Esterline Technologies Corp.

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Esterline Reports Fiscal 2013 Second Quarter and Year-to-Date Financial Results

BELLEVUE, WA -- (Marketwired) -- 05/30/13 -- Esterline Corporation (NYSE: ESL) (www.esterline.com), a leading specialty manufacturer serving global aerospace/defense markets, today reported second fiscal quarter (ended April 26, 2013) net earnings of $35.5 million, or $1.12 per diluted share, on sales of $499.6 million. Net earnings in the second quarter of fiscal 2012 were $45.2 million, or $1.44 per diluted share including a $0.30 per share benefit from a litigation settlement. Sales in the year-ago quarter were $504.8 million.

Brad Lawrence, Esterline's Chief Executive Officer, said the company's second quarter results "...reflect stable revenues, steady margins, controlled costs, and good performance in a variety of businesses and programs." Lawrence said he expects a solid second-half performance, despite headwinds in global defense markets and a slower-than-anticipated recovery of the European economy. He said the company "...adjusted full-year guidance to reflect these headwinds, but we're still expecting a strong finish to the year, especially in the fourth quarter," adding that a number of positive trends should be contributing factors. These include "...a steadily growing commercial aerospace market, solid margin performance, and a stable $1.3 billion backlog." He also emphasized the company's continued "...record cash flow from operations should exceed $200 million this fiscal year."

The updated full-year guidance puts earnings per share (EPS) in the range of $5.30 to $5.50 on sales of approximately $2.0 billion. Lawrence noted the midpoint of the guidance represents "...an increase of nearly 9% over last year's adjusted EPS and is realistic, especially in light of prolonged defense program uncertainty." He said defense customers continue to "...slide programs to the right in order to keep their options open. Beechcraft, for example, after implementing rolling furloughs earlier in the year, reduced the build rate for the T-6B Navy trainer by nearly 15%." Esterline makes the integrated glass cockpit for the T-6B.

Lawrence said the company's "...unrelenting focus on operational efficiencies" will be another key contributing factor to Esterline's second-half strength. Gross margin, at 36.3% in the second quarter of fiscal 2013, was steady with the fiscal 2012 second quarter level of 36.6%. Selling, general and administrative (SG&A) expenses as a percent of sales remained relatively unchanged at 19.7% in the second quarter of fiscal 2013, compared with 19.6% in the prior year's second quarter. R&D expenses were down in the second quarter of fiscal 2013 to 5.1% of sales compared with 5.9% in the same period last year. The income tax rate for the second fiscal quarter was 21.0% compared with 19.7% in last year's period.

New orders for the second fiscal quarter of 2013 were $494.1 million compared with $566.0 million for the same period last year, primarily reflecting the reduced order rate for the defense and industrial programs mentioned above. This impact was felt primarily in the Avionics & Controls and Sensors & Systems segments.

For the first half of fiscal 2013, Esterline reported net earnings of $60.6 million, or $1.92 per diluted share, on sales of $957.5 million, compared with net earnings of $68.0 million, or $2.18 per diluted share, on $975.7 million in sales in the same period last year.

New orders for the first six months of fiscal 2013 were $967.7 million compared with $1.03 billion for the same period last year. Total backlog grew to $1.33 billion compared with $1.31 billion at the end of the prior-year period.

Conference Call Information
Esterline will host a conference call to discuss this announcement today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). The U.S. dial-in number is 877-415-3186; outside the U.S., use 857-244-7329. The pass code for the call is: 73152565.

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



ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Statement of Operations (unaudited)
In thousands, except per share amounts

                                  Three Months Ended     Six Months Ended
                                 --------------------  --------------------
                                  Apr 26,    Apr 27,    Apr 26,    Apr 27,
                                    2013       2012       2013       2012
                                 ---------  ---------  ---------  ---------
Segment Sales
  Avionics & Controls            $ 192,130  $ 195,025  $ 366,700  $ 374,597
  Sensors & Systems                176,964    184,683    348,774    356,355
  Advanced Materials               130,468    125,123    242,050    244,761
                                 ---------  ---------  ---------  ---------

Net Sales                          499,562    504,831    957,524    975,713

Cost of Sales                      318,186    320,308    615,803    633,109
                                 ---------  ---------  ---------  ---------
                                   181,376    184,523    341,721    342,604
Expenses
  Selling, general and
   administrative                   98,278     98,950    196,889    193,647
  Research, development and
   engineering                      25,658     29,545     48,734     55,940
  Gain on settlement of
   contingency                          --    (11,891)        --    (11,891)
                                 ---------  ---------  ---------  ---------
    Total Expenses                 123,936    116,604    245,623    237,696
                                 ---------  ---------  ---------  ---------

Operating Earnings                  57,440     67,919     96,098    104,908

Interest Income                       (148)      (116)      (249)      (211)
Interest Expense                    11,482     11,484     21,926     23,012
Loss on Extinguishment of Debt         946         --        946         --
                                 ---------  ---------  ---------  ---------

Earnings Before Income Taxes        45,160     56,551     73,475     82,107
Income Tax Expense                   9,482     11,138     11,876     13,714
                                 ---------  ---------  ---------  ---------

Earnings Including
 Noncontrolling Interests           35,678     45,413     61,599     68,393
Earnings Attributable to
 Noncontrolling Interests             (156)      (222)      (966)      (414)
                                 ---------  ---------  ---------  ---------

Net Earnings Attributable to
 Esterline                       $  35,522  $  45,191  $  60,633  $  67,979
                                 =========  =========  =========  =========

Basic Earnings Per Share         $    1.14  $    1.47  $    1.96  $    2.22
                                 =========  =========  =========  =========

Diluted Earnings Per Share       $    1.12  $    1.44  $    1.92  $    2.18
                                 =========  =========  =========  =========

Weighted Average Number of
 Shares Outstanding--Basic          31,100     30,669     31,002     30,650

Weighted Average Number of
 Shares Outstanding--Diluted        31,696     31,319     31,559     31,238



ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Sales and Earnings by Segment (unaudited)
In thousands

                                  Three Months Ended     Six Months Ended
                                 --------------------  --------------------
                                  Apr 26,    Apr 27,    Apr 26,    Apr 27,
                                    2013       2012       2013       2012
                                 ---------  ---------  ---------  ---------

Segment Sales
  Avionics & Controls            $ 192,130  $ 195,025  $ 366,700  $ 374,597
  Sensors & Systems                176,964    184,683    348,774    356,355
  Advanced Materials               130,468    125,123    242,050    244,761
                                 ---------  ---------  ---------  ---------

    Net Sales                    $ 499,562  $ 504,831  $ 957,524  $ 975,713
                                 =========  =========  =========  =========

Earnings Before Income Taxes
  Avionics & Controls            $  21,465  $  18,251  $  40,054  $  38,314
  Sensors & Systems                 23,207     24,710     42,208     31,525
  Advanced Materials                28,623     26,160     46,267     49,233
                                 ---------  ---------  ---------  ---------
    Segment Earnings                73,295     69,121    128,529    119,072

Corporate expense                  (15,855)   (13,093)   (32,431)   (26,055)
  Gain on settlement of
   contingency                          --     11,891         --     11,891
  Interest income                      148        116        249        211
  Interest expense                 (11,482)   (11,484)   (21,926)   (23,012)
  Loss on extinguishment of debt      (946)        --       (946)        --
                                 ---------  ---------  ---------  ---------

    Earnings Before Income Taxes $  45,160  $  56,551  $  73,475  $  82,107
                                 =========  =========  =========  =========



ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Balance Sheet (unaudited)
In thousands                                        Apr 26,       Apr 27,
                                                      2013          2012
                                                 ------------- -------------
Assets
  Current Assets
  Cash and cash equivalents                      $     169,177 $     191,095
  Cash in escrow                                         4,017         5,012
  Accounts receivable, net                             340,548       361,304
  Inventories                                          429,961       413,855
  Income tax refundable                                  7,170         6,226
  Deferred income tax benefits                          46,046        49,199
  Prepaid expenses                                      23,310        25,065
  Other current assets                                   3,614         5,128
                                                 ------------- -------------
    Total Current Assets                             1,023,843     1,056,884

Property, Plant and Equipment, Net                     351,561       363,557

Other Non-Current Assets
  Goodwill                                           1,107,514     1,141,347
  Intangibles, net                                     595,207       652,457
  Debt issuance costs, net                               7,063         9,757
  Deferred income tax benefits                          94,477        83,381
  Other assets                                           7,921        20,175
                                                 ------------- -------------
                                                 $   3,187,586 $   3,327,558
                                                 ============= =============

Liabilities and Shareholders' Equity
  Current Liabilities
  Accounts payable                               $     111,399 $     114,386
  Accrued liabilities                                  240,689       259,168
  Current maturities of long-term debt                  20,844        13,139
  Deferred income tax liabilities                        3,184         5,095
  Federal and foreign income taxes                       2,886        11,829
                                                 ------------- -------------
    Total Current Liabilities                          379,002       403,617

Long-Term Liabilities
  Credit facilities                                    200,000       300,000
  Long-term debt, net of current maturities            558,586       660,935
  Deferred income tax liabilities                      201,175       228,603
  Pension and post-retirement obligations              133,073       103,054
  Other liabilities                                     34,243        13,809

Total Shareholders' Equity                           1,681,507     1,617,540
                                                 ------------- -------------
                                                 $   3,187,586 $   3,327,558
                                                 ============= =============

Source: Esterline Technologies

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