    10,939
    
    
    
    
    
    
    
    11,432Income (Loss) from Continuing
Operations Before Taxes
    
    
    (474
    )
    
    
    52,859
    
    
    
    (11,990
    )
    
    
    
    
    
    
    40,395Income Tax Expense (Benefit)
    
    
    (140
    )
    
    
    13,313
    
    
    
    (3,202
    )
    
    
    
    
    
    
    9,971Income (Loss) From
Continuing Operations
Before Minority Interest
    
    
    (334
    )
    
    
    39,546
    
    
    
    (8,788
    )
    
    
    
    
    
    
    30,424Minority Interest
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    
    
    
    
    (22
    )Income (Loss) From
Continuing Operations
    
    
    (334
    )
    
    
    39,546
    
    
    
    (8,810
    )
    
    
    
    
    
    
    30,402Income From Discontinued
Operations, Net of Tax
    
    
    
    
    
    
    9,181
    
    
    
    
    
    
    
    
    
    
    
    9,181Equity in Net Income of
Consolidated Subsidiaries
    
    
    39,917
    
    
    
    
    
    
    
    
    
    
    
    (39,917
    )
    
    
    Net Income (Loss)
    
    $
    39,583
    
    
    $
    48,727
    
    
    $
    (8,810
    )
    
    $
    (39,917
    )
    
    $
    39,583
 74




---



##### 



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalCash Flows Provided (Used) by Operating ActivitiesNet earnings (loss)
    
    $
    39,583
    
    
    $
    48,727
    
    
    $
    (8,810
    )
    
    $
    (39,917
    )
    
    $
    39,583Stock-based compensation
    
    
    
    
    
    
    3,191
    
    
    
    1,135
    
    
    
    
    
    
    
    4,326Minority interest
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    22Depreciation & amortization
    
    
    
    
    
    
    22,320
    
    
    
    8,825
    
    
    
    
    
    
    
    31,145Deferred income tax
    
    
    3,375
    
    
    
    
    
    
    
    (111
    )
    
    
    
    
    
    
    3,264Gain on disposal of
discontinued operations
    
    
    
    
    
    
    (12,521
    )
    
    
    
    
    
    
    
    
    
    
    (12,521
    )Gain on sale of land
    
    
    
    
    
    
    (892
    )
    
    
    
    
    
    
    
    
    
    
    (892
    )Gain on sale of product line
    
    
    (1,700
    )
    
    
    
    
    
    
    (1,734
    )
    
    
    
    
    
    
    (3,434
    )Working capital changes, net of
effect of acquisitionsAccounts receivable
    
    
    (2,126
    )
    
    
    (5,513
    )
    
    
    (1,393
    )
    
    
    
    
    
    
    (9,032
    )Inventories
    
    
    
    
    
    
    (6,897
    )
    
    
    (2,198
    )
    
    
    
    
    
    
    (9,095
    )Prepaid expenses
    
    
    (219
    )
    
    
    760
    
    
    
    (1,200
    )
    
    
    
    
    
    
    (659
    )Accounts payable
    
    
    382
    
    
    
    (684
    )
    
    
    2,902
    
    
    
    
    
    
    
    2,600Accrued liabilities
    
    
    11,800
    
    
    
    (1,444
    )
    
    
    (116
    )
    
    
    
    
    
    
    10,240Federal & foreign income taxes
    
    
    8,935
    
    
    
    (804
    )
    
    
    820
    
    
    
    
    
    
    
    8,951Other liabilities
    
    
    9,283
    
    
    
    (923
    )
    
    
    (4,001
    )
    
    
    
    
    
    
    4,359Other, net
    
    
    (9,734
    )
    
    
    5,668
    
    
    
    (1,464
    )
    
    
    
    
    
    
    (5,530
    )59,579
    
    
    
    50,988
    
    
    
    (7,323
    )
    
    
    (39,917
    )
    
    
    63,327Cash Flows Provided (Used) by Investing ActivitiesPurchases of capital assets
    
    
    (490
    )
    
    
    (18,881
    )
    
    
    (2,755
    )
    
    
    
    
    
    
    (22,126
    )Proceeds from sale of
discontinued operations
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    10,000Proceeds from sale of product line
    
    
    1,700
    
    
    
    
    
    
    
    1,775
    
    
    
    
    
    
    
    3,475Proceeds from sale of land
    
    
    
    
    
    
    1,654
    
    
    
    
    
    
    
    
    
    
    
    1,654Escrow deposit
    
    
    (12,500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,500
    )Capital dispositions
    
    
    23
    
    
    
    1,190
    
    
    
    (435
    )
    
    
    
    
    
    
    778Sale of short-term
investments
    
    
    12,797
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,797Acquisitions of businesses, net
    
    
    
    
    
    
    (50,855
    )
    
    
    (87,956
    )
    
    
    
    
    
    
    (138,811
    )1,530
    
    
    
    (56,892
    )
    
    
    (89,371
    )
    
    
    
    
    
    
    (144,733
    )
 75




---



##### 



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalCash Flows Provided (Used) by
Financing ActivitiesProceeds provided by stock
issuance under employee
stock plans
    
    
    2,807
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,807Net change in credit facilities
    
    
    5,000
    
    
    
    (180
    )
    
    
    (698
    )
    
    
    
    
    
    
    4,122Repayment of long-term debt, net
    
    
    (27,996
    )
    
    
    (77
    )
    
    
    (1,356
    )
    
    
    
    
    
    
    (29,429
    )Debt and other issuance costs
    
    
    (268
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (268
    )Net change in intercompany
financing
    
    
    (143,641
    )
    
    
    5,573
    
    
    
    98,151
    
    
    
    39,917
    
    
    
    (164,098
    )
    
    
    5,316
    
    
    
    96,097
    
    
    
    39,917
    
    
    
    (22,768
    )Effect of foreign exchange
rates on cash
    
    
    14
    
    
    
    (89
    )
    
    
    2,365
    
    
    
    
    
    
    
    2,290Net increase (decrease) in cash
and cash equivalents
    
    
    (102,975
    )
    
    
    (677
    )
    
    
    1,768
    
    
    
    
    
    
    
    (101,884
    )Cash and cash equivalents
 beginning of year
    
    
    109,834
    
    
    
    3,030
    
    
    
    18,499
    
    
    
    
    
    
    
    131,363Cash and cash equivalents
 end of year
    
    $
    6,859
    
    
    $
    2,353
    
    
    $
    20,267
    
    
    $
    
    
    
    $
    29,479
 76




---



##### 



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalAssetsCurrent AssetsCash and cash equivalents
    
    $
    109,834
    
    
    $
    3,030
    
    
    $
    18,499
    
    
    $
    
    
    
    $
    131,363Cash in escrow
    
    
    4,536
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,536Short-term investments
    
    
    12,797
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,797Accounts receivable, net
    
    
    95
    
    
    
    69,297
    
    
    
    29,003
    
    
    
    
    
    
    
    98,395Inventories
    
    
    
    
    
    
    57,816
    
    
    
    18,529
    
    
    
    
    
    
    
    76,345Income tax refundable
    
    
    7,838
    
    
    
    (160
    )
    
    
    (1
    )
    
    
    
    
    
    
    7,677Deferred income tax benefits
    
    
    19,687
    
    
    
    
    
    
    
    (961
    )
    
    
    
    
    
    
    18,726Prepaid expenses
    
    
    134
    
    
    
    3,797
    
    
    
    3,099
    
    
    
    
    
    
    
    7,030Total Current Assets
    
    
    154,921
    
    
    
    133,780
    
    
    
    68,168
    
    
    
    
    
    
    
    356,869Property, Plant & Equipment, Net
    
    
    2,332
    
    
    
    89,160
    
    
    
    25,598
    
    
    
    
    
    
    
    117,090Goodwill
    
    
    
    
    
    
    151,696
    
    
    
    33,657
    
    
    
    
    
    
    
    185,353Intangibles, Net
    
    
    
    
    
    
    67,224
    
    
    
    47,706
    
    
    
    
    
    
    
    114,930Debt Issuance Costs, Net
    
    
    6,301
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,301Other Assets
    
    
    4,015
    
    
    
    18,723
    
    
    
    (454
    )
    
    
    
    
    
    
    22,284Amounts Due To (From)
Subsidiaries
    
    
    77,297
    
    
    
    14,439
    
    
    
    
    
    
    
    (91,736
    )
    
    
    Investment in Subsidiaries
    
    
    458,293
    
    
    
    
    
    
    
    83
    
    
    
    (458,376
    )
    
    
    Total Assets
    
    $
    703,159
    
    
    $
    475,022
    
    
    $
    174,758
    
    
    $
    (550,112
    )
    
    $
    802,827
 77




---



##### 



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalLiabilities and Shareholders EquityCurrent LiabilitiesAccounts payable
    
    $
    138
    
    
    $
    14,315
    
    
    $
    8,820
    
    
    $
    
    
    
    $
    23,273Accrued liabilities
    
    
    22,168
    
    
    
    38,913
    
    
    
    13,910
    
    
    
    
    
    
    
    74,991Credit facilities
    
    
    
    
    
    
    
    
    
    
    2,312
    
    
    
    
    
    
    
    2,312Current maturities of
long-term debt
    
    
    30,000
    
    
    
    75
    
    
    
    398
    
    
    
    
    
    
    
    30,473Federal and foreign
income taxes
    
    
    
    
    
    
    17
    
    
    
    1,167
    
    
    
    
    
    
    
    1,184Total Current Liabilities
    
    
    52,306
    
    
    
    53,320
    
    
    
    26,607
    
    
    
    
    
    
    
    132,233Long-Term Debt, Net
    
    
    244,765
    
    
    
    59
    
    
    
    1,968
    
    
    
    
    
    
    
    246,792Deferred Income Taxes
    
    
    27,325
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,325Net Liabilities of
Discontinued Operations
    
    
    
    
    
    
    2,719
    
    
    
    (2,311
    )
    
    
    
    
    
    
    408Amounts Due To (From)
Subsidiaries
    
    
    (17,306
    )
    
    
    
    
    
    
    120,585
    
    
    
    (103,279
    )
    
    
    Shareholders Equity
    
    
    396,069
    
    
    
    418,924
    
    
    
    27,909
    
    
    
    (446,833
    )
    
    
    396,069Total Liabilities and
Shareholders Equity
    
    $
    703,159
    
    
    $
    475,022
    
    
    $
    174,758
    
    
    $
    (550,112
    )
    
    $
    802,827
 78




---



##### 



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalNet Sales
    
    $
    
    
    
    $
    439,373
    
    
    $
    124,638
    
    
    $
    (1,557
    )
    
    $
    562,454Cost of Sales
    
    
    
    
    
    
    300,807
    
    
    
    84,575
    
    
    
    (1,557
    )
    
    
    383,825
    
    
    
    138,566
    
    
    
    40,063
    
    
    
    
    
    
    
    178,629ExpensesSelling, general
and administrative
    
    
    
    
    
    
    83,384
    
    
    
    25,841
    
    
    
    
    
    
    
    109,225Research, development
and engineering
    
    
    
    
    
    
    9,306
    
    
    
    10,218
    
    
    
    
    
    
    
    19,524Total Expenses
    
    
    
    
    
    
    92,690
    
    
    
    36,059
    
    
    
    
    
    
    
    128,749Operating Earnings from
Continuing Operations
    
    
    
    
    
    
    45,876
    
    
    
    4,004
    
    
    
    
    
    
    
    49,880Loss on sale of business
    
    
    
    
    
    
    
    
    
    
    66
    
    
    
    
    
    
    
    66Gain on derivative
financial instruments
    
    
    (2,676
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,676
    )Interest income
    
    
    (5,492
    )
    
    
    (2,511
    )
    
    
    (370
    )
    
    
    7,505
    
    
    
    (868
    )Interest expense
    
    
    11,624
    
    
    
    2,530
    
    
    
    5,346
    
    
    
    (7,505
    )
    
    
    11,995Other expense (income)
    
    
    (116
    )
    
    
    96
    
    
    
    20
    
    
    
    
    
    
    
    Other Expense, Net
    
    
    3,340
    
    
    
    115
    
    
    
    5,062
    
    
    
    
    
    
    
    8,517Income (Loss) from Continuing
Operations Before Taxes
    
    
    (3,340
    )
    
    
    45,761
    
    
    
    (1,058
    )
    
    
    
    
    
    
    41,363Income Tax Expense (Benefit)
    
    
    (868
    )
    
    
    13,834
    
    
    
    (246
    )
    
    
    
    
    
    
    12,720Income (Loss) From
Continuing Operations
    
    
    (2,472
    )
    
    
    31,927
    
    
    
    (812
    )
    
    
    
    
    
    
    28,643Loss From Discontinued
Operations, Net of Tax
    
    
    
    
    
    
    (5,808
    )
    
    
    
    
    
    
    
    
    
    
    (5,808
    )Equity in Net Income of
Consolidated Subsidiaries
    
    
    25,307
    
    
    
    
    
    
    
    
    
    
    
    (25,307
    )
    
    
    Net Income (Loss)
    
    $
    22,835
    
    
    $
    26,119
    
    
    $
    (812
    )
    
    $
    (25,307
    )
    
    $
    22,835
 79




---



##### 



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalCash Flows Provided (Used) by Operating ActivitiesNet earnings (loss)
    
    $
    22,835
    
    
    $
    26,119
    
    
    $
    (812
    )
    
    $
    (25,307
    )
    
    $
    22,835Stock-based compensation
    
    
    
    
    
    
    1,137
    
    
    
    291
    
    
    
    
    
    
    
    1,428Depreciation & amortization
    
    
    
    
    
    
    22,230
    
    
    
    3,985
    
    
    
    
    
    
    
    26,215Deferred income tax (benefit)
    
    
    14,051
    
    
    
    (4,221
    )
    
    
    (595
    )
    
    
    
    
    
    
    9,235Loss on disposal and holding
period loss on discontinued
operations
    
    
    
    
    
    
    9,282
    
    
    
    
    
    
    
    
    
    
    
    9,282Loss on sale of product line
    
    
    
    
    
    
    
    
    
    
    66
    
    
    
    
    
    
    
    66Working capital changes, net of
effect of acquisitionsAccounts receivable
    
    
    154
    
    
    
    (10,824
    )
    
    
    1,154
    
    
    
    
    
    
    
    (9,516
    )Inventories
    
    
    
    
    
    
    2,078
    
    
    
    4,244
    
    
    
    
    
    
    
    6,322Prepaid expenses
    
    
    (97
    )
    
    
    (8
    )
    
    
    222
    
    
    
    
    
    
    
    117Accounts payable
    
    
    115
    
    
    
    503
    
    
    
    (5,014
    )
    
    
    
    
    
    
    (4,396
    )Accrued liabilities
    
    
    7,905
    
    
    
    1,155
    
    
    
    (4,134
    )
    
    
    
    
    
    
    4,926Federal & foreign income taxes
    
    
    (7,451
    )
    
    
    6,639
    
    
    
    (111
    )
    
    
    
    
    
    
    (923
    )Other, net
    
    
    (1,754
    )
    
    
    (2,397
    )
    
    
    4,348
    
    
    
    
    
    
    
    19735,758
    
    
    
    51,693
    
    
    
    3,644
    
    
    
    (25,307
    )
    
    
    65,788Cash Flows Provided (Used) by Investing ActivitiesPurchases of capital assets
    
    
    (2,235
    )
    
    
    (12,334
    )
    
    
    (2,561
    )
    
    
    
    
    
    
    (17,130
    )Proceeds from sale of business
    
    
    
    
    
    
    3,850
    
    
    
    5,630
    
    
    
    
    
    
    
    9,480Escrow deposit
    
    
    (1,036
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,036
    )Capital dispositions
    
    
    38
    
    
    
    581
    
    
    
    147
    
    
    
    
    
    
    
    766Purchase of short-term
investments
    
    
    (12,797
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,797
    )Acquisitions of businesses, net
    
    
    
    
    
    
    (32,767
    )
    
    
    (78,968
    )
    
    
    
    
    
    
    (111,735
    )(16,030
    )
    
    
    (40,670
    )
    
    
    (75,752
    )
    
    
    
    
    
    
    (132,452
    )
 80




---



##### 



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalCash Flows Provided (Used) by
Financing ActivitiesProceeds provided by stock
issuance under employee
stock plans
    
    
    2,424
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,424Net change in credit facilities
    
    
    
    
    
    
    
    
    
    
    2,279
    
    
    
    
    
    
    
    2,279Repayment of long-term debt
    
    
    (235
    )
    
    
    (76
    )
    
    
    (421
    )
    
    
    
    
    
    
    (732
    )Debt and other issuance costs
    
    
    (7,735
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,735
    )Proceeds from note issuance
    
    
    175,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175,000Investment in subsidiaries
    
    
    (85,867
    )
    
    
    (9,443
    )
    
    
    70,003
    
    
    
    25,307
    
    
    
    83,587
    
    
    
    (9,519
    )
    
    
    71,861
    
    
    
    25,307
    
    
    
    171,236Effect of foreign exchange
rates on cash
    
    
    (83
    )
    
    
    41
    
    
    
    4,322
    
    
    
    
    
    
    
    4,280Net increase in cash
and cash equivalents
    
    
    103,232
    
    
    
    1,545
    
    
    
    4,075
    
    
    
    
    
    
    
    108,852Cash and cash equivalents
 beginning of year
    
    
    6,602
    
    
    
    1,485
    
    
    
    14,424
    
    
    
    
    
    
    
    22,511Cash and cash equivalents
 end of year
    
    $
    109,834
    
    
    $
    3,030
    
    
    $
    18,499
    
    
    $
    
    
    
    $
    131,363
 81




---



##### 



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalNet Sales
    
    $
    
    
    
    $
    345,689
    
    
    $
    90,400
    
    
    $
    (1,280
    )
    
    $
    434,809Cost of Sales
    
    
    
    
    
    
    238,524
    
    
    
    55,992
    
    
    
    (1,280
    )
    
    
    293,236
    
    
    
    107,165
    
    
    
    34,408
    
    
    
    
    
    
    
    141,573ExpensesSelling, general
and administrative
    
    
    
    
    
    
    64,831
    
    
    
    18,966
    
    
    
    
    
    
    
    83,797Research, development
and engineering
    
    
    
    
    
    
    7,472
    
    
    
    7,961
    
    
    
    
    
    
    
    15,433Total Expenses
    
    
    
    
    
    
    72,303
    
    
    
    26,927
    
    
    
    
    
    
    
    99,230Operating Earnings From
Continuing Operations
    
    
    
    
    
    
    34,862
    
    
    
    7,481
    
    
    
    
    
    
    
    42,343Loss on derivative
financial instruments
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Interest income
    
    
    (2,449
    )
    
    
    166
    
    
    
    (315
    )
    
    
    784
    
    
    
    (1,814
    )Interest expense
    
    
    6,841
    
    
    
    (157
    )
    
    
    1,222
    
    
    
    (784
    )
    
    
    7,122Other expense (income)
    
    
    
    
    
    
    479
    
    
    
    (479
    )
    
    
    
    
    
    
    Other Expense, Net
    
    
    4,393
    
    
    
    488
    
    
    
    428
    
    
    
    
    
    
    
    5,309Income (Loss) From Continuing
Operations Before Taxes
    
    
    (4,393
    )
    
    
    34,374
    
    
    
    7,053
    
    
    
    
    
    
    
    37,034Income Tax Expense (Benefit)
    
    
    (1,838
    )
    
    
    7,628
    
    
    
    2,992
    
    
    
    
    
    
    
    8,782Income (Loss) From Continuing
Operations
    
    
    (2,555
    )
    
    
    26,746
    
    
    
    4,061
    
    
    
    
    
    
    
    28,252Loss From Discontinued
Operations, Net of Tax
    
    
    
    
    
    
    (24,624
    )
    
    
    (415
    )
    
    
    
    
    
    
    (25,039
    )Cumulative Effect of a Change
in Accounting Principle,
Net of Tax
    
    
    
    
    
    
    (7,574
    )
    
    
    
    
    
    
    
    
    
    
    (7,574
    )Equity in Net Income of
Consolidated Subsidiaries
    
    
    (1,806
    )
    
    
    
    
    
    
    
    
    
    
    1,806
    
    
    
    Net Income (Loss)
    
    $
    (4,361
    )
    
    $
    (5,452
    )
    
    $
    3,646
    
    
    $
    1,806
    
    
    $
    (4,361
    )
 82




---



##### 



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalCash Flows Provided (Used) by
Operating ActivitiesNet earnings (loss)
    
    $
    (4,361
    )
    
    $
    (5,452
    )
    
    $
    3,646
    
    
    $
    1,806
    
    
    $
    (4,361
    )Stock-based compensation
    
    
    
    
    
    
    3,921
    
    
    
    790
    
    
    
    
    
    
    
    4,711Depreciation & amortization
    
    
    
    
    
    
    15,152
    
    
    
    2,411
    
    
    
    
    
    
    
    17,563Deferred income tax (benefit)
    
    
    (764
    )
    
    
    (1,190
    )
    
    
    7
    
    
    
    
    
    
    
    (1,947
    )Loss on disposal and holding
period loss on discontinued
operations
    
    
    
    
    
    
    22,718
    
    
    
    
    
    
    
    
    
    
    
    22,718Working capital changes, net of
effect of acquisitionsAccounts receivable
    
    
    639
    
    
    
    3,057
    
    
    
    1,848
    
    
    
    
    
    
    
    5,544Inventories
    
    
    
    
    
    
    (105
    )
    
    
    3,041
    
    
    
    
    
    
    
    2,936Prepaid expenses
    
    
    66
    
    
    
    (1,683
    )
    
    
    1,160
    
    
    
    
    
    
    
    (457
    )Accounts payable
    
    
    (412
    )
    
    
    4,020
    
    
    
    1,441
    
    
    
    
    
    
    
    5,049Accrued liabilities
    
    
    1,714
    
    
    
    (350
    )
    
    
    550
    
    
    
    
    
    
    
    1,914Federal & foreign income taxes
    
    
    (1,662
    )
    
    
    (7,514
    )
    
    
    (1,021
    )
    
    
    
    
    
    
    (10,197
    )Other, net
    
    
    (140
    )
    
    
    16,279
    
    
    
    (6,656
    )
    
    
    
    
    
    
    9,483(4,920
    )
    
    
    48,853
    
    
    
    7,217
    
    
    
    1,806
    
    
    
    52,956Cash Flows Provided (Used) by
Investing ActivitiesPurchases of capital assets
    
    
    (209
    )
    
    
    (11,186
    )
    
    
    (4,314
    )
    
    
    
    
    
    
    (15,709
    )Escrow deposit
    
    
    (3,500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,500
    )Capital dispositions
    
    
    24
    
    
    
    140
    
    
    
    395
    
    
    
    
    
    
    
    559Acquisitions of businesses, net
    
    
    
    
    
    
    (118,995
    )
    
    
    (5,654
    )
    
    
    
    
    
    
    (124,649
    )(3,685
    )
    
    
    (130,041
    )
    
    
    (9,573
    )
    
    
    
    
    
    
    (143,299
    )
 83




---



##### 



Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    TotalCash Flows Provided (Used) by
Financing ActivitiesNet change in credit facilities
    
    
    
    
    
    
    
    
    
    
    (1,960
    )
    
    
    
    
    
    
    (1,960
    )Repayment of long-term debt
    
    
    (5,714
    )
    
    
    (75
    )
    
    
    (557
    )
    
    
    
    
    
    
    (6,346
    )Investment in subsidiaries
    
    
    (86,603
    )
    
    
    81,613
    
    
    
    6,796
    
    
    
    (1,806
    )
    
    
    (92,317
    )
    
    
    81,538
    
    
    
    4,279
    
    
    
    (1,806
    )
    
    
    (8,306
    )Effect of foreign exchange
rates on cash
    
    
    (68
    )
    
    
    75
    
    
    
    1,213
    
    
    
    
    
    
    
    1,220Net increase (decrease) in cash
and cash equivalents
    
    
    (100,990
    )
    
    
    425
    
    
    
    3,136
    
    
    
    
    
    
    
    (97,429
    )Cash and cash equivalents
 beginning of year
    
    
    107,592
    
    
    
    1,060
    
    
    
    11,288
    
    
    
    
    
    
    
    119,940Cash and cash equivalents
 end of year
    
    $
    6,602
    
    
    $
    1,485
    
    
    $
    14,424
    
    
    $
    
    
    
    $
    22,511
 84




---



##### 



85