8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

November 19, 2015

Date of Report (Date of earliest event reported)

ESTERLINE TECHNOLOGIES CORPORATION

(Exact Name of Registrant as Specified in Charter)

Delaware	001-06357	13-2595091
(State or Other Jurisdiction of Incorporation)	(Commission File No.)	(IRS Employer Identification No.)
500-108th Avenue NE, Bellevue, Washington		98004
(Address of principal executive offices)		(Zip Code)

(425) 453-9400

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On November 19, 2015, Esterline Technologies Corporation (“Esterline”) issued a press release announcing financial results for the two months and 11-month fiscal year ended October 2, 2015. Esterline’s reported fiscal periods were shortened to a two-month and 11-month transition period ended on October 2, 2015, due to the fact Esterline changed its fiscal year to the twelve months ending the last Friday in September, effective beginning with the year ending on September 30, 2016. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. In addition, supplemental information regarding the financial results for periods presented in the press release is attached hereto as Exhibit 99.2. The press release and the supplemental financial information should be read in conjunction with the note regarding forward-looking statements, which is included in the text of the press release and as part of the supplemental financial information.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Press release announcing financial results issued by Esterline Technologies Corporation dated November 19, 2015.
99.2	Supplemental Financial Information dated November 19, 2015.

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
Dated: November 19, 2015	By:	/s/ ROBERT D. GEORGE
	Name:	Robert D. George
	Title:	Chief Financial Officer, Vice President &
		Corporate Development

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release announcing financial results issued by Esterline Technologies Corporation dated November 19, 2015.
99.2	Supplemental Financial Information dated November 19, 2015.

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact: Julie Albrecht

+1 425-453-9400

ESTERLINE REPORTS FISCAL 2015 FOURTH QUARTER AND FULL-YEAR RESULTS

• Revenue of $349.6 million for the two-month fiscal fourth quarter

• Earnings from continuing operations of $20.7 million, or $0.69 per diluted share

• Adjusted earnings from continuing operations of $39.9 million, or $1.33 per diluted share

• Full-year free cash flow conversion of 159% of net income

• Company issues fiscal 2016 guidance

BELLEVUE, Wash., November 19, 2015—Esterline Corporation (NYSE: ESL) (www.esterline.com), a leading specialty manufacturer serving the global aerospace and defense markets, today reported results for the 2015 two-month fiscal fourth quarter and 11-month fiscal year ended October 2, 2015. All amounts for the fourth quarter and full year periods of fiscal 2014 are presented for the two months and 11 months ended September 26, 2014. In the fourth quarter of fiscal 2015, the company reported that consolidated revenue increased 11.6% to $349.6 million compared with the comparable year-ago period of $313.2 million. Higher revenue was attributable to an additional week in the fourth quarter of fiscal 2015 and the inclusion of revenue from the defense, aerospace and training display business (DAT) acquired from Barco N.V. in the second quarter of fiscal 2015. These factors were partially offset by a negative foreign exchange impact in the fourth quarter of fiscal 2015 compared with 2014. Excluding these factors, organic sales were relatively unchanged.

Earnings from continuing operations in the fiscal fourth quarter of 2015 were $20.7 million, or $0.69 per diluted share, compared with fourth quarter fiscal 2014 earnings from continuing operations of $20.0 million, or $0.63 per diluted share.

Adjusted earnings from continuing operations for the fiscal fourth quarter in 2015 were $39.9 million, or $1.33 per diluted share. As previously noted by the company, adjusted results exclude $0.17 per diluted share related to integration and compliance activities, $0.16 per diluted share related to the financial results of the DAT business, and $0.31 per diluted share in conjunction with debt refinancing activity (see Table 1). In the prior-year period, the company would have reported adjusted earnings from continuing operations of $23.5 million, or $0.74 per diluted share.

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Page 2 of 10 Esterline Reports 2015 Fiscal Fourth Quarter and Full-Year Financial Results

Curtis Reusser, Esterline’s Chief Executive Officer, said, “2015 marked an important year for Esterline, as we navigated through strategic initiatives that touched many aspects of our business. Operationally this included continued progress on our accelerated integration, strategic sourcing and continuous improvement activities as well as reshaping our business portfolio. Also, we refinanced our outstanding debt, adjusted our reporting calendar to better align with our industry, and returned $260 million of cash to shareholders through our share repurchase program.”

Reusser continued, “While 2015 was a challenging year by many measures, I’m pleased with the focus of our teams to successfully execute on our plans and finish on a strong note.”

Table 1: Effect of Certain Items on 4^th Fiscal Quarter 2015 Earnings from Continuing Operations

	$ millions		EPS
Earnings – U.S. GAAP	$	20.7	$	0.69
Accelerated Integration Costs		1.6		0.05
Compliance Costs		3.3		0.12
DAT Net Loss		5.0		0.16
Bond Redemption Costs		9.3		0.31
Adjusted Earnings	$	39.9	$	1.33

Including discontinued operations, net earnings for the nine-week fiscal fourth quarter of 2015 were $3.0 million, or $0.10 per diluted share, compared with a loss of $31.4 million, or $(0.98) per diluted share, in the comparable period last year. Net earnings in the fourth quarter of fiscal 2015 included a $17.7 million loss from discontinued operations, while the prior year included a $51.5 million loss from discontinued operations.

For the 11-month fiscal year of 2015, the company reported revenues of $1.77 billion compared with $1.80 billion in the comparable prior-year period. Fiscal 2015 earnings from continuing operations were $96.7 million, or $3.10 per diluted share. In the comparable period of 2014, the company would have reported earnings from continuing operations of $133.7 million, or $4.12 per diluted share. Adjusted earnings from continuing operations in fiscal 2015 were $145.5 million, or $4.67 per diluted share, excluding the discrete items shown in Table 2. Adjusted earnings in the comparable period of 2014 were $154.0 million, or $4.75 per diluted share, excluding compliance and integration expenses.

Net income in fiscal 2015 was $59.6 million, or $1.91 per diluted share, compared with $74.5 million, or $2.29 per diluted share, in the prior year period. The loss from discontinued operations was $37.1 million in fiscal 2015 and $59.2 million in the comparable period of 2014.

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Page 3 of 10 Esterline Reports 2015 Fiscal Fourth Quarter and Full-Year Financial Results

Table 2: Effect of Certain Items on Full-Year 2015 Earnings from Continuing Operations

	$ millions			EPS
Earnings – U.S. GAAP	$	96.7		$	3.10
Accelerated Integration Costs		9.8			0.31
Compliance Costs		15.3			0.49
DAT Closing Expenses		4.7			0.15
DAT Net Loss		13.4			0.43
Long-term Contract Adjustments		7.7			0.25
Pension Expense		2.3			0.08
Bond Redemption Costs		9.3			0.30
Non-Income Tax Gain		(13.7	)		(0.44	)
Adjusted Earnings	$	145.5		$	4.67

New orders in the fiscal fourth quarter of 2015 were $306.8 million, compared with $273.7 million in the comparable prior-year period. Backlog at the end of fiscal 2015 was $1.2 billion, compared with $1.1 billion at the end of the fiscal year ending October 31, 2014.

Reported gross margin as a percentage of sales in the fourth quarter of fiscal 2015 was 32.7%, compared with 32.6% in the prior-year period. For the 2015 fiscal year, reported gross margin as a percentage of sales was 33.2%, compared with 34.7% in the prior year. The lower gross margins in fiscal 2015 were due to weaker sales mix and lower sales in Avionics & Controls and Advanced Materials.

Fiscal fourth quarter selling, general and administrative (SG&A) expenses as a percent of sales were 17.8%, compared with the prior-year level of 18.0%. For fiscal-year 2015, selling, general and administrative expenses as a percentage of sales were 19.5%, compared with 18.0% in the prior-year period. The higher rate in fiscal 2015 mainly reflected higher incremental SG&A expenses from the DAT acquisition and increased compliance expense.

Research, development and engineering (R&D) spending in the fourth quarter of fiscal 2015 was $13.1 million, or 3.7% of sales, compared with $14.1 million, or 4.5% of sales, in the prior-year period. Fiscal 2015 R&D spending was $91.5 million, or 5.2% of sales, compared with $88.7 million, or 4.9% of sales, in the comparable period of 2014.

The company’s income tax rate in the fourth quarter of fiscal 2015 was 1.3%, compared with 19.1% for the prior-year period. Lower taxes in the fourth quarter of 2015 reflect certain discrete tax benefits during the period, including those associated with the DAT net loss. The fiscal 2015 tax rate was 16.3%, compared with a tax rate of 21.0% during the comparable 2014 period. The company expects a tax rate in a range of 21% to 22% in fiscal 2016.

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Page 4 of 10 Esterline Reports 2015 Fiscal Fourth Quarter and Full-Year Financial Results

Cash flow from operations for fiscal 2015 was $144.3 million. Free cash flow conversion was 159% of net income. During fiscal 2015, the company repurchased 2.6 million shares of common stock for $259.5 million. Within the company’s $400 million share repurchase authorization, it has purchased a total of 2.8 million shares for a purchase price of approximately $290 million.

Guidance for Fiscal Year 2016

The company today also provided guidance for fiscal 2016 ending on September 30, 2016. Revenues for fiscal 2016 are expected to be in the range of $2.03 billion to $2.08 billion. Adjusted earnings per share from continuing operations, excluding anticipated integration and compliance costs, are expected to be in the range of $5.50 to $5.80 per diluted share.

Reusser said 2016 would not be without challenges, but that the company “…looked closely at our plan and took into account some of the uncertainty that still exists in several of our core markets when we developed this guidance.” He further commented that as the company completes its accelerated integration projects and continues to make progress within strategic sourcing, the Esterline operating system, the DAT integration and its trade compliance activities, incremental sales and profits should become more evident.

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 1-866-318-8611; outside the U.S., use 617-399-5130. The pass code for the call is: 23783176. The company has posted a presentation on its website (www.esterline.com) to provide additional information about its fourth fiscal quarter operational and financial results.

Non-GAAP Financial Information

This press release and the related presentation providing supplemental financial information include non-GAAP financial measures—adjusted earnings from continuing operations, adjusted earnings from continuing operations per diluted share, adjusted earnings before interest and tax (EBIT), adjusted sales, adjusted gross margin, and free cash flow conversion—that have not been calculated in accordance with generally accepted accounting principles in the U.S. (GAAP). Adjusted earnings from continuing operations consists of earnings from continuing operations attributable to Esterline less the costs associated with certain integration activities—including restructuring charges—and incremental compliance costs as well as discrete items associated with the acquisition of the DAT business in January 2015, a bond redemption completed in August 2015, adjustments to reserves on long-term contracts incurred in the periods presented, and unique amounts related to pension expense and a non-income tax gain, in each case, as further detailed in the tables below. Adjusted earnings from continuing operations per diluted share divides each element of adjusted earnings from continuing operations by the weighted average number of shares outstanding, diluted for the periods presented (except the fourth

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Page 5 of 10 Esterline Reports 2015 Fiscal Fourth Quarter and Full-Year Financial Results

quarter of fiscal 2014). EBIT is defined as operating earnings from continuing operations. Adjusted EBIT excludes the same costs excluded from adjusted earnings from continuing operations, as well as excluding from GAAP sales the DAT sales of $20.0 million in the fiscal 2015 fourth quarter and $82.5 million for full fiscal year 2015. Adjusted gross margin excludes the cost of certain integration activities and DAT’s gross margin from GAAP gross margin and excludes DAT’s sales from GAAP sales. Full-year 2015 free cash flow conversion is calculated by dividing free cash flow of $95.0 million (cash flow from operations of $144.3 million less capital expenditures of $49.3 million) by net earnings of $59.6 million. In accordance with the SEC’s requirements, the reconciliations of adjusted sales, adjusted gross margin, and adjusted EBIT to their respective GAAP measures are included in the supplemental information related to this press release. Below is the reconciliation of the non-GAAP adjusted earnings from continuing operations to the comparable GAAP earnings from continuing operations.

In millions, except per share amounts

	Two Months Ended Oct. 2, 2015				Two Months Ended Sept. 26, 2014
	Per Diluted Share				Per Diluted Share
Earnings from Continuing Operations Attributable to Esterline (GAAP), Net of Tax	$	20.7	$	0.69	$	20.0	$	0.63
Accelerated Integration Costs, Net of $0 and $0.7 Tax Benefit		1.6		0.05		2.4		0.07
Compliance Costs, Net of $0 and $0.3 Tax Benefit		3.3		0.12		1.1		0.04
DAT Net Loss, Net of $0.7 Tax Benefit		5.0		0.16		—		—
Bond Redemption Costs, Net of $1.8 Tax Benefit		9.3		0.31		—		—
Adjusted Earnings from Continuing Operations (non-GAAP), Net of Tax	$	39.9	$	1.33	$	23.5	$	0.74

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Page 6 of 10 Esterline Reports 2015 Fiscal Fourth Quarter and Full-Year Financial Results

In millions, except per share amounts

	Eleven Months Ended Oct. 2, 2015						Eleven Months Ended Sept. 26, 2014
	Per Diluted Share						Per Diluted Share
Earnings from Continuing Operations Attributable to Esterline (GAAP), Net of Tax	$	96.7		$	3.10		$	133.7	$	4.12
Accelerated Integration Costs, Net of $2.0 and $3.7 Tax Benefit		9.8			0.31			13.8		0.43
Compliance Costs, Net of $3.0 and $1.8 Tax Benefit		15.3			0.49			6.5		0.20
DAT Closing Expenses, Net of $1.3 Tax Benefit		4.7			0.15			—		—
DAT Net Loss, Net of $2.6 Tax Benefit		13.4			0.43			—		—
Long-term Contract Adjustments, Net of $2.2 Tax Benefit		7.7			0.25			—		—
Pension Expense, Net of $0.7 Tax Benefit		2.3			0.08			—		—
Bond Redemption Costs, Net of $1.8 Tax Benefit		9.3			0.30			—		—
Non-Income Tax Gain, Net of $4.4 Tax Expense		(13.7	)		(0.44	)		—		—
Adjusted Earnings from Continuing Operations (non-GAAP), Net of Tax	$	145.5		$	4.67		$	154.0	$	4.75

The company provides these non-GAAP financial measures as supplemental information to the GAAP financial measures. Management uses these non-GAAP financial measures to (a) evaluate the company’s historical and prospective financial performance and its performance relative to its competitors, (b) allocate resources, and (c) measure the operational performance of the company’s business units.

In addition, management believes investors’ and financial analysts’ understanding of the company’s performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing the company’s historical results of operations.

These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the comparable GAAP measures, and free cash flow is not necessarily indicative of amounts available for discretionary use. There are limitations to these non-GAAP financial measures because they are not prepared in accordance with GAAP and may not be comparable to similarly titled measures of other companies due to potential differences in methods of calculation and items that comprise the calculation. The company compensates for these limitations by using these non-GAAP financial measures as a supplement to the GAAP measures and by providing reconciliations of the non-GAAP and comparable GAAP financial measures. The non-GAAP financial measures should be read only in conjunction with the company’s consolidated financial statements prepared in accordance with GAAP.

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Page 7 of 10 Esterline Reports 2015 Fiscal Fourth Quarter and Full-Year Financial Results

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 the company’s 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.

See attached Consolidated Statement of Operations, Consolidated Sales and Earnings from Continuing

Operations by Segment, and Consolidated Balance Sheet

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Page 8 of 10 Esterline Reports 2015 Fiscal Fourth Quarter and Full-Year Financial Results

ESTERLINE TECHNOLOGIES CORPORATION

Consolidated Statement of Operations (unaudited)

In thousands, except per share amounts

	Two Months Ended						Eleven Months Ended
	Oct. 2, 2015			Sept. 26, 2014			Oct. 2, 2015			Sept. 26, 2014
Segment Sales
Avionics & Controls	$	151,086		$	112,412		$	727,801		$	668,595
Sensors & Systems		117,835			110,719			633,446			689,850
Advanced Materials		80,706			90,069			413,202			442,682
Net Sales		349,627			313,200			1,774,449			1,801,127
Cost of Sales		235,462			211,100			1,185,056			1,176,413
		114,165			102,100			589,393			624,714
Expenses
Selling, general and administrative		62,356			56,285			346,781			323,957
Research, development and engineering		13,075			14,142			91,491			88,656
Restructuring charges		1,264			1,824			6,639			12,103
Other income		241			—			(12,503	)		—
Total Expenses		76,936			72,251			432,408			424,716
Operating Earnings From Continuing Operations		37,229			29,849			156,985			199,998
Interest Income		(131	)		(101	)		(578	)		(501	)
Interest Expense		5,067			5,062			30,090			29,986
Loss on Extinguishment of Debt		11,122			—			11,451			533
Earnings From Continuing Operations Before Income Taxes		21,171			24,888			116,022			169,980
Income Tax Expense		284			4,761			18,956			35,759
Earnings From Continuing Operations Including Noncontrolling Interests		20,887			20,127			97,066			134,221
Earnings Attributable to Noncontrolling Interests		(183	)		(98	)		(401	)		(527	)
Earnings From Continuing Operations Attributable to Esterline, Net of Tax		20,704			20,029			96,665			133,694
Loss From Discontinued Operations, Attributable to Esterline, Net of Tax		(17,718	)		(51,465	)		(37,053	)		(59,240	)
Net Earnings Attributable to Esterline	$	2,986		$	(31,436	)	$	59,612		$	74,454
Earnings (Loss) Per Share—Basic:
Continuing Operations	$	.70		$	.63		$	3.15		$	4.20
Discontinued Operations		(.60	)		(1.61	)		(1.21	)		(1.86	)
Earnings (Loss) Per Share—Basic	$	.10		$	(.98	)	$	1.94		$	2.34
Earnings (Loss) Per Share—Diluted:
Continuing Operations	$	.69		$	.63		$	3.10		$	4.12
Discontinued Operations		(.59	)		(1.61	)		(1.19	)		(1.83	)
Earnings (Loss) Per Share—Diluted	$	.10		$	(.98	)	$	1.91		$	2.29
Weighted Average Number of Shares Outstanding—Basic		29,543			31,975			30,729			31,839
Weighted Average Number of Shares Outstanding—Diluted		29,901			31,975			31,215			32,443

Page 9 of 10 Esterline Reports 2015 Fiscal Fourth Quarter and Full-Year Financial Results

ESTERLINE TECHNOLOGIES CORPORATION

Consolidated Sales and Earnings From Continuing Operations by Segment (unaudited)

In thousands

	Two Months Ended						Eleven Months Ended
	Oct. 2, 2015			Sept. 26, 2014			Oct. 2, 2015			Sept. 26, 2014
Segment Sales
Avionics & Controls	$	151,086		$	112,412		$	727,801		$	668,595
Sensors & Systems		117,835			110,719			633,446			689,850
Advanced Materials		80,706			90,069			413,202			442,682
Net Sales	$	349,627		$	313,200		$	1,774,449		$	1,801,127
Earnings From Continuing Operations Before Income Taxes
Avionics & Controls	$	15,230		$	11,402		$	65,910		$	92,227
Sensors & Systems		16,296			11,842			71,787			73,653
Advanced Materials		15,043			18,539			80,951			94,450
Segment Earnings		46,569			41,783			218,648			260,330
Corporate expense		(9,099	)		(11,934	)		(74,166	)		(60,332	)
Other income		(241	)		—			12,503			—
Interest income		131			101			578			501
Interest expense		(5,067	)		(5,062	)		(30,090	)		(29,986	)
Loss on extinguishment of debt		(11,122	)		—			(11,451	)		(533	)
Earnings From Continuing Operations
Before Income Taxes	$	21,171		$	24,888		$	116,022		$	169,980

Page 10 of 10 Esterline Reports 2015 Fiscal Fourth Quarter and Full-Year Financial Results

ESTERLINE TECHNOLOGIES CORPORATION

Consolidated Balance Sheet (unaudited)

In thousands
	October 2, 2015		October 31, 2014
Assets
Current Assets
Cash and cash equivalents	$	191,355	$	238,144
Accounts receivable, net		380,748		379,889
Inventories		446,768		433,595
Income tax refundable		12,575		5,266
Deferred income tax benefits		41,082		48,679
Prepaid expenses		23,008		20,336
Other current assets		5,427		2,149
Current assets held for sale		27,851		41,446
Total Current Assets		1,128,814		1,169,504
Property, Plant and Equipment, Net		309,399		319,342
Other Non-Current Assets
Goodwill		1,041,991		1,071,786
Intangibles, net		452,040		471,377
Debt issuance costs, net		8,467		4,295
Deferred income tax benefits		28,979		71,307
Other assets		12,423		14,179
Non-current assets held for sale		24,917		71,677
	$	3,007,030	$	3,193,467
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	117,976	$	115,284
Accrued liabilities		259,734		262,536
Current maturities of long-term debt		13,589		12,774
Deferred income tax liabilities		11		1,773
Federal and foreign income taxes		2,393		1,571
Current liabilities held for sale		17,106		14,191
Total Current Liabilities		410,809		408,129
Long-Term Liabilities
Credit facilities		160,000		100,000
Long-term debt, net of current maturities		707,786		509,720
Deferred income tax liabilities		73,849		149,165
Pension and post-retirement obligations		75,019		62,693
Other liabilities		29,367		46,884
Non-current liabilities held for sale		2,409		18,876
Total Shareholders’ Equity		1,547,791		1,898,000
	$	3,007,030	$	3,193,467

EX-99.2

Q4 2015 Supplemental Financial Information

November 19, 2015

Exhibit 99.2

1

This

presentation

may

contain

"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.  This presentation may also contain references to non-GAAP

financial information subject to Regulation G. 

The

reconciliations of each non-GAAP financial measure to its comparable GAAP measure as

well as further information on management’s use of non-GAAP financial measures are included in

Esterline’s press release dated November 19, 2015, included as Exhibit 99.1 to Form 8-K filed

with the SEC on the same date, as well as in this presentation.

Q4

2015

Supplemental

Financial

Information

Q4 2015 Supplemental Financial Information

Operational Highlights

•

Held eight Continuous Improvement Academies

–

Over 220 leaders trained in 2015

•

First facility-wide E3 transformation completed

–

ECCS (Korry) Everett site

•

Strategic sourcing initiative:

–

Wave 2 implementation stage

–

Wave 3 identification of addressable spend and savings

2

Q4 2015 Supplemental Financial Information

Current Market Conditions

Commercial Aerospace

•

Solid fundamentals:  Strong OE backlog, New airframe entry-into-service in

2016+, Good airline profitability

•

Near term challenges from flat production on key programs, some new airframe

delays and customer inventory rationalization

Defense

•

No significant uptick except for production increases in F-35 and A400M

Industrial

•

Challenging global market conditions, including low oil prices and weak

European economy

•

Bright spots in niche markets such as high-end medical, human-machine

interface  and UK nuclear

3

Q4 2015 Supplemental Financial Information

Q4 2015 Financial Results*

•

Sales of $350 million, up 12%

–

Organic sales flat

–

Additional week in Q4-15 (9-week vs 8-week stub period)

–

$20 million from DAT acquisition offset by $21 million

FX impact

•

GAAP EPS of $0.69

–

Adjusted EPS of $1.33** (excludes certain discrete items)

4

**See Page 1 regarding non-GAAP financial measures

* Q4 2015 was a two month fiscal quarter ended October 2, 2015. 

Comparison is versus the two months ended September 26, 2014.

Q4 2015 Supplemental Financial Information

FY 2015 Financial Results*

•

Sales of $1.77 billion, down 1.5%

–

Organic sales flat

–

$88 million from acquisition (primarily DAT) offset by

$103 million FX impact

•

GAAP EPS of $3.10

–

Adjusted EPS of $4.67** (excludes certain discrete items)

•

FY free cash flow** conversion 159% of net earnings

5

**See Page 1 regarding non-GAAP financial measures

* FY 2015 was an eleven month fiscal year ended October 2, 2015. 

Comparison is versus the eleven months ended September 26, 2014.

Q4 2015 Supplemental Financial Information

2015* Year-over-Year (YOY) Summary

6

Dollars in millions, except EPS

Q4

2015

Q4 2014

Change

FY 2015

FY 2014

Change

Sales

$ 350

$ 313

$     37

$  1,774

$  1,801

($27)

Gross Margin

$ 114

$ 102

$     12

$    589

$    625

($36)

As a % of sales

32.7%

32.6%

0.1%

33.2%

34.7%

(1.5%)

Earnings from continuing

operations

$   21

$   20

$      1

$      97

$    134

($37)

Earnings per diluted

share

(continuing ops)

$0.69

$0.63

$ 0.06

$  3.10

$  4.12

($1.02)

* Q4 2015 was a two month fiscal quarter ended October 2, 2015.  Fiscal 2015 was an eleven month year ended

October 2, 2015.  Comparisons to 2014 are for the two months and eleven months ended September 26, 2014.

Q4 2015 Supplemental Financial Information

2015* Earnings Adjustment

7

Dollars in millions, except EPS

EPS adjustments are net of tax

Q4 Earnings from

Continuing Ops

EPS

FY Earnings from

Continuing Ops

EPS

GAAP

$ 21

$ 0.69

$ 97

$3.10

•

Accelerated

integration

2

0.05

10

0.31

•

Incremental compliance

3

0.12

15

0.49

•

DAT net loss and closing expenses

5

0.16

18

0.58

•

Bond redemption costs

9

0.31

9

0.30

•

Long-term contract adjustments

-

-

8

0.25

•

Pension expense

-

-

2

0.08

•

Non-income tax gain

-

-

(13)

(0.44)

Adjusted **

$ 40

$ 1.33

$146

$4.67

**See Page 1 regarding non-GAAP financial measures

* Q4 2015 was a two month fiscal quarter ended October 2, 2015.  Fiscal 2015 was an eleven month year ended October 2, 2015.

Q4 2015 Supplemental Financial Information

2015* Sales Change (YOY)

Items

Q4 Sales

FY Sales

2014*

$   313

$  1,801

•

Foreign

currency translation

(17)

(84)

•

FX forward contract loss

(4)

(18)

•

Acquisitions (primarily DAT)

20

88

•

Additional week in Q4-15

39

-

•

Sales volume

(1)

(13)

2015*

$  350

$  1,774

Dollars in millions

8

* Q4 2015 was a two month fiscal quarter ended October 2, 2015.  Fiscal 2015 was an eleven month year ended

October 2, 2015.  Comparisons to 2014 are for the two months and eleven months ended September 26, 2014.

Q4 2015 Supplemental Financial Information

2015* Segment Sales Change (YOY)

Q4 Total

Change

Q4

Organic¹

Q4 FX

Q4

Acquisition

FY Total

Change

FY

Organic¹

FY FX

FY

Acquisition

Avionics &

Controls

34%

9%

(5%)

18%

9%

<(1%)

(3%)

12%

Sensors &

Systems

6%

6%

(12%)

-

(8%)

2%

(11%)

1%

Advanced

Materials

(10%)

(21%)

(2%)

-

(7%)

(5%)

(2%)

-

Total

12%

<(1%)

(7%)

6%

(1%)

<(1%)

(6%)

5%

¹ Organic sales growth represents the total reported increase within the company’s continuing operations less the impact of all

foreign currency translation and hedging activities and acquisitions. 

9

* Q4 2015 was a two month fiscal quarter ended October 2, 2015.  Fiscal 2015 was an eleven month year ended

October 2, 2015.  Comparisons to 2014 are for the two months and eleven months ended September 26, 2014.

Q4 2015 Supplemental Financial Information

2015* Gross Margin Change (YOY)

Items

Q4

Gross Margin

FY Gross

Margin

2014*

$  102

$   625

•

FX Impact

(8)

(27)

•

DAT

acquisition (FY: $28 million from operations

less $7 million purchase accounting)

1

21

•

Sales volume / mix

5

(15)

•

Additional

week in Q4-15

13

-

•

Higher mfg. costs / Inventory reserves

/ EAC /

Other adjustments

1

(15)

2015*

$  114

$

589

Dollars in millions

10

* Q4 2015 was a two month fiscal quarter ended October 2, 2015.  Fiscal 2015 was an eleven month year ended

October 2, 2015.  Comparisons to 2014 are for the two months and eleven months ended September 26, 2014.

Q4 2015 Supplemental Financial Information

Adjusted Gross Margin and EBIT

See Appendix for supporting details

Avionics & Controls

Sensors & Systems

Advanced

Materials

Total ESL

Q4 2015 Gross

Margin (Adjusted)*

36.0%

33.6%

33.7%

34.6%

Q4 2014 Gross Margin (Adjusted)*

30.7%

34.8%

33.7%

33.0%

FY 2015 Gross

Margin (Adjusted)*

34.6%

35.6%

32.4%

34.5%

FY 2014 Gross

Margin (Adjusted)*

36.5%

34.1%

34.2%

35.0%

Q4 2015 EBIT (Adjusted)*

16.0%

14.7%

18.6%

14.5%

Q4 2014

EBIT (Adjusted)*

11.0%

12.0%

21.9%

11.0%

FY 2015 EBIT (Adjusted)*

14.3%

12.5%

20.3%

12.2%

FY 2014 EBIT (Adjusted)*

14.8%

12.0%

22.6%

12.5%

11

Q4 2015 was a two month fiscal quarter and FY 2015 was an eleven month period, both ended October 2, 2015.  Comparisons are against the same periods ended September 26, 2014.

* See Page 1 regarding non-GAAP financial measures

Q4 2015 Supplemental Financial Information

Free Cash Flow Reconciliation

FY 2015*

FY 2014*

Net earnings attributable

to Esterline

$  60

$

74

•

Depreciation ($45M)

and amortization ($46M)

91

113

•

Change

in

working

capital

(A/R,

Inventory,

A/P)

(8)

(45)

•

Other

1

20

Cash flow from operations

$ 144

$ 162

•

Capital expenditures

(49)

(40)

Free cash flow**

$  95

$ 122

Cash

conversion**

159%

164%

Dollars in millions

12

* YTD 2015 and 2014 include 11 months of each fiscal year.

**See Page 1 regarding non-GAAP financial measures

Q4 2015 Supplemental Financial Information

Share Repurchase Update

# Shares

In thousands

$ Value

In millions

$ Authorization

Remaining

In millions

•

FY 2014

269

$   30.3

•

Q1 2015

850

92.6

•

Q2

2015

312

34.7

•

Q3 2015

1,400

132.2

•

Q4 2015*

0

0

Total spend since inception**

2,831

$ 289.8

$110.2

* Q4 2015 includes the two months ended October 2, 2015

** $400 million total authorization for share repurchase

13

Q4 2015 Supplemental Financial Information

2015 Income Statement (Restated for new fiscal calendar)

14

Dollars in

millions, except EPS

Q1

Q2

Q3

Q4

FY

Sales

$505

$447

$505

$545

$2,002

Gross Margin

$180

$144

$169

$186

$679

Earnings from

Continuing

Ops

$34

$29

$25

$40

$128

GAAP EPS

(diluted, continuing ops)

$1.06

$0.90

$0.79

$1.35

$4.11

#

weeks

13

13

13

14*

53*

* Fiscal 2016 has a 13-week fourth quarter and 52 weeks in the year. 

The following information is presented to assist with the analysis of future financial results using our new fiscal calendar.

This financial information reflects our fiscal 2015 actual results restated for the new fiscal calendar (October 2014 –

September 2015).  Our new fiscal calendar begins with the 2016 fiscal year starting on October 3, 2015. 

Q4 2015 Supplemental Financial Information

2016 Guidance

2016 Guidance

Sales

$2.03B

-

$2.08B

GAAP

EPS

(diluted, continuing ops)

$4.60 -

$4.90

Adjusted EPS*

(diluted, continuing ops)

$5.50 -

$5.80

*See Page 1 regarding non-GAAP financial measures

15

2016

Adjusted

EPS

GAAP

EPS (diluted, continuing ops)

$4.60 -

$4.90

Accelerated Integration

$0.11

Incremental

Compliance

$0.47

DAT Integration

$0.32

Adjusted EPS* (diluted, continuing ops)

$5.50 -

$5.80

Q4 2015 Supplemental Financial Information

Aerospace Growth and Outlook

2015 Sales

Mix

End Market

2015 Sales

Growth*

2016 Sales

Growth*

Growth Drivers Beyond 2016

~50%

Commercial Aerospace

Flat

Low single

digit

Increased

OE

production

rates: 

737Max,

A320Neo, 787, A350

Entry

into

service:,

C919,

E2,

MRJ,

C-Series

Higher

content:

777X

~30%

Defense

Flat

Flat

Increased

OE

production

rates:

F-35,

A400M

Entry

into

service:

KC-390

~80%

Total

Flat

Low single

digit

~10%

Aftermarket

(included in Commercial / Defense OE)

Mid single

digit

Mid

single

digit

Increased OE production rates

Use Sensors aftermarket infrastructure

for other ESL products

16

* Organic sales growth, excluding impacts from FX and acquisitions and adjusted for 11-month 2015 fiscal year.

Q4 2015 Supplemental Financial Information

Adjacent Markets Outlook

2015 Sales

Mix

End Market

2016 Expectations

~14%

Industrial

Opportunity

for sales growth in high-end medical markets and “human-

machine interface” products.  Overall economic growth pressure in

European and emerging markets. 

~4%

Gaming

Lower sales due to extremely

strong 2015.  Some uncertainty continues

due to customer consolidation.

~2%

Energy

Overall flat to lower sales.  Opportunities in UK nuclear market.  Continued

pressure on sales into oil & gas end markets.

~20%

Total

Low single

digit growth

17

Q4 2015 Supplemental Financial Information

2016 Guidance Assumptions

•

Interest expense ~ $30 million

–

Annualized 2015 ~ $33 million

–

Fiscal 2016 starts with higher debt levels at lower interest rate

•

Tax rate ~ 21-22% (assumes expiration of the US R&D tax credit)

•

Average diluted shares outstanding ~ 29.6 million

18

Q4 2015 Supplemental Financial Information

Company-Wide Efficiency Initiatives Update

Strategic Sourcing

Global Footprint

INITIATIVE GOALS

Achieve significant savings in

material and services

Implement standards and tools

for sustainability

•

Remaining restructuring

projects will complete in 2016

•

Acquisition integrating well

•

Increasing competitive

global presence

•

Savings ahead of plan

•

Savings tracker in place

and automated

•

All commodities progressing

well, executing to plan

•

Further projects being scoped

and opportunities identified

INITIATIVE GOALS

Leverage global presence for growth

Develop competitive cost structure

Infrastructure supporting

the Esterline Operating System

19

Ops Excellence

•

European launch for facility

wide re-layout events

•

8 Academies complete YTD

–

224 leaders trained

•

Everett site “kaikaku” event

complete

INITIATIVE GOALS

E3 transformation –

entire facility

New operating system deployed

Leadership-driven, fully aligned

operational improvements

Q4 2015 Supplemental Financial Information

E3 Transformation –

Everett

Facility

20

Kaikaku

–

Japanese for “radical change”

•

Re-layout of the entire manufacturing operation

–

Aligned

fab.

processes

and

physically

linked

them

to

main

assembly

lines

•

Key expected outcomes:

–

Double yearly revenue capacity

–

Reduce “days to manufacture”

by 50%

•

Standard work makes process

repeatable in other Esterline units

•

Part of a ~43-week process of

transforming the entire value stream

Q4 2015 Supplemental Financial Information

DAT* Integration Update

2015 Highlights

•

Integration progressing well with three areas of challenge:

–

IT, Export Compliance, Facility relocation

•

FY gross margins ~ 32% (excludes purchase accounting)

2016 Update

•

Continued progress on integration and synergies

–

Focus on incremental top-line growth and cost savings

•

DAT results integrated into platforms within Avionics & Controls

segment in fiscal Q2 2016

21

* Defense, Aerospace and Training display business (DAT), acquired from Barco N.V. in the second quarter of our fiscal 2015.

Q4 2015 Supplemental Financial Information

Export Compliance Update

22

•

Mid-way through 3-year

Consent Agreement (ends

March 2017)

•

Enterprise-wide training,

policies & procedures

implemented

•

Next action:  Internal audits

Incremental costs

will be $0 after

consent agreement

$ in millions

Q4 2015 Supplemental Financial Information

Appendix 

23

Q4 2015 Supplemental Financial Information

Q4 2015* Adjusted Gross Margin and EBIT

24

* Q4 2015 was a two month fiscal period ended October 2, 2015.

In thousands

Avionics

Sensors

AM

ESL

GAAP Sales

151,086

$  

117,835

$    

80,706

$  

349,627

$  

DAT Sales

(20,029)

-

-

(20,029)

Adjusted Sales

131,057

$  

117,835

$    

80,706

$  

329,598

$  

GAAP Gross Margin

47,720

$     

39,377

$      

27,068

$  

114,165

$  

Accelerated Integration

-

199

133

332

DAT Gross Margin

(553)

-

-

(553)

Adjusted Gross Margin

47,167

$     

39,576

$      

27,201

$  

113,944

$  

In thousands

Avionics

Sensors

AM

Corporate

ESL

GAAP EBIT

15,230

$     

16,296

$      

14,802

$  

(9,099)

$     

37,229

$   

Accelerated Integration

65

1,035

247

249

1,596

Incremental Compliance

-

-

-

3,320

3,320

DAT Net Loss

5,609

-

-

-

5,609

Adjusted EBIT

20,904

$     

17,331

$      

15,049

$  

(5,530)

$     

47,754

$   

Adjusted GM as a % of Adjusted Sales

36.0%

33.6%

33.7%

-

34.6%

Adjusted EBIT as a % of Adjusted Sales

16.0%

14.7%

18.6%

-

14.5%

Q4 2015 Supplemental Financial Information

Q4 2014* Adjusted Gross Margin and EBIT

25

* Q4 2014 was a two month fiscal period ended September 26, 2014.

In thousands

Avionics

Sensors

AM

ESL

GAAP Sales

112,412

$       

110,719

$   

90,069

$

313,200

$   

GAAP Gross Margin

34,324

$         

37,880

$      

29,896

$

102,100

$   

Accelerated Integration

209

651

446

1,306

Incremental Compliance

9

2

(27)

(16)

Adjusted Gross Margin

34,542

$         

38,533

$      

30,315

$

103,390

$   

In thousands

Avionics

Sensors

AM

Corporate

ESL

GAAP EBIT

11,402

$         

11,842

$      

18,539

$

(11,934)

$    

29,849

$

Accelerated Integration

705

1,255

976

194

3,130

Incremental Compliance

246

165

167

819

1,397

Adjusted EBIT

12,353

$         

13,262

$      

19,682

$

(10,921)

$    

34,376

$

Adjusted GM as a % of Adjusted Sales

30.7%

34.8%

33.7%

-

33.0%

Adjusted EBIT as a % of Adjusted Sales

11.0%

12.0%

21.9%

-

11.0%

Q4 2015 Supplemental Financial Information

FY 2015* Adjusted Gross Margin and EBIT

26

* FY 2015 was an eleven month fiscal year ended October 2, 2015.

In thousands

Avionics

Sensors

AM

ESL

GAAP Sales

727,801

$    

633,446

$   

413,202

$   

1,774,449

$

DAT Sales

(82,525)

-

-

(82,525)

Adjusted Sales

645,276

$    

633,446

$   

413,202

$   

1,691,924

$

GAAP Gross Margin

234,922

$    

221,218

$   

133,253

$   

589,393

$   

Accelerated Integration

-

4,322

761

5,083

Long-Term Contract Adjustments

7,814

-

-

7,814

DAT Gross Margin

(19,329)

-

-

(19,329)

Adjusted Gross Margin

223,407

$    

225,540

$   

134,014

$   

582,961

$   

In thousands

Avionics

Sensors

AM

Corporate

ESL

GAAP EBIT

65,910

$      

87,443

$     

80,951

$     

(77,319)

$    

156,985

$ 

Accelerated Integration

705

7,146

2,778

1,093

11,722

Incremental Compliance

-

-

-

18,291

18,291

DAT Net Loss & Closing Expenses

16,048

-

-

6,000

22,048

Long-Term Contract Adjustments

9,934

-

-

-

9,934

Pension Expense

-

-

-

3,000

3,000

Non-Income Tax Gain

-

(15,656)

-

-

(15,656)

Adjusted EBIT

92,597

$      

78,933

$     

83,729

$     

(48,935)

$    

206,324

$ 

Adjusted GM as a % of Adjusted Sales

34.6%

35.6%

32.4%

-

34.5%

Adjusted EBIT as a % of Adjusted Sales

14.3%

12.5%

20.3%

-

12.2%

Q4 2015 Supplemental Financial Information

FY 2014* Adjusted Gross Margin and EBIT

27

* FY 2014 was an eleven month fiscal period ended September 26, 2015.

In thousands

Avionics

Sensors

AM

ESL

GAAP Sales

668,595

$    

689,850

$    

442,682

$   

1,801,127

$   

GAAP Gross Margin

241,826

$    

232,446

$    

150,442

$   

624,714

$      

Accelerated Integration

1,826

2,780

738

5,344

Incremental Compliance

315

298

64

677

Adjusted Gross Margin

243,967

$    

235,524

$    

151,244

$   

630,735

$      

In thousands

Avionics

Sensors

AM

Corporate

ESL

GAAP EBIT

92,227

$       

73,653

$      

94,450

$      

(60,332)

$       

199,998

$     

Accelerated Integration

5,133

6,782

4,863

669

17,447

Incremental Compliance

1,435

2,672

744

3,451

8,302

Adjusted EBIT

98,795

$       

83,107

$      

100,057

$   

(56,212)

$       

225,747

$     

Adjusted GM as a % of Adjusted Sales

36.5%

34.1%

34.2%

-

35.0%

Adjusted EBIT as a % of Adjusted Sales

14.8%

12.0%

22.6%

-

12.5%