Robert W. Cremin, Esterline CEO, said, "...earnings came in about where our January forecast projections indicated." Cremin credited "sticking with our battle-tested business plan" for the solid performance. "We can move quite quickly to adjust to economic conditions," he said, "but we aren't going to sacrifice our long-term goals for short-term results. We've been making adjustments and we are prepared to take additional steps depending on circumstances."

Citing the current uncertainty in the industry, Cremin reduced the company's full-year earnings per share guidance range to $3.00 to $3.20, saying that a declining order rate in the second quarter dampened Esterline's outlook for the second half. Cremin said, "...our customers are reducing inventory levels, which is a clear change from just three months ago." He also noted potential timing issues with foreign shipments of countermeasure flares, declining business jet and spare parts demand, and the overall economic slowdown as contributing factors to ratcheting back the company's forecast for the second half of the year.

However, he emphasized that the company's backlog exceeds $1 billion and R&D expense is coming down as forecasted following a ramp-up over the last several years that locked in important positions on significant new programs. "The 787, the Joint Strike Fighter and the T-6B military trainer will be successful programs for Esterline," he said.

Research, development and engineering spending was $18.3 million, or 5.1% of sales, for the second quarter compared with $25.0 million, or 7.0% of sales, a year ago.

Overall, gross margin as a percentage of sales was 31.3% in the quarter, compared to 33.9% in the same period a year ago. The gross margin decline was due to several factors, including currency-related mark-to-market accounting requirements, adjustments to long-term contracts, and the impact of starting up another manufacturing facility in Mexico.

Selling, general and administrative expenses were 15.2% of sales in the quarter compared with 16.1% of sales last year. The effective income tax rate for the second quarter was 12.2% (before a $0.7 million tax expense) compared with 23.0% (before a $0.7 million tax expense) for the prior-year period. The effective tax rate differed from the statutory rate in the second quarters of 2009 and 2008, as both years benefited from various tax credits and certain foreign interest expense deductions.

Income from discontinued operations in the second quarter of 2009 was $.01 per diluted share, compared with $.04 per diluted share in the prior-year period. Net income was $25.7 million, or $.86 per diluted share, compared with $25.2 million, or $.84 per diluted share, in the prior-year period.

For the first half of fiscal 2009, Esterline reported net earnings from continuing operations of $36.8 million, or $1.23 per diluted share, on sales of $669.2 million, compared with net earnings from continuing operations of $53.7 million, or $1.80 per diluted share, on $715.4 million in sales in 2008. Income from discontinued operations in the first half of 2009 was $.53 per diluted share, compared with $.08 per diluted share in the prior-year period. Net income was $52.7 million, or $1.76 per diluted share, compared with $56.2 million, or $1.88 per diluted share, in the prior-year period.

New orders for the first six months of 2009 were $676.3 million compared with $788.1 million for the same period in 2008. Orders in the first six months of 2009 include $41.0 million in backlog acquired in the Racal and NMC transactions. New orders declined by $152.8 million if the Racal and NMC acquired backlog is excluded. The decline in new orders principally reflects the timing of receiving orders and a decrease in commercial aviation demand. Backlog was $1.1 billion compared with $1.0 billion at the end of the prior-year period and $1.1 billion at the end of fiscal 2008.

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

 ESTERLINE TECHNOLOGIES CORPORATION Consolidated Statement of Operations (unaudited) In thousands, except per share amounts                               Three months ended      Six months ended                               May 1,       May 2,      May 1,      May 2,                                2009        2008        2009        2008                             ----------  ----------  ----------  ---------- Segment Sales   Avionics & Controls       $  169,111  $  147,174  $  297,579  $  290,082   Sensors & Systems             86,755      97,332     171,310     190,873   Advanced Materials           103,636     113,527     200,330     234,403                             ----------  ----------  ----------  ---------- Net Sales                      359,502     358,033     669,219     715,358 Cost of Sales                  246,904     236,646     454,469     478,758                             ----------  ----------  ----------  ----------                                112,598     121,387     214,750     236,600 Expenses   Selling, General and    Administrative               54,619      57,697     114,344     117,125   Research, Development and    Engineering                  18,294      25,046      35,692      46,678                             ----------  ----------  ----------  ----------   Total Expenses                72,913      82,743     150,036     163,803 Other   Other Expense                  2,714          86       7,728          86                             ----------  ----------  ----------  ----------   Total Other                    2,714          86       7,728          86                             ----------  ----------  ----------  ---------- Operating Earnings From  Continuing Operations          36,971      38,558      56,986      72,711   Interest Income                 (370)       (939)       (781)     (2,231)   Interest Expense               7,610       7,272      14,346      15,178   Gain on Derivative    Financial Instruments            --          --          --      (1,850)                             ----------  ----------  ----------  ---------- Other Expense, Net               7,240       6,333      13,565      11,097                             ----------  ----------  ----------  ---------- Income From Continuing  Operations Before Income  Taxes                          29,731      32,225      43,421      61,614 Income Tax Expense               4,316       8,107       6,484       7,749                             ----------  ----------  ----------  ---------- Income From Continuing  Operations Before Minority  Interest                       25,415      24,118      36,937      53,865 Minority Interest                  (77)       (171)       (112)       (193)                             ----------  ----------  ----------  ---------- Income From Continuing  Operations                     25,338      23,947      36,825      53,672 Income From Discontinued  Operations, Net of Tax            375       1,238      15,831       2,497                             ----------  ----------  ----------  ---------- Net Earnings                $   25,713  $   25,185  $   52,656  $   56,169                             ==========  ==========  ==========  ========== Earnings Per Share  Basic:   Continuing Operations     $      .85  $      .81  $     1.24  $     1.82   Discontinued Operations          .02         .05         .53         .09                             ----------  ----------  ----------  ---------- Earnings Per Share - Basic  $      .87  $      .86  $     1.77  $     1.91                             ==========  ==========  ==========  ========== Earnings Per Share  Diluted:   Continuing Operations     $      .85  $      .80  $     1.23  $     1.80   Discontinued Operations          .01         .04         .53         .08                             ----------  ----------  ----------  ---------- Earnings Per Share -  Diluted                    $      .86  $      .84  $     1.76  $     1.88                             ==========  ==========  ==========  ========== Weighted Average Number  of Shares Outstanding  Basic                          29,705      29,442      29,684      29,413 Weighted Average Number  of Shares Outstanding  Diluted                        29,829      29,882      29,847      29,846 Consolidated Balance Sheet (unaudited) In thousands                              May 1,       May 2,                                            2009         2008                                        ------------  ------------ Assets Current Assets    Cash and cash equivalents           $    115,406  $    109,626    Short-term investments                        --        12,050    Accounts receivable, net                 266,589       248,708    Inventories                              286,194       289,678    Income tax refundable                      7,635         6,965    Deferred income tax benefits              32,563        30,986    Prepaid expenses                          15,036        16,953    Other current assets                          55            --                                        ------------  ------------       Total Current Assets                  723,478       714,966 Property, Plant and Equipment, Net          219,820       216,630 Other Non-Current Assets    Goodwill                                 690,518       652,965    Intangibles, net                         410,050       345,236    Debt issuance costs, net                   8,151         8,326    Deferred income tax benefits              60,597        44,375    Other assets                              38,137        26,696                                        ------------  ------------                                        $  2,150,751  $  2,009,194                                        ============  ============ Liabilities and Shareholders' Equity Current Liabilities    Accounts payable                    $     78,205  $     93,423    Accrued liabilities                      201,074       160,226    Credit facilities                          2,398         6,819    Current maturities of long-term debt      12,482         7,699    Federal and foreign income taxes             316        10,744                                        ------------  ------------       Total Current Liabilities             294,475       278,911 Long-Term Liabilities    Long-term debt, net of current     maturities                              513,559       393,594    Deferred income taxes liabilities        122,499       122,394    Other liabilities                        123,452        53,118 Commitments and Contingencies                    --            -- Minority Interest                             2,909         3,161 Shareholders' Equity                      1,093,857     1,158,016                                        ------------  ------------                                        $  2,150,751  $  2,009,194                                        ============  ============ 

 Contact: Brian Keogh 425-453-9400  

SOURCE: Esterline Corporation

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