10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended December 30, 2016.

OR

☐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	(I.R.S. Employer
of incorporation or organization)	Identification No.)

500 108th 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  ☑    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☑    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐(Do not check if a smaller reporting company)	Smaller reporting company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☑

As of February 1, 2017, 29,687,833 shares of the issuer’s common stock were outstanding.

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PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

ESTERLINE TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEET

As of December 30, 2016 and September 30, 2016

(In thousands, except share amounts)

	December 30,		September 30,
	2016		2016
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	278,024	$	258,520
Cash in escrow		-		1,125
Accounts receivable, net of allowances of $15,835 and $17,028		363,825		422,073
Inventories
Raw materials and purchased parts		181,157		177,069
Work in progress		171,659		171,515
Finished goods		101,417		101,622
		454,233		450,206
Income tax refundable		10,097		5,183
Prepaid expenses		19,481		17,909
Other current assets		5,130		5,322
Current assets of businesses held for sale		9,618		15,450
Total Current Assets		1,140,408		1,175,788
Property, Plant and Equipment		791,958		795,790
Accumulated depreciation		461,393		457,756
		330,565		338,034
Other Non-Current Assets
Goodwill		992,810		1,024,667
Intangibles, net		366,706		393,035
Deferred income tax benefits		74,133		75,409
Other assets		12,166		13,698
Non-current assets of businesses held for sale		11,012		11,400
Total Assets	$	2,927,800	$	3,032,031

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ESTERLINE TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEET

As of December 30, 2016 and September 30, 2016

(In thousands, except share amounts)

	December 30,			September 30,
	2016			2016
	(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	108,129		$	121,816
Accrued liabilities		223,561			238,163
Current maturities of long-term debt		16,717			16,774
Federal and foreign income taxes		9,257			10,932
Current liabilities of businesses held for sale		9,535			10,813
Total Current Liabilities		367,199			398,498
Long-Term Liabilities
Credit facilities		150,000			155,000
Long-term debt, net of current maturities		671,441			698,796
Deferred income tax liabilities		40,524			53,798
Pension and post-retirement obligations		90,726			92,520
Other liabilities		22,157			21,968
Non-current liabilities of businesses held for sale		154			320
Shareholders' Equity
Common stock, par value $.20 per share, authorized 60,000,000 shares,    issued 32,801,799 and 32,564,252 shares		6,560			6,513
Additional paid-in capital		715,971			702,610
Treasury stock at cost, repurchased 3,135,927 and 3,135,927 shares		(308,514	)		(308,514	)
Retained earnings		1,565,849			1,548,805
Accumulated other comprehensive loss		(404,733	)		(348,857	)
Total Esterline Shareholders' Equity		1,575,133			1,600,557
Noncontrolling interests		10,466			10,574
Total Shareholders' Equity		1,585,599			1,611,131
Total Liabilities and Shareholders' Equity	$	2,927,800		$	3,032,031

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ESTERLINE TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

For the Three Month Periods Ended December 30, 2016 and January 1, 2016

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended
	December 30,			January 1,
	2016			2016
Net Sales	$	457,733		$	441,477
Cost of Sales		313,686			303,758
		144,047			137,719
Expenses
Selling, general & administrative		95,633			94,091
Research, development and engineering		21,038			25,575
Restructuring charges		-			931
Insurance recovery		(2,600	)		-
Total Expenses		114,071			120,597
Operating Earnings from Continuing Operations		29,976			17,122
Interest Income		(96	)		(87	)
Interest Expense		7,888			7,216
Earnings from Continuing Operations Before Income Taxes		22,184			9,993
Income Tax Expense (Benefit)		420			(33	)
Earnings from Continuing Operations Including Noncontrolling Interests		21,764			10,026
Earnings Attributable to Noncontrolling Interests		(239	)		(162	)
Earnings from Continuing Operations Attributable to Esterline, Net of Tax		21,525			9,864
Loss from Discontinued Operations Attributable to Esterline, Net of Tax		(5,336	)		(4,780	)
Net Earnings Attributable to Esterline	$	16,189		$	5,084
Earnings (Loss) Per Share Attributable to Esterline - Basic:
Continuing operations	$	0.73		$	0.33
Discontinued operations		(0.18	)		(0.16	)
Earnings (Loss) Per Share - Basic	$	0.55		$	0.17
Earnings (Loss) Per Share Attributable to Esterline - Diluted:
Continuing operations	$	0.72		$	0.33
Discontinued operations		(0.18	)		(0.16	)
Earnings (Loss) Per Share - Diluted	$	0.54		$	0.17
Net Earnings	$	16,189		$	5,084
Change in Fair Value of Derivative Financial Instruments		(6,299	)		(4,173	)
Income Tax Expense (Benefit)		(1,909	)		(1,285	)
		(4,390	)		(2,888	)
Change in Pension and Post-Retirement Obligations		2,533			2,276
Income Tax Expense (Benefit)		992			758
		1,541			1,518
Foreign Currency Translation Adjustment		(53,027	)		(39,461	)
Comprehensive Income (Loss)	$	(39,687	)	$	(35,747	)

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ESTERLINE TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

For the Three Month Periods Ended December 30, 2016 and January 1, 2016

(Unaudited)

(In thousands)

	December 30,			January 1,
	2016			2016
Cash Flows Provided (Used) by Operating Activities
Net earnings including noncontrolling interests	$	16,428		$	5,246
Adjustments to reconcile net earnings including noncontrolling interests to net cash    provided (used) by operating activities:
Depreciation and amortization		25,625			24,171
Deferred income taxes		(9,342	)		(5,902	)
Share-based compensation		4,695			3,328
Excess tax benefits from share-based compensation		-			(476	)
Loss on assets held for sale		4,728			2,517
Working capital changes, net of effect of acquisitions:
Accounts receivable		49,181			31,763
Inventories		(16,201	)		(8,011	)
Prepaid expenses		(2,075	)		1,489
Other current assets		(876	)		(2,979	)
Accounts payable		(10,464	)		(491	)
Accrued liabilities		(13,883	)		(12,888	)
Federal and foreign income taxes		(5,585	)		(1,608	)
Other liabilities		1,361			(488	)
Other, net		1,943			4,981
		45,535			40,652
Cash Flows Provided (Used) by Investing Activities
Purchase of capital assets		(15,298	)		(14,862	)
		(15,298	)		(14,862	)
Cash Flows Provided (Used) by Financing Activities
Proceeds provided by stock issuance under employee stock plans		10,729			2,609
Withholding taxes on restricted stock units vested		(863	)		(1,128	)
Excess tax benefits from share-based compensation		-			476
Repayment of long-term credit facilities		(10,000	)		(10,000	)
Repayment of long-term debt		(3,073	)		(3,192	)
Proceeds from issuance of long-term credit facilities		5,000			-
		1,793			(11,235	)
Effect of Foreign Exchange Rates on Cash and Cash Equivalents		(12,526	)		(5,019	)
Net Increase (Decrease) in Cash and Cash Equivalents		19,504			9,536
Cash and Cash Equivalents - Beginning of Year		258,520			191,355
Cash and Cash Equivalents - End of Period	$	278,024		$	200,891
Supplemental Cash Flow Information:
Cash paid for interest	$	10,745		$	10,361
Cash paid for taxes		13,775			5,256

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ESTERLINE TECHNOLOGIES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Three Month Periods Ended December 30, 2016 and January 1, 2016

Note 1 – Basis of Presentation

The consolidated balance sheet as of December 30, 2016, the consolidated statement of operations and comprehensive income (loss) for the three month periods ended December 30, 2016, and January 1, 2016, and the consolidated statement of cash flows for the three month periods ended December 30, 2016, and January 1, 2016, 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.

The notes to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016, 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, October through December, includes significant holiday periods in both Europe and North America.

Note 2 – Recent Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (FASB) issued new guidance regarding the goodwill impairment test.   The new guidance eliminates the Step 2 valuation test, when evaluating goodwill for impairment.   The new guidance requires that an entity performs its annual or interim goodwill test by comparing the fair value of the reporting unit with its carrying amount.  An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.  The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.  The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures.  The guidance will be effective for the company in fiscal year 2020, with early adoption permitted.

In October 2016, FASB issued new guidance regarding income taxes.  The new guidance will require the tax effects of intercompany transactions, other than sales of inventory, to be recognized currently, eliminating an exception under current Generally Accepted Accounting Principles (GAAP) in which the tax effects of intra-entity asset transfers are deferred until the transferred asset is sold to a third party or otherwise recovered through use.  The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures.  The guidance will be effective for the company in fiscal year 2019, with early adoption permitted.

In August 2016, the FASB issued new guidance addressing how certain cash receipts and cash payments are presented and classified in the statement of cash flows.  The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures.  The guidance will be effective for the Company in fiscal year 2019, with early adoption permitted.

In June 2016, the FASB issued a new standard on the measurement of credit losses, which will impact the Company’s measurement of trade receivables.  The new standard replaces the current incurred loss model with a forward-looking expected loss model that is likely to result in earlier recognition of losses.  The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures.  The new standard is effective for the Company in fiscal year 2021, with early adoption permitted, but not earlier than in fiscal year 2020.

In March 2016, the FASB issued new guidance simplifying certain aspects of accounting for share-based payments.  The key provision of the new standard requires that excess tax benefits and shortfalls be recorded as income tax benefit or expense in the income statement, rather than in equity.  The Company adopted the new guidance during the first quarter of fiscal 2017, which resulted in a $0.7 million benefit to income tax expense and a favorable impact to operating cash flows of $0.7 million.  The Company has also elected to account for forfeitures as they occur, rather than estimate expected forfeitures, which resulted in a positive cumulative effect on retained earnings of $0.9 million and a reduction of additional paid-in capital of $0.9 million.

In February 2016, the FASB issued a new lease accounting standard, which provides revised guidance on accounting for lease arrangements by both lessors and lessees.  The central requirement of the new standard is that lessees must recognize lease related assets and liabilities for all leases with a term longer than 12 months.  The Company is evaluating the effect the standard will have on

6

the Company’s consolidated financial statements and related disclosures.  The new standard is effective for the Company in fiscal year 2020, with early adoption permitted.

In May 2014, the FASB amended requirements for an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective, and permits the use of either the retrospective or cumulative effect transition method.  The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures.  The updated standard becomes effective for the Company in the first quarter of fiscal 2019, with early adoption permitted.

Note 3 – Earnings Per Share and Shareholders’ Equity

Basic earnings per share is computed on the basis of the weighted average number of shares outstanding during the year.  Diluted earnings per share includes the dilutive effect of stock options, restricted stock units and share units related to the Company’s performance share plan to the extent that performance share plan objectives are met.  Common shares issuable from stock options excluded from the calculation of diluted earnings per share because they were anti-dilutive were 809,875 in the three month period ending December 30, 2016.  Common shares issuable from stock options excluded from the calculation of diluted earnings per share because they were anti-dilutive were 610,700 in the three month period ending January 1, 2016.  Shares used for calculating earnings per share are disclosed in the following table:

In Thousands	Three Months Ended
	December 30,		January 1,
	2016		2016
Shares used for basic earnings per share		29,547		29,582
Shares used for diluted earnings per share		29,831		29,939

The authorized capital stock of the Company consists of 25,000 shares of preferred stock ($100 par value), 475,000 shares of serial preferred stock ($1.00 par value), each issuable in series, and 60,000,000 shares of common stock ($.20 par value).  As of December 30, 2016, and September 30, 2016, there were no shares of preferred stock or serial preferred stock outstanding.

On June 19, 2014, the Company’s board of directors approved a $200 million share repurchase program.  In March 2015, the Company’s board of directors approved an additional $200 million for the share repurchase program.  Under the program, the Company is authorized to repurchase up to $400 million of outstanding shares of common stock from time to time, depending on market conditions, share price and other factors.  Repurchases may be made in the open market or through private transactions, in accordance with SEC requirements.  The Company may enter into a Rule 10(b)5-1 plan designed to facilitate the repurchase of all or a portion of the repurchase amount.  The program does not require the Company to acquire a specific number of shares.  Common stock repurchased can be reissued, and accordingly, the Company accounts for repurchased stock under the cost method of accounting.

There were no shares repurchased during the three months ended December 30, 2016, or during the three months ended January 1, 2016.  Since the program began, the Company has repurchased 3,135,927 shares for an aggregate purchase price of $308.5 million, leaving $91.5 million for shares to be repurchased in the future.

Changes in issued and outstanding common shares are summarized as follows:

	Three Months Ended			Year Ended
	December 30,			September 30,
	2016			2016
Shares Issued:
Balance, beginning of year		32,564,252			32,378,185
Shares issued under share-based compensation plans		237,547			186,067
Balance, end of current period		32,801,799			32,564,252
Treasury Stock:
Balance, beginning of year		(3,135,927	)		(2,831,350	)
Shares purchased		-			(304,577	)
Balance, end of current period		(3,135,927	)		(3,135,927	)
Shares outstanding, end of period		29,665,872			29,428,325

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The components of Accumulated Other Comprehensive Gain (Loss):

In Thousands	December 30,			September 30,
	2016			2016
Unrealized gain (loss) on derivative contracts	$	(10,846	)	$	(4,547	)
Tax effect		2,986			1,077
		(7,860	)		(3,470	)
Pension and post-retirement obligations		(113,813	)		(116,346	)
Tax effect		38,812			39,804
		(75,001	)		(76,542	)
Foreign currency translation adjustment		(321,872	)		(268,845	)
Accumulated other comprehensive gain (loss)	$	(404,733	)	$	(348,857	)

Note 4 – Retirement Benefits

The Company’s pension plans principally include a U.S. pension plan maintained by Esterline and a non-U.S. plan maintained by CMC Electronics, Inc. (CMC).  The Company also sponsors a number of other non-U.S. defined benefit pension plans, primarily in Belgium, France and Germany.  Components of periodic pension cost consisted of the following:

In Thousands	Three Months Ended
	December 30,			January 1,
	2016			2016
Components of Net Periodic Cost
Service cost	$	3,357		$	2,956
Interest cost		3,721			4,393
Expected return on plan assets		(6,265	)		(5,911	)
Amortization of prior service cost		114			115
Amortization of actuarial (gain) loss		1,763			1,476
Net periodic cost (benefit)	$	2,690		$	3,029

The Company amortizes prior service cost and actuarial gains and losses from accumulated other comprehensive income to expense over the remaining service period.

Note 5 – Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  A fair value hierarchy has been established that prioritizes the inputs to valuation techniques used to measure fair value.  An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.  The hierarchy of fair value measurements is described below:

Level 1 – Valuations are based on quoted prices that the Company has the ability to obtain in actively traded markets for identical assets and liabilities.  Since valuations are based on quoted prices that are readily and regularly available in an active market or exchange traded market, a valuation of these instruments does not require a significant degree of judgment.

Level 2 – Valuations are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 – Valuations are based on model-based techniques for which some or all of the assumptions are obtained from indirect market information that is significant to the overall fair value measurement and which require a significant degree of management judgment.

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The following table sets forth the Company’s financial assets and liabilities that were measured at fair value on a recurring basis by level within the fair value hierarchy at December 30, 2016, and September 30, 2016.

In Thousands	Level 2
	December 30,		September 30,
	2016		2016
Assets:
Derivative contracts designated as hedging instruments	$	1,389	$	2,948
Derivative contracts not designated as hedging instruments		107		143
Embedded derivatives		3,195		2,485
Liabilities:
Derivative contracts designated as hedging instruments	$	12,561	$	7,828
Derivative contracts not designated as hedging instruments		8,090		6,720
Embedded derivatives		826		985

In Thousands	Level 3
	December 30,		September 30,
	2016		2016
Assets:
Estimated value of assets held for sale	$	20,630	$	26,850
Liabilities:
Estimated value of liabilities held for sale	$	9,689	$	11,133

The Company’s embedded derivatives are the result of entering into sales or purchase contracts that are denominated in a currency other than the Company’s functional currency or the supplier’s or customer’s functional currency.  The fair value is determined by calculating the difference between quoted exchange rates at the time the contract was entered into and the period-end exchange rate.  These contracts are categorized as Level 2 in the fair value hierarchy.

The Company’s derivative contracts consist of foreign currency exchange contracts and, from time to time, interest rate swap agreements.  These derivative contracts are over the counter, and their fair value is determined using modeling techniques that include market inputs such as interest rates, yield curves, and currency exchange rates.  These contracts are categorized as Level 2 in the fair value hierarchy.

In fiscal 2014, the Company’s board of directors approved the plan to sell certain non-core business units. Based upon the estimated fair values, the Company adjusted the carrying value of the assets and liabilities of the businesses to fair value.  Principle assumptions used in measuring the estimated value of assets and liabilities held for sale included estimated selling price of the discontinued business, discount rates, industry growth rates, and pricing of comparable transactions in the market.

Note 6 – Derivative Financial Instruments

The Company uses derivative financial instruments in the form of foreign currency forward exchange contracts and interest rate swap contracts for the purpose of minimizing exposure to changes in foreign currency exchange rates on business transactions and interest rates, respectively.  The Company’s policy is to execute such instruments with banks the Company believes to be creditworthy and not to enter into derivative financial instruments for speculative purposes.  These derivative financial instruments do not subject the Company to undue risk, as gains and losses on these instruments generally offset gains and losses on the underlying assets, liabilities, or anticipated transactions that are being hedged.

All derivative financial instruments are recorded at fair value in the Consolidated Balance Sheet.  For a derivative that has not been designated as an accounting hedge, the change in the fair value is recognized immediately through earnings.  For a derivative that has been designated as an accounting hedge of an existing asset or liability (a fair value hedge), the change in the fair value of both the derivative and underlying asset or liability is recognized immediately through earnings.  For a derivative designated as an accounting hedge of an anticipated transaction (a cash flow hedge), the change in the fair value is recorded on the Consolidated Balance Sheet in Accumulated Other Comprehensive Income (AOCI) to the extent the derivative is effective in mitigating the exposure related to the anticipated transaction.  The change in the fair value related to the ineffective portion of the hedge, if any, is immediately recognized in earnings.  The amount recorded within AOCI is reclassified into earnings in the same period during which the underlying hedged transaction affects earnings.

9

The fair value of derivative instruments is presented on a gross basis, as the Company does not have any derivative contracts which are subject to master netting arrangements.  The Company did not have any hedges with credit-risk-related contingent features or that required the posting of collateral as of December 30, 2016, and September 30, 2016.  The cash flows from derivative contracts are recorded in operating activities in the Consolidated Statement of Cash Flows.

Foreign Currency Forward Exchange Contracts

The Company transacts business in various foreign currencies, which subjects the Company’s cash flows and earnings to exposure related to changes in foreign currency exchange rates.  These exposures arise primarily from purchases or sales of products and services from third parties.  Foreign currency forward exchange contracts provide for the purchase or sale of foreign currencies at specified future dates at specified exchange rates, and are used to offset changes in the fair value of certain assets or liabilities or forecasted cash flows resulting from transactions denominated in foreign currencies.  At December 30, 2016, and September 30, 2016, the Company had outstanding foreign currency forward exchange contracts principally to sell U.S. dollars with notional amounts of $424.9 million and $450.9 million, respectively.  These notional values consist primarily of contracts for the European euro, British pound sterling and Canadian dollar, and are stated in U.S. dollar equivalents at spot exchange rates at the respective dates.

Interest Rate Swaps

The Company manages its exposure to interest rate risk by maintaining an appropriate mix of fixed and variable rate debt, which over time should moderate the costs of debt financing.  When considered necessary, the Company may use financial instruments in the form of interest rate swaps to help meet this objective.

Embedded Derivative Instruments

The Company’s embedded derivatives are the result of entering into sales or purchase contracts that are denominated in a currency other than the Company’s functional currency or the supplier’s or customer’s functional currency.

Net Investment Hedge

In April 2015, the Company issued €330.0 million in 3.625% Senior Notes due April 2023 (2023 Notes) and requiring semi-annual interest payments in April and October each year until maturity. The Company designated the 2023 Notes and accrued interest as a hedge of the investment of certain foreign business units.  The foreign currency gain or loss that is effective as a hedge is reported as a component of other comprehensive income (loss) in shareholders’ equity.  To the extent that this hedge is ineffective, the foreign currency gain or loss is recorded in earnings.  There was no ineffectiveness of the hedge since inception.

Fair Value of Derivative Instruments

Fair value of derivative instruments in the Consolidated Balance Sheet at December 30, 2016, and September 30, 2016, consisted of:

In Thousands		Fair Value
		December 30,		September 30,
	Classification	2016		2016
Foreign Currency Forward Exchange Contracts:
	Other current assets	$	811	$	1,757
	Other assets		685		1,334
	Accrued liabilities		16,666		11,168
	Other liabilities		3,985		3,380
Embedded Derivative Instruments:
	Other current assets	$	2,386	$	1,864
	Other assets		809		621
	Accrued liabilities		783		866
	Other liabilities		43		119

The effect of derivative instruments on the Consolidated Statement of Operations and Comprehensive Income (Loss) for the three month periods ended December 30, 2016, and January 1, 2016, consisted of:

Fair Value Hedges and Embedded Derivatives

The Company recognized the following gains (losses) on contracts designated as fair value hedges and embedded derivatives:

In Thousands	Three Months Ended
Gain (Loss)	December 30,		January 1,
	2016		2016
Embedded derivatives:
Recognized in sales	$	253	$	1,154

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Cash Flow Hedges

The Company recognized the following gains (losses) on contracts designated as cash flow hedges:

In Thousands	Three Months Ended
Gain (Loss)	December 30,			January 1,
	2016			2016
Foreign currency forward exchange contracts:
Recognized in AOCI (effective portion)	$	(1,874	)	$	2,901
Reclassified from AOCI into sales		(4,425	)		(7,074	)

Net Investment Hedges

The Company recognized the following gains (losses) on contracts designated as net investment hedges:

In Thousands	Three Months Ended
Gain (Loss)	December 30,		January 1,
	2016		2016
2023 Notes and Accrued Interest:
Recognized in AOCI	$	23,913	$	11,533

During the first three months of fiscal 2017 and 2016, the Company recorded losses of $2.6 million and $2.4 million, respectively, on foreign currency forward exchange contracts that have not been designated as accounting hedges.  These foreign currency exchange gains and losses are included in selling, general and administrative expense.

There was no significant impact to the Company’s earnings related to the ineffective portion of any hedging instruments during the first three months of fiscal 2017 and 2016.  In addition, there was no significant impact to the Company’s earnings when a hedged firm commitment no longer qualified as a fair value hedge or when a hedged forecasted transaction no longer qualified as a cash flow hedge during the first three months of fiscal 2017 and 2016.

Amounts included in AOCI are reclassified into earnings when the hedged transaction settles.  The Company expects to reclassify approximately $10.3 million of net loss into earnings over the next 12 months. The maximum duration of the Company’s foreign currency cash flow hedge contracts at December 30, 2016, is 24 months.

Note 7 – Income Taxes

The income tax rate was 1.9% in the first quarter of fiscal 2017 compared with a 0.3% benefit in the prior-year period.  In the first quarter of fiscal 2017, the income tax rate was higher primarily due to higher income from continuing operations before income taxes and an increase in the estimated annual effective tax rate as a result of U.K. limitations on interest deductions, partially offset by increased discrete income tax benefits.  In the first quarter of fiscal 2017, a reduction of the income tax rate in France for fiscal year 2020 resulted in a reduction in the Company’s net deferred income tax liabilities of $3.8 million, which was primarily related to acquired intangible assets.  Secondly, $1.2 million of discrete tax benefits was recorded primarily related to a valuation allowance release due to an expected taxable gain from a foreign income tax law change. Lastly, the early adoption of the accounting standard update for employee share-based payment awards resulted in a $0.7 million tax benefit.  In the prior-year period, the retroactive extension of the U.S. federal research and experimentation credits resulted in a $1.3 million tax benefit.

During the next 12 months, it is reasonably possible that approximately $1.4 million of tax benefits that are currently unrecognized could be recognized as a result of settlement of examinations and/or the expiration of applicable statutes of limitations.  The Company recognizes interest related to unrecognized tax benefits in income tax expense.

Note 8 – Debt

U.S. Credit Facility

On April 9, 2015, the Company amended its secured credit facility to extend the maturity to April 9, 2020, increase the amount available for borrowing under the secured revolving credit facility to $500 million, and provide for a delayed-draw term loan facility of $250 million.  The Company recorded $2.3 million in debt issuance costs.  The credit facility is secured by substantially all the Company’s assets, and interest is based on standard inter-bank offering rates.  The interest rate ranges from LIBOR plus 1.25% to LIBOR plus 2.00% depending on leverage ratios at the time the funds are drawn.  The Company had $150.0 million outstanding under the secured credit facility at an interest rate of LIBOR plus 1.75%.  At December 30, 2016, the weighted average interest rate was 2.47%.

11

U.S. Term Loan, due April 2020

On August 3, 2015, the Company borrowed $250 million under the U.S. Term Loan, due 2020, provided for under the amended secured credit facility (U.S. Term Loan, due 2020).  The interest rate on the U.S. Term Loan, due 2020, ranges from LIBOR plus 1.25% to LIBOR plus 2.00%.  At December 30, 2016, the interest rate was LIBOR plus 1.75%, which equaled 2.36%.  The loan amortizes at 1.25% of the original principal balance quarterly through March 2020, with the remaining balance due in April 2020.

3.625% Senior Notes, due April 2023

In April 2015, the Company issued €330.0 million in 3.625% Notes, due 2023 requiring semi-annual interest payments in April and October of each year until maturity.  The net proceeds from the sale of the notes, after deducting $5.9 million of debt issuance costs, were $350.8 million.  The 2023 Notes are general unsecured senior obligations of the Company.  The 2023 Notes are unconditionally guaranteed on a senior basis by the Company and certain subsidiaries of the Company that are guarantors under the Company’s existing secured credit facility.  The 2023 Notes are subject to redemption at the option of the Company at any time prior to April 15, 2018, at a price equal to 100% of the principal amount, plus any accrued interest to the date of redemption and a make-whole provision.  The Company may also redeem up to 35% of the 2023 Notes before April 15, 2018, with the net cash proceeds from equity offerings.  The 2023 Notes are also subject to redemption at the option of the Company, in whole or in part, on or after April 15, 2018, at redemption prices starting at 102.719% of the principal amount plus accrued interest during the period beginning April 15, 2018, and declining annually to 100% of principal and accrued interest on or after April 15, 2021.

Based on quoted market prices, the fair value of the Company’s 2023 Notes was $354.0 million and $365.3 million as of December 30, 2016, and September 30, 2016, respectively.  The carrying amount of the secured credit facility and the U.S. Term Loan, due 2020, approximate fair value.  The estimate of fair value for the 2023 Notes is based on Level 2 inputs as defined in the fair value hierarchy described in Note 5.

Government Refundable Advances

Government refundable advances consist of payments received from the Canadian government to assist in research and development related to commercial aviation.  The requirement to repay this advance is solely based on year-over-year commercial aviation revenue growth at CMC beginning in 2014.  Imputed interest on the advance was 2.9% at December 30, 2016.  The debt recognized was $44.3 million and $45.0 million as of December 30, 2016, and September 30, 2016, respectively.

Obligation Under Capital Lease

The Company leases building and equipment under capital leases.  The present value of the minimum capital lease payments, net of the current portion, totaled $66.0 million and $66.2 million as of December 30, 2016, and September 30, 2016, respectively.

Note 9 – Commitments and Contingencies

The Company is party to various lawsuits and claims, both as a plaintiff and defendant, and has contingent liabilities arising from the conduct of business, none of which, in the opinion of management, is expected to have a material effect on the Company’s financial position or results of operations.  The Company believes that it has made appropriate and adequate provisions for contingent liabilities.

As of December 30, 2016, and September 30, 2016, the Company had a liability of $1.0 million and $0.8 million, respectively, related to environmental remediation at a previously sold business for which the Company provided indemnification.

On March 5, 2014, the Company entered into a Consent Agreement with the U.S. Department of State’s Directorate of Defense Trade Controls Office of Defense Trade Controls Compliance (DTCC) to resolve alleged International Traffic in Arms Regulations (ITAR) civil violations.  The Consent Agreement settled the pending ITAR compliance matter with the DTCC previously reported by the Company that resulted from voluntary reports the Company filed with DTCC that disclosed possible technical and administrative violations of the ITAR.  The Consent Agreement has a three-year term and provided for:  (i) a payment of $20 million, $10 million of which is suspended and eligible for offset credit based on verified expenditures for past and future remedial compliance measures; (ii) the appointment of an external Special Compliance Official to oversee compliance with the Consent Agreement and the ITAR; (iii) two external audits of the Company’s ITAR compliance program; and (iv) continued implementation of ongoing remedial compliance measures and additional remedial compliance measures related to automated systems and ITAR compliance policies, procedures and training.  The Company expects to be released from the Consent Agreement in fiscal 2017, depending upon the Company’s satisfactory completion of the remaining requirements under the agreement and the timing of final approval by the DTCC.  The $10 million portion of the settlement that is not subject to suspension will be paid in installments, with $8 million paid over fiscal years 2014, 2015 and 2016.  The remaining $2 million is payable in March 2017.  In fiscal 2016, the DTCC approved costs the Company incurred to implement compliance measures to fully offset the $10 million suspended payment.

During the first quarter of fiscal 2017, the Company received a $2.6 million insurance recovery due to an energetic incident at one of its countermeasure operations, which occurred in the third quarter of fiscal 2016.  The insurance recovery from this incident in fiscal 2016 was $5 million.  A further payment is expected in the second quarter of fiscal 2017.  The amount of the payment is subject to the insurance company’s final review of the claim and is estimated to range between $2.6 million to $5.0 million.

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Note 10 – Employee Stock Plans

As of December 30, 2016, the Company had three share-based compensation plans, which are described below.  The compensation cost that has been charged against income for those plans was $4.7 million and $3.3 million for the first three months of fiscal 2017 and 2016, respectively.  During the first three months of fiscal 2017 and 2016, the Company issued 237,547 and 72,349 shares, respectively, under its share-based compensation plans.

Employee Stock Purchase Plan (ESPP)

The ESPP is a “safe-harbor” designed plan whereby shares are purchased by participants at a discount of 5% of the market value on the purchase date and, therefore, compensation cost is not recorded.

Employee Sharesave Scheme

The Company offers shares under its employee sharesave scheme for U.K. employees.  This plan allows participants the option to purchase shares at a 5% discount of the market price of the stock as of the beginning of the offering period.  The term of these options is three years.  The sharesave scheme is not a “safe-harbor” design, and therefore, compensation cost is recognized on this plan.  Under the sharesave scheme, option exercise prices are equal to the fair market value of the Company’s common stock on the date of grant.  There were no grants in the three month periods ended December 30, 2016, and January 1, 2016.

Equity Incentive Plan

Under the equity incentive plan, option exercise prices are equal to the fair market value of the Company’s common stock on the date of grant.  The Company granted 231,100 and 217,200 options to purchase shares in the three month periods ended December 30, 2016, and January 1, 2016, respectively.  The weighted-average grant date fair value of options granted during the three month periods ended December 30, 2016, and January 1, 2016, was $32.55 and $35.87 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 risk-free rate for the contractual life of the option is based on the U.S. Treasury zero coupon issues in effect at the time of the grant.

	Three Months Ended
	December 30,	January 1,
	2016	2016
Volatility	34.97 - 35.42%	33.06 - 40.52%
Risk-free interest rate	1.98 - 2.51%	1.61 - 2.24%
Expected life (years)	5 - 9	5 - 9
Dividends	0	0

The Company granted 36,700 and 33,400 restricted stock units in the three month periods ended December 30, 2016, and January 1, 2016, respectively.  The weighted-average grant date fair value of restricted stock units granted during the three month periods ended December 30, 2016, and January 1, 2016, was $76.70 and $86.29 per share, respectively.  The fair value of each restricted stock unit granted by the Company is equal to the fair market value of the Company’s common stock on the date of grant.

The Company granted 42,100 and 55,300 performance share plan (PSP) shares in the three month periods ended December 30, 2016, and January 1, 2016, respectively.  PSP shares will be paid out in shares of Esterline common stock at the end of the three year performance period.  The PSP shares granted in each period equaled the number of shares participants would receive if the Company achieves target performance over the relevant period.  The actual number of shares that will be paid out upon completion of the performance period is based on actual performance and may range from 0% to 300% of the target number of shares.

Note 11 – Discontinued Operations

The Company’s board of directors previously approved the plan to sell certain non-core business units including Wallop Defence Systems, Ltd. (Wallop), a manufacturer of flare countermeasure devices; a small distribution business; and a small manufacturing business.

On May 4, 2016, the Company sold certain assets of Wallop for 2.5 million British pounds and deferred compensation up to a maximum payment of 9 million British pounds.  The deferred compensation is payable based upon receipt of acceptable orders during a three-year period ending May 3, 2019, and is equal to the amount of the acceptable order multiplied by a specified percentage ranging from 26.5% to 31%.  The earn-out payment was estimated to be 5.5 million British pounds at December 30, 2016.

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During the first three months of fiscal 2017 and 2016, the Company incurred a loss from discontinued operations of $5.3 million and $4.8 million, respectively.  Included in the loss of $5.3 million for the first three months of fiscal 2017 was a $4.6 million loss on Wallop assets held for sale, principally due to a reduction in the estimated sale price and the effect of changes in foreign currency exchange rates.

The operating results of the discontinued operations for the three month period ended December 30, 2016, consisted of the following:

In Thousands	Avionics &			Sensors &		Advanced
	Controls			Systems		Materials			Other			Total
Net Sales	$	2,696		$	-	$	-		$	-		$	2,696
Operating earnings (loss)		(871	)		895		(5,347	)		(604	)		(5,927	)
Tax expense (benefit)		(239	)		-		(141	)		(211	)		(591	)
Income (loss) from discontinued    operations	$	(632	)	$	895	$	(5,206	)	$	(393	)	$	(5,336	)
Included in Operating Earnings (Loss):
Loss on net assets held for sale	$	(140	)	$	-	$	(4,588	)	$	-		$	(4,728	)

The operating results of the discontinued operations for the three month period ended January 1, 2016, consisted of the following:

In Thousands	Avionics &			Sensors &			Advanced
	Controls			Systems			Materials			Other			Total
Net Sales	$	5,582		$	-		$	2,484		$	-		$	8,066
Operating earnings (loss)		897			(156	)		(5,993	)		(4	)		(5,256	)
Tax expense (benefit)		413			-			(889	)		-			(476	)
Income (loss) from discontinued    operations	$	484		$	(156	)	$	(5,104	)	$	(4	)	$	(4,780	)
Included in Operating Earnings (Loss):
Gain (loss) on net assets    held for sale	$	(270	)	$	-		$	(2,247	)	$	-		$	(2,517	)

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Assets and Liabilities Held for Sale within the Consolidated Balance Sheet at December 30, 2016, are comprised of the following:

In Thousands	Avionics &			Sensors &		Advanced
	Controls			Systems		Materials			Total
Accounts receivable, net	$	1,949		$	-	$	246		$	2,195
Inventories		6,453			-		725			7,178
Prepaid expenses		125			-		52			177
Income tax refundable		-			-		68			68
Current Assets of Businesses Held for Sale		8,527			-		1,091			9,618
Net property, plant and equipment		5,386			-		2,899			8,285
Intangibles, net		-			-		1,829			1,829
Deferred income tax benefits		(392	)		-		400			8
Other assets		-			-		890			890
Non-Current Assets of Businesses Held for Sale		4,994			-		6,018			11,012
Accounts payable		122			-		1,325			1,447
Accrued liabilities		6,631			-		1,457			8,088
Current Liabilities of Businesses Held for Sale		6,753			-		2,782			9,535
Deferred income tax liabilities		-			-		(166	)		(166	)
Other liabilities		-			-		320			320
Non-Current Liabilities of Businesses Held for Sale		-			-		154			154
Net Assets of Businesses Held for Sale	$	6,768		$	-	$	4,173		$	10,941

Assets and Liabilities Held for Sale within the Consolidated Balance Sheet at September 30, 2016, were comprised of the following:

In Thousands	Avionics &			Sensors &		Advanced
	Controls			Systems		Materials		Total
Accounts receivable, net	$	2,588		$	-	$	4,093	$	6,681
Inventories		8,070			-		398		8,468
Prepaid expenses		127			-		103		230
Income tax refundable		-			-		71		71
Current Assets of Businesses Held for Sale		10,785			-		4,665		15,450
Net property, plant and equipment		5,368			-		2,869		8,237
Intangibles, net		-			-		1,856		1,856
Deferred income tax benefits		(392	)		-		400		8
Other assets		-			-		1,299		1,299
Non-Current Assets of Businesses Held for Sale		4,976			-		6,424		11,400
Accounts payable		441			-		1,463		1,904
Accrued liabilities		7,000			-		1,909		8,909
Current Liabilities of Businesses Held for Sale		7,441			-		3,372		10,813
Other liabilities		-			-		320		320
Non-Current Liabilities of Businesses Held for Sale		-			-		320		320
Net Assets of Businesses Held for Sale	$	8,320		$	-	$	7,397	$	15,717

15

Note 12 – Business Segment Information

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

In Thousands	Three Months Ended
	December 30,			January 1,
	2016			2016
Sales
Avionics & Controls	$	192,682		$	186,245
Sensors & Systems		167,073			152,430
Advanced Materials		97,978			102,802
	$	457,733		$	441,477
Earnings from Continuing Operations Before Income Taxes
Avionics & Controls	$	17,917		$	9,413
Sensors & Systems		19,946			12,784
Advanced Materials		9,880			12,990
Segment Earnings		47,743			35,187
Corporate expense		(17,767	)		(18,065	)
Interest income		96			87
Interest expense		(7,888	)		(7,216	)
	$	22,184		$	9,993

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We operate our businesses in three segments:  Avionics & Controls, Sensors & Systems and Advanced Materials.  Our segments are structured around our technical capabilities.  Sales in all segments include domestic, international, defense and commercial customers.

The Avionics & Controls segment includes avionics systems, control and communication systems, and interface technologies capabilities.  The Sensors & Systems segment includes power systems, connection technologies and advanced sensors capabilities.  The Advanced Materials segment includes engineered materials and defense technologies capabilities.

Our current business and strategic plan focuses on the continued development of our products principally for aerospace and defense markets and operational excellence.  We are concentrating our efforts to expand our capabilities in these markets, to anticipate the global needs of our customers and to continually improve our operational performance.  These efforts focus on continuous research and new product development, acquisitions and strategic realignments of operations to offer more comprehensive solutions across our product offerings and the implementation of the principles of our operating system to become a supplier of choice for our customers.

In March 2014, we entered into a Consent Agreement with the U.S. Department of State’s Directorate of Defense Trade Controls Office of Defense Trade Controls Compliance (DDTC) to resolve alleged International Traffic in Arms Regulations (ITAR) civil violations.  Among other things, the Consent Agreement required us to pay a $20 million penalty, of which $10 million was suspended and eligible for offset credit.  In fiscal 2016, the DTCC approved costs we incurred to implement compliance measures to fully offset the $10 million suspended payment.  More information about the Consent Agreement is set forth in Note 9 to the Consolidated Financial Statements included in Part 1, Item 1 of this report.

As explained in Note 11 to the Consolidated Financial Statements included in Part 1, Item 1 of this report, in fiscal 2014, our board of directors previously approved the plan to sell certain non-core business units including Wallop Defence Systems, Ltd. (Wallop), a manufacturer of flare countermeasure devices; a small distribution business; and a small manufacturing business.  The loss from discontinued operations in the first quarter of fiscal 2017 was $5.3 million compared with $4.8 million, in the prior-year period.  Included in the loss from discontinued operations was a $4.7 million loss and $2.5 million loss on assets held for sale in the first quarter of fiscal 2017 and 2016, respectively.

Sales for the first quarter of fiscal 2017 were $457.7 million; sales volume increased $22 million over the prior-year period and was mainly due to strong sales of Avionics & Controls and Sensors & Systems segment products.

Gross margin was 31.5% in the first quarter of fiscal 2017 compared with 31.2% in the prior-year period.  Gross profit was $144.0 million and $137.7 million for the first quarter of fiscal 2017 and 2016, respectively.  Gross profit mainly benefited from higher sales volume and favorable product mix of Sensors & Systems segment products.

For further explanation about changes in sales and gross profit in the first quarter of fiscal 2017 over the prior-year period, please see the table at the end of the Overview section for a roll forward presentation of sales and gross profit.

Selling general and administrative expenses increased by $1.5 million in the first quarter of fiscal 2017 over the prior-year period to $95.6 million.

Research, development and engineering expense decreased by $5 million to $21.0 million or 4.6% of sales, in the first quarter of fiscal 2017, compared with the prior-year period.  The decrease mainly reflects lower expense for our Avionics & Controls segment.

During the first quarter of fiscal 2017, we received a $2.6 million insurance recovery due to an energetic incident at one of our countermeasure operations, which occurred in the third quarter of fiscal 2016.  We received a $5 million insurance recovery in the fourth quarter of fiscal 2016.  We anticipate a further payment in the second quarter of fiscal 2017.  The amount of the payment is subject to the insurance company’s final review of the claim and is estimated to range between $2.6 million to $5.0 million.

We adopted the new guidance on accounting for share-based payments during the first quarter of fiscal 2017.  The new guidance simplifies certain aspects of accounting for share-based payments.  The key provision of the new standard requires that excess tax benefits and shortfalls be recorded as income tax benefit or expense in the income statement, rather than in additional paid-in capital.  Adoption of the new guidance during the first quarter of fiscal 2017 resulted in a $0.7 million decrease in income tax expense.

The income tax rate was 1.9% in the first quarter of fiscal 2017 compared with a 0.3% benefit in the prior-year period.  In the first quarter of fiscal 2017, the income tax rate was higher primarily due to higher income from continuing operations before income taxes, partially offset by increased discrete tax benefits.  

Earnings from continuing operations in the first quarter of fiscal 2017 were $21.5 million, or $0.72 per diluted share, compared with $9.9 million, or $0.33 per diluted share, in the prior-year period.  Loss from discontinued operations in the first quarter of fiscal 2017

17

was $5.3 million, or $0.18 per diluted share, compared with $4.8 million, or $0.16 per diluted share, in the prior-year period.  Net income in the first quarter of fiscal 2017 was $16.2 million, or $0.54 per diluted share, compared with $5.1 million, or $0.17 per diluted share, in the prior-year period.

Cash flows from operating activities were $45.5 million in the first quarter of fiscal 2017 compared with $40.7 million in the prior-year period.

Our sales, gross margin and earnings results for the first quarter of fiscal 2017, compared with the prior-year period included a number of significant items which are summarized in the tables below.

The following is a roll forward of sales and gross margin from the three month period ended January 1, 2016, to the three month period ended December 30, 2016:

In Thousands	Avionics &			Sensors &			Advanced
	Controls			Systems			Materials			Total
Sales:
Three month period ended January 1, 2016	$	186,245		$	152,430		$	102,802		$	441,477
Foreign currency gain (loss)		(2,354	)		(1,651	)		(4,231	)		(8,236	)
Forward contract gain (loss)		2,845			(99	)		-			2,746
Sales volume		5,946			16,393			(593	)		21,746
Three month period ended December 30, 2016	$	192,682		$	167,073		$	97,978		$	457,733
Gross Margin:
Three month period ended January 1, 2016		59,667			50,235			27,817			137,719
Foreign currency gain (loss)		(993	)		59			(844	)		(1,778	)
Forward contract gain (loss)		2,796			(99	)		-			2,697
Volume/mix		(3,831	)		10,043			(2,690	)		3,522
Factory layout costs (Kaikaku)		1,917			-			-			1,917
DAT integration		800			-			-			800
Other		132			(1,132	)		170			(830	)
Three month period ended December 30, 2016	$	60,488		$	59,106		$	24,453		$	144,047

The following table shows the average foreign exchange rates for the British pound, Canadian dollar and euro relative to the U.S. dollar for the three month period ended December 30, 2016, and January 1, 2016.

	Three Months Ended
	December 30,		January 1,
	2016			2016	Change
GBP to USD		1.2441		1.5139	(17.8)%
CAD to USD		0.7463		0.7513	(0.7)%
EUR to USD		1.0819		1.0880	(0.6)%

The following table shows the impact of changes in the foreign currency exchange rates for the British pound, Canadian dollar and euro relative to the U.S. dollar on operating earnings during the three month period ended December 30, 2016, compared with the prior-year period.

In Thousands	Avionics &		Sensors &			Advanced
	Controls		Systems			Materials			Total
Foreign currency gain (loss)	$	258	$	1,159		$	(488	)	$	929
Forward contract gain (loss)		2,041		(250	)		278			2,069
Impact on Operating Earnings (Loss)	$	2,299	$	909		$	(210	)	$	2,998

Results of Operations

For further explanation, please see the roll forward table of sales, gross margin and the analysis of the impact of changes in foreign currency exchange rates at the end of the Overview section.

18

Three Month Period Ended December 30, 2016, Compared with Three Month Period Ended January 1, 2016

Total sales for the first fiscal quarter increased by $16.3 million, or 3.7%, over the prior-year period.  Sales by segment were as follows:

In Thousands		Three Months Ended
	Increase (Decrease)	December 30,		January 1,
	From Prior Year	2016		2016
Avionics & Controls	3.5%	$	192,682	$	186,245
Sensors & Systems	9.6%		167,073		152,430
Advanced Materials	(4.7)%		97,978		102,802
Total Net Sales		$	457,733	$	441,477

The $6.4 million increase in Avionics & Controls sales over the prior-year period mainly reflected the following:

• Higher sales volumes of avionics systems of $1 million reflected increased sales of $7 million in new programs for defense applications substantially offset by lower sales of displays due to timing

• Higher sales volumes of interface technologies of $7 million mainly for gaming and industrial applications

• Lower sales volumes of communication and control devices of $2 million mainly due to lower sales of cockpit controls for commercial aviation and headset communication devices for defense applications

The $14.6 million increase in Sensor & Systems sales over the prior-year period principally reflected the following:

• Higher sales of connection technologies of $5 million for commercial aviation applications and distribution customers

• Higher sales of advanced sensors of $7 million and power systems of $5 million for OEM and aftermarket customers

• Unfavorable effect of changes in foreign currency exchange rates of $2 million

The $4.8 million decrease in sales in Advanced Materials over the prior-year period was due mainly to unfavorable foreign currency exchange rates at engineered materials.  Sales volumes were flat in both defense technologies and engineered materials and reflected the following:

• Lower sales volumes of engineered materials for oil and gas and defense applications offset by higher sales for commercial aviation

• Lower sales volumes of defense technologies countermeasure devices were offset by higher sales of combustible ordnance.  Defense technologies countermeasure sales volumes were impacted by an energetic incident at one of our operations in May 2016.  Reduced manufacturing operations commenced in the fourth quarter of fiscal 2016, and management expects the factory to be operating at planned capacity in the second half of fiscal 2017.

Overall, gross margin was 31.5% and 31.2% for the first quarter of fiscal 2017 and 2016, respectively.  Gross profit was $144.0 million and $137.7 million for the first quarter of fiscal 2017 and 2016, respectively.  Gross profit and gross margin percentage by segment were as follows:

In Thousands		Three Months Ended
	Increase (Decrease)	December 30,			January 1,
	From Prior Year	2016			2016
Avionics & Controls	1.4%	$	60,488		$	59,667
Sensors & Systems	17.7%		59,106			50,235
Advanced Materials	(12.1)%		24,453			27,817
Total Gross Profit		$	144,047		$	137,719
Avionics & Controls	(0.6)%		31.4	%		32.0	%
Sensors & Systems	2.4%		35.4	%		33.0	%
Advanced Materials	(2.1)%		25.0	%		27.1	%
Gross Margin Percentage			31.5	%		31.2	%

Avionics & Controls segment gross margin was 31.4% and 32.0% for the first quarter of fiscal 2017 and 2016, respectively.  Segment gross profit was $60.5 million compared with $59.7 million in the prior-year period.  The $0.8 million increase in gross profit is mainly from a favorable effect of changes in foreign currency and higher sales of new programs at a lower gross margin.

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Sensors & Systems segment gross margin was 35.4% and 33.0% for the first quarter of fiscal 2017 and 2016, respectively.  Segment gross profit for the first quarter of fiscal 2017 was $59.1 million compared with $50.2 million in the prior-year period.  The $9 million increase in gross profit principally reflected increased sales volume and favorable product mix across all platforms.

Advanced Materials segment gross margin was 25.0% and 27.1% for the first quarter of fiscal 2017 and 2016, respectively.  Segment gross profit for the first quarter of fiscal 2017 was $24.5 million compared with $27.8 million in the prior-year period.  The $3 million decrease in Advanced Materials gross profit principally reflected a $2 million decrease in gross margin on sales of defense technologies due to the slow ramp up of manufacturing following the May 2016 incident noted above and expenses from the introduction of new countermeasure devices.

Selling, general and administrative expenses (which include corporate expenses) totaled $95.6 million, or 20.9% of sales, and $94.1 million, or 21.3% of sales, for the first quarter of fiscal 2017 and 2016, respectively.  The increase in selling, general and administrative expense mainly reflected a $3 million increase in compensation costs, partially offset by $2 million in favorable exchange rates.

Research, development and engineering spending was $21.0 million, or 4.6% of sales, for the first quarter of fiscal 2017 compared with $25.6 million, or 5.8% of sales, for the first quarter of fiscal 2016.  The $5 million decrease in research, development and engineering principally reflected lower spending in the Avionics & Controls segment.

We expect full year research, development and engineering expense will be 5% of sales, reflecting increased engineering efforts over the remaining three quarters in fiscal 2017.

Segment earnings (operating earnings excluding corporate expenses and other income or expense) for the first quarter of fiscal 2017 totaled $47.7 million, or 10.4% of sales, compared with $35.2 million, or 8.0% of sales, for the first quarter in fiscal 2016.  Segment earnings by segment were as follows:

In Thousands		Three Months Ended
	Increase (Decrease)	December 30,			January 1,
	From Prior Year	2016			2016
Avionics & Controls	90.3%	$	17,917		$	9,413
Sensors & Systems	56.0%		19,946			12,784
Advanced Materials	(23.9)%		9,880			12,990
Total Segment Earnings		$	47,743		$	35,187
Avionics & Controls	4.2%		9.3	%		5.1	%
Sensors & Systems	3.5%		11.9	%		8.4	%
Advanced Materials	(2.5)%		10.1	%		12.6	%
Segment Earnings Percentage			10.4	%		8.0	%

Avionics & Controls segment earnings were $17.9 million, or 9.3% of sales, in the first quarter of fiscal 2017 and $9.4 million, or 5.1% of sales, in the first quarter of fiscal 2016.  The $9 million increase in Avionics & Controls segment earnings mainly reflected a $5 million reduction in research, development and engineering and a $3 million decrease in selling, general and administrative expense due to lower integration expense of $2 million and the favorable effect of changes in foreign currency exchange rates.

Sensors & Systems segment earnings were $19.9 million, or 11.9% of sales, for the first quarter of fiscal 2017 compared with $12.8 million, or 8.4% of sales, for the first quarter of fiscal 2016.  The $7 million increase in Sensors & Systems segment earnings principally reflected the following:

• A $9 million increase in gross profit

• Partially offset by a $2 million increase in selling, general and administrative expense

Advanced Materials segment earnings were $9.9 million, or 10.1% of sales, for the first quarter of fiscal 2017 compared with $13.0 million, or 12.6% of sales, for the first quarter of fiscal 2016.  The $3 million decrease in Advanced Materials segment earnings mainly reflected the following:

• A $3 million decrease in gross profit, mostly offset by a $2.6 million insurance recovery noted above

• A $3 million increase in selling, general and administrative expense

Interest expense for the first quarter of fiscal 2017 was $7.9 million compared with $7.2 million for the first quarter of fiscal 2016.  The increase in interest expense mainly reflected a higher interest rate.

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The income tax rate was 1.9% in the first quarter of fiscal 2017 compared with a 0.3% benefit in the prior-year period.  In the first quarter of fiscal 2017, the income tax rate was higher primarily due to higher income from continuing operations before income taxes and an increase in the estimated annual effective tax rate as a result of U.K. limitations on interest deductions, partially offset by increased discrete income tax benefits.  In the first quarter of fiscal 2017, a reduction of the income tax rate in France for fiscal year 2020 resulted in a reduction in our net deferred income tax liabilities of $3.8 million, which was primarily related to acquired intangible assets.  Secondly, $1.2 million of discrete tax benefits was recorded primarily related to a valuation allowance release due to an expected taxable gain from a foreign income tax law change.  Lastly, the early adoption of the accounting standard update for employee share-based payment awards resulted in a $0.7 million tax benefit.  In the prior-year period, the retroactive extension of the U.S. federal research and experimentation credits resulted in a $1.3 million tax benefit.

Recent proposals to lower the U.S. corporate income tax rate from the current Federal statutory income tax rate of 35% would require us to reduce our net deferred tax assets primarily related to our U.S. post-retirement benefit plan, resulting in a one-time, non-cash increase in income tax expense in the year of enactment.  In subsequent years, our income tax expense would be materially reduced.

During the next 12 months, it is reasonably possible that approximately $1.4 million of tax benefits that are currently unrecognized could be recognized as a result of settlement of examinations and/or the expiration of a statute of limitations.  We recognize interest related to unrecognized tax benefits in income tax expense.

New orders for the first quarter of fiscal 2017 were $421.5 million compared with $458.1 million in the prior-year period, reflecting a decrease in our Avionics & Controls and Sensors & Systems segments, partially offset by an increase in our Advanced Materials segment.  Backlog was $1.3 billion at December 30, 2016, and September 30, 2016, and $1.2 billion at January 1, 2016.

Liquidity and Capital Resources

Cash and cash equivalents at December 30, 2016, totaled $278.0 million, an increase of $19.5 million from September 30, 2016.  Net working capital decreased to $773.2 million at December 30, 2016, from $777.3 million at September 30, 2016.  Sources and uses of cash flows from operating activities principally consisted of cash received from the sale of products and cash payments for material, labor and operating expenses.

Cash flows provided by operating activities were $45.5 million and $40.7 million in the first three months of fiscal 2017 and 2016, respectively.

Cash flows used by investing activities were $15.3 million and $14.9 million in the first three months of fiscal 2017 and 2016, respectively, and were primarily for capital expenditures.

Cash flows provided by financing activities were $1.8 million in the first three months of fiscal 2017, mainly reflecting:

• $10.7 million in proceeds from the issuance of common stock under our employee stock plans

• Partially offset by:

• $5.0 million net repayment of long-term credit facilities

• $3.1 million repayment of long-term debt

Cash flows used by financing activities were $11.2 million in the first three months of fiscal 2016 and mainly reflected:

• $10.0 million repayment of long-term credit facilities

• $3.2 million repayment of long-term debt

• Partially offset by $2.6 million in proceeds from the issuance of common stock under our employee stock plans

Capital expenditures, consisting of building, machinery, equipment and computers, are anticipated to be approximately $60 million during fiscal 2017, compared with $68.5 million expended in fiscal 2016 (excluding acquisitions).  Capital expenditures in fiscal 2017 are lower compared with the prior year due to the purchase of a building for our DAT operation in the prior year.

Total debt at December 30, 2016, was $838.2 million and consisted of $233.7 million of the U.S. Term Loan, due 2020, $342.5 million (€330.0 million) of the 2023 Notes, $150.0 million in borrowings under our secured credit facility, $44.3 million in government refundable advances, and $67.7 million under capital lease obligations.

We believe cash on hand and funds generated from operations and borrowing capacity available under our debt facilities are sufficient to fund operating cash requirements and capital expenditures through the next twelve months.

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,”

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“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 Report on Form 10-K for the fiscal year ended September 30, 2016, 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

There have been no significant changes in our exposure to market risk during the first three months of fiscal 2017.  A discussion of our exposure to market risk is provided in the Company’s Report on Form 10-K for the fiscal year ended September 30, 2016.

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 December 30, 2016.  Based upon that evaluation, they concluded as of December 30, 2016, 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 December 30, 2016, 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.

See Note 9 to the Consolidated Financial Statements included in Part 1, Item 1 of this report for information regarding legal proceedings.

Item 2.               Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

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Item 6.Exhibits

Exhibit
Number		Exhibit Index
10.1	*	Termination Protection Agreement, dated December 18, 2015, between Esterline Technologies Corporation and Roger A. Ross.
10.2	*	Esterline Technologies Corporation Fiscal Year 2017 Annual Incentive Compensation Plan.  (Incorporated by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the year ended September 30, 2016 [Commission File Number 1-6357].)
10.3	*	Esterline Technologies Corporation Long-Term Incentive Performance Share Plan, for fiscal years 2017 - 2019.  (Incorporated by reference to Exhibit 10.2 to the Company's Annual Report on Form 10-K for the year ended September 30, 2016 [Commission File Number 1-6357].)
10.4	*	Esterline Technologies Corporation 2002 Employee Stock Purchase Plan, as amended on November 22, 2016.  (Incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the year ended September 30, 2016 [Commission File Number 1-6357].)
10.5	*	Form on Global Stock Option Agreement for Esterline Technologies Corporation 2013 Equity Incentive Plan (dated November 2016).  (Incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year ended September 30, 2016 [Commission File Number 1-6357].)
10.6	*	Form on Restricted Stock Unit Agreement for Esterline Technologies Corporation 2013 Equity Incentive Plan (dated November 2016).  (Incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended September 30, 2016 [Commission File Number 1-6357].)
11		Schedule setting forth computation of basic and diluted earnings per share for the three month periods ended December 30, 2016, and January 1, 2016.
31.1		Certification of Chief Executive Officer.
31.2		Certification of Chief Financial Officer.
32.1		Certification (of Curtis C. Reusser) 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.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

* Indicates management contract or compensatory plan or arrangement.

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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: February 3, 2017	By:	/s/ Robert D. George
		Robert D. George
		Executive Vice President, Chief Financial Officer, and
		Corporate Development
		(Principal Financial Officer)

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EX-10.1

Exhibit 10.1

TERMINATION PROTECTION AGREEMENT

This Agreement (“Agreement”) is made this 18^th day of December, 2015 between Esterline Technologies Corporation, a Delaware corporation, with its principal offices at 500 108^th Avenue N.E., Suite 1500, Bellevue, Washington 98004 (the “Company”) and Roger A. Ross (the “Executive”).

WHEREAS, the Board of Directors of the Company (the “Board”) determined it is appropriate to encourage the continued attention and dedication of Company executives to their assigned duties without distraction in circumstances arising from a possible change in control of the Company; and

WHEREAS, the Executive is willing to enter into this Agreement for the purposes and on the terms and conditions described below;

NOW, THEREFORE, the parties agree as follows:

1.Definitions.

1.1“Cause” means: (a) the willful and continued failure by the Executive to substantially perform his or her duties and obligations to the Company (other than any such failure resulting from illness, sickness, or physical or mental incapacity) which failure continues after the Company has given notice to the Executive; or (b) the willful engaging by the Executive in misconduct that is significantly injurious to the Company, monetarily or otherwise.

1.2“Change in Control” has the meaning given such term under the Equity Incentive Plan, and also means the occurrence of any of the following events:

(a) an acquisition by any Entity (as defined in the Equity Incentive Plan) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (1) the number of then outstanding shares of common stock of the Company or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, provided, however, that the following acquisitions shall not constitute a Change in Control:  (i) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege where the security being so converted was not acquired directly from the Company by the party exercising the conversion privilege, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Related Company (as defined in the Equity Incentive Plan), or (iv) an acquisition by any Entity pursuant to a transaction that meets the conditions of clauses (i), (ii) and (iii) set forth in the definition of Change in Control in the Equity Incentive Plan; or

(b) a change in the composition of the Board during any two-year period such that the individuals who, as of the beginning of such two-year period, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that for purposes of this definition, any individual who becomes a member of the Board subsequent to the beginning of the two-year period, whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least two-thirds of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; and provided further, however, that any such individual whose initial assumption of office occurs as a result of or in

connection with an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of an Entity other than the Board shall not be considered a member of the Incumbent Board.

1.3“Code” means the Internal Revenue Code of 1986, as amended.

1.4“Contract Period” means the twenty-four (24) month period beginning on the Effective Date.

1.5“Disability” means any physical or mental condition for which the Executive would be eligible to receive benefits under the disability insurance provisions of (a) the Social Security Act or (b) the Company’s long-term disability program.

1.6“Effective Date” means the day preceding a Change in Control.

1.7“Equity Incentive Plan” means the Esterline Technologies Corporation 2013 Equity Incentive Plan, as amended from time to time.

1.8“Exchange Act” means the Securities Exchange Act of 1934, as amended.

1.9“Fringe Benefit Program” means any employee benefit plan, program, or arrangement, including, without limitation, employee benefit plans within the meaning of the Employee Retirement Income Security Act of 1974, as amended, but excluding the Equity Incentive Plan and any other incentive compensation plan.

1.10“Good Reason” means:

(a)A material diminution in the Executive's authority, duties or responsibilities, including, for example, assignment to the Executive of duties materially inconsistent with, or the material reduction of powers or functions associated with, his or her positions, duties, responsibilities and status with the Company immediately prior to the Effective Date, or removal of the Executive from or any failure to re-elect the Executive to any material positions or offices the Executive held immediately prior to the Effective Date, except in connection with the termination of the Executive’s employment by the Company for Cause or for Disability, or a material negative change in the employment relationship such as the failure to maintain a working environment conducive to the performance of the Executives’ duties or the effective exercise of the powers or functions associated with the Executive’s position, responsibilities and status with Company immediately prior to the Effective Date; or

(b)Any action or inaction that constitutes a material breach by the Company of this Agreement; or

(c)The Company’s mandatory transfer of the Executive to another geographic location, without the Executive’s consent, outside of a twenty (20) mile radius from the Executive’s current location, except for required travel on the Company’s business to an extent substantially consistent with the Executive’s business travel obligations prior to the Effective Date; or

(d)Failure by the Company to obtain an assumption of the obligations of the Company to perform this Agreement by any successor, as provided in Section 6.1.

A termination of employment by the Executive will not be deemed to be "for Good Reason" unless (i) the Executive  provides written notice to the Company of the Good Reason conduct or event within 90 days of its occurrence, (ii) the Company does not cure such conduct or

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eventwithin 30days after receiving the notice described in clause (i), and (iii) the Termination Date occurs at least thirty-one (31) days and not more than ninety-one (91) days after the date on which the Company receives the notice described in clause (i).

1.11“Minimum Base Salary” means the Executive’s annual rate of salary on the Effective Date, payable monthly, increased by ten (10)% per annum compounded annually on each anniversary of the Executive’s most recent raise.

1.12“Minimum Total Compensation” means a sum equal to one (1) times the Executive’s annual rate of salary on the Effective Date plus one (1) times the Executive’s target annual incentive compensation on the Effective Date.

1.13“Termination Date” means the effective date of the Executive’s “separation from service” (as that term is defined under Code Section 409A) from the Company.  For purposes of determining whether a "separation from service" under Code Section 409A has occurred, a "separation from service" is deemed to include a reasonably anticipated permanent reduction in the level of services performed by the Executive to less than fifty percent (50%) of the average level of services performed by the Executive during the immediately preceding 12-month period (or period of service if less than 12 months).

2.Scope of Agreement.  This Agreement applies with respect to any termination of employment of the Executive that occurs during the Contract Period.  It does not apply to any termination of the Executive’s employment that occurs other than during the Contract Period.  In addition, during the Contract Period, the Company will maintain the equivalent total value of compensation paid to the Executive prior to the Effective Date to include (i) payment to the Executive of a monthly base salary at least equal to the then applicable Minimum Base Salary; (ii) payment to the Executive, within seventy-five (75) days following the end of a fiscal year, of compensation with respect to each such fiscal year ending after the Effective Date in an amount at least equal to the Executive’s target annual incentive compensation;(iii) a minimum of two (2) annual grants of equity awards of Company common stock or other form of ownership interest with an equivalent market value to the grants made to the Executive during the twelve (12) months immediately preceding the Effective Date; and (iv) no act or omission by the Company, in its capacity as a plan administrator or otherwise, that adversely affects the Executive's participation in any Fringe Benefit Program in effect on the Effective Date, or materially reduces the value of his or her benefits under any such program, including benefits under any Company car allowance and vacation policy.

3.Termination During Contract Period.

3.1General.  During the Contract Period and subject to any employment agreement between the Company and the Executive, the Company will have the right to terminate the Executive’s employment with the Company for any reason or for no reason, and the Executive may terminate his or her employment with the Company for any reason or for no reason.  In the event of any such termination of employment, the Executive will be entitled to such compensation, if any, as provided for in this Agreement.

3.2Without Cause or For Good Reason. In the event the Executive’s employment with the Company is terminated during the Contract Period by the Company without Cause, or by the Executive for Good Reason, then the Executive will be entitled to the compensation and benefits provided in Section 4.

3.3Other Than For Good Reason.  In the event the Executive terminates his or her employment with the Company during the Contract Period for any reason other than for Good Reason, the

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Executive will not be entitled to any compensation under this Agreement, other than the Executive’s accrued but unpaid salary and accrued but unused vacation through his or her Termination Date.

3.4For Cause, Disability, or Death. In the event the Executive’s employment with the Company is terminated by the Company during the Contract Period for Cause or for Disability, or if the Executive’s employment with the Company is terminated as the result of the Executive’s death, neither the Executive nor his or her beneficiary, as the case may be, will be entitled to receive any compensation or benefits under this Agreement other than the Executive’s accrued but unpaid salary and accrued but unused vacation through his or her Termination Date.

4.Compensation and Benefits Upon Termination by the Company Without Cause or by the Executive for Good Reason.

4.1If the conditions set forth in Section 3.2 are satisfied, the Executive will be entitled to receive the following compensation and benefits:

(a)a pro rata amount of the Executive’s target annual incentive compensation calculated based on the number of days the Executive was employed during the current fiscal year through the Termination Date;

(b)all other amounts earned by the Executive and unpaid as of the Termination Date, including any accrued but unpaid vacation;

(c)an amount equal to three (3) times the Minimum Total Compensation;

(d)full vesting of all outstanding unvested equity awards held by the Executive as of the Effective Date to the extent such awards were not accelerated into full vesting in connection with the Change in Control;

(e)reimbursement of all legal fees and related expenses as may be incurred by the Executive in seeking to obtain or enforce any right or benefit provided to the Executive by this Agreement, provided (1) the Executive’s claims are determined under Section 8, or by agreement of the parties, to be well-founded in substantial part, and (2) that fees and expenses are reasonable in light of the claims at issue;  and,

(f)an amount equal to the then current monthly COBRA premium rates for the Executive and his qualified dependents, if any, multiplied by the number of months remaining in the Contract Period, and further multiplied by 1.4. The Executive bears administrative responsibility for electing and paying for COBRA continuation benefits, should s/he choose to do so; provided, however, that the Company may unilaterally amend this Section 4.1(f) or eliminate the benefit provided hereunder to the extent it deems necessary to avoid the imposition of excise taxes, penalties or similar charges on the Company or any of its subsidiaries, affiliates or successors, including, without limitation, under Code Section 4980D.

4.2The amounts specified in Sections 4.1(a), (b), (c), and (f) (if applicable), will be payable to the Executive in a lump sum as soon as practicable, but no later than within sixty (60) days of his or her Termination Date.

4.3The amounts specified in Section 4.1(e) will be payable to the Executive only to the extent payment of such amounts would not be subject to tax under Code Section 409A.

4.4Except as specifically provided in this Agreement, the amount of any compensation or benefits provided for in this Agreement will not be subject to mitigation by the Executive.

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5.280G Provisions.  Notwithstanding any provision of this Agreement to the contrary, if all or any portion of the amount payable to the Executive pursuant to this Agreement, alone or together with other payments the Executive has the right to receive from the Company, constitute “excess parachute payments” within the meaning of Code Section 280G, as amended, that are subject to the excise tax imposed by Code Section 4999, such amounts payable hereunder will be reduced (in accordance with Code Section 409A) to the extent necessary, after first applying any similar reduction to payments to be received from any other plan or program sponsored by the Company from which the Executive has a right to receive payments subject to Code Sections 280G and 4999, so that the excise tax imposed by Code Section 4999 does not apply; provided, however, that this payment reduction will take place only if such reduction would provide to the Executive a greater net, after-tax benefit than he or she would receive if such amounts were not subject to such reduction.

6.Successors; Binding Agreement.

6.1The Company will require any successor or successors (whether direct or indirect, by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all of the business and/or assets of the Company, upon or prior to such succession, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  A copy of such assumption and agreement shall be delivered to the Executive promptly after its execution by the successor.  Failure of the Company to obtain such agreement upon or prior to the effectiveness of any such succession shall entitle the Executive to terminate his or her employment for Good Reason, as set forth in Section 1.10(d).  As used in this Agreement “Company” shall include any successor to its business and/or assets that executes and delivers the agreement provided for in this Section 6.1 or that otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

6.2This Agreement is personal to the Executive and the Executive may not assign or transfer any part of his or her rights or duties hereunder, or any compensation due to the Executive hereunder, to any other person, except that this Agreement will inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, heirs, distributees, devisees, legatees or beneficiaries.

7.Modification; Waiver.  No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and by the Chief Executive Officer of the Company or such other director or officer as may be specifically designated by the Board.  Waiver by any party of any breach of or failure to comply with any provision of this Agreement by the other party will not be construed as, or constitute, a continuing waiver of such provision, or a waiver of any other breach of, or failure to comply with, any other provision of this Agreement.

8.Arbitration of Disputes.

8.1Any disagreement, dispute, controversy or claim arising out of or relating to this Agreement or the interpretation or validity of this Agreement will be settled exclusively and finally by arbitration.  It is specifically understood and agreed that any disagreement, dispute or controversy that cannot be resolved between the parties, including without limitation any matter relating to the interpretation of this Agreement, may be submitted to arbitration irrespective of the magnitude thereof, the amount in controversy or whether such disagreement, dispute or controversy would otherwise be considered justiciable or ripe for resolution by a court or arbitral tribunal.

8.2The arbitration will be conducted in accordance with the Commercial Arbitration Rules (the “Arbitration Rules”) of the American Arbitration Association (the “AAA”).

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8.3The arbitral tribunal will consist of one arbitrator.  The parties to the arbitration jointly will directly appoint such arbitrator within 30 days of initiation of the arbitration.  If the parties fail to appoint such arbitrator as provided above, such arbitrator will be appointed by the AAA as provided in the Arbitration Rules and will be a person who (a) maintains his or her principal place of business in the State of Washington; and (b) has had substantial experience in business transactions.  The Company will pay all of the fees, if any, and expenses of such arbitrator.

8.4The arbitration will be conducted in Seattle, Washington or in such other city in the United States of America as the parties to the dispute may designate by mutual written consent.

8.5At any oral hearing of evidence in connection with the arbitration, each party thereto or its legal counsel will have the right to examine its witnesses and to cross-examine the witnesses of any opposing party.  No evidence of any witness will be presented in written form unless the opposing party or parties will have the opportunity to cross-examine such witness, except as the parties to the dispute otherwise agree in writing or except under extraordinary circumstances where the interests of justice require a different procedure.

8.6Any decision or award of the arbitral tribunal will be final and binding upon the parties to the arbitration proceeding.  The parties hereto hereby waive to the extent permitted by law any rights to appeal or to seek review of such award by any court or tribunal.  The parties hereto agree that the arbitral award may be enforced against the parties to the arbitration proceeding or their assets wherever they may be found and that a judgment upon the arbitral award may be entered in any court having jurisdiction.

8.7The arbitral tribunal will not have any authority, power, or right to alter, change, amend, modify, add to, or subtract from any of the provisions of this Agreement.

9.Payroll and Withholding Taxes.  All payments to be made or benefits to be provided hereunder by the Company will be subject to reduction for any applicable payroll-related or withholding taxes.

10.Compliance with Code Section 409A.

10.1General.  The parties intend that this Agreement and the payments and benefits provided under this Agreement, including, without limitation, those provided pursuant to Section 4, be exempt from the requirements of Code Section 409A to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise.  To the extent Code Section 409A is applicable to this Agreement, the parties intend that this Agreement and any payments and benefits under this Agreement comply with the deferral, payout and other limitations and restrictions imposed under Code Section 409A.  Notwithstanding anything in this Agreement to the contrary, this Agreement will be interpreted, operated and administered in a manner consistent with such intentions; provided, however, that in no event will the Company or its agents, subsidiaries, affiliates or successors be liable for any additional tax, interest or penalty that may be imposed on the Executive pursuant to Code Section 409A or for any damages incurred by the Executive as a result of this Agreement (or the payments or benefits hereunder) failing to comply with, or be exempt from, Code Section 409A.  Without limiting the generality of the foregoing, and notwithstanding any other provision of this Agreement to the contrary:

(a)If the Executive is a “specified employee,” within the meaning of Code Section 409A (a “Specified Employee”), on the Termination Date, then to the extent necessary to avoid subjecting the Executive to the imposition of any additional tax or interest under Code

- 6 -

Section 409A, (i) amounts that would (but for this provision) be payable within six (6) months following the Termination Date shall not be paid to the Executive during such period, but will instead be accumulated and paid to the Executive (or to his estate) in a lump sum on the first business day occurring after the earlier of (A) the date that is six (6) months after the Termination Date, and (B) the date of the Executive’s death, and (ii) benefits that would (but for this provision) have been provided to the Executive within six (6) months following the Termination Date will be made available to the Executive by the Company during such period at the Executive’s expense and the Company will reimburse the Executive (or the Executive’s estate) for such amounts at the time specified in clause (i) above.  Any payments delayed, and any reimbursements due, pursuant to this Section 10.1(a), will be credited with interest for the period commencing on the Executive’s Termination Date (or, if later, the date on which the Executive incurred the expense being reimbursed) and ending on the date payment (or reimbursement, as applicable) of such amounts is made to the Executive based on an annual interest rate equal to the greater of (a) the interest rate used to determine participant interest credits under the Company’s defined benefit cash balance plan for the fiscal year in which the Termination Date occurs and (b) the applicable federal rate appropriate for a six-month loan determined as of the Termination Date.

(b)Each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate and distinct payments.

(c)With regard to any provision in this Agreement that provides for reimbursement of expenses or in-kind benefits, except for any expense, reimbursement or in-kind benefit provided pursuant to this Agreement that does not constitute a "deferral of compensation," within the meaning of Treasury Regulation Section 1.409A-1(b), (i) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any calendar year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year (other than for medical reimbursement arrangements as excepted under Treasury Regulation Section 1.409A-3(i)(1)(iv)(B) solely because the arrangement provides for a limit on the amount of expenses that may be reimbursed under such arrangement over some or all of the period the arrangement remains in effect), (ii) such reimbursements shall be made on or before the last day of the calendar year following the calendar year in which the expense was incurred, and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

11.Cooperation.  If the Company or the Executive determines that any provision of this Agreement is or might be inconsistent with the requirements of Code Section 409A, the parties will attempt in good faith to agree on such amendments to this Agreement as may be necessary or appropriate to avoid subjecting the Executive to the imposition of any additional tax under Code Section 409A without changing the basic economic terms of this Agreement.  Notwithstanding the foregoing, no provision of this Agreement will be interpreted or construed to transfer any liability for failure to comply with Code Section 409A from the Executive or any other individual to the Company or any of its agents, subsidiaries, affiliates or successors.

- 7 -

12.Notice.All notices, requests, demands and other communications required or permitted to be given by either party to the other party by this Agreement (including, without limitation, any notice under the Arbitration Rules of an intention to arbitrate) must be in writing and will be deemed to have been duly given when delivered personally or received by certified or registered mail, return receipt requested, postage prepaid, at the address of the other party, as follows:

If to the Company, to

Esterline Technologies Corporation

500 108^th Avenue N.E.

Suite 1500

Bellevue, Washington 98004

Attention: Board of Directors and Secretary

If to the Executive, to

Roger A. Ross

c/o Esterline Technologies Corporation

500 108^th Ave NE

Suite 1500

Bellevue, WA 98004

Either party may change its address for purposes of this Section 12 by giving fifteen (15) days’ prior notice to the other party.

13.Severability.  If any term or provision of this Agreement or the application of this Agreement to any person or circumstances is to any extent invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable will not be affected thereby, and each term and provision of this Agreement will be valid and enforceable to the fullest extent permitted by law.

14.Headings.  The headings in this Agreement are inserted for convenience of reference only and will not be a part of or control or affect the meaning of this Agreement.

15.Counterparts.  This Agreement may be executed in several counterparts, each of which will be deemed an original.

16.Governing Law. This Agreement will in all respects be governed by, and construed and enforced in accordance with, the laws of the State of Washington, without regard to its conflicts of laws principles.  

17.Entire Agreement.  This Agreement supersedes any and all other oral or written agreements made relating to the subject matter of this Agreement and constitutes the entire agreement of the parties relating to the subject matter of this Agreement; provided that this Agreement will not supersede or limit or in any way affect (a) the Executive’s rights under the Company’s Equity Incentive Plan, any other incentive compensation plan, or any deferred compensation plan as in effect on the Effective Date or with respect to any awards made pursuant to such plans; (b) any rights the Executive may have under any other company employee benefit plan, program or arrangement (including, without limitation, any pension, life insurance, medical, dental, health, vacation and accident and disability plans, programs and arrangements); or (c) the Company’s right to amend or terminate its employee benefit plans in accordance with their terms.

- 8 -

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

Executive

/s/ Roger A. Ross

Esterline Technologies Corporation

/s/ Curtis C, Reusser

By:    Curtis C. Reusser

Chairman, President & CEO

- 9 -

EX-11

EXHIBIT 11

ESTERLINE TECHNOLOGIES CORPORATION

Computation of Basic and Diluted Earnings Per Common Share

For the Three Month Periods Ended December 30, 2016 and January 1, 2016

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended
	December 30,			January 1,
	2016			2016
Basic
Weighted Average Number of Shares Outstanding		29,547			29,582
Earnings (Loss) Per Share Attributable to Esterline - Basic:
Continuing Operations	$	0.73		$	0.33
Discontinued Operations		(0.18	)		(0.16	)
Earnings (Loss) Per Share Attributable to Esterline - Basic	$	0.55		$	0.17
Diluted
Weighted Average Number of Shares Outstanding		29,547			29,582
Net Shares Assumed to be Issued for Stock Options and RSUs		284			357
Weighted Average Number of Shares and Equivalent Shares Outstanding - Diluted		29,831			29,939
Earnings (Loss) Per Share Attributable to Esterline - Diluted:
Continuing Operations	$	0.72		$	0.33
Discontinued Operations		(0.18	)		(0.16	)
Earnings (Loss) Per Share Attributable to Esterline - Diluted	$	0.54		$	0.17

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Curtis C. Reusser, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Esterline Technologies Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 3, 2017	By:	/s/ Curtis C. Reusser
		Curtis C. Reusser
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Robert D. George, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Esterline Technologies Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 3, 2017	By:	/s/ Robert D. George
		Robert D. George
		Executive Vice President, Chief Financial Officer, and
		Corporate Development (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Esterline Technologies Corporation (the “Company”) on Form 10-Q for the period ended December 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, Curtis C. Reusser, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 3, 2017	By:	/s/ Curtis C. Reusser
		Curtis C. Reusser
		Chairman, President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Esterline Technologies Corporation (the “Company”) on Form 10-Q for the period ended December 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, Robert D. George, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 3, 2017	By:	/s/ Robert D. George
		Robert D. George
		Executive Vice President, Chief Financial Officer, and Corporate Development

XML

Document and Entity Information - shares	3 Months Ended
	Dec. 30, 2016	Feb. 01, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 30, 2016
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Trading Symbol	ESL
Entity Registrant Name	ESTERLINE TECHNOLOGIES CORP
Entity Central Index Key	0000033619
Current Fiscal Year End Date	--09-29
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		29,687,833

XML

CONSOLIDATED BALANCE SHEET (Unaudited) - USD ($) $ in Thousands	Dec. 30, 2016	Sep. 30, 2016
Current Assets
Cash and cash equivalents	$ 278,024	$ 258,520
Cash in escrow	0	1,125
Accounts receivable, net of allowances of $15,835 and $17,028	363,825	422,073
Inventories
Raw materials and purchased parts	181,157	177,069
Work in progress	171,659	171,515
Finished goods	101,417	101,622
Inventories	454,233	450,206
Income tax refundable	10,097	5,183
Prepaid expenses	19,481	17,909
Other current assets	5,130	5,322
Current assets of businesses held for sale	9,618	15,450
Total Current Assets	1,140,408	1,175,788
Property, Plant and Equipment	791,958	795,790
Accumulated depreciation	461,393	457,756
Total Property, Plant and Equipment	330,565	338,034
Other Non-Current Assets
Goodwill	992,810	1,024,667
Intangibles, net	366,706	393,035
Deferred income tax benefits	74,133	75,409
Other assets	12,166	13,698
Non-current assets of businesses held for sale	11,012	11,400
Total Assets	2,927,800	3,032,031
Current Liabilities
Accounts payable	108,129	121,816
Accrued liabilities	223,561	238,163
Current maturities of long-term debt	16,717	16,774
Federal and foreign income taxes	9,257	10,932
Current liabilities of businesses held for sale	9,535	10,813
Total Current Liabilities	367,199	398,498
Long-Term Liabilities
Credit facilities	150,000	155,000
Long-term debt, net of current maturities	671,441	698,796
Deferred income tax liabilities	40,524	53,798
Pension and post-retirement obligations	90,726	92,520
Other liabilities	22,157	21,968
Non-current liabilities of businesses held for sale	154	320
Shareholders' Equity
Common stock, par value $.20 per share, authorized 60,000,000 shares, issued 32,801,799 and 32,564,252 shares	6,560	6,513
Additional paid-in capital	715,971	702,610
Treasury stock at cost, repurchased 3,135,927 and 3,135,927 shares	(308,514)	(308,514)
Retained earnings	1,565,849	1,548,805
Accumulated other comprehensive loss	(404,733)	(348,857)
Total Esterline Shareholders' Equity	1,575,133	1,600,557
Noncontrolling interests	10,466	10,574
Total Shareholders' Equity	1,585,599	1,611,131
Total Liabilities and Shareholders' Equity	$ 2,927,800	$ 3,032,031

XML

CONSOLIDATED BALANCE SHEET (Parenthetical) (Unaudited) - USD ($) $ in Thousands	Dec. 30, 2016	Sep. 30, 2016
Statement Of Financial Position [Abstract]
Accounts receivable, allowances	$ 15,835	$ 17,028
Common stock, par value	$ 0.20	$ 0.20
Common stock, shares authorized	60,000,000	60,000,000
Common stock, shares issued	32,801,799	32,564,252
Treasury stock, shares repurchased	3,135,927	3,135,927

XML

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2016	Jan. 01, 2016
Income Statement [Abstract]
Net Sales	$ 457,733	$ 441,477
Cost of Sales	313,686	303,758
Gross Profit	144,047	137,719
Expenses
Selling, general & administrative	95,633	94,091
Research, development and engineering	21,038	25,575
Restructuring charges	0	931
Insurance recovery	(2,600)	0
Total Expenses	114,071	120,597
Operating Earnings from Continuing Operations	29,976	17,122
Interest Income	(96)	(87)
Interest Expense	7,888	7,216
Earnings from Continuing Operations Before Income Taxes	22,184	9,993
Income Tax Expense (Benefit)	420	(33)
Earnings from Continuing Operations Including Noncontrolling Interests	21,764	10,026
Earnings Attributable to Noncontrolling Interests	(239)	(162)
Earnings from Continuing Operations Attributable to Esterline, Net of Tax	21,525	9,864
Loss from Discontinued Operations Attributable to Esterline, Net of Tax	(5,336)	(4,780)
Net Earnings Attributable to Esterline	$ 16,189	$ 5,084
Earnings (Loss) Per Share Attributable to Esterline - Basic:
Continuing operations	$ 0.73	$ 0.33
Discontinued operations	(0.18)	(0.16)
Earnings (Loss) Per Share - Basic	0.55	0.17
Earnings (Loss) Per Share Attributable to Esterline - Diluted:
Continuing operations	0.72	0.33
Discontinued operations	(0.18)	(0.16)
Earnings (Loss) Per Share - Diluted	$ 0.54	$ 0.17
Net Earnings	$ 16,189	$ 5,084
Change in Fair Value of Derivative Financial Instruments	(6,299)	(4,173)
Income Tax Expense (Benefit)	(1,909)	(1,285)
Change in Fair Value of Derivative Financial Instruments, Net of Tax	(4,390)	(2,888)
Change in Pension and Post-Retirement Obligations	2,533	2,276
Income Tax Expense (Benefit)	992	758
Change in Pension and Post-Retirement Obligations, Net of Tax	1,541	1,518
Foreign Currency Translation Adjustment	(53,027)	(39,461)
Comprehensive Income (Loss)	$ (39,687)	$ (35,747)

XML

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2016	Jan. 01, 2016
Cash Flows Provided (Used) by Operating Activities
Net earnings including noncontrolling interests	$ 16,428	$ 5,246
Adjustments to reconcile net earnings including noncontrolling interests to net cash provided (used) by operating activities:
Depreciation and amortization	25,625	24,171
Deferred income taxes	(9,342)	(5,902)
Share-based compensation	4,695	3,328
Excess tax benefits from share-based compensation	0	(476)
Loss on assets held for sale	4,728	2,517
Working capital changes, net of effect of acquisitions:
Accounts receivable	49,181	31,763
Inventories	(16,201)	(8,011)
Prepaid expenses	(2,075)	1,489
Other current assets	(876)	(2,979)
Accounts payable	(10,464)	(491)
Accrued liabilities	(13,883)	(12,888)
Federal and foreign income taxes	(5,585)	(1,608)
Other liabilities	1,361	(488)
Other, net	1,943	4,981
Net Cash Provided (Used) by Operating Activities	45,535	40,652
Cash Flows Provided (Used) by Investing Activities
Purchase of capital assets	(15,298)	(14,862)
Net Cash Provided (Used) by Investing Activities	(15,298)	(14,862)
Cash Flows Provided (Used) by Financing Activities
Proceeds provided by stock issuance under employee stock plans	10,729	2,609
Withholding taxes on restricted stock units vested	(863)	(1,128)
Excess tax benefits from share-based compensation	0	476
Repayment of long-term credit facilities	(10,000)	(10,000)
Repayment of long-term debt	(3,073)	(3,192)
Proceeds from issuance of long-term credit facilities	5,000	0
Net Cash Provided (Used) by Financing Activities	1,793	(11,235)
Effect of Foreign Exchange Rates on Cash and Cash Equivalents	(12,526)	(5,019)
Net Increase (Decrease) in Cash and Cash Equivalents	19,504	9,536
Cash and Cash Equivalents - Beginning of Year	258,520	191,355
Cash and Cash Equivalents - End of Period	278,024	200,891
Supplemental Cash Flow Information:
Cash paid for interest	10,745	10,361
Cash paid for taxes	$ 13,775	$ 5,256

XML

Basis of Presentation

3 Months Ended

Dec. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

Note 1 – Basis of Presentation

The consolidated balance sheet as of December 30, 2016, the consolidated statement of operations and comprehensive income (loss) for the three month periods ended December 30, 2016, and January 1, 2016, and the consolidated statement of cash flows for the three month periods ended December 30, 2016, and January 1, 2016, 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.

The notes to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016, 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, October through December, includes significant holiday periods in both Europe and North America.

XML

Recent Accounting Pronouncements

3 Months Ended

Dec. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Recent Accounting Pronouncements

Note 2 – Recent Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (FASB) issued new guidance regarding the goodwill impairment test.   The new guidance eliminates the Step 2 valuation test, when evaluating goodwill for impairment.   The new guidance requires that an entity performs its annual or interim goodwill test by comparing the fair value of the reporting unit with its carrying amount.  An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.  The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.  The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures.  The guidance will be effective for the company in fiscal year 2020, with early adoption permitted.

In October 2016, FASB issued new guidance regarding income taxes.  The new guidance will require the tax effects of intercompany transactions, other than sales of inventory, to be recognized currently, eliminating an exception under current Generally Accepted Accounting Principles (GAAP) in which the tax effects of intra-entity asset transfers are deferred until the transferred asset is sold to a third party or otherwise recovered through use.  The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures.  The guidance will be effective for the company in fiscal year 2019, with early adoption permitted.

In August 2016, the FASB issued new guidance addressing how certain cash receipts and cash payments are presented and classified in the statement of cash flows.  The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures.  The guidance will be effective for the Company in fiscal year 2019, with early adoption permitted.

In June 2016, the FASB issued a new standard on the measurement of credit losses, which will impact the Company’s measurement of trade receivables.  The new standard replaces the current incurred loss model with a forward-looking expected loss model that is likely to result in earlier recognition of losses.  The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures.  The new standard is effective for the Company in fiscal year 2021, with early adoption permitted, but not earlier than in fiscal year 2020.

In March 2016, the FASB issued new guidance simplifying certain aspects of accounting for share-based payments.  The key provision of the new standard requires that excess tax benefits and shortfalls be recorded as income tax benefit or expense in the income statement, rather than in equity.  The Company adopted the new guidance during the first quarter of fiscal 2017, which resulted in a $0.7 million benefit to income tax expense and a favorable impact to operating cash flows of $0.7 million.  The Company has also elected to account for forfeitures as they occur, rather than estimate expected forfeitures, which resulted in a positive cumulative effect on retained earnings of $0.9 million and a reduction of additional paid-in capital of $0.9 million.

In February 2016, the FASB issued a new lease accounting standard, which provides revised guidance on accounting for lease arrangements by both lessors and lessees.  The central requirement of the new standard is that lessees must recognize lease related assets and liabilities for all leases with a term longer than 12 months.  The Company is evaluating the effect the standard will have on the Company’s consolidated financial statements and related disclosures.  The new standard is effective for the Company in fiscal year 2020, with early adoption permitted.

In May 2014, the FASB amended requirements for an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective, and permits the use of either the retrospective or cumulative effect transition method.  The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures.  The updated standard becomes effective for the Company in the first quarter of fiscal 2019, with early adoption permitted.

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Earnings Per Share and Shareholders Equity

3 Months Ended

Dec. 30, 2016

Earnings Per Share [Abstract]

Earnings Per Share and Shareholders Equity

Note 3 – Earnings Per Share and Shareholders’ Equity

Basic earnings per share is computed on the basis of the weighted average number of shares outstanding during the year.  Diluted earnings per share includes the dilutive effect of stock options, restricted stock units and share units related to the Company’s performance share plan to the extent that performance share plan objectives are met.  Common shares issuable from stock options excluded from the calculation of diluted earnings per share because they were anti-dilutive were 809,875 in the three month period ending December 30, 2016.  Common shares issuable from stock options excluded from the calculation of diluted earnings per share because they were anti-dilutive were 610,700 in the three month period ending January 1, 2016.  Shares used for calculating earnings per share are disclosed in the following table:

In Thousands	Three Months Ended
	December 30,		January 1,
	2016		2016
Shares used for basic earnings per share		29,547		29,582
Shares used for diluted earnings per share		29,831		29,939

The authorized capital stock of the Company consists of 25,000 shares of preferred stock ($100 par value), 475,000 shares of serial preferred stock ($1.00 par value), each issuable in series, and 60,000,000 shares of common stock ($.20 par value).  As of December 30, 2016, and September 30, 2016, there were no shares of preferred stock or serial preferred stock outstanding.

On June 19, 2014, the Company’s board of directors approved a $200 million share repurchase program.  In March 2015, the Company’s board of directors approved an additional $200 million for the share repurchase program.  Under the program, the Company is authorized to repurchase up to $400 million of outstanding shares of common stock from time to time, depending on market conditions, share price and other factors.  Repurchases may be made in the open market or through private transactions, in accordance with SEC requirements.  The Company may enter into a Rule 10(b)5-1 plan designed to facilitate the repurchase of all or a portion of the repurchase amount.  The program does not require the Company to acquire a specific number of shares.  Common stock repurchased can be reissued, and accordingly, the Company accounts for repurchased stock under the cost method of accounting.

There were no shares repurchased during the three months ended December 30, 2016, or during the three months ended January 1, 2016.  Since the program began, the Company has repurchased 3,135,927 shares for an aggregate purchase price of $308.5 million, leaving $91.5 million for shares to be repurchased in the future.

Changes in issued and outstanding common shares are summarized as follows:

	Three Months Ended			Year Ended
	December 30,			September 30,
	2016			2016
Shares Issued:
Balance, beginning of year		32,564,252			32,378,185
Shares issued under share-based compensation plans		237,547			186,067
Balance, end of current period		32,801,799			32,564,252
Treasury Stock:
Balance, beginning of year		(3,135,927	)		(2,831,350	)
Shares purchased		-			(304,577	)
Balance, end of current period		(3,135,927	)		(3,135,927	)
Shares outstanding, end of period		29,665,872			29,428,325

The components of Accumulated Other Comprehensive Gain (Loss):

In Thousands	December 30,			September 30,
	2016			2016
Unrealized gain (loss) on derivative contracts	$	(10,846	)	$	(4,547	)
Tax effect		2,986			1,077
		(7,860	)		(3,470	)
Pension and post-retirement obligations		(113,813	)		(116,346	)
Tax effect		38,812			39,804
		(75,001	)		(76,542	)
Foreign currency translation adjustment		(321,872	)		(268,845	)
Accumulated other comprehensive gain (loss)	$	(404,733	)	$	(348,857	)

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Retirement Benefits

3 Months Ended

Dec. 30, 2016

Compensation And Retirement Disclosure [Abstract]

Retirement Benefits

Note 4 – Retirement Benefits

The Company’s pension plans principally include a U.S. pension plan maintained by Esterline and a non-U.S. plan maintained by CMC Electronics, Inc. (CMC).  The Company also sponsors a number of other non-U.S. defined benefit pension plans, primarily in Belgium, France and Germany.  Components of periodic pension cost consisted of the following:

In Thousands	Three Months Ended
	December 30,			January 1,
	2016			2016
Components of Net Periodic Cost
Service cost	$	3,357		$	2,956
Interest cost		3,721			4,393
Expected return on plan assets		(6,265	)		(5,911	)
Amortization of prior service cost		114			115
Amortization of actuarial (gain) loss		1,763			1,476
Net periodic cost (benefit)	$	2,690		$	3,029

The Company amortizes prior service cost and actuarial gains and losses from accumulated other comprehensive income to expense over the remaining service period.

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Fair Value Measurements

3 Months Ended

Dec. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 5 – Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  A fair value hierarchy has been established that prioritizes the inputs to valuation techniques used to measure fair value.  An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.  The hierarchy of fair value measurements is described below:

Level 1 – Valuations are based on quoted prices that the Company has the ability to obtain in actively traded markets for identical assets and liabilities.  Since valuations are based on quoted prices that are readily and regularly available in an active market or exchange traded market, a valuation of these instruments does not require a significant degree of judgment.

Level 2 – Valuations are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 – Valuations are based on model-based techniques for which some or all of the assumptions are obtained from indirect market information that is significant to the overall fair value measurement and which require a significant degree of management judgment.

The following table sets forth the Company’s financial assets and liabilities that were measured at fair value on a recurring basis by level within the fair value hierarchy at December 30, 2016, and September 30, 2016.

In Thousands	Level 2
	December 30,		September 30,
	2016		2016
Assets:
Derivative contracts designated as hedging instruments	$	1,389	$	2,948
Derivative contracts not designated as hedging instruments		107		143
Embedded derivatives		3,195		2,485
Liabilities:
Derivative contracts designated as hedging instruments	$	12,561	$	7,828
Derivative contracts not designated as hedging instruments		8,090		6,720
Embedded derivatives		826		985

In Thousands	Level 3
	December 30,		September 30,
	2016		2016
Assets:
Estimated value of assets held for sale	$	20,630	$	26,850
Liabilities:
Estimated value of liabilities held for sale	$	9,689	$	11,133

The Company’s embedded derivatives are the result of entering into sales or purchase contracts that are denominated in a currency other than the Company’s functional currency or the supplier’s or customer’s functional currency.  The fair value is determined by calculating the difference between quoted exchange rates at the time the contract was entered into and the period-end exchange rate.  These contracts are categorized as Level 2 in the fair value hierarchy.

The Company’s derivative contracts consist of foreign currency exchange contracts and, from time to time, interest rate swap agreements.  These derivative contracts are over the counter, and their fair value is determined using modeling techniques that include market inputs such as interest rates, yield curves, and currency exchange rates.  These contracts are categorized as Level 2 in the fair value hierarchy.

In fiscal 2014, the Company’s board of directors approved the plan to sell certain non-core business units. Based upon the estimated fair values, the Company adjusted the carrying value of the assets and liabilities of the businesses to fair value.  Principle assumptions used in measuring the estimated value of assets and liabilities held for sale included estimated selling price of the discontinued business, discount rates, industry growth rates, and pricing of comparable transactions in the market.

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Derivative Financial Instruments

3 Months Ended

Dec. 30, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Note 6 – Derivative Financial Instruments

The Company uses derivative financial instruments in the form of foreign currency forward exchange contracts and interest rate swap contracts for the purpose of minimizing exposure to changes in foreign currency exchange rates on business transactions and interest rates, respectively.  The Company’s policy is to execute such instruments with banks the Company believes to be creditworthy and not to enter into derivative financial instruments for speculative purposes.  These derivative financial instruments do not subject the Company to undue risk, as gains and losses on these instruments generally offset gains and losses on the underlying assets, liabilities, or anticipated transactions that are being hedged.

All derivative financial instruments are recorded at fair value in the Consolidated Balance Sheet.  For a derivative that has not been designated as an accounting hedge, the change in the fair value is recognized immediately through earnings.  For a derivative that has been designated as an accounting hedge of an existing asset or liability (a fair value hedge), the change in the fair value of both the derivative and underlying asset or liability is recognized immediately through earnings.  For a derivative designated as an accounting hedge of an anticipated transaction (a cash flow hedge), the change in the fair value is recorded on the Consolidated Balance Sheet in Accumulated Other Comprehensive Income (AOCI) to the extent the derivative is effective in mitigating the exposure related to the anticipated transaction.  The change in the fair value related to the ineffective portion of the hedge, if any, is immediately recognized in earnings.  The amount recorded within AOCI is reclassified into earnings in the same period during which the underlying hedged transaction affects earnings.

The fair value of derivative instruments is presented on a gross basis, as the Company does not have any derivative contracts which are subject to master netting arrangements.  The Company did not have any hedges with credit-risk-related contingent features or that required the posting of collateral as of December 30, 2016, and September 30, 2016.  The cash flows from derivative contracts are recorded in operating activities in the Consolidated Statement of Cash Flows.

Foreign Currency Forward Exchange Contracts

The Company transacts business in various foreign currencies, which subjects the Company’s cash flows and earnings to exposure related to changes in foreign currency exchange rates.  These exposures arise primarily from purchases or sales of products and services from third parties.  Foreign currency forward exchange contracts provide for the purchase or sale of foreign currencies at specified future dates at specified exchange rates, and are used to offset changes in the fair value of certain assets or liabilities or forecasted cash flows resulting from transactions denominated in foreign currencies.  At December 30, 2016, and September 30, 2016, the Company had outstanding foreign currency forward exchange contracts principally to sell U.S. dollars with notional amounts of $424.9 million and $450.9 million, respectively.  These notional values consist primarily of contracts for the European euro, British pound sterling and Canadian dollar, and are stated in U.S. dollar equivalents at spot exchange rates at the respective dates.

Interest Rate Swaps

The Company manages its exposure to interest rate risk by maintaining an appropriate mix of fixed and variable rate debt, which over time should moderate the costs of debt financing.  When considered necessary, the Company may use financial instruments in the form of interest rate swaps to help meet this objective.

Embedded Derivative Instruments

The Company’s embedded derivatives are the result of entering into sales or purchase contracts that are denominated in a currency other than the Company’s functional currency or the supplier’s or customer’s functional currency.

Net Investment Hedge

In April 2015, the Company issued €330.0 million in 3.625% Senior Notes due April 2023 (2023 Notes) and requiring semi-annual interest payments in April and October each year until maturity.  The Company designated the 2023 Notes and accrued interest as a hedge of the investment of certain foreign business units.  The foreign currency gain or loss that is effective as a hedge is reported as a component of other comprehensive income (loss) in shareholders’ equity.  To the extent that this hedge is ineffective, the foreign currency gain or loss is recorded in earnings.  There was no ineffectiveness of the hedge since inception.

Fair Value of Derivative Instruments

Fair value of derivative instruments in the Consolidated Balance Sheet at December 30, 2016, and September 30, 2016, consisted of:

In Thousands		Fair Value
		December 30,		September 30,
	Classification	2016		2016
Foreign Currency Forward Exchange Contracts:
	Other current assets	$	811	$	1,757
	Other assets		685		1,334
	Accrued liabilities		16,666		11,168
	Other liabilities		3,985		3,380
Embedded Derivative Instruments:
	Other current assets	$	2,386	$	1,864
	Other assets		809		621
	Accrued liabilities		783		866
	Other liabilities		43		119

The effect of derivative instruments on the Consolidated Statement of Operations and Comprehensive Income (Loss) for the three month periods ended December 30, 2016, and January 1, 2016, consisted of:

Fair Value Hedges and Embedded Derivatives

The Company recognized the following gains (losses) on contracts designated as fair value hedges and embedded derivatives:

In Thousands	Three Months Ended
Gain (Loss)	December 30,		January 1,
	2016		2016
Embedded derivatives:
Recognized in sales	$	253	$	1,154

Cash Flow Hedges

The Company recognized the following gains (losses) on contracts designated as cash flow hedges:

In Thousands	Three Months Ended
Gain (Loss)	December 30,			January 1,
	2016			2016
Foreign currency forward exchange contracts:
Recognized in AOCI (effective portion)	$	(1,874	)	$	2,901
Reclassified from AOCI into sales		(4,425	)		(7,074	)

Net Investment Hedges

The Company recognized the following gains (losses) on contracts designated as net investment hedges:

In Thousands	Three Months Ended
Gain (Loss)	December 30,		January 1,
	2016		2016
2023 Notes and Accrued Interest:
Recognized in AOCI	$	23,913	$	11,533

During the first three months of fiscal 2017 and 2016, the Company recorded losses of $2.6 million and $2.4 million, respectively, on foreign currency forward exchange contracts that have not been designated as accounting hedges.  These foreign currency exchange gains and losses are included in selling, general and administrative expense.

There was no significant impact to the Company’s earnings related to the ineffective portion of any hedging instruments during the first three months of fiscal 2017 and 2016.  In addition, there was no significant impact to the Company’s earnings when a hedged firm commitment no longer qualified as a fair value hedge or when a hedged forecasted transaction no longer qualified as a cash flow hedge during the first three months of fiscal 2017 and 2016.

Amounts included in AOCI are reclassified into earnings when the hedged transaction settles.  The Company expects to reclassify approximately $10.3 million of net loss into earnings over the next 12 months.  The maximum duration of the Company’s foreign currency cash flow hedge contracts at December 30, 2016, is 24 months.

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Income Taxes

3 Months Ended

Dec. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Note 7 – Income Taxes

The income tax rate was 1.9% in the first quarter of fiscal 2017 compared with a 0.3% benefit in the prior-year period.  In the first quarter of fiscal 2017, the income tax rate was higher primarily due to higher income from continuing operations before income taxes and an increase in the estimated annual effective tax rate as a result of U.K. limitations on interest deductions, partially offset by increased discrete income tax benefits.  In the first quarter of fiscal 2017, a reduction of the income tax rate in France for fiscal year 2020 resulted in a reduction in the Company’s net deferred income tax liabilities of $3.8 million, which was primarily related to acquired intangible assets.  Secondly, $1.2 million of discrete tax benefits was recorded primarily related to a valuation allowance release due to an expected taxable gain from a foreign income tax law change.  Lastly, the early adoption of the accounting standard update for employee share-based payment awards resulted in a $0.7 million tax benefit.  In the prior-year period, the retroactive extension of the U.S. federal research and experimentation credits resulted in a $1.3 million tax benefit.

During the next 12 months, it is reasonably possible that approximately $1.4 million of tax benefits that are currently unrecognized could be recognized as a result of settlement of examinations and/or the expiration of applicable statutes of limitations.  The Company recognizes interest related to unrecognized tax benefits in income tax expense.

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Debt

3 Months Ended

Dec. 30, 2016

Debt Disclosure [Abstract]

Debt

Note 8 – Debt

U.S. Credit Facility

On April 9, 2015, the Company amended its secured credit facility to extend the maturity to April 9, 2020, increase the amount available for borrowing under the secured revolving credit facility to $500 million, and provide for a delayed-draw term loan facility of $250 million.  The Company recorded $2.3 million in debt issuance costs.  The credit facility is secured by substantially all the Company’s assets, and interest is based on standard inter-bank offering rates.  The interest rate ranges from LIBOR plus 1.25% to LIBOR plus 2.00% depending on leverage ratios at the time the funds are drawn.  The Company had $150.0 million outstanding under the secured credit facility at an interest rate of LIBOR plus 1.75%.  At December 30, 2016, the weighted average interest rate was 2.47%.

U.S. Term Loan, due April 2020

On August 3, 2015, the Company borrowed $250 million under the U.S. Term Loan, due 2020, provided for under the amended secured credit facility (U.S. Term Loan, due 2020).  The interest rate on the U.S. Term Loan, due 2020, ranges from LIBOR plus 1.25% to LIBOR plus 2.00%.  At December 30, 2016, the interest rate was LIBOR plus 1.75%, which equaled 2.36%.  The loan amortizes at 1.25% of the original principal balance quarterly through March 2020, with the remaining balance due in April 2020.

3.625% Senior Notes, due April 2023

In April 2015, the Company issued €330.0 million in 3.625% Notes, due 2023 requiring semi-annual interest payments in April and October of each year until maturity.  The net proceeds from the sale of the notes, after deducting $5.9 million of debt issuance costs, were $350.8 million.  The 2023 Notes are general unsecured senior obligations of the Company.  The 2023 Notes are unconditionally guaranteed on a senior basis by the Company and certain subsidiaries of the Company that are guarantors under the Company’s existing secured credit facility.  The 2023 Notes are subject to redemption at the option of the Company at any time prior to April 15, 2018, at a price equal to 100% of the principal amount, plus any accrued interest to the date of redemption and a make-whole provision.  The Company may also redeem up to 35% of the 2023 Notes before April 15, 2018, with the net cash proceeds from equity offerings.  The 2023 Notes are also subject to redemption at the option of the Company, in whole or in part, on or after April 15, 2018, at redemption prices starting at 102.719% of the principal amount plus accrued interest during the period beginning April 15, 2018, and declining annually to 100% of principal and accrued interest on or after April 15, 2021.

Based on quoted market prices, the fair value of the Company’s 2023 Notes was $354.0 million and $365.3 million as of December 30, 2016, and September 30, 2016, respectively.  The carrying amount of the secured credit facility and the U.S. Term Loan, due 2020, approximate fair value.  The estimate of fair value for the 2023 Notes is based on Level 2 inputs as defined in the fair value hierarchy described in Note 5.

Government Refundable Advances

Government refundable advances consist of payments received from the Canadian government to assist in research and development related to commercial aviation.  The requirement to repay this advance is solely based on year-over-year commercial aviation revenue growth at CMC beginning in 2014.  Imputed interest on the advance was 2.9% at December 30, 2016.  The debt recognized was $44.3 million and $45.0 million as of December 30, 2016, and September 30, 2016, respectively.

Obligation Under Capital Lease

The Company leases building and equipment under capital leases.  The present value of the minimum capital lease payments, net of the current portion, totaled $66.0 million and $66.2 million as of December 30, 2016, and September 30, 2016, respectively.

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Commitments and Contingencies

3 Months Ended

Dec. 30, 2016

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 9 – Commitments and Contingencies

The Company is party to various lawsuits and claims, both as a plaintiff and defendant, and has contingent liabilities arising from the conduct of business, none of which, in the opinion of management, is expected to have a material effect on the Company’s financial position or results of operations.  The Company believes that it has made appropriate and adequate provisions for contingent liabilities.

As of December 30, 2016, and September 30, 2016, the Company had a liability of $1.0 million and $0.8 million, respectively, related to environmental remediation at a previously sold business for which the Company provided indemnification.

On March 5, 2014, the Company entered into a Consent Agreement with the U.S. Department of State’s Directorate of Defense Trade Controls Office of Defense Trade Controls Compliance (DTCC) to resolve alleged International Traffic in Arms Regulations (ITAR) civil violations.  The Consent Agreement settled the pending ITAR compliance matter with the DTCC previously reported by the Company that resulted from voluntary reports the Company filed with DTCC that disclosed possible technical and administrative violations of the ITAR.  The Consent Agreement has a three-year term and provided for:  (i) a payment of $20 million, $10 million of which is suspended and eligible for offset credit based on verified expenditures for past and future remedial compliance measures; (ii) the appointment of an external Special Compliance Official to oversee compliance with the Consent Agreement and the ITAR; (iii) two external audits of the Company’s ITAR compliance program; and (iv) continued implementation of ongoing remedial compliance measures and additional remedial compliance measures related to automated systems and ITAR compliance policies, procedures and training.  The Company expects to be released from the Consent Agreement in fiscal 2017, depending upon the Company’s satisfactory completion of the remaining requirements under the agreement and the timing of final approval by the DTCC.  The $10 million portion of the settlement that is not subject to suspension will be paid in installments, with $8 million paid over fiscal years 2014, 2015 and 2016.  The remaining $2 million is payable in March 2017.  In fiscal 2016, the DTCC approved costs the Company incurred to implement compliance measures to fully offset the $10 million suspended payment.

During the first quarter of fiscal 2017, the Company received a $2.6 million insurance recovery due to an energetic incident at one of its countermeasure operations, which occurred in the third quarter of fiscal 2016.  The insurance recovery from this incident in fiscal 2016 was $5 million.  A further payment is expected in the second quarter of fiscal 2017.  The amount of the payment is subject to the insurance company’s final review of the claim and is estimated to range between $2.6 million to $5.0 million.

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Employee Stock Plans

3 Months Ended

Dec. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Employee Stock Plans

Note 10 – Employee Stock Plans

As of December 30, 2016, the Company had three share-based compensation plans, which are described below.  The compensation cost that has been charged against income for those plans was $4.7 million and $3.3 million for the first three months of fiscal 2017 and 2016, respectively.  During the first three months of fiscal 2017 and 2016, the Company issued 237,547 and 72,349 shares, respectively, under its share-based compensation plans.

Employee Stock Purchase Plan (ESPP)

The ESPP is a “safe-harbor” designed plan whereby shares are purchased by participants at a discount of 5% of the market value on the purchase date and, therefore, compensation cost is not recorded.

Employee Sharesave Scheme

The Company offers shares under its employee sharesave scheme for U.K. employees.  This plan allows participants the option to purchase shares at a 5% discount of the market price of the stock as of the beginning of the offering period.  The term of these options is three years.  The sharesave scheme is not a “safe-harbor” design, and therefore, compensation cost is recognized on this plan.  Under the sharesave scheme, option exercise prices are equal to the fair market value of the Company’s common stock on the date of grant.  There were no grants in the three month periods ended December 30, 2016, and January 1, 2016.

Equity Incentive Plan

Under the equity incentive plan, option exercise prices are equal to the fair market value of the Company’s common stock on the date of grant.  The Company granted 231,100 and 217,200 options to purchase shares in the three month periods ended December 30, 2016, and January 1, 2016, respectively.  The weighted-average grant date fair value of options granted during the three month periods ended December 30, 2016, and January 1, 2016, was $32.55 and $35.87 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 risk-free rate for the contractual life of the option is based on the U.S. Treasury zero coupon issues in effect at the time of the grant.

	Three Months Ended
	December 30,	January 1,
	2016	2016
Volatility	34.97 - 35.42%	33.06 - 40.52%
Risk-free interest rate	1.98 - 2.51%	1.61 - 2.24%
Expected life (years)	5 - 9	5 - 9
Dividends	0	0

The Company granted 36,700 and 33,400 restricted stock units in the three month periods ended December 30, 2016, and January 1, 2016, respectively.  The weighted-average grant date fair value of restricted stock units granted during the three month periods ended December 30, 2016, and January 1, 2016, was $76.70 and $86.29 per share, respectively.  The fair value of each restricted stock unit granted by the Company is equal to the fair market value of the Company’s common stock on the date of grant.

The Company granted 42,100 and 55,300 performance share plan (PSP) shares in the three month periods ended December 30, 2016, and January 1, 2016, respectively.  PSP shares will be paid out in shares of Esterline common stock at the end of the three year performance period.  The PSP shares granted in each period equaled the number of shares participants would receive if the Company achieves target performance over the relevant period.  The actual number of shares that will be paid out upon completion of the performance period is based on actual performance and may range from 0% to 300% of the target number of shares.

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Discontinued Operations

3 Months Ended

Dec. 30, 2016

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

Note 11 – Discontinued Operations

The Company’s board of directors previously approved the plan to sell certain non-core business units including Wallop Defence Systems, Ltd. (Wallop), a manufacturer of flare countermeasure devices; a small distribution business; and a small manufacturing business.

On May 4, 2016, the Company sold certain assets of Wallop for 2.5 million British pounds and deferred compensation up to a maximum payment of 9 million British pounds.  The deferred compensation is payable based upon receipt of acceptable orders during a three-year period ending May 3, 2019, and is equal to the amount of the acceptable order multiplied by a specified percentage ranging from 26.5% to 31%.  The earn-out payment was estimated to be 5.5 million British pounds at December 30, 2016.

During the first three months of fiscal 2017 and 2016, the Company incurred a loss from discontinued operations of $5.3 million and $4.8 million, respectively.  Included in the loss of $5.3 million for the first three months of fiscal 2017 was a $4.6 million loss on Wallop assets held for sale, principally due to a reduction in the estimated sale price and the effect of changes in foreign currency exchange rates.

The operating results of the discontinued operations for the three month period ended December 30, 2016, consisted of the following:

In Thousands	Avionics &			Sensors &		Advanced
	Controls			Systems		Materials			Other			Total
Net Sales	$	2,696		$	-	$	-		$	-		$	2,696
Operating earnings (loss)		(871	)		895		(5,347	)		(604	)		(5,927	)
Tax expense (benefit)		(239	)		-		(141	)		(211	)		(591	)
Income (loss) from discontinued    operations	$	(632	)	$	895	$	(5,206	)	$	(393	)	$	(5,336	)
Included in Operating Earnings (Loss):
Loss on net assets held for sale	$	(140	)	$	-	$	(4,588	)	$	-		$	(4,728	)

The operating results of the discontinued operations for the three month period ended January 1, 2016, consisted of the following:

In Thousands	Avionics &			Sensors &			Advanced
	Controls			Systems			Materials			Other			Total
Net Sales	$	5,582		$	-		$	2,484		$	-		$	8,066
Operating earnings (loss)		897			(156	)		(5,993	)		(4	)		(5,256	)
Tax expense (benefit)		413			-			(889	)		-			(476	)
Income (loss) from discontinued    operations	$	484		$	(156	)	$	(5,104	)	$	(4	)	$	(4,780	)
Included in Operating Earnings (Loss):
Gain (loss) on net assets    held for sale	$	(270	)	$	-		$	(2,247	)	$	-		$	(2,517	)

Assets and Liabilities Held for Sale within the Consolidated Balance Sheet at December 30, 2016, are comprised of the following:

In Thousands	Avionics &			Sensors &		Advanced
	Controls			Systems		Materials			Total
Accounts receivable, net	$	1,949		$	-	$	246		$	2,195
Inventories		6,453			-		725			7,178
Prepaid expenses		125			-		52			177
Income tax refundable		-			-		68			68
Current Assets of Businesses Held for Sale		8,527			-		1,091			9,618
Net property, plant and equipment		5,386			-		2,899			8,285
Intangibles, net		-			-		1,829			1,829
Deferred income tax benefits		(392	)		-		400			8
Other assets		-			-		890			890
Non-Current Assets of Businesses Held for Sale		4,994			-		6,018			11,012
Accounts payable		122			-		1,325			1,447
Accrued liabilities		6,631			-		1,457			8,088
Current Liabilities of Businesses Held for Sale		6,753			-		2,782			9,535
Deferred income tax liabilities		-			-		(166	)		(166	)
Other liabilities		-			-		320			320
Non-Current Liabilities of Businesses Held for Sale		-			-		154			154
Net Assets of Businesses Held for Sale	$	6,768		$	-	$	4,173		$	10,941

Assets and Liabilities Held for Sale within the Consolidated Balance Sheet at September 30, 2016, were comprised of the following:

In Thousands	Avionics &			Sensors &		Advanced
	Controls			Systems		Materials		Total
Accounts receivable, net	$	2,588		$	-	$	4,093	$	6,681
Inventories		8,070			-		398		8,468
Prepaid expenses		127			-		103		230
Income tax refundable		-			-		71		71
Current Assets of Businesses Held for Sale		10,785			-		4,665		15,450
Net property, plant and equipment		5,368			-		2,869		8,237
Intangibles, net		-			-		1,856		1,856
Deferred income tax benefits		(392	)		-		400		8
Other assets		-			-		1,299		1,299
Non-Current Assets of Businesses Held for Sale		4,976			-		6,424		11,400
Accounts payable		441			-		1,463		1,904
Accrued liabilities		7,000			-		1,909		8,909
Current Liabilities of Businesses Held for Sale		7,441			-		3,372		10,813
Other liabilities		-			-		320		320
Non-Current Liabilities of Businesses Held for Sale		-			-		320		320
Net Assets of Businesses Held for Sale	$	8,320		$	-	$	7,397	$	15,717

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Business Segment Information

3 Months Ended

Dec. 30, 2016

Segment Reporting [Abstract]

Business Segment Information

Note 12 – Business Segment Information

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

In Thousands	Three Months Ended
	December 30,			January 1,
	2016			2016
Sales
Avionics & Controls	$	192,682		$	186,245
Sensors & Systems		167,073			152,430
Advanced Materials		97,978			102,802
	$	457,733		$	441,477
Earnings from Continuing Operations Before Income Taxes
Avionics & Controls	$	17,917		$	9,413
Sensors & Systems		19,946			12,784
Advanced Materials		9,880			12,990
Segment Earnings		47,743			35,187
Corporate expense		(17,767	)		(18,065	)
Interest income		96			87
Interest expense		(7,888	)		(7,216	)
	$	22,184		$	9,993

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Recent Accounting Pronouncements (Policies)

3 Months Ended

Dec. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Recent Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (FASB) issued new guidance regarding the goodwill impairment test.   The new guidance eliminates the Step 2 valuation test, when evaluating goodwill for impairment.   The new guidance requires that an entity performs its annual or interim goodwill test by comparing the fair value of the reporting unit with its carrying amount.  An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.  The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.  The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures.  The guidance will be effective for the company in fiscal year 2020, with early adoption permitted.

In October 2016, FASB issued new guidance regarding income taxes.  The new guidance will require the tax effects of intercompany transactions, other than sales of inventory, to be recognized currently, eliminating an exception under current Generally Accepted Accounting Principles (GAAP) in which the tax effects of intra-entity asset transfers are deferred until the transferred asset is sold to a third party or otherwise recovered through use.  The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures.  The guidance will be effective for the company in fiscal year 2019, with early adoption permitted.

In August 2016, the FASB issued new guidance addressing how certain cash receipts and cash payments are presented and classified in the statement of cash flows.  The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures.  The guidance will be effective for the Company in fiscal year 2019, with early adoption permitted.

In June 2016, the FASB issued a new standard on the measurement of credit losses, which will impact the Company’s measurement of trade receivables.  The new standard replaces the current incurred loss model with a forward-looking expected loss model that is likely to result in earlier recognition of losses.  The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures.  The new standard is effective for the Company in fiscal year 2021, with early adoption permitted, but not earlier than in fiscal year 2020.

In March 2016, the FASB issued new guidance simplifying certain aspects of accounting for share-based payments.  The key provision of the new standard requires that excess tax benefits and shortfalls be recorded as income tax benefit or expense in the income statement, rather than in equity.  The Company adopted the new guidance during the first quarter of fiscal 2017, which resulted in a $0.7 million benefit to income tax expense and a favorable impact to operating cash flows of $0.7 million.  The Company has also elected to account for forfeitures as they occur, rather than estimate expected forfeitures, which resulted in a positive cumulative effect on retained earnings of $0.9 million and a reduction of additional paid-in capital of $0.9 million.

In February 2016, the FASB issued a new lease accounting standard, which provides revised guidance on accounting for lease arrangements by both lessors and lessees.  The central requirement of the new standard is that lessees must recognize lease related assets and liabilities for all leases with a term longer than 12 months.  The Company is evaluating the effect the standard will have on the Company’s consolidated financial statements and related disclosures.  The new standard is effective for the Company in fiscal year 2020, with early adoption permitted.

In May 2014, the FASB amended requirements for an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective, and permits the use of either the retrospective or cumulative effect transition method.  The Company is evaluating the effect the updated standard will have on the Company’s consolidated financial statements and related disclosures.  The updated standard becomes effective for the Company in the first quarter of fiscal 2019, with early adoption permitted.

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Earnings Per Share and Shareholders Equity (Tables)

3 Months Ended

Dec. 30, 2016

Earnings Per Share [Abstract]

Shares Used for Calculating Earnings Per Share

Shares used for calculating earnings per share are disclosed in the following table:

In Thousands	Three Months Ended
	December 30,		January 1,
	2016		2016
Shares used for basic earnings per share		29,547		29,582
Shares used for diluted earnings per share		29,831		29,939

Schedule of Changes in Issued and Outstanding Common Shares and Treasury Stock

Changes in issued and outstanding common shares are summarized as follows:

	Three Months Ended			Year Ended
	December 30,			September 30,
	2016			2016
Shares Issued:
Balance, beginning of year		32,564,252			32,378,185
Shares issued under share-based compensation plans		237,547			186,067
Balance, end of current period		32,801,799			32,564,252
Treasury Stock:
Balance, beginning of year		(3,135,927	)		(2,831,350	)
Shares purchased		-			(304,577	)
Balance, end of current period		(3,135,927	)		(3,135,927	)
Shares outstanding, end of period		29,665,872			29,428,325

Schedule of Components of Accumulated Other Comprehensive Loss

The components of Accumulated Other Comprehensive Gain (Loss):

In Thousands	December 30,			September 30,
	2016			2016
Unrealized gain (loss) on derivative contracts	$	(10,846	)	$	(4,547	)
Tax effect		2,986			1,077
		(7,860	)		(3,470	)
Pension and post-retirement obligations		(113,813	)		(116,346	)
Tax effect		38,812			39,804
		(75,001	)		(76,542	)
Foreign currency translation adjustment		(321,872	)		(268,845	)
Accumulated other comprehensive gain (loss)	$	(404,733	)	$	(348,857	)

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Retirement Benefits (Tables)

3 Months Ended

Dec. 30, 2016

Compensation And Retirement Disclosure [Abstract]

Schedule of Net Periodic Pension Cost

The Company’s pension plans principally include a U.S. pension plan maintained by Esterline and a non-U.S. plan maintained by CMC Electronics, Inc. (CMC).  The Company also sponsors a number of other non-U.S. defined benefit pension plans, primarily in Belgium, France and Germany.  Components of periodic pension cost consisted of the following:

In Thousands	Three Months Ended
	December 30,			January 1,
	2016			2016
Components of Net Periodic Cost
Service cost	$	3,357		$	2,956
Interest cost		3,721			4,393
Expected return on plan assets		(6,265	)		(5,911	)
Amortization of prior service cost		114			115
Amortization of actuarial (gain) loss		1,763			1,476
Net periodic cost (benefit)	$	2,690		$	3,029

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Fair Value Measurements (Tables)

3 Months Ended

Dec. 30, 2016

Fair Value Disclosures [Abstract]

Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table sets forth the Company’s financial assets and liabilities that were measured at fair value on a recurring basis by level within the fair value hierarchy at December 30, 2016, and September 30, 2016.

In Thousands	Level 2
	December 30,		September 30,
	2016		2016
Assets:
Derivative contracts designated as hedging instruments	$	1,389	$	2,948
Derivative contracts not designated as hedging instruments		107		143
Embedded derivatives		3,195		2,485
Liabilities:
Derivative contracts designated as hedging instruments	$	12,561	$	7,828
Derivative contracts not designated as hedging instruments		8,090		6,720
Embedded derivatives		826		985

In Thousands	Level 3
	December 30,		September 30,
	2016		2016
Assets:
Estimated value of assets held for sale	$	20,630	$	26,850
Liabilities:
Estimated value of liabilities held for sale	$	9,689	$	11,133

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Derivative Financial Instruments (Tables)

3 Months Ended

Dec. 30, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Fair Value of Derivative Instruments In Consolidated Balance Sheet

Fair value of derivative instruments in the Consolidated Balance Sheet at December 30, 2016, and September 30, 2016, consisted of:

In Thousands		Fair Value
		December 30,		September 30,
	Classification	2016		2016
Foreign Currency Forward Exchange Contracts:
	Other current assets	$	811	$	1,757
	Other assets		685		1,334
	Accrued liabilities		16,666		11,168
	Other liabilities		3,985		3,380
Embedded Derivative Instruments:
	Other current assets	$	2,386	$	1,864
	Other assets		809		621
	Accrued liabilities		783		866
	Other liabilities		43		119

Effect of Derivative Instruments on Consolidated Statement of Operations

The effect of derivative instruments on the Consolidated Statement of Operations and Comprehensive Income (Loss) for the three month periods ended December 30, 2016, and January 1, 2016, consisted of:

Fair Value Hedges and Embedded Derivatives

The Company recognized the following gains (losses) on contracts designated as fair value hedges and embedded derivatives:

In Thousands	Three Months Ended
Gain (Loss)	December 30,		January 1,
	2016		2016
Embedded derivatives:
Recognized in sales	$	253	$	1,154

Cash Flow Hedges

The Company recognized the following gains (losses) on contracts designated as cash flow hedges:

In Thousands	Three Months Ended
Gain (Loss)	December 30,			January 1,
	2016			2016
Foreign currency forward exchange contracts:
Recognized in AOCI (effective portion)	$	(1,874	)	$	2,901
Reclassified from AOCI into sales		(4,425	)		(7,074	)

Net Investment Hedges

The Company recognized the following gains (losses) on contracts designated as net investment hedges:

In Thousands	Three Months Ended
Gain (Loss)	December 30,		January 1,
	2016		2016
2023 Notes and Accrued Interest:
Recognized in AOCI	$	23,913	$	11,533

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Employee Stock Plans (Tables)

3 Months Ended

Dec. 30, 2016

Equity Incentive Plan

Share Based Compensation Arrangement By Share Based Payment Award [Line Items]

Fair Value of Option Granted using Black-Scholes Pricing Model

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.

	Three Months Ended
	December 30,	January 1,
	2016	2016
Volatility	34.97 - 35.42%	33.06 - 40.52%
Risk-free interest rate	1.98 - 2.51%	1.61 - 2.24%
Expected life (years)	5 - 9	5 - 9
Dividends	0	0

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Discontinued Operations (Tables)

3 Months Ended

Dec. 30, 2016

Discontinued Operations And Disposal Groups [Abstract]

Schedule of Discontinued Operations

The operating results of the discontinued operations for the three month period ended December 30, 2016, consisted of the following:

In Thousands	Avionics &			Sensors &		Advanced
	Controls			Systems		Materials			Other			Total
Net Sales	$	2,696		$	-	$	-		$	-		$	2,696
Operating earnings (loss)		(871	)		895		(5,347	)		(604	)		(5,927	)
Tax expense (benefit)		(239	)		-		(141	)		(211	)		(591	)
Income (loss) from discontinued    operations	$	(632	)	$	895	$	(5,206	)	$	(393	)	$	(5,336	)
Included in Operating Earnings (Loss):
Loss on net assets held for sale	$	(140	)	$	-	$	(4,588	)	$	-		$	(4,728	)

The operating results of the discontinued operations for the three month period ended January 1, 2016, consisted of the following:

In Thousands	Avionics &			Sensors &			Advanced
	Controls			Systems			Materials			Other			Total
Net Sales	$	5,582		$	-		$	2,484		$	-		$	8,066
Operating earnings (loss)		897			(156	)		(5,993	)		(4	)		(5,256	)
Tax expense (benefit)		413			-			(889	)		-			(476	)
Income (loss) from discontinued    operations	$	484		$	(156	)	$	(5,104	)	$	(4	)	$	(4,780	)
Included in Operating Earnings (Loss):
Gain (loss) on net assets    held for sale	$	(270	)	$	-		$	(2,247	)	$	-		$	(2,517	)

Assets and Liabilities Held for Sale within the Consolidated Balance Sheet at December 30, 2016, are comprised of the following:

In Thousands	Avionics &			Sensors &		Advanced
	Controls			Systems		Materials			Total
Accounts receivable, net	$	1,949		$	-	$	246		$	2,195
Inventories		6,453			-		725			7,178
Prepaid expenses		125			-		52			177
Income tax refundable		-			-		68			68
Current Assets of Businesses Held for Sale		8,527			-		1,091			9,618
Net property, plant and equipment		5,386			-		2,899			8,285
Intangibles, net		-			-		1,829			1,829
Deferred income tax benefits		(392	)		-		400			8
Other assets		-			-		890			890
Non-Current Assets of Businesses Held for Sale		4,994			-		6,018			11,012
Accounts payable		122			-		1,325			1,447
Accrued liabilities		6,631			-		1,457			8,088
Current Liabilities of Businesses Held for Sale		6,753			-		2,782			9,535
Deferred income tax liabilities		-			-		(166	)		(166	)
Other liabilities		-			-		320			320
Non-Current Liabilities of Businesses Held for Sale		-			-		154			154
Net Assets of Businesses Held for Sale	$	6,768		$	-	$	4,173		$	10,941

Assets and Liabilities Held for Sale within the Consolidated Balance Sheet at September 30, 2016, were comprised of the following:

In Thousands	Avionics &			Sensors &		Advanced
	Controls			Systems		Materials		Total
Accounts receivable, net	$	2,588		$	-	$	4,093	$	6,681
Inventories		8,070			-		398		8,468
Prepaid expenses		127			-		103		230
Income tax refundable		-			-		71		71
Current Assets of Businesses Held for Sale		10,785			-		4,665		15,450
Net property, plant and equipment		5,368			-		2,869		8,237
Intangibles, net		-			-		1,856		1,856
Deferred income tax benefits		(392	)		-		400		8
Other assets		-			-		1,299		1,299
Non-Current Assets of Businesses Held for Sale		4,976			-		6,424		11,400
Accounts payable		441			-		1,463		1,904
Accrued liabilities		7,000			-		1,909		8,909
Current Liabilities of Businesses Held for Sale		7,441			-		3,372		10,813
Other liabilities		-			-		320		320
Non-Current Liabilities of Businesses Held for Sale		-			-		320		320
Net Assets of Businesses Held for Sale	$	8,320		$	-	$	7,397	$	15,717

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Business Segment Information (Tables)

3 Months Ended

Dec. 30, 2016

Segment Reporting [Abstract]

Business Segment Information for Continuing Operations

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

In Thousands	Three Months Ended
	December 30,			January 1,
	2016			2016
Sales
Avionics & Controls	$	192,682		$	186,245
Sensors & Systems		167,073			152,430
Advanced Materials		97,978			102,802
	$	457,733		$	441,477
Earnings from Continuing Operations Before Income Taxes
Avionics & Controls	$	17,917		$	9,413
Sensors & Systems		19,946			12,784
Advanced Materials		9,880			12,990
Segment Earnings		47,743			35,187
Corporate expense		(17,767	)		(18,065	)
Interest income		96			87
Interest expense		(7,888	)		(7,216	)
	$	22,184		$	9,993

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Recent Accounting Pronouncements - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Dec. 30, 2016	Jan. 01, 2016	Sep. 30, 2016
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Tax expense (benefit)	$ 420	$ (33)
Favorable impact to operating cash flows	45,535	$ 40,652
New Guidance | Early Adoption
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Tax expense (benefit)	700		$ 1,300
Favorable impact to operating cash flows	700
Positive cumulative effect on retained earnings	900
Reduction of additional paid in capital	$ (900)

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Earnings Per Share and Shareholders Equity - Additional Information (Detail) - USD ($)	3 Months Ended		12 Months Ended	30 Months Ended
	Dec. 30, 2016	Jan. 01, 2016	Sep. 30, 2016	Dec. 30, 2016	Jul. 01, 2016	Mar. 31, 2015	Jun. 19, 2014
Earnings Per Share And Shareholders Equity [Line Items]
Anti-dilutive shares excluded from computation of earnings per share	809,875	610,700
Preferred stock shares authorized	25,000			25,000
Preferred stock, par value	$ 100			$ 100
Common stock, shares authorized	60,000,000		60,000,000	60,000,000
Common stock, par value	$ 0.20		$ 0.20	$ 0.20
Preferred stock shares outstanding	0		0	0
Approved and authorized amount under the stock repurchase program						$ 400,000,000	$ 200,000,000
Additional approved and authorized amount under the stock repurchase program						$ 200,000,000
Stock repurchased during period, shares	0	0	304,577	3,135,927
Aggregate value of repurchased stock				$ 308,500,000
Stock repurchase program, remaining authorized amount to be repurchased in future					$ 91,500,000
Series B Preferred Stock
Earnings Per Share And Shareholders Equity [Line Items]
Preferred stock shares authorized	475,000			475,000
Preferred stock, par value	$ 1.00			$ 1.00
Preferred stock shares outstanding	0		0	0

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Shares Used for Calculating Earnings Per Share (Detail) - shares shares in Thousands	3 Months Ended
	Dec. 30, 2016	Jan. 01, 2016
Earnings Per Share [Abstract]
Shares used for basic earnings per share	29,547	29,582
Shares used for diluted earnings per share	29,831	29,939

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Schedule of Changes in Issued and Outstanding Common Shares and Treasury Stock (Detail) - shares	3 Months Ended		12 Months Ended	30 Months Ended
	Dec. 30, 2016	Jan. 01, 2016	Sep. 30, 2016	Dec. 30, 2016
Equity [Abstract]
Balance, beginning of year	32,564,252	32,378,185	32,378,185
Shares issued under share-based compensation plans	237,547		186,067
Balance, end of current period	32,801,799		32,564,252	32,801,799
Balance, beginning of year	(3,135,927)	(2,831,350)	(2,831,350)
Shares purchased	0	0	(304,577)	(3,135,927)
Balance, end of current period	(3,135,927)		(3,135,927)	(3,135,927)
Shares outstanding, end of period	29,665,872		29,428,325	29,665,872

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Schedule of Components of Accumulated Other Comprehensive Gain (Loss) (Detail) - USD ($) $ in Thousands	Dec. 30, 2016	Sep. 30, 2016
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]
Unrealized gain (loss) on derivative contracts	$ (10,846)	$ (4,547)
Tax effect	2,986	1,077
Unrealized gain (loss) on derivative contracts, Total	(7,860)	(3,470)
Pension and post-retirement obligations	(113,813)	(116,346)
Tax effect	38,812	39,804
Pension and post-retirement obligations, Total	(75,001)	(76,542)
Foreign currency translation adjustment	(321,872)	(268,845)
Accumulated other comprehensive gain (loss)	$ (404,733)	$ (348,857)

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Schedule of Net Periodic Pension Cost (Detail) - Pension Plans, Defined Benefit - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2016	Jan. 01, 2016
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 3,357	$ 2,956
Interest cost	3,721	4,393
Expected return on plan assets	(6,265)	(5,911)
Amortization of prior service cost	114	115
Amortization of actuarial (gain) loss	1,763	1,476
Net periodic cost (benefit)	$ 2,690	$ 3,029

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Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Dec. 30, 2016	Sep. 30, 2016
Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative contracts designated as hedging instruments, Assets	$ 1,389	$ 2,948
Derivative contracts not designated as hedging instruments, Assets	107	143
Embedded derivatives, Assets	3,195	2,485
Derivative contracts designated as hedging instruments, Liabilities	12,561	7,828
Derivative contracts not designated as hedging instruments, Liabilities	8,090	6,720
Embedded derivatives, Liabilities	826	985
Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Estimated value of assets held for sale	20,630	26,850
Estimated value of liabilities held for sale	$ 9,689	$ 11,133

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Derivative Financial Instruments - Additional Information (Detail) € in Millions, $ in Millions	1 Months Ended	3 Months Ended
	Apr. 30, 2015 EUR (€)	Dec. 30, 2016 USD ($)	Jan. 01, 2016 USD ($)	Sep. 30, 2016 USD ($)
Derivative [Line Items]
Losses on foreign currency forward exchange contracts not designated as an accounting hedge		$ (2.6)	$ (2.4)
Net Gain (Loss) expected to be reclassified into earnings over next 12 months		$ (10.3)
Maturities of forecasted transactions using forward exchange contracts		24 months
3.625% Senior Notes, Due April 2023
Derivative [Line Items]
Debt instrument, interest rate	3.625%
Debt instruments maturity date	Apr. 30, 2023
3.625% Senior Notes, Due April 2023 | Net Investment Hedges
Derivative [Line Items]
Derivative notional amount | €	€ 330.0
Foreign Exchange Forward
Derivative [Line Items]
Derivative notional amount		$ 424.9		$ 450.9

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Fair Value of Derivative Instruments in Consolidated Balance Sheet (Detail) - USD ($) $ in Thousands	Dec. 30, 2016	Sep. 30, 2016
Foreign Exchange Forward | Other Current Assets
Derivatives Fair Value [Line Items]
Derivative Instruments, Assets	$ 811	$ 1,757
Foreign Exchange Forward | Other Assets
Derivatives Fair Value [Line Items]
Derivative Instruments, Assets	685	1,334
Foreign Exchange Forward | Other Liabilities
Derivatives Fair Value [Line Items]
Derivative Instruments, Liabilities	3,985	3,380
Foreign Exchange Forward | Accrued Liabilities
Derivatives Fair Value [Line Items]
Derivative Instruments, Liabilities	16,666	11,168
Embedded Derivative Financial Instruments | Other Current Assets
Derivatives Fair Value [Line Items]
Derivative Instruments, Assets	2,386	1,864
Embedded Derivative Financial Instruments | Other Assets
Derivatives Fair Value [Line Items]
Derivative Instruments, Assets	809	621
Embedded Derivative Financial Instruments | Other Liabilities
Derivatives Fair Value [Line Items]
Derivative Instruments, Liabilities	43	119
Embedded Derivative Financial Instruments | Accrued Liabilities
Derivatives Fair Value [Line Items]
Derivative Instruments, Liabilities	$ 783	$ 866

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Effect of Derivative Instruments on Consolidated Statement of Operations and Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2016	Jan. 01, 2016
Net Investment Hedges | 2023 Notes and Accrued Interest
Derivative Instruments Gain Loss [Line Items]
Recognized in AOCI	$ 23,913	$ 11,533
Embedded Derivatives | Fair Value Hedging | Sales
Derivative Instruments Gain Loss [Line Items]
Recognized in sales	253	1,154
Foreign Exchange Forward | Cash Flow Hedging
Derivative Instruments Gain Loss [Line Items]
Gain (loss) recognized in AOCI (effective portion)	(1,874)	2,901
Gain (loss) reclassified from AOCI into sales	$ (4,425)	$ (7,074)

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Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Dec. 30, 2016	Jan. 01, 2016	Sep. 30, 2016
Income Taxes [Line Items]
Tax expense (benefit)	$ 420	$ (33)
Change in unrecognized tax benefit within the next twelve months	$ 1,400
New Guidance For Accounting Standard Update | Adjustments for New Accounting Principle, Early Adoption
Income Taxes [Line Items]
Income tax rate	1.90%	0.30%
Tax expense (benefit)	$ 700		$ 1,300
Net deferred income tax liabilities related acquired intangible assets	3,800
Discrete tax benefits related to valuation allowance	$ 1,200

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Debt - Additional Information (Detail) € in Millions			1 Months Ended	3 Months Ended
	Aug. 03, 2015 USD ($)	Apr. 09, 2015 USD ($)	Apr. 30, 2015 USD ($)	Dec. 30, 2016 USD ($)	Sep. 30, 2016 USD ($)	Apr. 30, 2015 EUR (€)
Debt Instrument [Line Items]
Credit facilities				$ 150,000,000	$ 155,000,000
Imputed interest on advance				2.90%
Government refundable advances				$ 44,300,000	45,000,000
Present value of minimum lease payment				$ 66,000,000	66,200,000
U.S. Term Loan, due April 2020
Debt Instrument [Line Items]
Funds borrowed under the delayed-draw term Loan	$ 250,000,000
Loan amortization rate				1.25%
Loan amortization end date				Mar. 31, 2020
7% Senior Notes, due August 2020
Debt Instrument [Line Items]
Debt instruments maturity date				Apr. 30, 2020
3.625% Senior Notes, Due April 2023
Debt Instrument [Line Items]
Debt issuance costs			$ 5,900,000
Debt instruments maturity date			Apr. 30, 2023
Debt instrument, face amount | €						€ 330.0
Debt instrument, interest rate						3.625%
Net proceeds from issuance of debt			$ 350,800,000
Fair market value of long-term debt and short-term borrowings				$ 354,000,000	$ 365,300,000
3.625% Senior Notes, Due April 2023 | Debt Redemption Prior April 15, 2018
Debt Instrument [Line Items]
Debt instrument redemption price percentage plus accrued interest			100.00%
Debt instrument redemption allowed percentage of principal amount redeemed			35.00%
3.625% Senior Notes, Due April 2023 | Debt Redemption After April 15, 2018
Debt Instrument [Line Items]
Debt instrument redemption price percentage plus accrued interest			102.719%
3.625% Senior Notes, Due April 2023 | Debt Redemption After April 15, 2021
Debt Instrument [Line Items]
Debt instrument redemption price percentage plus accrued interest			100.00%
London Interbank Offered Rate (LIBOR) | U.S. Term Loan, due April 2020
Debt Instrument [Line Items]
Interest rate, basis spread on variable rate				1.75%
Interest rate				2.36%
London Interbank Offered Rate (LIBOR) | Minimum | U.S. Term Loan, due April 2020
Debt Instrument [Line Items]
Interest rate, basis spread on variable rate	1.25%
London Interbank Offered Rate (LIBOR) | Maximum | U.S. Term Loan, due April 2020
Debt Instrument [Line Items]
Interest rate, basis spread on variable rate	2.00%
Secured Debt
Debt Instrument [Line Items]
Credit facility maturity date		Apr. 09, 2020
Debt issuance costs		$ 2,300,000
Credit facilities				$ 150,000,000
Interest rate				2.47%
Secured Debt | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Interest rate, basis spread on variable rate				1.75%
Secured Debt | London Interbank Offered Rate (LIBOR) | Minimum
Debt Instrument [Line Items]
Interest rate, basis spread on variable rate		1.25%
Secured Debt | London Interbank Offered Rate (LIBOR) | Maximum
Debt Instrument [Line Items]
Interest rate, basis spread on variable rate		2.00%
Secured Debt | Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility maximum borrowing capacity		$ 500,000,000
Secured Debt | Delayed-Draw Term Loan Facility
Debt Instrument [Line Items]
Credit facility maximum borrowing capacity		$ 250,000,000

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Commitments and Contingencies - Additional Information (Detail) - USD ($)	3 Months Ended		12 Months Ended
	Dec. 30, 2016	Jan. 01, 2016	Sep. 30, 2016	Mar. 05, 2014
Commitments And Contingencies [Line Items]
Environmental Exit Costs, Assets Previously Disposed, Liability for Remediation	$ 1,000,000		$ 800,000
Consent agreement term	The Consent Agreement has a three-year term and provided for: (i) a payment of $20 million, $10 million of which is suspended and eligible for offset credit based on verified expenditures for past and future remedial compliance measures; (ii) the appointment of an external Special Compliance Official to oversee compliance with the Consent Agreement and the ITAR; (iii) two external audits of the Company’s ITAR compliance program; and (iv) continued
Total penalty proposed by DDTC Office of Compliance				$ 20,000,000
Penalty suspended and eligible for offset credit				$ 10,000,000
Estimated and recorded charge	$ 10,000,000
Paid and recorded over fiscal years 2014, 2015, and 2016	8,000,000
Remaining payable in March 2017	2,000,000
Penalty suspended and approved for offset credit	10,000,000
Insurance recovery received	2,600,000	$ 0	$ 5,000,000
Minimum
Commitments And Contingencies [Line Items]
Estimated insurance recovery	2,600,000
Maximum
Commitments And Contingencies [Line Items]
Estimated insurance recovery	$ 5,000,000

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Employee Stock Plans - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 30, 2016	Jan. 01, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation	$ 4,695	$ 3,328
Shares issued under share-based compensation plans	237,547	72,349
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted	36,700	33,400
Weighted Average Grant Date Fair Value	$ 76.70	$ 86.29
Performance Share Plan Shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted	42,100	55,300
Performance Share Plan Shares | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of the target number of shares paid out	0.00%
Performance Share Plan Shares | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of the target number of shares paid out	300.00%
Employee Share-save Scheme
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Discount rate of market value on purchase date	5.00%
The term of options, years	3 years
Number of options granted	0	0
Equity Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of options granted	231,100	217,200
Weighted-average grant date fair value of options granted	$ 32.55	$ 35.87
Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Discount rate of market value on purchase date	5.00%

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Schedule of Fair Value of Option Granted using Black-Scholes Pricing Model (Detail) - Equity Incentive Plan - USD ($)	3 Months Ended
	Dec. 30, 2016	Jan. 01, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Volatility, minimum	34.97%	33.06%
Volatility, maximum	35.42%	40.52%
Risk-free interest rate, minimum	1.98%	1.61%
Risk-free interest rate, maximum	2.51%	2.24%
Dividends	$ 0	$ 0
Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life (years)	5 years	5 years
Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life (years)	9 years	9 years

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Discontinued Operations - Additional Information (Detail) $ in Thousands, £ in Millions			3 Months Ended
	Dec. 30, 2016 GBP (£)	May 04, 2016 GBP (£)	Dec. 30, 2016 USD ($)	Jan. 01, 2016 USD ($)
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Loss from Discontinued Operations Attributable to Esterline, Net of Tax | $			$ (5,336)	$ (4,780)
Loss on net assets held for sale | $			(4,728)	$ (2,517)
Wallop
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Sale of discontinued operation | £		£ 2.5
Deferred compensation payments term		3 years
Deferred compensation payment date		May 03, 2019
Payments for earn out | £	£ 5.5
Loss on net assets held for sale | $			$ (4,600)
Wallop | Maximum
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Deferred compensation payments | £		£ 9.0
Deferred compensation payable acceptable orders percentage		31.00%
Wallop | Minimum
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Deferred compensation payable acceptable orders percentage		26.50%

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Discontinued Operations Income (Loss) Net of Tax (Detail) - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2016	Jan. 01, 2016
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Net Sales	$ 2,696	$ 8,066
Operating earnings (loss)	(5,927)	(5,256)
Tax expense (benefit)	(591)	(476)
Income (loss) from discontinued operations	(5,336)	(4,780)
Included in Operating Earnings (Loss):
Loss on net assets held for sale	(4,728)	(2,517)
Avionics & Controls
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Net Sales	2,696	5,582
Operating earnings (loss)	(871)	897
Tax expense (benefit)	(239)	413
Income (loss) from discontinued operations	(632)	484
Included in Operating Earnings (Loss):
Loss on net assets held for sale	(140)	(270)
Sensors & Systems
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Net Sales	0	0
Operating earnings (loss)	895	(156)
Tax expense (benefit)	0	0
Income (loss) from discontinued operations	895	(156)
Included in Operating Earnings (Loss):
Loss on net assets held for sale	0	0
Advanced Materials
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Net Sales	0	2,484
Operating earnings (loss)	(5,347)	(5,993)
Tax expense (benefit)	(141)	(889)
Income (loss) from discontinued operations	(5,206)	(5,104)
Included in Operating Earnings (Loss):
Loss on net assets held for sale	(4,588)	(2,247)
Other
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Net Sales	0	0
Operating earnings (loss)	(604)	(4)
Tax expense (benefit)	(211)	0
Income (loss) from discontinued operations	(393)	(4)
Included in Operating Earnings (Loss):
Loss on net assets held for sale	$ 0	$ 0

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Discontinued Operations Assets and Liabilities Held for Sale (Detail) - USD ($) $ in Thousands	Dec. 30, 2016	Sep. 30, 2016
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Accounts receivable, net	$ 2,195	$ 6,681
Inventories	7,178	8,468
Prepaid expenses	177	230
Income tax refundable	68	71
Current Assets of Businesses Held for Sale	9,618	15,450
Net property, plant and equipment	8,285	8,237
Intangibles, net	1,829	1,856
Deferred income tax benefits	8	8
Other assets	890	1,299
Non-Current Assets of Businesses Held for Sale	11,012	11,400
Accounts payable	1,447	1,904
Accrued liabilities	8,088	8,909
Current Liabilities of Businesses Held for Sale	9,535	10,813
Deferred income tax liabilities	(166)
Other liabilities	320	320
Non-Current Liabilities of Businesses Held for Sale	154	320
Net Assets of Businesses Held for Sale	10,941	15,717
Avionics & Controls
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Accounts receivable, net	1,949	2,588
Inventories	6,453	8,070
Prepaid expenses	125	127
Income tax refundable	0	0
Current Assets of Businesses Held for Sale	8,527	10,785
Net property, plant and equipment	5,386	5,368
Intangibles, net	0	0
Deferred income tax benefits	(392)	(392)
Other assets	0	0
Non-Current Assets of Businesses Held for Sale	4,994	4,976
Accounts payable	122	441
Accrued liabilities	6,631	7,000
Current Liabilities of Businesses Held for Sale	6,753	7,441
Deferred income tax liabilities	0
Other liabilities	0	0
Non-Current Liabilities of Businesses Held for Sale	0	0
Net Assets of Businesses Held for Sale	6,768	8,320
Sensors & Systems
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Accounts receivable, net	0	0
Inventories	0	0
Prepaid expenses	0	0
Income tax refundable	0	0
Current Assets of Businesses Held for Sale	0	0
Net property, plant and equipment	0	0
Intangibles, net	0	0
Deferred income tax benefits	0	0
Other assets	0	0
Non-Current Assets of Businesses Held for Sale	0	0
Accounts payable	0	0
Accrued liabilities	0	0
Current Liabilities of Businesses Held for Sale	0	0
Deferred income tax liabilities	0
Other liabilities	0	0
Non-Current Liabilities of Businesses Held for Sale	0	0
Net Assets of Businesses Held for Sale	0	0
Advanced Materials
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Accounts receivable, net	246	4,093
Inventories	725	398
Prepaid expenses	52	103
Income tax refundable	68	71
Current Assets of Businesses Held for Sale	1,091	4,665
Net property, plant and equipment	2,899	2,869
Intangibles, net	1,829	1,856
Deferred income tax benefits	400	400
Other assets	890	1,299
Non-Current Assets of Businesses Held for Sale	6,018	6,424
Accounts payable	1,325	1,463
Accrued liabilities	1,457	1,909
Current Liabilities of Businesses Held for Sale	2,782	3,372
Deferred income tax liabilities	(166)
Other liabilities	320	320
Non-Current Liabilities of Businesses Held for Sale	154	320
Net Assets of Businesses Held for Sale	$ 4,173	$ 7,397

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Business Segment Information for Continuing Operations (Detail) - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2016	Jan. 01, 2016
Segment Reporting Information [Line Items]
Sales	$ 457,733	$ 441,477
Interest income	96	87
Interest expense	(7,888)	(7,216)
Earnings from Continuing Operations Before Income Taxes	22,184	9,993
Avionics & Controls
Segment Reporting Information [Line Items]
Sales	192,682	186,245
Sensors & Systems
Segment Reporting Information [Line Items]
Sales	167,073	152,430
Advanced Materials
Segment Reporting Information [Line Items]
Sales	97,978	102,802
Operating Segments
Segment Reporting Information [Line Items]
Segment Earnings	47,743	35,187
Operating Segments | Avionics & Controls
Segment Reporting Information [Line Items]
Segment Earnings	17,917	9,413
Operating Segments | Sensors & Systems
Segment Reporting Information [Line Items]
Segment Earnings	19,946	12,784
Operating Segments | Advanced Materials
Segment Reporting Information [Line Items]
Segment Earnings	9,880	12,990
Corporate Non Segment
Segment Reporting Information [Line Items]
Corporate expense	$ (17,767)	$ (18,065)