ITEM 1. BUSINESS
(a) General Development of Business.
Esterline Technologies Corporation (the "Company") conducts business through 13 principal domestic and foreign subsidiaries in three business segments described in sub-item (c) below. The Company was organized in August 1967.
On March 30, 1992 the Company sold substantially all of the assets of Hollis Automation Co., an Esterline subsidiary which was not significant to the Company in terms of operations or financial condition. Hollis was in the Company's Automation Group.
In the fourth quarter of 1993, the Company recorded a $40.6 million restructuring charge ($27.2 million net of income tax effect). It provided for the sale or shutdown of certain small operations in each of the Company's three business segments. On a pretax basis, $21.1 million of the restructuring charge related to the Aerospace and Defense Group, $8.9 million to the Instrumentation Group and $8.4 million to the Automation Group. The affected operations represented approximately 10% of the Company's fiscal 1993 sales. The charge further provided for the consolidation of plants and product lines, including employees' severance, write-off of intangible assets which no longer had value and the write-down and sale of two vacant facilities.
Actions completed through fiscal 1994 associated with the restructuring included the sale of Republic Electronics Co. (an Aerospace and Defense Group operation), the sale of a vacant facility in Torrance, California (an Automation Group property), most elements of employees' severance, and the intangibles write-off, and comprised $19.1 million (before tax) of the recorded provision.
(b) Financial Information About Industry Segments.
A summary of net sales to unaffiliated customers, operating earnings and identifiable assets attributable to the Company's business segments for the fiscal years ended October 31, 1994, 1993 and 1992 is incorporated herein by reference to Note 12 to the Company's Consolidated Financial Statements on pages 41 and 42 of the Annual Report to Shareholders for the fiscal year ended October 31, 1994.
(c) Narrative Description of Business.
The Company consists of 13 individual businesses whose results can vary widely based on a number of factors, including domestic and foreign economic conditions and developments affecting the specific industries and customers they serve. The products sold by most of these businesses represent capital investment by either the initial customer or the ultimate end user. Also, a significant portion of the sales and profitability of some Company businesses is derived from defense and other government contracts or the commercial aircraft industry. Changes in general economic conditions or conditions in specific industries, capital acquisition cycles, and government policies, collectively or individually, can have a significant effect on the Company's performance.
Specific comments covering all of the Company's fiscal 1994 business segments and operating units are set forth below.
AUTOMATION GROUP
This Group produces and markets automated drilling equipment for the printed circuit board (PCB) manufacturing industry (principally computer, telecommunications and automotive equipment); and automated metal fabrication equipment for transportation, heavy equipment and other related markets.
Excellon Automation produces automated drilling equipment for the PCB manufacturing industry. Excellon's products emphasize productivity and are designed to provide a highly efficient automated production system for PCB manufacturers. Excellon's latest product development combines multiple spindle microdrilling of circuit boards, automatic board loading and unloading, and fully integrated material handling capabilities. During fiscal 1994, Excellon acquired Amtech, a manufacturer of unique material handling systems used in PCB production.
Excellon products are sold worldwide to the PCB manufacturing industry, including both large and small electronics equipment manufacturers as well as component manufacturers, independent circuit board fabricators and custom drilling operations.
In fiscal 1994, 1993 and 1992, printed circuit board drilling equipment accounted for 18%, 16% and 12%, respectively, of the Company's consolidated net sales.
Tulon produces tungsten carbide drill and router bits, commonly ranging in size from 5.6mm down to .25mm--some as small as .10mm--for use in PCB drilling equipment. Tulon utilizes computerized equipment which automatically inspects drill bits and provides the product consistency customers need for higher-technology drilling.
W.A. Whitney produces automated equipment for the fabrication of structural steel, sheet metal and plate components and related material-handling equipment. This equipment performs such functions as punching, cutting, shearing and tapping. W.A. Whitney historically has specialized in equipment for punching and cutting mid- to heavy-guage plate metal, utilizing plasma-arc air torch systems and hydraulic punching. Its customers consist principally of large metal fabricators, such as truck, farm implement and construction equipment manufacturers, and a wide range of independent fabricators.
W.A. Whitney also produces a line of specialized screw machine and turret lathe tooling attachments under the Boyar-Schultz name. These products are sold to a wide range of customers primarily for use in tool room and production operations.
Equipment Sales Co. acts as a sales representative for various manufacturers' products sold to the PCB assembly industry, including high-speed assembly equipment.
At October 31, 1994, the backlog of the Automation Group (all of which is expected to be filled during fiscal 1995) was $29.9 million compared with $9.2 million one year earlier. The increase was primarily attributable to strengthening markets and strong customer acceptance of newer products at key Group companies.
AEROSPACE AND DEFENSE GROUP
This Group provides a broad range of measuring and sensing devices, high-performance elastomers and clamping systems, and specialized metal finishing principally for commercial aircraft and jet engine manufacturers; also combustible ammunition components and electronic and electrical cable assemblies for both domestic and foreign defense agencies and contractors. During fiscal 1994, a group operating company, Republic Electronics Co., was sold in connection with the Company's 1993 restructuring plan.
Armtec Defense Products manufactures molded fiber cartridge cases, mortar increments, igniter tubes and other combustible ammunition components for the United States armed forces and domestic and foreign defense contractors. Armtec currently is the sole U.S. producer of combustible ordnance, including the 120mm combustible case used on the main armament system on the Army's M-1A1 tank and of 120mm, 81mm and 60mm combustible mortar increments for the U.S. Army. The majority of Armtec's sales are to ordnance suppliers to the U.S. Armed Forces.
In fiscal 1994, 1993 and 1992, combustible ordnance components accounted for 9%, 9% and 12%, respectively, of the Company's consolidated net sales.
Auxitrol, headquartered in France, manufactures temperature and pressure sensors for use in aerospace and aviation applications, liquid level measurement devices for ships and storage tanks, pneumatic accessories (including pressure gauges and regulators) and industrial alarms, as well as electrical penetration devices and alarm systems for European and other foreign nuclear power plants. This subsidiary also distributes products manufactured by others, including valves, temperature and pressure switches and flow gauges. The markets served by Auxitrol principally consist of jet engine manufacturers, aerospace equipment manufacturers, shipbuilders, petroleum companies, process industries and electric utilities. Auxitrol has a joint venture with a Russian company to facilitate use of Auxitrol technology in retrofitting the aging nuclear plants in Eastern Europe. Exhaust gas temperature sensing equipment for a jet engine manufacturer constitute a significant portion of Auxitrol's sales.
Hytek Finishes provides specialized metal finishing and inspection services, including plating, anodizing, polishing, non-destructive testing and organic coatings, primarily to the commercial aircraft, aerospace and electronics markets. Hytek also has an automated tin-lead plating line, employing the latest automated plating technology, to serve the semi- conductor industry.
Midcon Cables manufactures electronic and electrical cable assemblies and cable harnesses for the military, government contractors and the commercial electronics market, offering both product design services and assembly of product to customer specifications.
TA Mfg. designs and manufactures specialty clamps and elastomeric compounds in custom molded shapes for wiring and tubing installations for airframe and jet engine manufacturers as well as military and commercial airline aftermarkets. TA's products include elastomers which are specif- ically formulated for various applications, including high-temperature environments.
At October 31, 1994, the backlog of the Aerospace and Defense Group (of which $4.1 million is expected to be filled after fiscal 1995) was $38.9 million, compared with $40.8 million one year earlier.
INSTRUMENTATION GROUP
This Group designs and manufactures a variety of meters, gauges and measurement and analysis equipment for public utilities and industrial manufacturers; also lighted indicators, switches and control components for the commercial aerospace and defense industries.
Korry Electronics designs and manufactures illuminated information and control components, and integrated thin-panel data systems, such as switches, indicators, panels and keyboards which act as man-machine interfaces in a broad variety of control and display applications. Korry's customers include original equipment manufacturers and the aftermarkets (equipment operators and spare parts distributors), primarily in the commercial aviation, general aviation, military airborne, ground- based military equipment and shipboard military equipment markets. A significant portion of Korry's sales are to suppliers of military equipment to the U.S. Government and to a commercial aircraft manufacturer.
Federal Products manufactures a broad line of high-precision analog and digital dimensional and surface measurement and inspection instruments and systems for a wide range of industrial quality control and scientific applications. Federal also distributes certain products which complement its manufactured product lines. These products constitute three major business segments: gauging, which includes dial indicators, air gauges and other precision gauges; instrumentation, which includes electronic gauges for use where ultra-precision measurement is required; and engineered products, which include custom-built and dedicated semi- automatic and automatic gauging systems. Distributed products manufac- tured by others include laser interferometer systems used primarily to check machine tool calibrations. Federal Products' equipment is used extensively in precision metal working. Its customers include the automotive, farm implement, construction equipment, aerospace, ordnance and bearing industries.
In each of fiscal years 1994, 1993 and 1992, gauge products manufac- tured by Federal Products accounted for 13% of the Company's consolidated net sales.
Scientific Columbus (formerly Jemtec Electronics) produces analog and digital meters, electrical transducers and instruments for the monitoring, controlling and billing of electrical power. Included among these products are solid-state devices for calibration of electric utility instrumentation and a line of solid state-meters, including programmable multi-function billing meters. The latest products of Scientific Columbus are multi- function, microprocessor-based meters which offer a broad range of features on a modular basis. Scientific Columbus' products are sold to electrical utilities and industrial power users.
Angus Electronics manufactures recording instruments together with other analytical and process and environmental monitoring instrumentation. These include analog strip chart and digital printout recorders as well as electronic and multi-channel microprocessor-based recording equipment. Customers of Angus Electronics include industrial equipment manufacturers, electric utilities, scientific laboratories, pharmaceutical manufacturers and process industries.
At October 31, 1994, the backlog of the Instrumentation Group (of which $7.2 million is expected to be filled after fiscal 1995) was $28 million compared with $24.4 million one year earlier.
MARKETING AND DISTRIBUTION
Automation Group products manufactured by Excellon are marketed domestically principally through employees and in foreign markets through employees, independent distributors, and affiliated distributors. Tulon products are marketed in the United States through employees and independent distributors and elsewhere principally through independent distributors. W.A. Whitney products are sold principally through independent distributors and representatives.
Aerospace and Defense Group products manufactured by Auxitrol are marketed through employees, independent representatives, and an affiliated U.S. distributor. The products of Armtec Defense Products are marketed domestically and abroad by employees and independent representatives. Midcon Cables' products are marketed domestically by employees and independent representatives. Hytek's services are marketed domestically through employees. TA Mfg. products are marketed domestically and abroad by employees and independent representatives.
Instrumentation Group products manufactured by Angus Electronics are marketed domestically through employees, independent representatives and distributors, and abroad through independent representatives and employees of Esterline's Auxitrol subsidiary. Scientific Columbus' products are sold through independent representatives. The products of Federal Products are marketed domestically principally through employees, and in foreign markets through both employees and independent representatives. Korry Electronics' products are marketed domestically and abroad principally through employees and independent representatives.
For most of the Company's products, the maintenance of a service capability is an integral part of the marketing function.
RESEARCH AND DEVELOPMENT
The Company's subsidiaries conduct product development and design programs with approximately 175 professional engineers, technicians and support personnel, supplemented by independent engineering and consulting firms when needed. In fiscal 1994, approximately $13.7 million was expended for research, development and engineering, compared with $14 million in 1993 and $13.4 million in 1992.
FOREIGN OPERATIONS
The Company's principal foreign operations consist of manufacturing facilities of Auxitrol located in France and Spain, a manufacturing facility of Tulon located in Mexico, sales and service operations of Excellon located in England, Germany and Japan, and sales offices of TA Mfg and Korry Electronics located in England and France, respectively. In addition, W.A. Whitney has a small manufacturing and distribution facility in Italy. For information as to sales, operating results and assets by geographic area and export sales, reference is made to Note 1 to the Consolidated Financial Statements on page 33, and Note 12 to the Consolidated Financial Statements on pages 41, 42 and 43, of the Company's Annual Report to Shareholders for the fiscal year ended October 31, 1994, which is incorporated herein by reference.
EMPLOYEES
During fiscal 1994, restructuring plan actions included the sale of a small operating company and most elements of employees' severance, as discussed earlier in this report. Notwithstanding these actions, the Company and its subsidiaries had approximately 2,800 employees at October 31, 1994, level with the prior year.
COMPETITION AND PATENTS
The Company's subsidiaries experience varying degrees of competition with respect to all of their products and services. Most subsidiaries are in specialized market niches with relatively few competitors. In automated drilling equipment for printed circuit board manufacturing, Excellon Automation is a leader in its field and believes it has the largest installed base in the world of automated drilling machines for the production of printed circuit boards. In molded fiber cartridge cases, mortar increments and other combustible ammunition components, Armtec currently is the sole supplier to the U.S. Army. In addition, Hytek is one of the largest metal finishers on the West Coast, and Korry Electronics, Federal Products, W.A. Whitney, and TA Mfg. are among the leaders in their respective markets.
The Company's subsidiaries generally compete with many larger companies with substantially greater volume and financial resources. The Company believes the main competitive factors for the Company's products is product performance and service. Overall, the Company believes its ongoing product development and design programs, coupled with a strong customer service orientation, keep its various product groups competitive in the marketplace.
The subsidiaries hold a number of patents but in general rely on technical superiority, exclusive features in their equipment and marketing and service to customers to meet competition. Licenses which help maintain a significant advantage over competition include a long- term license agreement under which Auxitrol manufactures and sells electrical penetration assemblies.
SOURCES AND AVAILABILITY OF RAW MATERIALS AND COMPONENTS
The Company's subsidiaries are not materially dependent for their raw materials and components upon any one source of supply except for certain components and supplies such as hydraulic components purchased by W.A. Whitney and certain other raw materials and components purchased by other subsidiaries. In such instances, ongoing efforts are conducted to develop alternative sources or designs to help avoid the possibility of any business impairment.
(d) Financial Information About Foreign and Domestic Operations and Export Sales. 	 See "Foreign Operations" above.
ITEM 2.
ITEM 2. PROPERTIES
The following table summarizes the principal properties (in excess of 15,000 square feet) owned or leased by the Company and its subsidiaries as of October 31, 1994:
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The Company group (business segment) operating each facility described above is indicated by the letter following the description of the facility, as follows:
(A) - Automation (D) - Aerospace and Defense (I) - Instrumentation
In addition to the properties listed above, a 64,000 square foot facility in Nashua, NH is owned by the Company and planned for sale. Liabilities have been accrued for environmental remediation costs expected to be incurred in the disposition of this facility.
In the opinion of the management of the Company, the subsidiaries' plants and equipment are in good condition, adequate for current operations and provide sufficient capacity for up to 25% expansion at most locations.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Company has various lawsuits and claims, both offensive and defensive, and contingent liabilities arising from the conduct of business, including those associated with government contracting activities, 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.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year ended October 31, 1994.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The following information which appears in the Company's Annual Report to Shareholders for fiscal 1994 is hereby incorporated by reference:
(a)	The high and low market prices of the Company's common stock for each quarterly period during the fiscal years ended October 31, 1994 and 1993, respectively (page 28 of the Annual Report to Shareholders).
	(b)	The approximate number of holders of common stock (page 28 of 		the Annual Report to Shareholders).
	(c)	Restrictions on the ability to pay future cash dividends 		(Note 4 to Consolidated Financial Statements, pages 34 and 		35 of the Annual Report to Shareholders).
No cash dividends were paid during the fiscal years ended October 31, 1994 and 1993 as the Company continued its policy of retaining all internally generated funds to support the long-term growth of the Company and to retire debt obligations.
The principal market for the Company's common stock is the New York Stock Exchange.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The Company hereby incorporates by reference the Selected Financial Data of the Company which appears on page 28 of the Company's Annual Report to Shareholders for fiscal 1994.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company hereby incorporates by reference Management's Discussion and Analysis of Results of Operations and Financial Condition which is set forth on pages 25, 26 and 27 of the Company's Annual Report to Shareholders for fiscal 1994.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company hereby incorporates by reference the Consolidated Financial Statements and the report thereon of Deloitte & Touche LLP, dated December 5, 1994, which appear on pages 29 - 44 of the Company's Annual Report to Shareholders for fiscal 1994, including Note 13, page 43, which contains unaudited quarterly financial data.
ITEM 9.
ITEM 9.	 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
	(a) Directors.
The Company hereby incorporates by reference the information set forth under "Election of Directors" in the definitive form of the Company's Proxy Statement, relating to its Annual Meeting of Shareholders to be held on March 8, 1995, filed with the Securities and Exchange Commission and the New York Stock Exchange on January 13, 1995.
(b) Executive Officers.
The names and ages of all executive officers of the Company and the positions and offices held by such persons as of January 25, 1995 are as follows:
Mr. Hurlbut has been Chairman, President and Chief Executive Officer since January 1993. From February 1989 through December 1992, he was President and Chief Executive Officer.
Mr. Stevenson has been Executive Vice President and Chief Financial Officer, Secretary and Treasurer since October 1987.
Mr. Cremin has been Senior Vice President and Group Executive since December 1990. From October 1987 to December 1990, he was Group Vice President.
Mr. Kring has been Group Vice President since August 1993. For more than five years prior to that date, he was President of Heath Tecna Aerospace Co., a unit of Ciba Composites Division, Anaheim, California.
Mr. Larson has been Group Vice President since April 1991. For more than five years prior to that date, he held various executive positions with Korry Electronics, including President and Executive Vice President, Marketing.
Ms. Greenberg has been Vice President, Human Relations since March 1993. For more than five years prior to that date, she was a partner in the law firm of Bogle & Gates, Seattle, Washington.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The Company hereby incorporates by reference the information set forth under "Executive Compensation" in the definitive form of the Company's Proxy Statement, relating to its Annual Meeting of Shareholders to be held on March 8, 1995, filed with the Securities and Exchange Commission and the New York Stock Exchange on January 13, 1995.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company hereby incorporates by reference the information with respect to stock ownership set forth under "Security Ownership of Certain Beneficial Owners and Management" in the definitive form of the Company's Proxy Statement, relating to its Annual Meeting of Shareholders to be held on March 8, 1995, filed with the Securities and Exchange Commission and the New York Stock Exchange on January 13, 1995.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements.
The following consolidated financial statements, together with the report thereon of Deloitte & Touche LLP, dated December 5, 1994, appearing on pages 29 - 44 of the Company's Annual Report to Shareholders for fiscal 1994, are hereby incorporated by reference:
(a) (2) Financial Statement Schedules.
The following additional financial data should be read in conjunction with the consolidated financial statements in the Annual Report to Shareholders for the fiscal year ended October 31, 1994:
Independent Auditors' Report Schedule VIII-- Valuation and Qualifying Accounts and Reserves
	(a) (3) Exhibits.
	(b) Reports on Form 8-K.
	No reports on Form 8-K were filed during the fourth quarter of fiscal 	1994.
				 SIGNATURES
	Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
				ESTERLINE TECHNOLOGIES CORPORATION 		 (Registrant)
			 By /s/ Robert W. Stevenson ---------------------------- 				Robert W. Stevenson 				Executive Vice President and 				Chief Financial Officer, Secretary 				and Treasurer (Principal Financial 				and Accounting Officer)
	Dated: January 27, 1995 ----------------
	Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders Esterline Technologies Corporation Bellevue, Washington
We have audited the consolidated financial statements of Esterline Technologies Corporation as of October 31, 1994 and 1993, and for each of the three years in the period ended October 31, 1994, and have issued our report thereon dated December 5, 1994; such financial statements and report are included in your 1994 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the financial statement schedules of Esterline Technologies Corporation, listed in Item 14. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
/s/ Deloitte & Touche LLP - ------------------------- Seattle, Washington December 5, 1994
	 ESTERLINE TECHNOLOGIES CORPORATION AND SUBSIDIARIES SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (in thousands)
For Years Ended October 31, 1994, 1993 and 1992
			 ESTERLINE TECHNOLOGIES CORPORATION 		 Form 10-K Report for Fiscal Year Ended October 31, 1994
		 INDEX TO EXHIBITS -----------------