Edgar Filing: ESTERLINE TECHNOLOGIES CORP

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Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended April 28, 2006

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

For the transition period from _____________ to _____________

Commission file number 1-6357

ESTERLINE TECHNOLOGIES CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		13-2595091
(State or other Jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


500 108^th Avenue N.E., Bellevue, Washington 98004
(Address of principal executive offices) (Zip Code)

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

As of June 2, 2006, 25,426,170 shares of the issuer’s common stock were outstanding.

PART 1 – FINANCIAL INFORMATION

Item 1.

Financial Statements

ESTERLINE TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEET

As of April 28, 2006 and October 28, 2005

(In thousands, except share amounts)


	April 28, 2006		October 28, 2005
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	46,256	$	118,304
Cash in escrow		4,315		11,918
Short-term investments		—		62,656
Accounts receivable, net of allowances of $4,435 and $4,462		171,236		149,751
Inventories
Raw materials and purchased parts		80,500		64,377
Work in process		62,740		45,798
Finished goods		25,439		20,294

		168,679		130,469

Deferred income tax benefits		26,672		26,868
Prepaid expenses		10,469		7,533

Total Current Assets		427,627		507,499

Property, Plant and Equipment		322,490		282,110
Accumulated depreciation		155,811		143,896

		166,679		138,214
Other Non-Current Assets
Goodwill		360,784		261,167
Intangibles, net		245,845		166,118
Debt issuance costs, net of accumulated amortization of $1,939 and $1,602		4,806		5,144
Deferred income tax benefits		17,773		13,320
Other assets		26,573		23,786

	$	1,250,087	$	1,115,248

ESTERLINE TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEET

As of April 28, 2006 and October 28, 2005

(In thousands, except share amounts)


	April 28, 2006		October 28, 2005
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	59,975	$	41,453
Accrued liabilities		108,790		119,115
Credit facilities		18,413		2,031
Current maturities of long-term debt		3,077		70,934
Federal and foreign income taxes		5,751		8,798

Total Current Liabilities		196,006		242,331

Long-Term Liabilities
Long-term debt, net of current maturities		279,756		175,682
Deferred income taxes		74,806		46,421
Other liabilities		34,527		27,237

Commitments and Contingencies		—		—
Minority Interest		3,158		2,713

Shareholders’ Equity
Common stock, par value $.20 per share, authorized 60,000,000 shares, issued and outstanding 25,419,920 and 25,319,892 shares		5,084		5,064
Additional paid-in capital		265,434		260,095
Retained earnings		371,393		345,370
Accumulated other comprehensive income		19,923		10,335

Total Shareholders’ Equity		661,834		620,864

	$	1,250,087	$	1,115,248

ESTERLINE TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

For the Three and Six Month Periods Ended April 28, 2006 and April 29, 2005

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended						Six Months Ended
	April 28, 2006			April 29, 2005			April 28, 2006			April 29, 2005
Net Sales	$	247,939		$	211,592		$	453,604		$	401,384
Cost of Sales		167,200			143,054			310,006			274,746

		80,739			68,538			143,598			126,638
Expenses
Selling, general & administrative		40,973			35,837			76,863			66,445
Research, development & engineering		12,939			9,866			23,272			19,113

Total Expenses		53,912			45,703			100,135			85,558


Operating Earnings From Continuing Operations		26,827			22,835			43,463			41,080

Other (income) expense		(263	)		28			(462	)		66
Interest income		(998	)		(1,025	)		(1,857	)		(1,560	)
Interest expense		5,790			4,097			10,295			8,779
Loss on extinguishment of debt		—			—			2,156			—

Other Expense, Net		4,529			3,100			10,132			7,285


Income From Continuing Operations Before Income Taxes		22,298			19,735			33,331			33,795
Income Tax Expense		4,307			5,974			6,863			9,938

Income From Continuing Operations Before Minority Interest		17,991			13,761			26,468			23,857

Minority Interest		(332	)		(35	)		(445	)		(48	)

Income From Continuing Operations		17,659			13,726			26,023			23,809

Income (Loss) From Discontinued Operations, Net of Tax		—			(562	)		—			6,965

Net Earnings	$	17,659		$	13,164		$	26,023		$	30,774

ESTERLINE TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

For the Three and Six Month Periods Ended April 28, 2006 and April 29, 2005

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended					Six Months Ended
	April 28, 2006		April 29, 2005			April 28, 2006		April 29, 2005
Earnings (Loss) Per Share – Basic:
Continuing operations	$	.70	$	.55		$	1.03	$	.97
Discontinued operations		—		(.03	)		—		.28

Earnings per share – basic	$	.70	$	.52		$	1.03	$	1.25


Earnings (Loss) Per Share – Diluted:
Continuing operations	$	.68	$	.54		$	1.01	$	.95
Discontinued operations		—		(.02	)		—		.28

Earnings per share – diluted	$	.68	$	.52		$	1.01	$	1.23

ESTERLINE TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

For the Six Month Periods Ended April 28, 2006 and April 29, 2005

(Unaudited)

(In thousands)


	Six Months Ended
	April 28, 2006			April 29, 2005
Cash Flows Provided (Used) by Operating Activities
Net earnings	$	26,023		$	30,774
Minority interest		445			49
Depreciation and amortization		19,838			18,508
Deferred income taxes		585			1,830
Stock-based compensation		2,649			680
Gain on sale of discontinued operations		—			(9,456	)
Gain on sale of short-term investments		(610	)		—
Loss on sale of building		—			59
Working capital changes, net of effect of acquisitions
Accounts receivable		919			3,040
Inventories		(22,089	)		(14,535	)
Prepaid expenses		(2,108	)		773
Accounts payable		6,354			4,214
Accrued liabilities		(9,692	)		754
Federal and foreign income taxes		(5,224	)		472
Other liabilities		1,115			1,300
Other, net		(735	)		(682	)

		17,470			37,780

Cash Flows Provided (Used) by Investing Activities
Purchases of capital assets		(12,392	)		(9,342	)
Proceeds from sale of discontinued operations		—			21,421
Proceeds from sale of building		—			2,319
Proceeds from sale of capital assets		458			146
Proceeds from sale of short-term investments		63,266			—
Purchase of short-term investments		—			(45,486	)
Acquisitions of businesses, net of cash acquired		(189,667	)		(3,346	)

		(138,335	)		(34,288	)

ESTERLINE TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

For the Six Month Periods Ended April 28, 2006 and April 29, 2005

(Unaudited)

(In thousands)


	Six Months Ended
	April 28, 2006			April 29, 2005
Cash Flows Provided (Used) by Financing Activities
Proceeds provided by stock issuance under employee stock plans	$	2,351		$	2,435
Excess tax benefits from stock option exercises		359			—
Proceeds provided by sale of common stock		—			108,490
Net change in credit facilities		16,188			(4,424	)
Proceeds from issuance of long-term debt		100,000			—
Repayment of long-term obligations		(70,556	)		(1,474	)

		48,342			105,027

Effect of Foreign Exchange Rates on Cash		475			(294	)

Net Increase (Decrease) in Cash and Cash Equivalents		(72,048	)		108,225

Cash and Cash Equivalents – Beginning of Period		118,304			29,479

Cash and Cash Equivalents – End of Period	$	46,256		$	137,704


Supplemental Cash Flow Information
Cash Paid for Interest	$	11,635		$	7,966
Cash Paid for Taxes		3,655			8,446

ESTERLINE TECHNOLOGIES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Six Month Periods Ended April 28, 2006 and April 29, 2005

The consolidated balance sheet as of April 28, 2006, the consolidated statement of operations for the three and six month periods ended April 28, 2006 and April 29, 2005, and the consolidated statement of cash flows for the six month periods ended April 28, 2006 and April 29, 2005 are unaudited, but in the opinion of management, all of the necessary adjustments, consisting of normal recurring accruals, have been made to present fairly the financial statements referred to above in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the above statements do not include all of the footnotes required for complete financial statements. The results of operations and cash flows for the interim periods presented are not necessarily indicative of results that can be expected for the full year.

2.	The notes to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended October 28, 2005 provide a summary of significant accounting policies and additional financial information that should be read in conjunction with this Form 10-Q.

The timing of the Company’s revenues is impacted by the purchasing patterns of customers and, as a result, revenues are not generated evenly throughout the year. Moreover, the Company’s first fiscal quarter, November through January, includes significant holiday vacation periods in both Europe and North America.

Basic earnings per share is computed on the basis of the weighted average number of shares outstanding during the period. Diluted earnings per share includes the dilutive effect of stock options. The weighted average number of shares outstanding used to compute basic earnings per share was 25,385,000 and 25,120,000 for the three month periods ended April 28, 2006 and April 29, 2005, respectively. The weighted average number of shares outstanding used to compute diluted earnings per share was 25,817,000 and 25,484,000 for the three month periods ended April 28, 2006 and April 29, 2005, respectively. The weighted average number of shares outstanding used to compute basic earnings per share was 25,361,000 and 24,577,000 for the six month periods ended April 28, 2006, and April 29, 2005, respectively. The weighted average number of shares outstanding used to compute diluted earnings per share was 25,780,000 and 24,953,000 for the six month periods ended April 28, 2006 and April 29, 2005, respectively.

5.	New Accounting Standard

Prior to October 29, 2005, the Company accounted for its stock-based compensation in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.” The variable method of accounting was used to account for stock option plans where the option holders were permitted to exercise options by surrendering the option

subject to the grant in payment of exercise price of the option and the related statutory taxes. No compensation expense was recognized at the date of grant because the exercise price of all stock option grants is equal to the market price of the Company’s common stock as of the date of grant. However, subsequent changes in the market price of the Company’s stock to the date of exercise or forfeiture resulted in a change in the measurement of compensation costs. Effective October 29, 2005, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (Statement No. 123R), which requires the Company to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The Company adopted Statement 123R using the modified prospective method effective October 29, 2005. The cumulative effect of the change in accounting principle upon adoption of Statement 123R was included in selling, general and administrative expense as the amount was not significant.

6.	The Company’s comprehensive income is as follows:


(In thousands)	Three Months Ended						Six Months Ended
	April 28, 2006			April 29, 2005			April 28, 2006			April 29, 2005

Net Earnings	$	17,659		$	13,164		$	26,023		$	30,774
Change in Fair Value of Derivative Financial Instruments, Net of Tax		1,255			612			831			1,435
Minimum Pension Liability, Net of Tax		(3,682	)		—			(3,682	)		—
Foreign Currency Translation Adj.		12,113			(738	)		12,439			3,453

Comprehensive Income	$	27,345		$	13,038		$	35,611		$	35,662

On March 24, 2006, the Company acquired all of the outstanding capital stock of Wallop Defence Systems Limited (Wallop), a manufacturer of military pyrotechnic countermeasure devices for U.K. £33.2 million in cash (approximately $57.9 million including acquisition costs and an adjustment based on the amount of indebtedness and net working capital of Wallop as of closing). In addition, the Company may pay an additional purchase price up to U.K. £10.0 million, or approximately $18.2 million, depending on the future financial performance of Wallop. The acquisition strengthens the Company’s international position in countermeasure devices. Wallop is included in the Advanced Materials segment and the results of its operations were included from the effective date of the acquisition. A preliminary estimate of the fair value of assets acquired and liabilities assumed was made at April 28, 2006, which will be revised during the third quarter of fiscal 2006 when the independent valuation is completed.

8.	On December 16, 2005, the Company acquired all of the outstanding capital stock of Darchem Holdings Limited (Darchem), a manufacturer of thermally engineered components for critical aerospace applications for U.K. £68.6 million in cash (approximately

$121.6 million including acquisition costs and an adjustment based on the amount of cash and net working capital of Darchem as of closing). Darchem holds a leading position in its niche market and fits the Company’s engineered-to-order model. Darchem is included in the Advanced Materials segment and the results of its operations were included from the effective date of the acquisition.

The following summarizes the estimated fair market value of the assets acquired and liabilities assumed at the date of acquisition. The allocation of the purchase price was based upon a preliminary independent valuation report. The amount allocated to goodwill is not expected to be deductible for income tax purposes.


(In thousands)
As of December 16, 2005

Current Assets	$	22,361
Property, plant and equipment		8,499
Intangible assets subject to amortization
Programs (20 year weighted average useful life)		45,691
Customer relationships (8 year weighted average useful life)		2,215
Patents (11 year weighted average useful life)		3,083
Other (1 year useful life)		284

		51,273

Trade name		6,219
Other		171
Goodwill		60,689

Total assets acquired		149,212

Current liabilities assumed		8,523
Deferred tax liabilities		19,083

Net assets acquired	$	121,606

On January 28, 2005, the Company completed the sale of the outstanding stock of its wholly owned subsidiary Fluid Regulators Corporation (Fluid Regulators), which was included in the Company’s Sensors & Systems segment, for approximately $21.4 million. As a result of the sale, the Company recorded a gain of $7.0 million, net of tax of $2.4 million, in the first fiscal quarter of 2005. Sales and net earnings were $3.4 million and $0.3 million during the six-month period ended April 29, 2005. Fluid Regulators is reported as discontinued operations and the consolidated financial statements for all prior periods have been adjusted to reflect this presentation.

10.

The effective income tax rate for the first six months of fiscal 2006 was 29.3% (before a $2.9 million reduction of previously estimated tax liabilities) compared with 29.4% for the first six months of fiscal 2005. The effective tax rate differed from the statutory rate, as both years benefited from various tax credits and certain foreign interest expense deductions. On April 25, 2006, the Company received a Notice of Proposed Adjustment (NOPA) from the

State of California Franchise Tax Board covering, among other items, the examination of research and development tax credits for fiscal years 1997 through 2002. As a result of receiving the NOPA the Company reduced previously estimated tax liabilities by $2.0 million. Additionally, as a result of a favorable tax audit which was concluded on December 23, 2005, the Company also reduced previously estimated tax liabilities by $0.9 million. While the effective tax rate in the first six months of fiscal 2006 was impacted by the expiration of the U.S. Research and Experimentation Credit at December 31, 2005, the impact was partially offset by increased benefits from various tax credits and foreign interest deductions.

11.

As of April 28, 2006, the Company has two share-based compensation plans, which are described below. The compensation cost that has been charged against income for those plans for the first six months of fiscal 2006 was $2.6 million. The total income tax benefit recognized in the income statement for share-based compensation arrangements was $0.8 million.

In March 2002, the Company’s shareholders approved the establishment of an Employee Stock Purchase Plan (ESPP) under which 300,000 shares of the Company’s common stock are reserved for issuance to employees. On March 1, 2006, the Company’s shareholders authorized an additional 150,000 shares of the Company’s stock under the ESPP. The plan qualifies as a noncompensatory employee stock purchase plan under Section 423 of the Internal Revenue Code. Employees are eligible to participate through payroll deduction subject to certain limitations. At the end of each offering period, usually six months, shares are purchased by the participants at 85% of the lower of the fair market value on the first day of the offering period or the purchase date. During the first six months of fiscal 2006, employees purchased 34,452 shares at a fair market value price of $36.55 per share, leaving a balance of 238,526 shares available for issuance in the future. As of April 28, 2006, deductions aggregating $815,520 were accrued for the purchase of shares on June 15, 2006.

The Company also has an equity incentive plan for officers and key employees. On March 1, 2006, the Company’s shareholders authorized the issuance of an additional 1,000,000 shares of the Company’s common stock under the equity incentive plan. At April 28, 2006, the Company had 2,620,450 shares reserved for issuance to officers and key employees, of which 1,121,950 shares were available to be granted in the future. The Board of Directors authorized the Compensation Committee to administer awards granted under the equity incentive plan, including option grants, and to establish the terms of such awards. Awards under the equity incentive plan may be granted to eligible employees of the Company over the 10-year period ending March 3, 2014. Options granted become exercisable ratably over a period of four years following the date of grant and expire on the tenth anniversary of the grant. Option exercise prices are equal to the fair market value of the Company’s common stock on the date of grant. The weighted-average grant date fair value of options granted during the six-month periods ended April 28, 2006 and April 29, 2005, was $22.10 per share and $18.10 per share, respectively.

The fair value of each option granted by the Company was estimated using a Black-Scholes pricing model which uses the assumptions noted in the following table. The Company uses historical data to estimate volatility of the Company’s common stock and option exercise and employee termination assumptions. The range of the expected term reflects the results from certain groups of employees exhibiting different behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury zero coupon issues in effect at the time of the grant.


	Six Months Ended
	April 28, 2006		April 29, 2005
Risk-free interest rate (U.S. Treasury zero coupon issues)	4.53 – 4.72	%	4.48 – 4.71	%
Expected dividend yield	—		—
Expected volatility	45.0	%	45.3	%
Expected life (years)	6.5 – 9.5		5.6 – 8.6

The following table summarizes the changes in outstanding options granted under the Company’s stock option plans for the six-month period ended April 28, 2006:


			Weighted Average
	Shares Subject to Option		Remaining Contractual Term (years)	Exercise Price
Outstanding, beginning of period	1,401,100			$	23.56
Granted	166,400				38.98
Exercised	(57,000	)			16.28
Canceled or expired	(12,000	)			25.85

Outstanding, end of period	1,498,500		6.7	$	25.53

Exercisable, end of period	807,200		5.0	$	19.27

The aggregate intrinsic value of option shares outstanding and exercisable at April 28, 2006 was $29.2 million and $20.8 million, respectively.

The table below presents stock activity related to stock options exercised in the periods ended April 28, 2006 and April 29, 2005:


(In thousands)	Six Months Ended
	April 28, 2006		April 29, 2005
Proceeds from stock options exercised	$	928	$	1,345
Tax benefits related to stock options exercised		564		977
Intrinsic value of stock options exercised		1,511		3,055

Total unrecognized compensation expense for options that have not vested as of April 28, 2006, is $6.6 million, which will be recognized over a weighted average period of 1.52 years.

The following table illustrates the effect on net income and earnings per share as if the Company had applied the fair value method for the prior-year three and six month periods:


(In thousands)	Three and Six Months Ended April 29, 2005
Net earnings, as reported	$	13,164		$	30,774
Stock-based compensation expense reversal, net of income tax benefit included in net earnings as reported		911			457
Stock-based compensation costs net of income tax under the fair value method of accounting		(476	)		(917	)

Pro forma net earnings	$	13,599		$	30,314


Basic earnings per share:
As reported	$	.52		$	1.25
Pro forma		.54			1.23

Diluted earnings per share:
As reported	$	.52		$	1.23
Pro forma		.53			1.21

12.	The Company’s pension plans principally include a U.S. pension plan maintained by Esterline and U.S. and non-U.S. plans maintained by Leach Holding Corporation, a wholly-owned subsidiary of the Company. Components of net periodic pension cost consisted of the following:


(In thousands)	Three Months Ended						Six Months Ended
	April 28, 2006			April 29, 2005			April 28, 2006			April 29, 2005
Components of Net Periodic Pension Cost
Service cost	$	880		$	1,065		$	1,760		$	2,133
Interest cost		2,494			2,352			4,988			5,720
Expected return on plan assets		(3,180	)		(2,955	)		(6,359	)		(6,753	)
Amortization of prior service cost		5			5			9			9
Amortization of actuarial loss		406			165			812			335

Net Periodic Cost	$	605		$	632		$	1,210		$	1,444

13.	Segment information:

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


(In thousands)	Three Months Ended						Six Months Ended
	April 28, 2006			April 29, 2005			April 28, 2006			April 29, 2005
Sales
Avionics & Controls	$	71,864		$	64,990		$	134,306		$	125,845
Sensors & Systems		83,177			84,541			156,647			158,915
Advanced Materials		92,898			62,061			162,651			116,624

Total Sales	$	247,939		$	211,592		$	453,604		$	401,384


Income from Continuing Operations
Avionics & Controls	$	11,296		$	9,204		$	20,671		$	18,603
Sensors & Systems		7,300			11,166			13,083			17,563
Advanced Materials		15,696			8,747			23,816			15,228

Segment Earnings		34,292			29,117			57,570			51,394

Corporate expense		(7,465	)		(6,282	)		(14,107	)		(10,314	)
Other income (expense)		263			(28	)		462			(66	)
Interest income		998			1,025			1,857			1,560
Interest expense		(5,790	)		(4,097	)		(10,295	)		(8,779	)
Loss on extinguishment of debt		—			—			(2,156	)		—

	$	22,298		$	19,735		$	33,331		$	33,795

14.

On November 24, 2004, the Company completed a public offering of 3.7 million shares of common stock, including shares sold under the underwriters’ over-allotment option, priced at $31.25 per share, generating net proceeds of approximately $108.5 million, of which $5.0 million was used to pay off existing credit facilities. The funds provide additional financial resources for acquisitions and general corporate purposes. The Company issued 100,028 and 154,411 shares under its employee stock plans during the six month periods ended April 28, 2006 and April 29, 2005, respectively.

15.

On November 15, 2005, the $30.0 million 6.4% Senior Notes matured and were paid. Additionally, on November 15, 2005, the Company prepaid the outstanding principal amount of the $40.0 million 6.77% Senior Notes due November 15, 2008. Under the terms of the Note Purchase Agreement, the Company paid an additional $2.2 million make-whole payment, which was recorded as a loss on extinguishment of debt in the first fiscal quarter of 2006. On February 10, 2006, the Company amended its credit agreement to provide a $100.0 million term loan facility, which may be drawn in U.S. dollars, U.K. pounds or euros. In addition, the amendment provides that up to $25.0 million of the credit facility and up to $50.0 million of the letter of credit may be drawn in U.K. pounds or euros in addition to U.S. dollars. On February 10, 2006, the Company borrowed U.K. £57.0 million, or approximately $100.0 million, under the term loan facility. The Company used the proceeds from the loan as working capital for its U.K. operations and to repay a portion of its outstanding borrowings under the revolving credit facility. The principal amount of the loan is payable quarterly commencing on March 31, 2007 through the termination date of November 14, 2010, according to a payment schedule by which 1.25% of the principal amount is paid in each quarter of 2007, 2.50% in each quarter of 2008, 5.00% in each quarter of 2009 and 16.25% in each quarter of 2010. The loan accrues interest at a variable rate based on the British Bankers Association Interest Settlement Rate for deposits in U.K. pounds plus an additional margin amount that ranges from 1.125% to 0.500% depending upon the Company’s leverage ratio. As of February 10, 2006, the initial interest rate on the term loan was 5.33%. The Company entered into an interest rate swap agreement on the full principal amount by which the variable interest rate was exchanged for a fixed interest rate of 4.755% plus an additional margin amount determined by reference to the Company’s leverage ratio. In addition, in November 2005, the Company collateralized a $9.9 million letter of credit with an equivalent amount of cash and cash equivalents.

16.

The following schedules set forth condensed consolidating financial information as required by Rule 3-10 of Securities and Exchange Commission Regulation S-X as of April 28, 2006, and October 28, 2005, and for the applicable periods ended April 28, 2006, and April 29, 2005, for (a) Esterline Technologies Corporation (the Parent); (b) on a combined basis, the subsidiary guarantors (Guarantor Subsidiaries) of the Senior Subordinated Notes which include Advanced Input Devices, Inc., Amtech Automated Manufacturing Technology, Angus Electronics Co., Armtec Countermeasures Co., Armtec Countermeasures TNO Co., Armtec Defense Products Co., AVISTA, Incorporated, BVR Technologies Co., Equipment Sales Co., EA Technologies Corporation, Esterline Sensors Services Americas, Inc., Esterline Technologies Holdings Limited, H.A. Sales Co., Hauser Inc., Hytek Finishes Co., Janco

Corporation, Kirkhill-TA Co., Korry Electronics Co., Leach Holding Corporation, Leach International Corporation, Leach Technology Group, Inc., Mason Electric Co., MC Tech Co., Memtron Technologies Co., Norwich Aero Products, Inc., Palomar Products, Inc., Pressure Systems, Inc., Pressure Systems International, Inc., Surftech Finishes Co., UMM Electronics Inc., and (c) on a combined basis, the subsidiary non-guarantors (Non-Guarantor Subsidiaries), which include Auxitrol S.A., Auxitrol Technologies S.A., Darchem Holdings Ltd., Esterline Sensors Services Asia PTD, Ltd., Esterline Technologies Denmark Aps (Denmark), Esterline Technologies Ltd. (England), Esterline Technologies Ltd. (Hong Kong), Guizhou Leach-Tianyi Aviation Electrical Company Ltd. (China), Leach International Asia-Pacific Ltd. (Hong Kong), Leach International Europe S.A. (France), Leach International Germany GmbH (Germany), Leach International Mexico S. de R.L. de C.V. (Mexico), Leach International U.K. (England), LRE Medical GmbH (Germany), Muirhead Aerospace Ltd., Norcroft Dynamics Ltd., Pressure Systems International Ltd., Wallop Defence Systems Limited, Weston Aero Ltd. (England), and Weston Aerospace Ltd. (England). The guarantor subsidiaries are direct and indirect wholly-owned subsidiaries of Esterline Technologies and have fully and unconditionally, jointly and severally, guaranteed the Senior Subordinated Notes.

Condensed Consolidating Balance Sheet as of April 28, 2006.


(In thousands)	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Total
Assets
Current Assets
Cash and cash equivalents	$	19,951	$	6,089	$	20,216	$	—		$	46,256
Cash in escrow		4,315		—		—		—			4,315
Accounts receivable, net		1,068		89,891		80,277		—			171,236
Inventories		—		100,500		68,179		—			168,679
Deferred income tax benefits		23,084		4		3,584		—			26,672
Prepaid expenses		195		5,376		4,898		—			10,469

Total Current Assets		48,613		201,860		177,154		—			427,627

Property, Plant & Equipment, Net		2,557		102,307		61,815		—			166,679
Goodwill		—		195,474		165,310		—			360,784
Intangibles, Net		107		79,082		166,656		—			245,845
Debt Issuance Costs, Net		4,806		—		—		—			4,806
Deferred Income Tax Benefits		13,900		1,637		2,236		—			17,773
Other Assets		3,531		16,794		6,248		—			26,573
Amounts Due (To) From Subsidiaries		235,371		73,061		—		(308,432	)		—
Investment in Subsidiaries		719,030		—		—		(719,030	)		—

Total Assets	$	1,027,915	$	670,215	$	579,419	$	(1,027,462	)	$	1,250,087


(In thousands)	Parent		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Total
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	2,299	$	20,928		$	36,748	$	—		$	59,975
Accrued liabilities		27,459		51,030			30,301		—			108,790
Credit facilities		14,000		—			4,413		—			18,413
Current maturities of long-term debt		1,300		1,026			751		—			3,077
Federal and foreign income taxes		3,925		70			1,756		—			5,751

Total Current Liabilities		48,983		73,054			73,969		—			196,006

Long-Term Debt, Net		275,314		2,862			1,580		—			279,756
Deferred Income Taxes		31,346		(13	)		43,473		—			74,806
Other Liabilities		10,438		17,139			6,950		—			34,527
Amounts Due To (From) Subsidiaries		—		—			291,939		(291,939	)		—
Minority Interest		—		—			3,158		—			3,158
Shareholders’ Equity		661,834		577,173			158,350		(735,523	)		661,834

Total Liabilities and Shareholders’ Equity	$	1,027,915	$	670,215		$	579,419	$	(1,027,462	)	$	1,250,087

Condensed Consolidating Statement of Operations for the three month period ended April 28, 2006.


(In thousands)	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Net Sales	$	—		$	161,486		$	88,604		$	(2,151	)	$	247,939
Cost of Sales		—			107,985			61,366			(2,151	)		167,200

		—			53,501			27,238			—			80,739
Expenses
Selling, general and administrative		—			23,984			16,989			—			40,973
Research, development and engineering		—			5,488			7,451			—			12,939

Total Expenses		—			29,472			24,440			—			53,912


Operating Earnings From Continuing Operations		—			24,029			2,798			—			26,827

Other (income) expense		—			—			(263	)		—			(263	)
Interest income		(4,957	)		(631	)		(977	)		5,567			(998	)
Interest expense		5,581			1,067			4,709			(5,567	)		5,790
Loss on extinguishment of debt		—			—			—			—			—

Other Expense, Net		624			436			3,469			—			4,529

Income (Loss) From Continuing Operations Before Taxes		(624	)		23,593			(671	)		—			22,298
Income Tax Expense (Benefit)		(153	)		4,500			(40	)		—			4,307

Income (Loss) From Continuing Operations Before Minority Interest		(471	)		19,093			(631	)		—			17,991

Minority Interest		—			—			(332	)		—			(332	)

Income (Loss) From Continuing Operations		(471	)		19,093			(963	)		—			17,659

Equity in Net Income of Consolidated Subsidiaries		18,130			—			—			(18,130	)		—

Net Income (Loss)	$	17,659		$	19,093		$	(963	)	$	(18,130	)	$	17,659

Condensed Consolidating Statement of Operations for the six month period ended April 28, 2006.


(In thousands)	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Net Sales	$	—		$	304,882		$	155,872		$	(7,150	)	$	453,604
Cost of Sales		—			207,459			109,697			(7,150	)		310,006

		—			97,423			46,175			—			143,598
Expenses
Selling, general and administrative		—			47,880			28,983			—			76,863
Research, development and engineering		—			10,590			12,682			—			23,272

Total Expenses		—			58,470			41,665			—			100,135

Operating Earnings From Continuing Operations		—			38,953			4,510			—			43,463

Other (income) expense		—			—			(462	)		—			(462	)
Interest income		(9,157	)		(1,265	)		(1,880	)		10,445			(1,857	)
Interest expense		9,989			2,093			8,658			(10,445	)		10,295
Loss on extinguishment of debt		2,156			—			—			—			2,156

Other Expense, Net		2,988			828			6,316			—			10,132

Income (Loss) From Continuing Operations Before Taxes		(2,988	)		38,125			(1,806	)		—			33,331
Income Tax Expense (Benefit)		(817	)		8,925			(1,245	)		—			6,863

Income (Loss) From Continuing Operations Before Minority Interest		(2,171	)		29,200			(561	)		—			26,468

Minority Interest		—			—			(445	)		—			(445	)

Income (Loss) From Continuing Operations		(2,171	)		29,200			(1,006	)		—			26,023

Equity in Net Income of Consolidated Subsidiaries		28,194			—			—			(28,194	)		—

Net Income (Loss)	$	26,023		$	29,200		$	(1,006	)	$	(28,194	)	$	26,023

Condensed Consolidating Statement of Cash Flows for the six month period ended April 28, 2006.


(In thousands)	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Cash Flows Provided (Used) by Operating Activities
Net earnings (loss)	$	26,023		$	29,200		$	(1,006	)	$	(28,194	)	$	26,023
Minority interest		—			—			445			—			445
Depreciation & amortization		—			11,937			7,901			—			19,838
Deferred income taxes		(1,488	)		95			1,978			—			585
Stock-based compensation		—			1,775			874			—			2,649
Gain on sale of short-term investments		(610	)		—			—			—			(610	)
Working capital changes, net of effect of acquisitions
Accounts receivable		(397	)		7,156			(5,840	)		—			919
Inventories		—			(15,043	)		(7,046	)		—			(22,089	)
Prepaid expenses		(16	)		(883	)		(1,209	)		—			(2,108	)
Accounts payable		1,309			669			4,376			—			6,354
Accrued liabilities		(4,895	)		(2,617	)		(2,180	)		—			(9,692	)
Federal & foreign income taxes		291			(6	)		(5,509	)		—			(5,224	)
Other liabilities		1,115			58			(58	)		—			1,115
Other, net		123			(434	)		(424	)		—			(735	)

		21,455			31,907			(7,698	)		(28,194	)		17,470

Cash Flows Provided (Used) by Investing Activities
Purchases of capital assets		(126	)		(7,115	)		(5,151	)		—			(12,392	)
Proceeds from sale of capital assets		5			379			74			—			458
Proceeds from sale of short-term investments		63,266			—			—			—			63,266
Acquisitions of businesses, net		—			(9,889	)		(179,778	)		—			(189,667	)

		63,145			(16,625	)		(184,855	)		—			(138,335	)


(In thousands)	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Total
Cash Flows Provided (Used) by Financing Activities
Proceeds provided by stock issuance under employee stock plans		2,351			—			—			—		2,351
Excess tax benefits from stock option exercises		359			—			—			—		359
Net change in credit facilities		14,000			—			2,188			—		16,188
Proceeds from issuance of long-term debt		100,000			—			—			—		100,000
Repayment of long-term debt		(66,037	)		(324	)		(4,195	)		—		(70,556	)
Net change in intercompany financing		(190,686	)		(10,945	)		173,437			28,194		—

		(140,013	)		(11,269	)		171,430			28,194		48,342

Effect of Foreign Exchange Rates on Cash		—			(78	)		553			—		475


Net Increase (Decrease) in Cash and Cash Equivalents		(55,413	)		3,935			(20,570	)		—		(72,048	)
Cash and Cash Equivalents – Beginning of Period		75,364			2,154			40,786			—		118,304

Cash and Cash Equivalents – End of Period	$	19,951		$	6,089		$	20,216		$	—	$	46,256

Condensed Consolidating Balance Sheet as of October 28, 2005.


(In thousands)	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Total
Assets
Current Assets
Cash and cash equivalents	$	75,364	$	2,154	$	40,786		$	—		$	118,304
Cash in escrow		11,918		—		—			—			11,918
Short-term investments		62,656		—		—			—			62,656
Accounts receivable, net		671		96,931		52,149			—			149,751
Inventories		—		84,351		46,118			—			130,469
Deferred income tax benefits		25,115		102		1,651			—			26,868
Prepaid expenses		179		4,481		2,873			—			7,533
Other current assets		—		—		—			—			—

Total Current Assets		175,903		188,019		143,577			—			507,499

Property, Plant & Equipment, Net		2,687		95,001		40,526			—			138,214
Goodwill		—		191,919		69,248			—			261,167
Intangibles, Net		107		82,196		83,815			—			166,118
Debt Issuance Costs, Net		5,144		—		—			—			5,144
Deferred Income Tax Benefits		11,257		—		2,063			—			13,320
Other Assets		2,638		16,266		4,882			—			23,786
Amounts Due (To) From Subsidiaries		134,964		64,835		—			(199,799	)		—
Investment in Subsidiaries		615,599		129		(128	)		(615,600	)		—

Total Assets	$	948,299	$	638,365	$	343,983		$	(815,399	)	$	1,115,248


(In thousands)	Parent		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Total
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	990	$	19,877		$	20,586	$	—		$	41,453
Accrued liabilities		38,620		53,246			27,249		—			119,115
Credit facilities		—		—			2,031		—			2,031
Current maturities of long-term debt		70,000		—			934		—			70,934
Federal and foreign income taxes		3,634		76			5,088		—			8,798

Total Current Liabilities		113,244		73,199			55,888		—			242,331

Long-Term Debt, Net		173,988		—			1,694		—			175,682
Deferred Income Taxes		30,880		(10	)		15,551		—			46,421
Other Liabilities		9,323		11,209			6,705		—			27,237
Amounts Due To (From) Subsidiaries		—		—			195,829		(195,829	)		—
Minority Interest		—		—			2,713		—			2,713
Shareholders’ Equity		620,864		553,967			65,603		(619,570	)		620,864

Total Liabilities and Shareholders’ Equity	$	948,299	$	638,365		$	343,983	$	(815,399	)	$	1,115,248

Condensed Consolidating Statement of Operations for the three month period ended April 29, 2005.


(In thousands)	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Net Sales	$	—		$	141,165		$	75,528		$	(5,101	)	$	211,592
Cost of Sales		—			97,380			50,775			(5,101	)		143,054

		—			43,785			24,753			—			68,538
Expenses
Selling, general and administrative		—			24,143			11,694			—			35,837
Research, development and engineering		—			4,191			5,675			—			9,866

Total Expenses		—			28,334			17,369			—			45,703


Operating Earnings From Continuing Operations		—			15,451			7,384			—			22,835

Other (income) expense		50			16			(38	)		—			28
Interest income		(4,027	)		(571	)		(666	)		4,239			(1,025	)
Interest expense		4,492			1,033			2,811			(4,239	)		4,097

Other Expense, Net		515			478			2,107			—			3,100

Income (Loss) From Continuing Operations Before Taxes		(515	)		14,973			5,277			—			19,735
Income Tax Expense (Benefit)		(165	)		4,470			1,669			—			5,974

Income (Loss) From Continuing Operations Before Minority Interest		(350	)		10,503			3,608			—			13,761

Minority Interest		—			—			(35	)		—			(35	)

Income (Loss) From Continuing Operations		(350	)		10,503			3,573			—			13,726

Loss From Discontinued Operations, Net of Tax		—			(562	)		—			—			(562	)
Equity in Net Income of Consolidated Subsidiaries		13,514			—			—			(13,514	)		—

Net Income (Loss)	$	13,164		$	9,941		$	3,573		$	(13,514	)	$	13,164

Condensed Consolidating Statement of Operations for the six month period ended April 29, 2005.


(In thousands)	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Net Sales	$	—		$	266,494		$	143,846		$	(8,956	)	$	401,384
Cost of Sales		—			187,164			96,538			(8,956	)		274,746

		—			79,330			47,308			—			126,638
Expenses
Selling, general and administrative		—			42,422			24,023			—			66,445
Research, development and engineering		—			7,722			11,391			—			19,113

Total Expenses		—			50,144			35,414			—			85,558

Operating Earnings From Continuing Operations		—			29,186			11,894			—			41,080

Other expense		50			16			—			—			66
Interest income		(7,580	)		(1,696	)		(1,274	)		8,990			(1,560	)
Interest expense		8,981			2,565			6,223			(8,990	)		8,779

Other Expense, Net		1,451			885			4,949			—			7,285

Income (Loss) From Continuing Operations Before Taxes		(1,451	)		28,301			6,945			—			33,795
Income Tax Expense (Benefit)		(426	)		8,278			2,086			—			9,938

Income (Loss) From Continuing Operations Before Minority Interest		(1,025	)		20,023			4,859			—			23,857

Minority Interest		—			—			(48	)		—			(48	)

Income (Loss) From Continuing Operations		(1,025	)		20,023			4,811			—			23,809

Income From Discontinued Operations, Net of Tax		—			6,965			—			—			6,965
Equity in Net Income of Consolidated Subsidiaries		31,799			—			—			(31,799	)		—

Net Income (Loss)	$	30,774		$	26,988		$	4,811		$	(31,799	)	$	30,774

Condensed Consolidating Statement of Cash Flows for the six month period ended April 29, 2005.


(In thousands)	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Cash Flows Provided (Used) by Operating Activities
Net earnings (loss)	$	30,774		$	26,988		$	4,811		$	(31,799	)	$	30,774
Minority interest		—			—			49			—			49
Depreciation & amortization		—			11,059			7,449			—			18,508
Deferred income taxes		4,294			—			(2,464	)		—			1,830
Stock-based compensation		—			519			161			—			680
Gain on sale of discontinued operation		—			(9,456	)		—			—			(9,456	)
Loss on sale of building		—			59			—			—			59
Working capital changes, net of effect of acquisitions
Accounts receivable		1,549			8,019			(6,528	)		—			3,040
Inventories		—			(11,112	)		(3,423	)		—			(14,535	)
Prepaid expenses		107			(1,895	)		2,561			—			773
Accounts payable		(285	)		144			4,355			—			4,214
Accrued liabilities		442			1,226			(914	)		—			754
Federal & foreign income taxes		(4,837	)		5			5,304			—			472
Other liabilities		1,109			44			147			—			1,300
Other, net		665			(651	)		(696	)		—			(682	)

		33,818			24,949			10,812			(31,799	)		37,780

Cash Flows Provided (Used) by Investing Activities
Purchases of capital assets		(208	)		(6,669	)		(2,465	)		—			(9,342	)
Proceeds from sale of discontinued operation		—			21,421			—			—			21,421
Proceeds from sale of building		—			2,319			—			—			2,319
Proceeds from sale of capital assets		5			74			67			—			146
Purchase of short-term investments		(45,486	)		—			—			—			(45,486	)
Acquisitions of businesses, net		—			(3,346	)		—			—			(3,346	)

		(45,689	)		13,799			(2,398	)		—			(34,288	)


(In thousands)	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Total
Cash Flows Provided (Used) by Financing Activities
Proceeds provided by stock issuance under employee stock plans		2,435			—			—			—		2,435
Proceeds provided by sale of common stock		108,490			—			—			—		108,490
Net change in credit facilities		(5,000	)		—			576			—		(4,424	)
Repayment of long-term debt		(1,002	)		(57	)		(415	)		—		(1,474	)
Net change in intercompany financing		86			(39,445	)		7,560			31,799		—

		105,009			(39,502	)		7,721			31,799		105,027

Effect of Foreign Exchange Rates on Cash		211			(7	)		(498	)		—		(294	)


Net Increase (Decrease) in Cash and Cash Equivalents		93,349			(761	)		15,637			—		108,225
Cash and Cash Equivalents – Beginning of Period		6,859			2,353			20,267			—		29,479

Cash and Cash Equivalents – End of Period	$	100,208		$	1,592		$	35,904		$	—	$	137,704

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We view and operate our businesses in three segments: Avionics & Controls, Sensors & Systems and Advanced Materials. The Avionics & Controls segment designs and manufactures technology interface systems for military and commercial aircraft and land- and sea-based military vehicles, secure communications systems, specialized medical equipment, and other industrial applications. The Sensors & Systems segment produces high-precision temperature and pressure sensors, electrical power switching, control and data communication devices, micro-motors, motion control sensors, and other related systems, principally for aerospace and defense customers. The Advanced Materials segment develops and manufactures high-performance elastomer products used in a wide range of commercial aerospace and military applications and combustible ordnance components and electronic warfare countermeasure devices for military customers. Sales in all segments include domestic, international, defense and commercial customers.

Our current business and strategic plan focuses on the continued development of our products in three key technology segments: avionics and controls, sensors and systems and specialized high-performance elastomers and other complex materials, principally for the aerospace and defense markets. We are concentrating our efforts to expand our capabilities in these markets and to anticipate the global needs of our customers and respond to such needs with comprehensive solutions. These efforts focus on continuous research and new product development, acquisitions and establishing strategic realignments of operations to expand our capabilities as a more comprehensive supplier to our customers across our entire product offering. On March 24, 2006, we acquired all of the outstanding capital stock of Wallop Defence Systems Limited (Wallop), a manufacturer of military pyrotechnic countermeasure devices for U.K. £33.2 million in cash (approximately $57.9 million including acquisition costs and an adjustment based on the amount of indebtedness and net working capital as of closing). In addition, we may pay an additional purchase price up to U.K. £10.0 million or approximately $18.2 million, depending on the future financial performance of Wallop. The acquisition strengthens our international position in countermeasure devices. Wallop is included in our Advanced Materials segment. On December 16, 2005, we acquired all of the outstanding capital stock of Darchem Holdings Limited (Darchem), a manufacturer of thermally engineered components for critical aerospace applications for U.K. £68.6 million in cash (approximately $121.6 million including acquisition costs and an adjustment based on the amount of cash and net working capital of Darchem as of closing). Darchem holds a leading position in its niche market and fits our engineered-to-order model and is included in our Advanced Materials segment.

On January 28, 2005, we completed the sale of the outstanding stock of our wholly owned subsidiary Fluid Regulators Corporation (Fluid Regulators), which was included in our Sensors & Systems segment, for approximately $21.4 million. As a result of the sale, we

recorded a gain of approximately $7.0 million, net of tax of $2.4 million, in the first fiscal quarter of 2005.

On May 13, 2005, we closed a small unit in our Other segment and incurred $0.4 million in severance, net of $0.2 million in tax, in the second quarter of fiscal 2005.

The dispositions and closure described above are reported as discontinued operations and the consolidated financial statements for all prior periods have been adjusted to reflect this presentation.

Results of Continuing Operations

Three Month Period Ended April 28, 2006 Compared to Three Month Period Ended April 29, 2005

Sales for the second fiscal quarter increased 17.2% compared with the prior-year period. Sales by segment were as follows:


(In thousands)	Incr./(Decr.) from prior year period	Three Months Ended
	Incr./(Decr.) from prior year period	April 28, 2006		April 29, 2005
Avionics & Controls	10.6%	$	71,864	$	64,990
Sensors & Systems	(1.6)%		83,177		84,541
Advanced Materials	49.7%		92,898		62,061

Total Net Sales		$	247,939	$	211,592

The 10.6% increase in Avionics & Controls principally reflected incremental sales from the Palomar acquisition in the third fiscal quarter of 2005 and increased sales volumes of cockpit controls due to new OEM programs. These sales increases were partially offset by a decrease in sales of medical devices due to one customer’s decision to source its requirements from a low-cost country. We expect to replace this business with new or existing customers who meet our targeted profile of requiring highly engineered solutions, generally lower production volumes and higher product mix.

The 1.6% decrease in sales of Sensors & Systems principally reflected lower motion control distribution sales to the British Ministry of Defence (British MoD). In addition, pressure sensor sales in the second fiscal quarter of 2005 were enhanced by a retrofit program. Sensors & Systems sales also reflected a weaker U.K. pound and euro relative to the U.S. dollar, as the average exchange rate from the U.K. pound and euro to the U.S. dollar decreased from 1.89 and 1.31 in the second quarter of fiscal 2005 to 1.76 and 1.21 in the second quarter of fiscal 2006. These decreases in sensors sales were partially offset by increased sales of electrical power switching devices from new OEM programs.

The 49.7% increase in Advanced Materials reflected $20.1 million in incremental sales from the acquisitions of Darchem and Wallop and higher sales of combustible ordnance, countermeasure devices and elastomer material to aerospace and defense customers.

Overall, for the second quarter of fiscal 2006, gross margin as a percentage of sales was 32.6% compared with 32.4% for the second quarter of fiscal 2005. Avionics & Controls segment gross margin was 35.1% and 33.7% for the second fiscal quarter of 2006 and 2005, respectively. Avionics & Controls gross margin increased from the prior-year period due to a higher mix of cockpit control sales and stronger medical equipment gross margins due to improved cost control and higher unit prices. Sensors & Systems segment gross margin was 34.0% and 35.3% for the second fiscal quarter of 2006 and 2005, respectively. The decrease in gross margin reflected

lower after-market spares sales, production inefficiencies and increased rent, maintenance and energy expenses at our pressure and temperature sensor operations. Gross margin was also impacted by the effect of our hedging activities related to U.S. dollar denominated sales. Advanced Materials segment gross margin was 29.3% and 27.0% for the second fiscal quarter of 2006 and 2005, respectively. Gross margin was favorably impacted by increased sales of our higher gross margin combustible ordnance and elastomer clamping devices as well as improved operating efficiencies at our flare countermeasure operations. The prior-year period gross margin was negatively impacted by lower sales volumes of combustible ordnance and incremental start-up costs on certain flare countermeasure devices.

Selling, general and administrative expenses (which include corporate expenses) totaled $41.0 million and $35.8 million for the second fiscal quarter of 2006 and 2005, respectively, or 16.5% of sales for the second fiscal quarter of 2006 compared with 16.9% for the prior-year period. Selling, general and administrative expenses include stock option expense of $1.3 million in the second fiscal quarter of 2006, resulting from accounting for stock option expense under Financial Accounting Standards No. 123(R), “Share-Based Payment,” (Statement 123(R)). For information on our adoption of Statement 123(R), see Note 11 of the condensed consolidated financial statements. In the second fiscal quarter of 2005, we recorded $1.4 million of stock option expense under the variable method of accounting. The overall increase in the amount of selling, general and administrative expenses primarily reflected incremental selling, general and administrative expenses as a result of the Darchem and Palomar acquisitions. The decrease in selling, general and administrative expenses as a percentage of sales principally reflected higher sales volumes without a proportional increase in the expense during the current fiscal quarter. Our selling, general and administrative expenses are typically fixed.

Research, development and engineering spending was $12.9 million, or 5.2% of sales, for the second fiscal quarter of 2006 compared with $9.9 million, or 4.7% of sales, for the second fiscal quarter of 2005. Darchem’s research, development and engineering spending is relatively low as a percentage of sales compared to our other operating units. If research, development and engineering spending as a percentage of sales is calculated excluding Darchem, the percentage is 5.6%, which is considered by management to be a better comparison to the prior year. The increase in research, development and engineering principally reflected spending on new programs including the A400 primary power distribution assembly, TP400 engine sensors, 787 overhead panel control and 787 environmental control programs. Research, development and engineering is net of a $0.5 million government subsidy due from France in the second quarter of fiscal 2006. Research, development and engineering spending is expected to increase for the balance of the year before returning to historical levels.

Segment earnings (operating earnings excluding corporate expenses) for the second fiscal quarter of 2006 totaled $34.3 million, compared with $29.1 million for the second fiscal quarter in 2005. Avionics & Controls segment earnings were $11.3 million for the second fiscal quarter of 2006 compared with $9.2 million for the second fiscal quarter of 2005, principally reflecting strong results from our cockpit control and medical equipment operations. We believe that the earnings growth acceleration we experienced from our medical equipment operations during the second

fiscal quarter of 2006 may moderate in the second half of the fiscal year. Stock option expense was $0.2 million in the second fiscal quarter of 2006 compared with $0.4 million in the second fiscal quarter of 2005.

Sensors & Systems segment earnings were $7.3 million for the second quarter of fiscal 2006 compared with $11.2 million for the second quarter of fiscal 2005. The decrease in earnings reflects a production ramp up of industrial sensors for a relatively new program and manufacturing inefficiencies and delayed shipments due to employee turnover. Management expects these matters to be resolved by the fourth quarter of fiscal 2006. Sensors & Systems earnings were also impacted by an estimated $1.0 million charge as a result of a customer contract termination. Stock option expense was $0.1 million in the second fiscal quarter of 2006 compared with $0.2 million in the second fiscal quarter of 2005.

Advanced Materials segment earnings were $15.7 million for the second fiscal quarter of 2006 compared with $8.7 million for the second fiscal quarter of 2005. Advanced Materials earnings were principally enhanced by increased earnings at our combustible ordnance operations due to strong demand and improved recovery of fixed overhead expenses. Additionally, Advanced Materials earnings reflected incremental earnings from the Darchem acquisition and improved results at our elastomer clamping devices’ operations. In the second quarter of fiscal 2005, earnings at our combustible ordnance and countermeasure operations were impacted by production inefficiencies on new countermeasure flare products and higher operating expenses. Stock option expense was $0.1 million in the second fiscal quarter of 2006 compared with $0.5 million in the second fiscal quarter of 2005.

Interest expense for the second fiscal quarter of 2006 was $5.8 million compared with $4.1 million for the second fiscal quarter of 2005, reflecting increased borrowings to finance acquisitions.

The effective income tax rate for the second fiscal quarter of 2006 was 28.3% (before a $2.0 million reduction of previously estimated tax liabilities) compared with 30.3% for the second fiscal quarter of 2005. On April 25, 2006 we received a Notice of Proposed Adjustment (NOPA) from the State of California Franchise Tax Board covering, among other items, the examination of research and development tax credits for fiscal years 1997 through 2002. As a result of receiving the NOPA we reduced previously estimated tax liabilities by $2.0 million. The effective tax rate differed from the statutory rate, as both years benefited from various tax credits and benefits and certain foreign interest expense deductions. While the second fiscal quarter of 2006 effective tax rate was impacted by the expiration of the U.S. Research and Experimentation Credit at December 31, 2005, the impact was partially offset by increased benefits from various tax credits and foreign interest deductions.

New orders for the second fiscal quarter of 2006 were $335.1 million compared with $263.4 million for the same period in 2005, an increase of 27.2%. The increase in orders principally reflects increased orders for Avionics & Controls and the Darchem and Wallop acquisitions.

Six Month Period Ended April 28, 2006 Compared to Six Month Period Ended April 29, 2005

Year-to-date sales increased 13.0% compared with the prior-year period. Sales by segment were as follows:


(In thousands)	Incr./(Decr.) from prior year period	Six Months Ended
	Incr./(Decr.) from prior year period	April 28, 2006		April 29, 2005
Avionics & Controls	6.7%	$	134,306	$	125,845
Sensors & Systems	(1.4)%		156,647		158,915
Advanced Materials	39.5%		162,651		116,624

Total Net Sales		$	453,604	$	401,384

The 6.7% increase in sales of Avionics & Controls principally reflected incremental sales from the Palomar acquisition and increased sales of cockpit control devices. These sales increases were partially offset by a decrease in sales of medical devices due to one customer’s decision to source its requirements from a low-cost country. We expect to replace this business with new or existing customers who meet our targeted profile of requiring highly engineered solutions, generally lower production volumes, and higher product mix.

The 1.4% decrease in sales of Sensors & Systems principally reflected lower motion control distribution sales to the British Ministry of Defence (British MoD). In addition, pressure sensor sales in the first six months of fiscal 2005 were enhanced by a retrofit program. Sensors & Systems sales also reflected a weaker U.K. pound and euro relative to the U.S. dollar, as the average exchange rate from the U.K. pound and euro to the U.S. dollar decreased from 1.89 and 1.31 in the six month period ended April 29, 2005 to 1.75 and 1.20 in the six month period ended April 28, 2006. These decreases in sensors sales were partially offset by increased sales of electrical power switching devices from new OEM programs.

The 39.5% increase in Advanced Materials reflected $27.4 million in incremental sales from the acquisitions of Darchem and Wallop and higher sales of combustible ordnance, countermeasure devices and elastomer material to aerospace and defense customers.

Overall, gross margin as a percentage of sales was 31.7% and 31.6% for the first six months of fiscal 2006 and 2005, respectively. Avionics & Controls segment gross margin was 35.4% and 32.6% for the first six months of fiscal 2006 and 2005, respectively, reflecting a higher mix of cockpit control sales, increased pricing and an improved recovery of fixed expenses. Sensors & Systems segment gross margin was 33.2% and 35.0% for the first six months of fiscal 2006 and 2005, respectively. The decrease in gross margin reflected lower after-market spares sales, production inefficiencies and increased rent, maintenance and energy expenses at our pressure and temperature sensor operations. Gross margin was also impacted by the effect of our hedging activities related to U.S. dollar-denominated sales. Advanced Materials segment gross margin was 27.0% and 25.7% for the first six months of fiscal 2006 and 2005, respectively. Gross

margin was favorably impacted by higher sales of combustible ordnance and elastomer clamping devices as well as improved operating efficiencies at our flare countermeasure operations.

Selling, general and administrative expenses (which include corporate expenses) totaled $76.9 million and $66.4 million for the first six months of fiscal 2006 and 2005, respectively, or 16.9% of sales, for the first six months of fiscal 2006 compared with 16.6% for the prior-year period. Selling, general and administrative expenses include stock option expense of $2.6 million in the first six months of fiscal 2006, resulting from accounting for stock option expense under Statement 123(R). For information on our adoption of Statement 123(R), see Note 11 of the condensed consolidated financial statements. In the first six months of fiscal 2005, we recorded $0.7 million in stock option expense under the variable method of accounting. The overall increase in the amount of selling, general and administrative expenses primarily reflected incremental selling, general and administrative expenses as a result of the Darchem and Palomar acquisitions. Our selling, general and administrative expenses are typically fixed.

Research, development and engineering expenses were $23.3 million, or 5.1% of sales for the first six months of fiscal 2006 compared with $19.1 million, or 4.8% of sales, for the first six months of fiscal 2005. Darchem’s research, development and engineering spending is relatively low as a percentage of sales compared to other operating units. If research, development and engineering spending as a percentage of sales is calculated excluding Darchem, the percentage is 5.4%, which is considered by management to be a better comparison to the prior year. The increase in research, development and engineering principally reflected spending on new programs including the A400 primary power distribution assembly, TP400 engine sensors, 787 overhead panel control and 787 environmental control programs. Research, development and engineering is net of a $2.3 million government subsidy due from France in the first six months of fiscal 2006. Research, development and engineering spending is expected to increase for the balance of the year before returning to historical levels.

Segment earnings (operating earnings excluding corporate expenses) for the first six months of fiscal 2006 totaled $57.6 million, compared with $51.4 million for the prior-year period. Avionics & Controls segment earnings were $20.7 million for the first six months of fiscal 2006 compared with $18.6 million in the prior-year period and reflected strong earnings from our cockpit control operations and lower earnings from our medical device operations due to decreased sales volumes as described above. Stock option expense was $0.4 million and $0.2 million in the first six months of fiscal 2006 and 2005, respectively.

Sensors & Systems segment earnings were $13.1 million for the first six months of fiscal 2006 compared with $17.6 million in the prior-year period. The decrease in earnings reflects a production ramp up of industrial sensors for a relatively new program and manufacturing inefficiencies and delayed shipments due to employee turnover. Sensors & Systems earnings were also impacted by an estimated $1.0 million charge as a result of a customer contract termination. Additionally, fiscal 2005 results benefited from a retrofit program. Stock option expense was $0.3 million and $0.1 million in the first six months of fiscal 2006 and 2005, respectively.

Advanced Materials segment earnings were $23.8 million for the first six months of fiscal 2006 compared with $15.2 million for the prior-year period. Advanced Materials earnings were principally enhanced by increased earnings at our combustible ordnance operations due to strong demand and improved recovery of fixed overhead expenses. Additionally, Advanced Materials earnings reflected incremental earnings from the Darchem acquisition and improved results at our elastomer clamping devices’ operations. Stock option expense was $0.3 million in the first six months of fiscal 2006 and 2005.

Interest expense for the first six months of fiscal 2006 was $10.3 million compared with $8.8 million for the prior-year period, reflecting increased borrowings to finance acquisitions.

The effective income tax rate for the first six months of fiscal 2006 was 29.3%, (before a $2.9 million reduction of previously estimated tax liabilities) compared with 29.4% for the first six months of fiscal 2005. The effective tax rate differed from the statutory rate, as both years benefited from various tax credits and certain foreign interest expense deductions. On April 25, 2006 we received a Notice of Proposed Adjustment (NOPA) from the State of California Franchise Tax Board covering, among other items, the examination of research and development tax credits for fiscal years 1997 through 2002. As a result of receiving the NOPA we reduced $2.0 million of previously estimated tax liabilities. Additionally, as a result of a favorable tax audit which was concluded on December 23, 2005, we reduced previously estimated tax liabilities by $0.9 million. While the effective tax rate in the first six months of fiscal 2006 was impacted by the expiration of the U.S. Research and Experimentation Credit at December 31, 2005, the impact was partially offset by increased benefits from various tax credits and foreign interest deductions.

New orders for the first six months of fiscal 2006 were $604.2 million compared with $467.2 million for the same period in fiscal 2005. Backlog at April 28, 2006, was $633.4 million compared with $489.6 million at April 29, 2005. The increase in backlog principally reflected the Darchem, Wallop and Palomar acquisitions. Approximately $270.1 million in backlog is scheduled for delivery after fiscal 2006. Most orders in backlog are subject to cancellation until delivery.

Liquidity and Capital Resources

Cash and cash equivalents and short-term investments at April 28, 2006 totaled $46.3 million, a decrease of $134.7 million from October 28, 2005. Net working capital decreased to $231.6 million at April 28, 2006 from $265.2 million at October 28, 2005. Sources of cash flows from operating activities principally consist of cash received from the sale of products offset by cash payments for material, labor and operating expenses. Cash flows from operating activities were $17.5 million and $37.8 million in the first six months of fiscal 2006 and 2005, respectively. The decrease principally reflected lower cash flows from operating activities of our non-U.S. units, the $2.3 million research and development subsidy from France not yet received in cash and lower cash collections related to our recent U.K.-based acquisitions. Repayment terms on U.K. trade accounts receivable are generally longer than U.S.-based companies. Additionally, the decrease in cash received from customers reflected slower cash receipts from a China-based customer. The decrease in cash flows from operating activities also reflects increased purchases of inventory, higher payments of interest, the $2.2 million make-whole payment, and increased cash payments for incentive compensation, which is paid annually in December. The increase in cash for investing activities mainly reflected cash paid for acquisitions of businesses. Additionally, the prior-year period included $21.4 million in proceeds from the sale of our discontinued operations. The decrease in cash provided by financing activities principally reflected the net proceeds of $108.5 million from our public offering of 3.7 million shares of common stock completed in the prior-year period. Additionally, the decrease reflected the repayment of our $30.0 million 6.40% Senior Notes in accordance with terms and the $40.0 million prepayment of our 6.77% Senior Notes in the first fiscal quarter of 2006.

Capital expenditures, consisting of machinery, equipment and computers, are anticipated to be approximately $22.0 million during fiscal 2006, compared with $23.8 million expended in fiscal 2005. Capital expenditures for the first six months of fiscal 2006 totaled $12.4 million, primarily for machinery and equipment and enhancements to information systems.

Total debt at April 28, 2006 was $301.2 million and consisted of $175.0 million of Senior Subordinated Notes, $104.0 million term loan facility, $14.0 million under our U.S. credit facility, and $8.2 million of various foreign currency debt agreements, including capital lease obligations. The Senior Subordinated Notes mature June 15, 2013, bear interest at 7.75% and contain customary covenants, including restrictions on incurrence of additional debt in certain circumstances, repurchase of our common stock, declaration of dividends, retirement or redemption of subordinated debt, creation of liens and certain asset dispositions. We are in compliance with these covenants and do not view the restrictions as limiting our planned activities. In September 2003 we entered into an interest rate swap agreement on $75 million of our Senior Subordinated Notes due in 2013. The swap agreement exchanged the fixed rate for a variable interest rate on $75 million of the $175 million principal amount outstanding. On November 15, 2005, the $30.0 million 6.4% Senior Notes matured and were paid. Additionally, on November 15, 2005, we prepaid the outstanding principal amount of $40.0 million of our 6.77% Senior Notes due November 15, 2008. Under the terms of the Note Purchase Agreement, we paid an additional $2.2 million make-whole payment, which was recorded as a loss on

extinguishment of debt in the first quarter of fiscal 2006. On February 10, 2006, we amended our credit agreement to provide a $100.0 million term loan facility, which may be drawn in U.S. dollars, U.K. pounds or euros. In addition, the amendment provides that up to $25.0 million of the credit facility and up to $50.0 million of the letter of credit may be drawn in U.K. pounds or euros in addition to U.S. dollars. On February 10, 2006 we borrowed U.K. £57.0 million, or approximately $100 million, under the term loan facility. We used the proceeds from the loan as working capital for our U.K. operations and to repay a portion of our outstanding borrowings under our revolving credit facility. The principal amount of the loan is payable quarterly commencing on March 31, 2007 through the termination date of November 14, 2010 according to a payment schedule by which 1.25% of the principal amount is paid in each quarter of 2007, 2.50% in each quarter of 2008, 5.00% in each quarter of 2009 and 16.25% in each quarter of 2010. The loan accrues interest at a variable rate based on the British Bankers Association Interest Settlement Rate for deposits in U.K. pounds plus an additional margin amount that ranges from 1.125% to 0.500% depending upon our leverage ratio. At February 10, 2006, the initial interest rate on the term loan was 5.33%. We also entered into an interest rate swap agreement on the full principal amount of the term loan, exchanging the variable interest rate for a fixed interest rate of 4.755% plus an additional margin amount determined by reference to the Company’s leverage ratio. In addition, in November 2005, we collateralized a $9.9 million letter of credit with an equivalent amount of cash and cash equivalents.

We believe cash on hand and funds generated from operations are adequate to service operating cash requirements and capital expenditures through April 2007. In addition, we believe that we have adequate access to capital markets to fund future acquisitions.

Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should” or “will” or the negative of such terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risk factors set forth in “Forward-Looking Statements and Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended October 28, 2005, that may cause our or the industry’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. You should not place undue reliance on these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance or achievements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included or incorporated by reference into this report are made only as of the date hereof. We do not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect future events or developments.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

To the extent that sales are transacted in a foreign currency, we are subject to foreign currency fluctuation risk. Furthermore, we have assets denominated in foreign currencies that are not offset by liabilities in such foreign currencies. Although we own significant operations in France, Germany and the United Kingdom, historically we have not experienced material gains or losses due to interest rate or foreign exchange fluctuations. As more fully described in the Liquidity and Capital Resources section set forth in Part I, Item 2 “Management Discussion and Analysis of Financial Condition and Results of Operations” of this report, on February 10, 2006 we borrowed U.K. £57.0 million, or approximately $100.0 million, under the term loan facility. In addition, we designated the obligation as a derivative instrument to hedge our net investment in Darchem, a U.K. operation. Darchem has $17.3 million in firmly committed sales contracts denominated in U.S. dollars, with maturities of $7.3 million and $10.0 million in fiscal years ended 2006 and 2007, respectively. Darchem also uses forward foreign currency exchange agreements to hedge these U.S. dollar-denominated sales. The notional amount for contracts maturing in fiscal 2006 and 2007 aggregated $4.6 million and $5.0 million, respectively, at April 28, 2006. The average contract rate for contracts maturing in fiscal 2006 and 2007 was 1.79 and 1.80, respectively.

Item 4.

Controls and Procedures

Our principal executive and financial officers evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of April 28, 2006. Based upon that evaluation, they concluded as of April 28, 2006 that our disclosure controls and procedures were effective to ensure that information we are required to disclose in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within time periods specified in Securities and Exchange Commission rules and forms. In addition, our principal executive and financial officers concluded as of April 28, 2006 that our disclosure controls and procedures are also effective to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including to our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

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

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

From time to time we are involved in legal proceedings arising in the ordinary course of business. We believe that adequate reserves for these liabilities have been made and that there is no litigation pending that could have a material adverse effect on our results of operations and financial condition.

Item 4.

Submission of Matters to a Vote of Security Holders

At our annual meeting of shareholders held on March 1, 2006, the shareholders acted on the following proposals:

a)	The election of the following directors for three-year terms expiring at the 2009 annual meeting:


	Votes Cast
Name	For	Withheld
Ross J. Centanni	19,972,891	2,031,020
Robert S. Cline	19,301,611	2,702,300
James L. Pierce	19,917,994	2,085,917

Current directors whose terms are continuing after the 2006 annual meeting are Lewis E. Burns, John F. Clearman, Robert W. Cremin, Anthony P. Franceschini, Charles R. Larson, and Jerry D. Leitman.

b)	The approval of amendments to the Company’s 2004 Equity Incentive Plan to, among other things, authorize the issuance of an additional 1,000,000 shares of the Company’s Common Stock:

There were 5,389,929 broker non-votes on the above proposal.

c)	The approval of amendments to the Company’s 2002 Employee Stock Purchase Plan (the ESPP) to authorize the issuance of an additional 150,000 shares of the Company’s Common Stock:

There were 5,389,929 broker non-votes on the above proposal.

Item 6.

Exhibits


		10.2		Amendment No. 4 to Credit Agreement dated as of February 10, 2006 by and among Esterline Technologies Corporation, the financial institutions identified therein and Wachovia Bank, National Association, as Administrative Agent. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated February 10, 2006 [Commission File Number 1-6357].)

		10.33		Esterline Technologies Corporation 2002 Stock Purchase Plan. (Incorporated by reference to Annex D in the definitive form of the Company’s Proxy Statement relating to its 2006 Annual Meeting of Shareholders held on March 1, 2006 filed on January 24, 2006 [Commission File Number 1-6357].)

		10.36		Esterline Technologies Corporation 2004 Equity Incentive Plan. (Incorporated by reference to Annex C in the definitive form of the Company’s Proxy Statement relating to its 2006 Annual Meeting of Shareholders held on March 1, 2006 filed on January 24, 2006 [Commission File Number 1-6357].)

		10.38		Lease Agreement, dated November 29, 2005 between Lordbay Investments Limited, Darchem Engineering Limited and Darchem Holdings Limited relating to premises located at Units 4 and 5 Eastbrook Road, London Borough of Gloucestershire Gloucester.

		10.41		Amendment No. 1 dated as of November 23, 2005 to Lease Agreement dated as of March 1, 1994 between Highland Industrial Park, Inc. and Armtec Countermeasures Company.

		11		Schedule setting forth computation of basic and diluted earnings per common share for the three and six month periods ended April 28, 2006 and April 29, 2005.

		31.1		Certification of Chief Executive Officer.

		31.2		Certification of Chief Financial Officer.

		32.1		Certification (of Robert W. Cremin) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

		32.2		Certification (of Robert D. George) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

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


	ESTERLINE TECHNOLOGIES CORPORATION
	(Registrant)

Dated: June 6, 2006	By:	/s/ Robert D. George
		Robert D. George
		Vice President, Chief Financial Officer,
		Secretary and Treasurer
		(Principal Financial Officer)