<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended October 31, 1994 Commission file number 1-6357
ESTERLINE TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-2595091
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10800 NE 8th Street
Bellevue, Washington 98004
(Address of principal executive offices) (Zip code)
</TABLE>
Registrant's telephone number, including area code 206/453-9400
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock ($.20 par value) New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
</TABLE>
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.
X Yes No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. X
---------------
As of January 9, 1995, 6,516,975 shares of the Registrant's common
stock were outstanding. The aggregate market value of such common
stock held by non-affiliates at such date (based upon the closing
sale price) was $92,247,538.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Annual Report to Shareholders for Fiscal Year ended
October 31, 1994--Parts I, II and IV.
Portions of Proxy Statement relating to the 1995 Annual Meeting of
Shareholders, to be held on March 8, 1995--Part III.
- -----------------------------------------------------------------------
Page 1 of 67 pages
Exhibit index at page 20
<PAGE> 2
PART I
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.
<PAGE> 3
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.
<PAGE> 4
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.
<PAGE> 5
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.
<PAGE> 6
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.
<PAGE> 7
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.
<PAGE> 8
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:
<TABLE>
<CAPTION>
Approximate
Type of Number of Owned
Location Facility Square Feet or Leased
- -------- ----------------- ----------- ----------
<S> <C> <C> <C>
Coachella, CA Office and Plant (D) 110,000 Owned
Columbus, OH Office and Plant (I) 40,000 Owned
Gardena, CA Office and Plant (A) 18,000 Leased
Glendale, CA Office and Plant (D) 45,000 Leased
Indianapolis, IN Office and Plant (I) 63,000 Owned
Joplin, MO Office and Plant (D) 92,000 Owned
Kent, WA Office and Plant (D) 93,000 Owned
Rancho Cucamonga, CA Office and Plant (A) 33,000 Owned
Providence, RI Office and Plant (I) 166,000 Owned
Rockford, IL Office and Plant (A) 257,000 Owned
Seattle, WA Office and Plant (I) 100,000 Leased
Torrance, CA Office and Plant (A) 150,000 Leased
Bourges, France Plant (D) 69,000 Owned
Dietzenbach, Germany Office and Service
Facility (A) 32,000 Leased
Rustington, England Office and Service
Facility(A) 18,000 Leased
Guadalajara, Mexico Office and Plant (A) 40,000 Leased
Torino, Italy Office and Plant (A) 20,000 Leased
Torrejon de Ardoz,
Spain Office and Plant (D) 17,000 Owned
</TABLE>
- -----------------
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. 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.
<PAGE> 9
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. 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. 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. 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. 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. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
<PAGE> 10
PART III
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:
<TABLE>
<CAPTION>
Name Age Position with the Company
---- --- -------------------------
<S> <C> <C>
Wendell P. Hurlbut 63 Chairman, President and
Chief Executive Officer
Robert W. Stevenson 55 Executive Vice President and Chief
Financial Officer, Secretary and
Treasurer
Robert W. Cremin 54 Senior Vice President and Group Executive
Larry A. Kring 54 Group Vice President
Stephen R. Larson 50 Group Vice President
Marcia J. M. Greenberg 42 Vice President, Human Relations
</TABLE>
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. 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.
<PAGE> 11
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. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
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:
<TABLE>
<CAPTION>
Annual Report
Page Number
-------------
<S> <C>
Report of Independent Auditors.................. 44
Consolidated Balance Sheet--October 31, 1994 and 1993... 30
Consolidated Statement of Operations--Years ended
October 31, 1994, 1993 and 1992......................... 29
Consolidated Statement of Shareholders' Equity--Years ended
October 31, 1994, 1993 and 1992......................... 32
Consolidated Statement of Cash Flows--Years ended
October 31, 1994, 1993 and 1992......................... 31
Notes to Consolidated Financial Statements.............. 33 - 43
</TABLE>
(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
<PAGE> 12
(a) (3) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<S> <C>
3.1 Composite Restated Certificate of Incorporation of the Company
as amended by Certificate of Amendment dated March 14, 1990.
(Incorporated by reference to Exhibit 19 to 10-Q Report for
the quarter ended July 31, 1990.)
3.2 By-laws of the Company, as amended and restated
December 15, 1988. (Incorporated by reference to Exhibit 3.2
to 10-K Report for the fiscal year ended October 31, 1988.)
4.1 Indenture, dated as of October 1, 1980, among Esterline
International Finance N.V., the Company and Manufacturers
Hanover Trust Company, relating to 8-1/4% Convertible Sub-
ordinated Guaranteed Debentures due 1995 of Esterline Inter-
national Finance N.V., convertible into Common Stock of the
Company. (Incorporated by reference to Exhibit 4.1 to 10-K
Report for the fiscal year ended October 31, 1980.) Registrant
undertakes to furnish to the Commission, upon request, a copy
of any other instrument defining the rights of long-term debt
of the Registrant and all of its subsidiaries for which
consolidated or unconsolidated financial statements are
required to be filed.
4.2 Form of Rights Agreement, dated as of December 9, 1992,
between the Company and Chemical Bank, which includes as
Exhibit A thereto the form of Certificate of Designation,
Preferences and Rights of Series A Serial Preferred Stock
and as Exhibit B thereto the form of Rights Certificate
(Incorporated by reference to Exhibit 1 to the Registration
Statement to Form 8-A filed December 17, 1992.)
10.1 Amendment of Lease and Agreement, dated March 11, 1959,
between the City of Torrance, California, and Longren
Aircraft Company, Inc., as original lessee; Lease, dated
July 1, 1959, between the City of Torrance and Aeronca
Manufacturing Corporation, as original lessee; and Assignment
of Ground Lease, dated September 26, 1985, from Robert G.
Harris, as successor lessee under the foregoing leases, to
Excellon Industries, Inc., relating to principal manufacturing
facility of Excellon at 24751 Crenshaw Boulevard, Torrance,
California. (Incorporated by reference to Exhibit 10.1 to
10-K Report for fiscal year ended October 31, 1986.)
10.4 Industrial Lease dated July 17, 1984 between 901 Dexter
Associates and Korry Electronics Co., First Amendment to
Lease dated May 10, 1985, Second Amendment to Lease dated
June 20, 1986, Third Amendment to Lease dated
September 1, 1987, and Notification of Option Exercise dated
January 7, 1991, relating to the manufacturing facility of
Korry Electronics at 901 Dexter Avenue N., Seattle, Washington.
(Incorporated by reference to Exhibit 10.4 to 10-K Report for
the fiscal year ended October 31, 1991.)
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<S> <C>
10.4a Fourth Amendment dated July 27, 1994 to Industrial Lease dated
July 17, 1984 between Houg Family Partnership, as successor to
901 Dexter Associates, and Korry Electronics Co.
10.5 Industrial Lease dated July 17, 1984 between 801 Dexter
Associates and Korry Electronics Co., First Amendment to
Lease dated May 10, 1985, Second Amendment to Lease dated
June 20, 1986, Third Amendment to Lease dated
September 1, 1987, and Notification of Option Exercise dated
January 7, 1991, relating to the manufacturing facility of
Korry Electronics at 801 Dexter Avenue N., Seattle Washington.
(Incorporated by reference to Exhibit 10.5 to 10-K Report
for the fiscal year ended October 31, 1991.)
10.5a Fourth Amendment dated March 28, 1994 to Industrial Lease
dated July 17, 1984 between Michael Maloney and the Bancroft &
Maloney general partnership, as successor to 801 Dexter
Associates, and Korry Electronics Co.
10.7 Amended and Restated Credit Agreement executed as of
January 25, 1991 dated and effective as of September 18, 1989
between Esterline Corporation, certain of its subsidiaries,
various financial institutions and Continental Bank N.A. as
Agent. (Incorporated by reference to Exhibit 10.7 to 10-K
Report for the fiscal year ended October 31, 1990.)
10.8 Amendment, dated as of August 6, 1992, among Esterline
Technologies Corporation, certain of its subsidiaries, various
financial institutions and Continental Bank N.A., as agent, to
that certain Amended and Restated Credit Agreement, executed
as of January 25, 1991 and dated and effective as of
September 18, 1989, among Esterline Corporation, certain of
its subsidiaries, certain financial institutions and
Continental Bank N.A., as agent. (Incorporated by reference
to Exhibit 10.8 to 10-Q Report for the quarter ended
July 31, 1992.)
10.8a Amendment, dated as of October 31, 1993, among Esterline
Technologies Corporation, certain of its subsidiaries,
various financial institutions and Continental Bank N.A., as
agent, to that certain Amended and Restated Credit Agreement,
executed as of January 25, 1991 and dated and effective as of
September 18, 1989 and amended August 6, 1992, among Esterline
Corporation, certain of its subsidiaries, certain financial
institutions and Continental Bank N.A., as agent.
(Incorporated by reference to Exhibit 10.8a to 10-K Report for
the fiscal year ended October 31, 1993.)
10.9 Note Agreement, dated as of July 15, 1992, among Esterline
Technologies Corporation, certain of its subsidiaries, The
Northwestern Mutual Life Insurance Company and New England
Mutual Life Insurance Company relating to 8.75% Senior Notes
due July 30, 2002 of Esterline Technologies Corporation and
certain of its subsidiaries. (Incorporated by reference to
Exhibit 10.9 to 10-Q Report for the quarter ended July 31, 1992.)
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<S> <C>
10.9a Amendment to Note Agreement, executed as of October 31, 1993,
to that certain Note Agreement, dated and effective as of
July 15, 1992 , among Esterline Technologies Corporation,
certain of its subsidiaries, The Northwestern Mutual Life
Insurance Company and New England Mutual Life Insurance
Company relating to 8.75% Senior Notes due July 30, 2002 of
Esterline Technologies Corporation and certain of its
subsidiaries. (Incorporated by reference to Exhibit 10.9a to
10-K Report for the fiscal year ended October 31, 1993.)
10.10 Compensation of Directors. (Incorporated by reference to first
paragraph under "Other Information as to Directors" in the
definitive form of the Company's Proxy Statement, relating to
its 1995 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.)
10.14 Stock Option Plan for Carroll M. Martenson. (Incorporated by
reference to Exhibit B to the Company's Proxy Statement dated
February 9, 1988.)
10.14a Certificate of Grant of Option pursuant to Stock Option Plan
for Carroll M. Martenson. (Incorporated by reference to
Exhibit 10.14a to 10-K Report for the fiscal year ended
October 31, 1991.)
10.14b Amendment to Certificate of Grant of Option pursuant to
Stock Option Plan for Carroll M. Martenson. (Incorporated
by reference to Exhibit 10.14b to 10-K Report for the fiscal
year ended October 31, 1991.)
11 Schedule setting forth computation of earnings per share for
the five fiscal years ended October 31, 1994.
13 Annual Report to Shareholders for the fiscal year ended
October 31, 1994. (Not filed as part of this Report except
for those portions thereof incorporated by reference herein.)
21 List of subsidiaries.
23.1 Consent of Deloitte & Touche LLP.
</TABLE>
<TABLE>
<CAPTION>
Exhibit
Number Management Contracts or Compensatory Plans or Arrangements
------- ----------------------------------------------------------
<S> <C>
10.13 Amended and Restated 1987 Stock Option Plan. (Incorporated
by reference to Exhibit 10.13 to 10-Q Report for the quarter
ended January 31, 1992.)
10.15 Esterline Corporation Supplemental Retirement Income Plan for
Key Executives. (Incorporated by reference to Exhibit 10.15
to 10-K Report for the fiscal year ended October 31, 1989.)
10.16b Esterline Corporation Long-Term Incentive Compensation Plan,
Fiscal Years 1992 through 1995. (Incorporated by reference to
Exhibit 10.16b to 10-K Report for the fiscal year ended
October 31, 1992.)
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
Exhibit
Number Management Contracts or Compensatory Plans or Arrangements
------- ----------------------------------------------------------
<S> <C>
10.16c Esterline Corporation Long-Term Incentive Compensation Plan,
Fiscal Years 1993 through 1996. (Incorporated by reference
to Exhibit 10.16c to 10-K Report for the fiscal year ended
October 31, 1993.)
10.16d Esterline Corporation Long-Term Incentive Compensation Plan,
Fiscal Years 1994 through 1997.
10.19 Executive Officer Termination Protection Agreement.
(Incorporated by reference to Exhibit 10.19 to 10-K Report for
the fiscal year ended October 31, 1992.)
10.20b Esterline Technologies Corporation Corporate Management
Incentive Compensation Plan for fiscal year 1994.
</TABLE>
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of fiscal
1994.
<PAGE> 16
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.
<TABLE>
<S> <C> <C>
/s/ Wendell P. Hurlbut Director, Chairman, President and January 27, 1995
- ---------------------- ----------------
(Wendell P. Hurlbut) Chief Executive Officer
(Principal Executive Officer)
/s/ Robert W. Stevenson Executive Vice President January 27, 1995
- ----------------------- ----------------
(Robert W. Stevenson) and Chief Financial
Officer, Secretary and
Treasurer (Principal
Financial and Accounting
Officer)
</TABLE>
<PAGE> 17
<TABLE>
<S> <C> <C>
/s/ Gilbert W. Anderson Director January 18, 1995
- ----------------------- ----------------
(Gilbert W. Anderson)
/s/ John F. Clearman Director January 12, 1995
- -------------------- ----------------
(John F. Clearman)
/s/ Edwin I. Colodny Director January 18, 1995
- -------------------- ----------------
(Edwin I. Colodny)
/s/ E. John Finn Director January 12, 1995
- ---------------- ----------------
(E. John Finn)
/s/ Robert F. Goldhammer Director January 13, 1995
- ------------------------ ----------------
(Robert F. Goldhammer)
/s/ Jerome J. Meyer Director January 13, 1995
- ------------------- ----------------
(Jerome J. Meyer)
/s/ Paul G. Schloemer Director January 13, 1995
- --------------------- ----------------
(Paul G. Schloemer)
/s/ Malcolm T. Stamper Director January 16, 1995
- ---------------------- ----------------
(Malcolm T. Stamper)
</TABLE>
<PAGE> 18
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
<PAGE> 19
ESTERLINE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(in thousands)
For Years Ended October 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
Deduction for
Balance at Additions Purpose for Balance
Beginning Charged which Reserve at End
Description of Year to Income was Created of Year
----------- ---------- --------- ------------- --------
<S> <C> <C> <C> <C>
Reserve for doubtful
accounts receivable
Year Ended October 31
- ---------------------
1994 $ 2,417 $ 117 $ (333) $ 2,201
========== ======== ============ ========
1993 $ 2,314 $ 668 $ (565) $ 2,417
========== ======== ============ ========
1992 $ 2,078 $ 916 $ (680) $ 2,314
========== ======== ============ ========
Restructuring reserves related to
accounts receivable and inventory
Year Ended October 31
- ---------------------
1994 $ 3,890 $ --- $ (344) $ 3,546
========= ======= ============ ========
1993 $ --- $ 3,890 $ --- $ 3,890
========= ======= ============ ========
1992 $ --- $ --- $ --- $ ---
========= ======= ============ ========
</TABLE>
<PAGE> 20
ESTERLINE TECHNOLOGIES CORPORATION
Form 10-K Report for Fiscal Year Ended
October 31, 1994
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Page No.
------- ------- --------
<S> <C>
3.1 Composite Restated Certificate of Incorporation
of the Company as amended by Certificate of
Amendment dated March 14, 1990. (Incorporated
by reference to Exhibit 19 to 10-Q Report for
the quarter ended July 31, 1990.)
3.2 By-laws of the Company, as amended and restated
December 15, 1988. (Incorporated by reference
to Exhibit 3.2 to 10-K Report for the fiscal
year ended October 31, 1988.)
4.1 Indenture, dated as of October 1, 1980, among
Esterline International Finance N.V., the
Company and Manufacturers Hanover Trust Company,
relating to 8-1/4% Convertible Subordinated
Guaranteed Debentures due 1995 of Esterline
International Finance N.V., convertible into
Common Stock of the Company. (Incorporated
by reference to Exhibit 4.1 to 10-K Report
for the fiscal year ended October 31, 1980.)
Registrant undertakes to furnish to the
Commission, upon request, a copy of any other
instrument defining the rights of long-term
debt of the Registrant and all of its subsidiaries
for which consolidated or unconsolidated
financial statements are required to be
filed.
4.2 Form of Rights Agreement, dated as of December 9, 1992,
between the Company and Chemical Bank, which includes
as Exhibit A thereto the form of Certificate of Designation,
Preferences and Rights of Series A Serial Preferred Stock
and as Exhibit B thereto the form of Rights Certificate
(Incorporated by reference to Exhibit 1 to the Registration
Statement to Form 8-A filed December 17, 1992.)
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Page No.
------- ------- --------
<S> <C> <C>
10.1 Amendment of Lease and Agreement, dated
March 11, 1959, between the City of Torrance,
California, and Longren Aircraft Company, Inc., as
original lessee; Lease, dated July 1, 1959, between
the City of Torrance and Aeronca Manufacturing
Corporation, as original lessee; and Assignment of
Ground Lease, dated September 26, 1985, from Robert
G. Harris, as successor lessee under the foregoing
leases, to Excellon Industries, Inc., relating to
principal manufacturing facility of Excellon at 24751
Crenshaw Boulevard, Torrance, California. (Incorporated
by reference to Exhibit 10.1 to 10-K Report for
fiscal year ended October 31, 1986.)
10.4 Industrial Lease dated July 17, 1984 between 901 Dexter
Associates and Korry Electronics Co., First Amendment
to Lease dated May 10, 1985, Second Amendment to
Lease dated June 20, 1986, Third Amendment to Lease
dated September 1, 1987, and Notification of Option
Exercise dated January 7, 1991, relating to the
manufacturing facility of Korry Electronics at 901 Dexter
Avenue N., Seattle, Washington. (Incorporated by
reference to Exhibit 10.4 to 10-K Report for the fiscal
year ended October 31, 1991.)
10.4a Fourth Amendment dated July 27, 1994 to Industrial Lease
dated July 17, 1984 between Houg Family Partnership, as
successor to 901 Dexter Associates, and Korry
Electronics Co. 25
10.5 Industrial Lease dated July 17, 1984 between 801 Dexter
Associates and Korry Electronics Co., First Amendment
to Lease dated May 10, 1985, Second Amendment to
Lease dated June 20, 1986, Third Amendment to Lease
dated September 1, 1987, and Notification of Option
Exercise dated January 7, 1991, relating to the
manufacturing facility of Korry Electronics at 801 Dexter
Avenue N., Seattle, Washington. (Incorporated by
reference to Exhibit 10.5 to 10-K Report for the fiscal
year ended October 31, 1991.)
10.5a Fourth Amendment dated March 28, 1994 to Industrial Lease
dated July 17, 1984 between Michael Maloney and the
Bancroft & Maloney general partnership, as successor to
801 Dexter Associates, and Korry Electronics Co. 28
</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Page No.
------- ------- --------
<S> <C>
10.7 Amended and Restated Credit Agreement executed
as of January 25, 1991 dated and effective as of
September 18, 1989 between Esterline Corporation,
certain of its subsidiaries, various financial
institutions and Continental Bank N.A. as Agent.
(Incorporated by reference to Exhibit 10.7 to 10-K
Report for the fiscal year ended October 31, 1990.)
10.8 Amendment, dated as of August 6, 1992, among
Esterline Technologies Corporation, certain of its
subsidiaries, various financial institutions and
Continental Bank N.A., as agent, to that certain
Amended and Restated Credit Agreement, executed as
of January 25, 1991 and dated and effective as of
September 18, 1989, among Esterline Corporation,
certain of its subsidiaries, certain financial
institutions and Continental Bank N.A., as agent.
(Incorporated by reference to Exhibit 10.8 to 10-Q
Report for the quarter ended July 31, 1992.)
10.8a Amendment, dated as of October 31, 1993, among
Esterline Technologies Corporation, certain of its
subsidiaries, various financial institutions and
Continental Bank N.A., as agent, to that certain Amended
and Restated Credit Agreement, executed as of
January 25, 1991 and dated and effective as of
September 18, 1989 and amended August 6, 1992, among
Esterline Corporation, certain of its subsidiaries,
certain financial institutions and Continental Bank N.A.,
as agent. (Incorporated by reference to Exhibit 10.8a
to 10-K Report for the fiscal year ended October 31, 1993.)
10.9 Note Agreement, dated as of July 15, 1992, among Esterline
Technologies Corporation, certain of its subsidiaries, The
Northwestern Mutual Life Insurance Company and New England
Mutual Life Insurance Company relating to 8.75% Senior
Notes due July 30, 2002 of Esterline Technologies
Corporation and certain of its subsidiaries. (Incorporated
by reference to Exhibit 10.9 to 10-Q Report for the quarter
ended July 31, 1992.)
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Page No.
------- ------- --------
<S> <C> <C>
10.9a Amendment to Note Agreement, executed as of
October 31, 1993, to that certain Note Agreement,
dated and effective as of July 15, 1992, among
Esterline Technologies Corporation, certain of its
subsidiaries, The Northwestern Mutual Life Insurance
Company and New England Mutual Life Insurance Company
relating to 8.75% Senior Notes due July 30, 2002 of
Esterline Technologies Corporation and certain of its
subsidiaries. (Incorporated by reference to Exhibit
10.9a to 10-K Report for the fiscal year ended
October 31, 1993.)
10.10 Compensation of Directors. (Incorporated by
reference to first paragraph under "Other
Information as to Directors" in the definitive
form of the Company's Proxy Statement,
relating to its 1995 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.)
10.14 Stock Option Plan for Carroll M. Martenson.
(Incorporated by reference to Exhibit B to the
Company's Proxy Statement dated February 9, 1988.)
10.14a Certificate of Grant of Option pursuant to
Stock Option Plan for Carroll M. Martenson.
(Incorporated by reference to Exhibit 10.14a
to 10-K Report for the fiscal year ended
October 31, 1991.)
10.14b Amendment to Certificate of Grant of Option pursuant
to Stock Option Plan for Carroll M. Martenson.
(Incorporated by reference to Exhibit 10.14b to 10-K
Report for the fiscal year ended October 31, 1991.)
11 Schedule setting forth computation of earnings per
share for the five fiscal years ended
October 31, 1994. 35
13 Annual Report to Shareholders for the fiscal
year ended October 31, 1994. (Not filed as
part of this Report except for those portions
thereof incorporated by reference herein.) 37
21 List of subsidiaries. 57
23.1 Consent of Deloitte & Touche LLP. 58
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
Exhibit Management Contracts or Compensatory Plans or
Number Arrangements Page No.
------- -------------------------------------------- --------
<S> <C> <C>
10.13 Amended and Restated 1987 Stock Option Plan.
(Incorporated by reference to Exhibit 10.13 to 10-Q
Report for the quarter ended January 31, 1992.)
10.15 Esterline Corporation Supplemental Retirement
Income Plan for Key Executives. (Incorporated
by reference to Exhibit 10.15 to 10-K Report for
the fiscal year ended October 31, 1989.)
10.16b Esterline Corporation Long-Term Incentive
Compensation Plan, Fiscal Years 1992 through 1995.
(Incorporated by reference to Exhibit 10.16b to
10-K Report for the fiscal year ended
October 31, 1992)
10.16c Esterline Corporation Long-Term Incentive
Compensation Plan, Fiscal Years 1993 through 1996.
(Incorporated by reference to Exhibit 10.16c to
10-K Report for the fiscal year ended
October 31, 1993.)
10.16d Esterline Corporation Long-Term Incentive
Compensation Plan, Fiscal Years 1994 through 1997 59
10.19 Executive Officer Termination Protection Agreement.
(Incorporated by reference to Exhibit 10.19 to
10-K Report for the fiscal year ended
October 31, 1992.)
10.20b Esterline Technologies Corporation Corporate
Management Incentive Compensation Plan for
fiscal year 1994. 65
</TABLE>
<PAGE> 1
EXHIBIT 10.4A
FOURTH AMENDMENT TO LEASE
(901 Lease)
This Fourth Amendment to Lease (this "Agreement") is entered into
this 27 day of July, 1994, by and between Korry Electronics Co., a
Delaware corporation ("Korry") and Houg Family Partnership ("HFP"),
a Washington limited partnership.
RECITALS
a. HFP's predecessor, 901 Dexter Avenue Associates, and Korry's
predecessor, Criton Technologies ("CT"), a Delaware general partnership,
entered into an industrial lease agreement (the "Original Lease") dated
July 17, 1974, under the terms of which CT, as tenant, leased certain
property (the "Premises") located at 901 Dexter Avenue North, Seattle,
Washington. The Original Lease has been amended by three amendments,
dated respectively May 10, 1985 (the "First Amendment"), June 20, 1986
(the "Second Amendment"), and September 1, 1987 (the "Third Amendment").
The Original Lease, as amended by these three amendments, is hereinafter
designated as the "Amended Lease."
b. HFP succeeded to the landlord's interest under the Amended Lease
on it acquired title to the Premises on April 17, 1989. Korry succeeded
to the lessee's interest under the Amended Lease pursuant to an assignment
dated September 27, 1989.
c. The parties wish to amend the Amended Lease under the terms and
conditions set forth below.
TERMS AND CONDITIONS
1. Term of Occupancy; Termination. The Lease term is hereby extended
-------------------------------
to July 31, 2011, and Korry shall have the sole and exclusive right to
peaceful and quiet enjoyment of the Premises, and to occupy the Premises
without interruption or interference for the entire remainder of the
term as extended hereby. However, Korry shall have the right to
terminate the Lease at any time by giving written notice to HFP at
least two years in advance of the termination date. Korry shall not
be liable for any obligations arising under or in connection with the
Lease following the date specified as the termination date.
2. Notices. Paragraph 19 of the Original Lease is hereby deleted
--------
and replaced by the following:
a. Notice Addresses. Any notice, keys, drawings, or other item
-----------------
or items that may or shall be delivered pursuant to the terms of
this Lease shall be delivered to the following addresses:
<PAGE> 2
If to Landlord, to the following:
Houg Family Partnership
c/o Dr. Andrew Houg
11066 5th Avenue N.E.
Seattle, WA 98125
If to Tenant, to the following:
Korry Electronics Co.
901 Dexter Avenue North
Seattle, WA 98109
Attn: Director of Finance
b. Form of Notice and Delivery. Any and all notices shall be in writing
----------------------------
and either delivered by hand or mailed, via certified United States
mail, postage prepaid, to the addresses of the respective recipient
as set forth above. Delivery shall be deemed complete and effective
upon receipt by the addressee or upon the third business day following
mailing, whichever shall first occur.
c. Covenant to Accept Notice. Neither party shall refuse or otherwise
--------------------------
attempt to avoid delivery of any notice.
d. Change of Notice Address. Either party may change its notice
-------------------------
address by giving written notice of a new address in accordance with
the foregoing notice provisions.
3. Continuation of Unmodified Terms. Except as modified by this Agreement,
---------------------------------
the terms of the Amended Lease remain in full force and effect. In the event
of conflict or inconsistency between the provisions of the Amended Lease
and the provisions of this Agreement, this Agreement will control.
4. Binding Effect. The terms and conditions of this Agreement shall be
---------------
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
5. Entire Agreement. This Agreement contains the entire understanding
-----------------
between and among the undersigned parties in connection with the subject
matter addressed herein. It supersedes and replaces any and all prior
negotiations, agreements, discussions, representations, statements and
promises, whether oral or written. Each party hereby acknowledges that
no promise, representation or warranty whatsoever, express or implied,
has been made by any other party or agent or attorney of any other party
to induce it to execute this document, other than the terms expressly
stated in this written Agreement.
<PAGE> 3
6. Construction of this Agreement.
-------------------------------
a. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington.
b. The paragraph headings used in this Agreement are inserted
for convenience only and are not intended to be a part of this
Agreement or to affect its construction.
c. When used in this Agreement, terms such as "herein," "hereto,
" and "hereof" refer to the entire Agreement, and are not limited
to any portion or portions hereof.
d. The language of this Agreement, including without limitation
any ambiguities, shall not be construed in favor of any party or
against any other party.
e. Time is of the essence in this Agreement.
f. This Agreement is exclusively for the benefit of the
undersigned parties, and no intent to benefit any third person or
entity shall be inferred, implied, or presumed in construing this
Agreement.
7. Signing Authority. Each of the individuals signing below on behalf
------------------
of one of the parties warrants that he is authorized to sign this Agreement
on that party's behalf and that his signature binds that party to this
Agreement.
Dated the day and year first set forth above.
KORRY ELECTRONICS CO. HOUG FAMILY PARTNERSHIP
by /s/ David Elkins by /s/ Andrew Houg
------------------- ------------------
David Elkins Andrew Houg
President Managing General Partner
ESTERLINE TECHNOLOGIES, INC.
by /s/ R. W. Stevenson
---------------------
R. W. Stevenson - Chief Financial Officer
<PAGE> 1
EXHIBIT 10.5A
FOURTH AMENDMENT TO LEASE
(801 LEASE)
This Fourth Amendment to Lease (this "Agreement") is entered into this
28 day of March, 1994, by and between Korry Electronics Co., a Delaware
corporation ("Korry"), Esterline Technologies, Inc., a Delaware corporation
("Esterline"), and Michael Maloney ("Maloney"), a single man, acting
individually and as managing partner for the Bancroft & Maloney general
partnership.
RECITALS
a. Maloney's predecessor, 801 Dexter Associates, and Korry's
predecessor, Criton Technologies ("CT"), a Delaware general partnership,
entered into an industrial lease agreement (the "Original Lease") dated
July 17, 1974, under the terms of which CT, as tenant, leased certain
property (the "Premises") located at 801 Dexter Avenue North, Seattle,
Washington. The lease has been amended by three amendments, dated
respectively May 10, 1985 (the "First Amendment"), June 20, 1986
(the "Second Amendment"), and September 1, 1987 (the "Third Amendment").
The Original Lease, as amended by these three amendments, is hereinafter
designated as the "Amended Lease."
b. Maloney succeeded to the landlord's interest under the Lease
pursuant to an assignment dated August 30, 1988. Korry succeeded to the
lessee's interest under the Lease pursuant to an assignment dated
September 27, 1989, which assignment has been and is hereby recognized and
consented to by Maloney as being effective as of September 27, 1989.
c. The parties wish to amend the Amended Lease under the terms
and conditions set forth below.
TERMS AND CONDITIONS
1. Esterline's Agreement to be Bound by Amended Lease.
---------------------------------------------------
Esterline agrees to be bound as tenant by all terms and covenants of the
Amended Lease, including this Agreement and any and all subsequent amendments
or modifications to the Amended Lease which Korry and Esterline sign hereafter.
2. Landlord's Maintenance Obligations. Paragraph 2 of the Third
-----------------------------------
Amendment is hereby deleted and replaced with the following, to be effective
as of the date of this Agreement:
<PAGE> 2
The Landlord's maintenance and replacement obligations under the
Lease shall hereafter be limited to the costs of the maintenance of
the utilities located outside of the leased premises, the foundations,
and the exterior side of the exterior walls, and heat pump/compressor
replacement costs; provided, that the Tenant shall be solely
responsible for paying the first $5,000 of the costs incurred in the
aggregate in connection with these items during any Lease year
(as that term is defined below), and Tenant and Landlord shall each
pay one-half of all additional costs incurred in connection with
these items in excess of $5,000 during each Lease year. As used
herein, the term "Lease year" means any period commencing with
August 1 of any given year during which the Lease remains in effect
and continuing through July 31 of the following year or such earlier
date as the Lease may terminate.
3. Rental Adjustments. Paragraph 1.3 of the First Amendment is
-------------------
hereby deleted and replaced with the following:
a. The monthly rent for the period 8/1/93 through
7/31/95 (the "Base Period") is and shall continue to be $27,444.
b. The monthly rent for the two-year period 8/1/95 through
7/31/97 and for each successive two-year period during the term of
this lease shall be equal to the monthly rent payable during the prior
two-year period, increased by a percentage equal to the percentage
increase in the Index (defined below) during the prior two-year period,
up to a maximum percentage increase of two and one-half percent in
any one year, for a maximum of a five percent increase for each
two-year period.
c. As used herein, the term "Index" means the Consumer Price
Index for all Urban Consumers - All Items, for the Seattle Metropolitan
Area, as published by the U.S. Department of Labor's Bureau of Labor
Statistics.
d. In addition to the rental adjustments described above, and
not in lieu thereof, a rent adjustment shall be made on
August 1, 2001, which shall be an amount equal to one-half of the sum
of Monthly Excess Amounts (defined below) computed at the end of each
of the following two-year periods: 8/1/93 through 7/31/95, 8/1/95
through 7/31/97, 8/1/97 through 7/31/99, and 8/1/99 through 7/31/01.
e. As used herein, the term "Monthly Excess Amount" means
the difference between (a) the monthly rent increase that would have
been made for the upcoming two-year period if the two and one-half
percent annual limit were not in effect, and (b) the monthly rent
<PAGE> 3
increase actually payable (i.e., with the two and one-half percent
annual limit in effect).
f. In addition to the rental adjustments described above,
and not in lieu thereof, a rent adjustment shall be made on
August 1, 2005, which shall be an amount equal to one-half of the
sum of the Monthly Excess Amounts computed at the end of each of
these two-year periods: 8/1/01 through 7/31/03 and 8/1/03 through
7/31/05.
g. By way of illustration only, if the Index were to
increase by four percent during the first twelve months of the Base
Period and one percent during the second twelve months of the Base
Period, the monthly rent for the following two-year period (8/1/95
through 7/31/97) would be $28,404.54 (i.e., the Base Period monthly
rent of $27,444 plus three and one-half percent of $27,444, or
$960.54, based on the two and one-half percent limit for the first
twelve months and the actual one percent increase during the second
twelve months). The Monthly Excess Rent at the end of the Base
Period would be $411.66 (calculated by multiplying the Base Period
monthly rent of $27,444 by one and one-half percent, or .015, which
is the difference between the five percent increase in the Index
during the Base Period and the three and one-half percent increase
actually applied to the rent adjustment for the following period.)
The Monthly Excess Amount for the period from 8/1/95 through 7/31/97
would be calculated based on a beginning monthly rent of $28,404.54.
A similar calculation will be made for each successive two-year period.
h. If the Index is discontinued, the parties shall substitute
a comparable index of consumer prices.
4. Term of Occupancy; Last Month's Rent. The Lease term is hereby
-------------------------------------
extended to July 31, 2011, and Tenant shall have the sole and exclusive right
to peaceful and quiet enjoyment of the Premises, and to occupy the Premises
without interruption or interference for the entire remainder of the term as
extended hereby. However, Tenant shall have the right to terminate the Lease
at any time by giving written notice to Landlord at least two years in advance
of the termination date. Tenant shall not be liable for any obligations
arising under or in connection with the Lease following the date specified as
the termination date. Maloney, Korry, and Esterline agree that a termination
notice shall be binding and no party will apply to a Court in equity or
otherwise to extend the term of the Amended Lease beyond the date specified
in the termination notice. The parties recognize Maloney is not holding the
last month's rent. Upon termination of the Amended Lease no rent prepaid
prior to the date of this Agreement will be returned.
<PAGE> 4
5. Improvements to the Property. Paragraph 7.5(a) of the Original
-----------------------------
Lease is hereby deleted and replaced by the following:
a. Tenant shall not make any alterations, improvements, or
additions in, on, or about the Premises, except (i) non-structural
alterations not exceeding $5,000 in cost and/or (ii) in the case of
an emergency, to protect life or property, without first obtaining
Landlord's consent, which consent shall not be unreasonably withheld.
As a condition of giving such consent, Landlord may require Tenant to
remove any such alterations, improvements, additions, or utility
installations hereafter installed at the expiration of the Lease term
or any prior termination thereof, and to restore the Premises to their
condition just prior to making the requested alteration, improvement,
or addition. Landlord's consent to Tenant's request for such consent
shall be implied as given, and Tenant shall be entitled to make such
alterations, improvements, or additions as have been described in a
notice issued to Landlord, if Landlord does not object to the alter-
ations, improvements, or additions within fifteen days after actual
receipt of such notice from Tenant. Notice and objections under this
paragraph must be made in accordance with the notice provisions of
paragraph 6 of this Agreement; provided, however, that the requirement
of receipt of any fifteen-day notice sent by Tenant may be met by
actual receipt of the notice by either of the notice recipients for
Landlord identified in paragraph 6.a. of this Agreement, rather than
both.
b. Any and all requests for alterations, improvements, or
additions affecting exterior or load bearing walls or the foundation
of the building located on the Premises, or which involve cutting
holes through floors in the building, shall be accompanied by a
writing from a licensed structural engineer, certifying that, in the
opinion of the structural engineer, the structural integrity of the
building would not be impaired by the proposed alterations,
improvements, or additions.
6. Notices. Paragraph 19 of the Original Lease is hereby deleted
--------
and replaced by the following:
a. Notice Addresses. Any notice, keys, drawings, or other
-----------------
item or items that may or shall be delivered pursuant to the terms of this
Lease shall be delivered to the following addresses:
<PAGE> 5
If to Landlord, to both of the following:
Michael Maloney
P.O. Box 33007
Seattle, WA 98133
Ryan Swanson & Cleveland
Suite 3400, 1201 Third Avenue
Seattle, WA 98101
Attn: Roger J. Kindley
Barbara J. Duffy
If to Tenant, to both of the following:
Korry Electronics Co.
901 Dexter Avenue North
Seattle, WA 98109
Attn: Director of Finance
Esterline Technologies, Inc.
10800 N.E. 8th
Bellevue, WA 98004
Attn: Chief Financial Officer
b. Form of Notice and Delivery. Any and all notices shall be
----------------------------
in writing and either delivered by hand or mailed, via certified
United States mail, postage prepaid, to the addresses of the
respective recipient as set forth above. Delivery shall be deemed
complete and effective upon receipt by the recipient or upon the
third business day following mailing, whichever shall first occur.
c. Covenant to Accept Notice. No party shall refuse or
--------------------------
otherwise attempt to avoid delivery of any notice.
d. Change of Notice Address. Any party may change its notice
-------------------------
address by giving written notice of a new address in accordance with
the foregoing notice provisions.
7. Continuation of Unmodified Terms. Except as modified by this
---------------------------------
Agreement, the terms of the Amended Lease remain in full force and effect.
In the event of conflict or inconsistency between the provisions of the
Amended Lease and the provisions of this Agreement, this Agreement will control.
<PAGE> 6
8. Binding Effect. The terms and conditions of this Agreement shall
---------------
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors, personal representatives, and permitted assigns.
9. Entire Agreement. This Agreement contains the entire understanding
-----------------
between and among the undersigned parties in connection with the subject matter
addressed herein. It supersedes and replaces any and all prior negotiations,
agreements, discussions, representations, statements and promises, whether
oral or written. Each party hereby acknowledges that no promise, representa-
tion or warranty whatsoever, express or implied, has been made by any other
party or agent or attorney of any other party to induce it to execute this
document, other than the terms expressly stated in this written Agreement.
10. Construction of this Agreement.
-------------------------------
a. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington.
b. The paragraph headings used in this Agreement are inserted
for convenience only and are not intended to be a part of this
Agreement or to affect its construction.
c. When used in this Agreement, terms such as "herein,"
"hereto," and "hereof" refer to the entire Agreement, and are not
limited to any portion or portions hereof.
d. This Agreement has been negotiated by counsel for all
parties, and the language hereof, including without limitation any
ambiguities, shall not be construed in favor of any one or more
parties or against any one or more other parties.
e. Time is of the essence in this Agreement.
f. This Agreement is exclusively for the benefit of the
undersigned parties, and no intent to benefit any third person or
entity shall be inferred, implied, or presumed in construing this
Agreement.
11. Signing Authority. Each of the individuals signing below on
------------------
behalf of Korry and Esterline hereby warrants that he is authorized to sign
this Agreement on that party's behalf and that his signature binds that party.
Maloney hereby warrants that he is authorized to sign this Agreement on behalf
of the Bancroft & Maloney partnership as well as on his own behalf, and that
he and the partnership are bound thereby.
<PAGE> 7
Dated the day and year first set forth above.
KORRY ELECTRONICS CO. MICHAEL MALONEY
by /s/ David Elkins by /s/ Michael Maloney
---------------- -------------------
David Elkins Michael Maloney, individually
President and as managing partner of
Bancroft & Maloney, a general
partnership
ESTERLINE TECHNOLOGIES, INC.
By /s/ R. W. Stevenson
-------------------
R. W. Stevenson
Chief Financial Officer
<PAGE> 1
EXHIBIT 11
Page 1
ESTERLINE TECHNOLOGIES CORPORATION
Computation of Primary Earnings Per Common Share
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Earnings $ 7,563 $ (25,635) $ 5,094 $ 7,315 $ 7,058
======== ========== ======= ======= =======
Average Number of Common
Shares Outstanding 6,513 6,512 6,506 6,502 6,501
Net Shares Assumed to be
Issued for Stock Options 58 67 161 41 34
-------- -------- ------ ------ ------
Total 6,571 6,579 6,667 6,543 6,535
======== ======== ====== ====== ======
Earnings Per Common Share -
Primary Basis $ 1.15 $ (3.90) $ .76 $ 1.12 $ 1.08
======== ======== ====== ======= =======
</TABLE>
<PAGE> 2
Exhibit 11
Page 2
ESTERLINE TECHNOLOGIES CORPORATION
Computation of Fully Diluted Earnings Per Common Share
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Earnings $ 7,563 $ (25,635) $ 5,094 $ 7,315 $ 7,058
======= ========= ======= ======= =======
Average Number of Common
Shares Outstanding 6,513 6,512 6,506 6,502 6,501
Net Shares Assumed to
be Issued for Stock Options 269 67 161 180 34
------- --------- ------- ------- -------
Total Common Shares on a
Fully Diluted Basis 6,782 6,579 6,667 6,682 6,535
======= ========= ======= ======= =======
Earnings Per Common Share -
Fully Diluted Basis $ 1.12 $ (3.90) $ .76 $ 1.09 $ 1.08
======= ========= ====== ======= =======
Earnings Per Common Share -
Primary Basis $ 1.15 $ (3.90) $ .76 $ 1.12 $ 1.08
======= ========= ====== ======= =======
Dilutive Effect Per
Common Share $ .03 None None $ .03 None
======= ========= ====== ======= =======
</TABLE>
<PAGE> 1
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
The following commentary discusses the Company's
operations for the fiscal years ended October 31, 1994
and 1993 and its financial condition at the end of
fiscal 1994.
1994 FISCAL YEAR
Net earnings in 1994 were $7.6 million, or $1.15
per share on sales of $294 million, compared with a
net loss of $25.6 million, or $3.90 per share on
sales of $285 million in 1993. Net earnings in
1994 reflect a $2 million tax benefit recorded in
the fourth quarter resulting from a settlement with
the Internal Revenue Service of audits of certain
federal income tax returns. Net earnings in 1993
included a $27.2 million after tax ($40.6 million
before tax) restructuring provision. Without the
restructuring charge, 1993 net earnings would have
been $1.6 million, or $.24 per share.
Net earnings in 1994 reflect full-year effects
of the restructuring plan, which provided for the
sale or shutdown of certain small operations, the
writeoff of intangible assets, anticipated losses
on the sale of vacant facilities, employees'
severance and consolidation of facilities for
increased efficiency. Savings in 1994 associated
with the restructuring plan included a $2.6 million
(before tax) reduction in the amount of depreciation
and amortization expense incurred.
Restructuring actions completed through 1994
included the sale of one small subsidiary (Republic
Electronics Co.), the sale of a vacant facility in
Torrance, California, employees' severance and the
intangibles write-off, and comprised $19.1 million
(before tax) of the recorded provision. The
restructuring plan's anticipated two-year time
frame is on schedule and management believes that
provisions remain adequate to cover future actions
based on current estimates. Remaining actions include
either the sale or shutdown of certain small operations
without strong market potential, the sale or consolida-
tion of facilities and employees' severance.
The 1994 sales improvement was attributable to the
Automation Group, where sales increased $14.2
million (15%) to $109 million. Strengthening of
domestic markets coupled with strong customer
acceptance of newer products at key Group companies
contributed to the sales growth. Instrumentation
Group sales stabilized and were virtually level with
the prior year at $92 million, while sales in the
<PAGE> 2
Aerospace and Defense Group decreased $6 million (6%)
to $93 million. The sale of Republic Electronics Co.
in the second quarter of 1994 accounted for approxi-
mately two-thirds of this decrease.
Including export sales by domestic operations, sales
to foreign buyers totaled $91 million and $89 million
in 1994 and 1993, respectively, and accounted for 31%
of the Company's total sales in each year.
Operating earnings in 1994 improved in all three of
the Company's business segments and totaled $23.3
million, compared with $16.1 million in the prior year.
The improvement was primarily attributable to the
Automation Group where earnings advanced $4 million
over the prior year. Overall, operating earnings
reflect the $2.6 million reduction in depreciation
and amortization expense as a result of the 1993
restructuring, and continued cost containment measures.
Gross margin as a percent of sales increased
slightly to 39% in 1994 from 38% in 1993. Gross margin
percentages by business segment increased in the current
year in both the Aerospace and Defense and Instrumenta-
tion Groups, and were approximately level in the
Automation Group. In 1994, group margins ranged from
38% to 42%, compared with 37% to 40% in the prior year.
Selling, general and administrative expenses in 1994
were level with the prior year at $101 million.
However, they decreased slightly as a percent of sales
from 35.5% to 34.3%. The research, development and
engineering costs segment of SG&A amounted to $13.7
million in 1994, compared with $14 million in 1993,
reflecting the Company's continuing commitment to invest
in strategic product development programs.
Orders for the year ended October 31, 1994 totaled
$319 million, up more than 20% from the prior year.
Company-wide backlog at the end of 1994 was $97 million
compared with $74 million a year earlier. The increases
were primarily attributable to the Automation Group,
where year-end backlog levels of $30 million were
more than triple the prior-year amount, reflecting
strengthening markets. Backlog at the Company's two
other groups were relatively consistent with prior-year
levels. Approximately $11 million of 1994's Company-wide
backlog was scheduled to be shipped after fiscal 1995.
Net interest expense decreased from $6.3 million in
1993 to $6 million in 1994 due to reduced debt levels,
offset by increases in interest rates.
Income tax expense in 1994 was $1.3 million, reflect-
ing the $2 million benefit recorded in the fourth
quarter of 1994, compared with an income tax benefit of
$12.4 million recorded in 1993.
<PAGE> 3
1993 FISCAL YEAR
Sales in 1993 were $285 million, compared with $305
million in 1992. The $20 million decrease was almost
equally divided between two business segments:
Aerospace and Defense Group, and Instrumentation Group.
Sales in the Automation Group increased $3 million
over 1992, from $91 million to $94 million. Aerospace
and Defense Group sales decreased 11% from 1992, from
$111 million to $99 million. The commercial aircraft
and defense markets served by this group faced
significant downturns during 1993, resulting in the
sales decrease. Sales in the Instrumentation Group
(which decreased 10% from 1992, from $102 million to $92
million) also were affected by the commercial aircraft
market down turn as well as reduced capital spending by
industrial and utilities customers for the types of
products produced by the group operating units.
In the Automation Group, some market improvement
together with new products produced the increased
sales. However, orders in the group's drilling machine
operation had fallen off significantly in late fiscal 1993,
presenting a cloudy outlook for early fiscal 1994.
Including exports, sales to foreign buyers as a
percent of total 1993 sales remained approximately level
with the prior year at 31%.
A net loss of $25.6 million, or $3.90 per share, was
reported for 1993, resulting from a fourth quarter
after-tax restructuring charge of $27.2 million ($40.6
million before tax). Without the restructuring charge
the Company's net earnings for 1993 would have been $1.6
million, or $.24 per share. In 1992, net earnings were
$5.1 million, or $.76 per share.
The objective of the restructuring plan was to
strengthen the Company for long-term growth and
permit management to focus on operations with
strong market positions. It was an extension of
the Company's efforts to meet market conditions in
an effective manner and structure operations to
maintain profitability. The continued weakness in
capital goods markets served by the Company together
with a drop in the commercial aircraft industry and
shrinking defense budgets caused management to make the
restructuring plan effective in the fourth quarter of
1993.
The plan contemplated a number of actions including
either sale or shutdown of certain small operations
with weak market potential. These operations re-
presented approximately 10% of the Company's
fiscal 1993 sales. Other items included write-
off of intangible assets, anticipated losses on
<PAGE> 4
the sale of vacant facilities, employees' severance
and consolidation of facilities for increased
efficiency. The restructuring provision was based
on management's estimate of the effects of the
contemplated actions. 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.
Company-wide backlog at October 31, 1993 was $74
million compared with $97 million at October 31, 1992.
The decrease was primarily in the Aerospace and
Defense Group and was due to the timing of the
release of orders by customers together with the
downturn in the commercial aircraft and defense
markets. Automation Group backlog at the end of 1993
was also somewhat lower than at the end of 1992 due
to low order levels for printed circuit board drilling
machines. Of 1993's year-end backlog, $14 million
was scheduled to be shipped after fiscal 1994.
Gross margin as a percent of sales remained approxi-
mately level from 1992 (38% in 1993 and 39% in 1992)
despite reduced sales. This was the result of sign-
ificant cost containment efforts throughout the Company.
Gross margin percentages increased in the Automation
Group and decreased in the Aerospace and Defense and
Instrumentation Groups. In 1993, group margins ranged
from 37% to 40%, compared with 35% to 40% in the prior
year.
Research, development and engineering costs increased
slightly to $14 million in 1993 from $13.4 million the
prior year, reflecting the Company's continued commit-
ment to strong product development programs.
Although selling, general and administrative expenses
decreased by $2 million from 1992 to 1993, they increased
as a percent of sales from 33.5% to 35.3%. The Company
continued its emphasis on sales and marketing despite
decreased sales volumes in some segments.
Operating earnings, prior to the restructuring charge,
decreased overall from $23.3 million in 1992 to $16.1
million in 1993. The decrease was primarily due to
lower sales volumes in the Aerospace and Defense and
Instrumentation Groups and the resultant reduced
profitability levels. Operating earnings in the
Aerospace and Defense Group decreased by 51%, from
$14.9 million in 1992 to $7.3 million, and Instrumen-
tation Group earnings dropped to $900,000 from $7.5
million in 1992. In the Automation Group, operating
earnings increased from $1 million in 1992 to $7.9
million in 1993 based on some market improvement and
increased sales coupled with significant cost
reductions at a key operation.
<PAGE> 5
Net interest expense decreased from $7.2 million in
1992 to $6.3 million in 1993 due to the reduced
debt level.
A net tax benefit of $12.4 million was recorded in
1993 compared to a $3.1 million expense recorded in
1992. The 1993 net benefit reflects an estimated
$13.4 million realizable tax benefit from
restructuring.
FINANCIAL CONDITION
Cash and equivalents on hand increased $5.9 million
during the year to $9.1 million at October 31, 1994.
Debt at the end of 1994 was $62.4 million, $12.1 million
less than at the same time last year. More than
three-fourths of this $18 million combined cash increase
and debt reduction in 1994 was generated from operations;
the remaining amount was the net effect of restructuring
plan actions.
The Company's year-end debt-to-equity ratio was .95:1,
down from 1.3:1 at the end of fiscal 1993. This improve-
ment was attributable equally to debt paydown and earnings.
During 1994 the Company continued its policy of retaining
all internally generated funds to support operations and
to retire debt. Capital expenditures were $11.3 million
in 1994 and are expected to approximate $12 million in
1995. Cash requirements of future actions associated
with the 1993 restructuring, net of anticipated proceeds
from asset sales, are not expected to have a material
effect on the Company's cash flows.
Working capital at October 31, 1994 increased
slightly to $10.5 million from $9.1 million at the end
of 1993, although certain elements of working capital
changed significantly. Receivables at October 31, 1994
increased to $63.7 million from $45.8 million at the
end of the prior year primarily due to an exceptionally
strong fourth quarter 1994 sales volume. Year-end
inventories were significantly lower than at the same
time last year primarily due to improved manufacturing
techniques and to the strong fourth quarter sales level.
Current maturities of long-term debt at October 31, 1994
included the Company's $20 million convertible debenture
issue. Management believes cash on hand, funds generated
from operations, and available bank credit lines at
October 31, 1994 of approximately $38 million will
adequately service cash requirements.
At October 31, 1994 a net deferred tax asset totaling
$13.7 million remains primarily as a result of the 1993
restructuring. This asset will be realized in the form
of tax deductions when future restructuring steps are
taken and as sufficient profitability is achieved.
<PAGE> 6
SELECTED FINANCIAL DATA
In thousands, except per share amounts, for the years ended October 31,
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net sales $ 294,044 $ 285,152 $ 304,827 $ 350,934 $ 389,109
Cost of sales 178,397 175,568 187,235 214,415 241,235
Selling, general and administrative 100,845 100,669 102,202 111,858 118,618
Restructuring provision -- 40,626 -- -- --
Interest expense, net 5,985 6,324 7,246 12,709 17,350
Income tax expense (benefit) 1,254 (12,400) 3,050 4,637 4,848
Net earnings (loss) 7,563 (25,635) 5,094 7,315 7,058
Net earnings (loss) per share 1.15 (3.90) .76 1.12 1.08
FINANCIAL STRUCTURE
Total assets $ 215,975 $ 205,672 $ 232,024 $ 256,384 $ 289,667
Long-term debt, net 41,714 62,267 68,622 87,011 99,393
Shareholders' equity 65,491 55,323 82,622 77,377 71,441
Average number of shares outstanding 6,571 6,579 6,667 6,543 6,535
</TABLE>
MARKET PRICE OF ESTERLINE COMMON STOCK
Principal Market-- New York Stock Exchange
For the years ended October 31,
<TABLE>
<CAPTION>
QUARTER 1994 1993
High Low High Low
<S> <C> <C> <C> <C>
First $ 8.13 $ 7.25 $ 13.00 $ 9.63
Second 9.00 7.13 11.88 8.50
Third 10.00 6.38 10.00 7.63
Fourth 12.38 9.50 8.63 7.50
</TABLE>
At October 31, 1994 there were approximately 1,200 holders of
record of the Company's common stock. Certain of the Company's
financing arrangements impose restrictions on the payment of
dividends. (See Note 4 of Notes to Consolidated Financial
Statements.)
<PAGE> 7
CONSOLIDATED STATEMENT OF OPERATIONS
In thousands, except per share amounts, for the years ended October 31,
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Net Sales $ 294,044 $ 285,152 $ 304,827
Costs and Expenses
Cost of sales 178,397 175,568 187,235
Selling, general and administrative 100,845 100,669 102,202
Restructuring provision -- 40,626 --
Interest expense, net 5,985 6,324 7,246
--------- --------- ---------
285,227 323,187 296,683
--------- --------- ---------
Earnings (Loss) Before Income Taxes 8,817 (38,035) 8,144
Income Tax Expense (Benefit) 1,254 (12,400) 3,050
--------- --------- ---------
Net Earnings (Loss) $ 7,563 $ (25,635) $ 5,094
========= ========== =========
Net Earnings (Loss) Per Share $ 1.15 $ (3.90) $ .76
========= ========== =========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 8
CONSOLIDATED BALANCE SHEET
In thousands, October 31,
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
ASSETS
Current Assets
Cash and equivalents $ 9,076 $ 3,218
Accounts receivable, net of allowances of
$2,201 and $2,417 for doubtful accounts 63,685 45,778
Inventories 31,673 38,430
Deferred income taxes 13,002 7,882
Prepaid expenses 1,876 1,838
------- -------
Total Current Assets 119,312 97,146
<PAGE> 9
PROPERTY, PLANT AND EQUIPMENT
Land 3,901 4,833
Buildings 43,137 44,317
Machinery and equipment 98,635 91,741
------- -------
145,673 140,891
Accumulated depreciation 94,070 84,326
------- -------
51,603 56,565
Cost in Excess of Net Assets Acquired 22,960 23,802
Intangibles and Other 21,437 23,679
Deferred Income Taxes 663 4,480
------- -------
$ 215,975 $ 205,672
========= =========
</TABLE>
<PAGE> 10
<TABLE>
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 18,927 $ 14,647
Accrued liabilities 67,877 60,063
Notes payable 58 5,157
Current maturities of long-term debt 20,588 7,062
Federal and foreign income taxes 1,320 1,153
-------- --------
Total Current Liabilities 108,770 88,082
Long-Term Debt, net of current maturities 41,714 62,267
Shareholders' Equity
Common stock, par value $.20 per share,
authorized 30,000,000
shares, issued and outstanding 6,513,057
and 6,512,641 shares 1,302 1,302
Capital in excess of par value 10,482 10,482
Retained earnings 54,951 47,388
Cumulative translation adjustment (1,244) (3,849)
------- -------
Total Shareholders' Equity 65,491 55,323
------- -------
$ 215,975 $ 205,672
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 11
CONSOLIDATED STATEMENT OF CASH FLOWS
In thousands, for the years ended October 31,
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Cash Flows Provided (Used) by Operating Activities
Net earnings (loss) $ 7,563 $ (25,635) $ 5,094
Restructuring provision -- 40,626 --
Depreciation and amortization 16,414 19,259 19,823
Deferred income taxes (1,303) (16,558) 331
Working capital changes
Accounts receivable (17,907) 3,432 3,584
Inventories 6,757 1,817 7,541
Prepaid expenses (38) (150) (124)
Accounts payable 4,280 (2,563) (580)
Accrued liabilities 7,814 1,577 (2,042)
Federal and foreign income taxes 167 (1,834) 204
Other, net (55) (1,845) (396)
-------- -------- --------
23,692 18,126 33,435
-------- -------- --------
Cash Flows Provided (Used) by Investing Activities
Capital expenditures (11,288) (9,556) (10,762)
Capital dispositions, net 2,975 496 5,528
-------- -------- --------
(8,313) (9,060) (5,234)
-------- -------- --------
Cash Flows Provided (Used) by Financing Activities
Net change in notes payable (5,099) 2,314 (9,200)
Repayment of long-term debt (7,027) (9,612) (58,318)
Proceeds from sale of senior notes -- -- 40,000
Cumulative translation adjustment 2,605 (1,667) 115
-------- -------- --------
(9,521) (8,965) (27,403)
-------- -------- --------
Net Increase in Cash and Equivalents 5,858 101 798
Cash and Equivalents - Beginning of Year 3,218 3,117 2,319
-------- -------- --------
Cash and Equivalents - End of Year $ 9,076 $ 3,218 $ 3,117
======== ======== ========
Supplemental Cash Flow Information
Cash paid during the year for
Interest expense $ 6,033 $ 6,271 $ 7,836
Income taxes 2,212 2,264 1,436
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 12
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
In thousands, for the years ended October 31,
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Common Stock, par value $.20 per share
Beginning of year $ 1,302 $ 1,301 $ 1,300
Stock issued under stock option plans -- 1 1
------- ------- -------
End of year 1,302 1,302 1,301
------- ------- -------
Capital in Excess of Par Value
Beginning of year 10,482 10,480 10,445
Stock issued under stock option plans -- 2 35
------- ------- -------
End of year 10,482 10,482 10,480
------- ------- -------
Retained Earnings
Beginning of year 47,388 73,023 67,929
Net earnings (loss) 7,563 (25,635) 5,094
------- ------- -------
End of year 54,951 47,388 73,023
------- ------- -------
Cumulative Foreign Currency Translation Adjustment
Beginning of year (3,849) (2,182) (2,297)
Aggregate adjustment resulting from
foreign currency translation 2,605 (1,667) 115
------- ------- -------
End of year (1,244) (3,849) (2,182)
------- ------- -------
Shareholders' Equity $ 65,491 $ 55,323 $ 82,622
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial
statements include the accounts of Esterline Technologies
Corporation and its subsidiaries. All significant inter-
company accounts and transactions have been eliminated.
Foreign Currency Translation: Foreign currency assets
and liabilities are translated into their U.S. dollar
equivalents based on year-end exchange rates. Revenue
and expense accounts are generally translated at average
exchange rates. Aggregate exchange gains and losses
arising from the translation of foreign assets and
liabilities are included in shareholders' equity. Trans-
action gains and losses are included in income and have
not been significant in amount.
Inventories: Most inventories are stated at the
lower of cost (first in, first out) or market. Two
subsidiaries state their inventories at the lower of cost
(last in, first out) or market. Inventory cost includes
material, labor and factory overhead.
Research, Development and Engineering Costs: Research,
development and engineering costs approximated $13,711,000,
$14,007,000 and $13,441,000 in 1994, 1993 and 1992,
respectively, and are generally expensed as incurred.
Property, Plant and Equipment and Depreciation:
Property, plant and equipment is carried at cost and
includes expenditures for major improvements which
increase useful lives. Depreciation is provided
generally on the straight-line method. For income tax
purposes, depreciation is computed using various
accelerated methods.
Cost in Excess of Net Assets Acquired: The cost of
purchased businesses in excess of amounts assigned
to tangible and intangible assets is being amortized
over periods of 30 to 40 years. Accumulated amorti-
zation at October 31, 1994 and 1993 was $7,639,000 and
$6,784,000, respectively. Excess value arising from
companies purchased prior to October 31, 1970 amounted
to $2,800,000, and is not being amortized as in the
opinion of management there has been no diminution in
the value thereof.
Intangibles: Intangibles, arise primarily from acquisi-
tions and are being amortized over estimated lives of up
to 20 years. Accumulated amortization at October 31, 1994
and 1993 was $9,535,000 and $7,844,000, respectively.
Asset Valuation: The carrying amount of long-life assets
is reviewed periodically. If the asset carrying amount
is not recoverable, the asset is considered to be impaired
and the value is adjusted.
Environmental: Environmental exposures are provided for
in total at the time they are known to exist or are
considered reasonably probable.
Earnings per Share: Earnings per share are computed using
the average number of common and common equivalent shares
outstanding during each year (6,571,000 shares in 1994,
6,579,000 shares in 1993 and 6,667,000 shares in 1992).
The effect of the convertible debentures upon earnings
per share is antidilutive.
Cash Equivalents: Investments maturing in three months
or less are classified as cash equivalents.
<PAGE> 14
Financial Instruments: The Company's financial instruments
include cash and equivalents, accounts receivable and
accounts payable, for which the fair value approximates
carrying value, and notes payable and long-term debt. The
fair values of notes payable and long-term debt (see
Note 4) were estimated using interest rates that are
currently available to the Company for issuance of debt
with similar terms and remaining maturities.
Concentrations of Credit Risk: Concentrations
of credit risk with respect to accounts receivable are
generally diversified due to the large number of entities
comprising the Company's customer base and their dispersion
across many different industries and geographies. The
Company performs ongoing credit evaluations of its customers'
financial condition and, in certain circumstances,
utilizes letters of credit and bank guarantees to minimize
credit risk.
2. INVENTORIES
Inventories at October 31 consisted of the following:
In thousands
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Finished goods $ 6,016 $ 9,508
Work in process 16,887 17,340
Raw materials and purchased parts 8,770 11,582
------- -------
$ 31,673 $ 38,430
======== ========
</TABLE>
At October 31, 1994 and 1993, $8,500,000 and $9,000,000,
respectively, of the Company's total inventories were stated
under the last in, first out inventory method. Had the first
in, first out method been used, these inventories would have
been $3,386,000 and $2,995,000 higher than reported at
October 31, 1994 and 1993, respectively.
3. ACCRUED LIABILITIES
Accrued liabilities at October 31 consisted of the following:
In thousands
<PAGE> 15
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Payroll and other compensation $ 18,905 $ 13,893
Self-insurance provisions 7,886 6,912
Interest 2,770 4,187
Warranties 3,495 2,426
State and other tax accruals 7,048 6,508
Accrued restructuring cost 13,698 15,261
Other 14,075 10,876
-------- --------
$ 67,877 $ 60,063
======== ========
</TABLE>
4. DEBT
Long-term debt at October 31 consisted of the following:
In thousands
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
8.75% senior notes, due 2002 $ 40,000 $ 40,000
8.25% convertible subordinated guaranteed
debentures, due 1995 20,000 20,000
Variable rate term loan -- 6,621
Other 2,302 2,708
-------- --------
62,302 69,329
Less current maturities 20,588 7,062
-------- --------
$ 41,714 $ 62,267
======== ========
</TABLE>
The 8.75% senior notes are unsecured and payable in equal annual
installments beginning in fiscal 1996. Interest is payable
semi-annually in January and July of each year.
The 8.25% convertible debentures were issued by Esterline
International Finance N.V., a subsidiary of the Company, and
require annual interest payments. The debentures are convertible
into common stock of the Company at $39.6667 per share, subject,
in certain events, to adjustment. The debentures are guaranteed,
on a subordinated basis, as to payment of interest and principal
by the Company.
The variable rate term loan, together with a $35,000,000 line of
credit, are unsecured and are with a group of banks. Alternative
interest rates are available based on LIBOR, or the lead
bank's prime rate, at the Company's option. The term loan was
repaid during fiscal 1994 and at October 31, 1994 there were no
amounts borrowed under the line of credit.
The loan agreements contain various restrictions, including
maintenance of net worth, payment of dividends, interest coverage,
and limitations on additional borrowings.
The fair value of the Company's notes payable and long-term debt
was estimated at $61,088,000 and $75,886,000 at October 31, 1994
and 1993, respectively.
<PAGE> 16
Maturities of long-term debt are as follows:
In thousands
<TABLE>
<S> <C>
1995 $ 20,588
1996 6,422
1997 6,215
1998 6,136
1999 5,796
2000 and thereafter 17,145
--------
$ 62,302
========
</TABLE>
At October 31, 1994, the Company had lines of
credit with domestic and foreign banks as follows:
In thousands
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Outstanding Balance
Domestic $ -- $ --
Foreign 58 5,157
------- ------
$ 58 $ 5,157
======= =======
Credit Lines
Domestic $ 35,000 $ 35,000
Foreign 10,000 10,000
Average Borrowings
Domestic 500 400
Foreign 4,500 3,700
Average Interest Rates
Domestic 6.8% 6.6%
Foreign 7.5% 9.5%
</TABLE>
Available credit lines were reduced by outstanding letters of credit of
approximately $6,965,000 at October 31, 1994.
<PAGE> 18
5. RETIREMENT BENEFITS
Pension benefits are provided for substantially all U.S. employees
under contributory and non-contributory pension and other plans,
and are based on years of service and five-year average
compensation. The Company makes actuarially computed contri-
butions as necessary to adequately fund benefits. The actuarial
computations assumed discount rates on benefit obligations and
expected long-term rates of return on plan assets of 7.5% and
annual compensation increases of 5%. Investments of the plans
primarily consist of U.S. Government obligations, publicly traded
common stocks, mutual funds and insurance contracts.
Pension expense for the years ended October 31 consisted of the following:
In thousands
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Service cost-benefits earned during the year $ 2,322 $ 2,106 $ 1,755
Interest cost on projected benefit obligation
4,457 4,248 4,125
Actual return on plan assets-investment losses
(gains) (2,827) (10,467) (6,231)
Net amortization and deferral (3,515) 4,487 308
------- ------- -------
Net pension expense (credit) $ 437 $ 374 $ (43)
======= ======= =======
</TABLE>
Combined funded status of the plans at October 31 was as follows:
In thousands
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Plan assets at fair market value $ 75,457 $ 77,642
Projected benefit obligation for service rendered
to date 62,278 59,485
Plan assets in excess of projected benefit
obligations 13,179 18,157
Unrecognized prior service cost 481 --
Unrecognized net gain (761) (4,423)
Unrecognized net asset at November 1, 1985 (2,162) (2,562)
-------- --------
Prepaid pension expense $ 10,737 $ 11,172
======== ========
Actuarial present value of accumulated benefit
obligation, including vested benefits
of $ 52,931 and $ 49,730 $ 54,044 $ 50,305
======== ========
</TABLE>
<PAGE> 19
Provision for all retirement benefits for the years
ended October 31 consisted of the following:
In thousands
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Pension plans $ 1,232 $ 464 $ 649
Profit-sharing and other plans -- 72 246
------- ----- -----
$ 1,232 $ 536 $ 895
======= ===== =====
</TABLE>
6. INCOME TAXES
During 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes." The cumulative effect of the change was not material
and prior years' financial statements have not been restated.
During 1994, the Internal Revenue Service completed an examin-
ation of certain federal income tax returns and reached agreement
with the Company on various filing positions. As a result, the
Company recorded a $2 million tax benefit in the fourth quarter
of 1994.
Income tax expense (benefit) for the years ended October 31
consisted of the following:
In thousands
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Current U.S. Federal $ 1,210 $ 836 $ 959
Foreign 762 681 1,317
State and local 585 178 443
Deferred (1,303) (14,095) 331
------- ------ ------
$ 1,254 $ (12,400) $ 3,050
======= ========= =======
</TABLE>
Primary components of the Company's deferred tax assets and
(liabilities) for the years ended October 31 resulted from
temporary tax differences associated with the following:
<PAGE> 20
In thousands
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Reserves and liabilities $ 10,660 $ 9,026
Employee benefits 5,357 3,779
Tax credits 751 1,234
Restructuring accruals 4,863 5,418
-------- -------
Total deferred tax assets 21,631 19,457
Depreciation and amortization (4,110) (3,061)
Retirement benefits (3,856) (4,034)
-------- -------
Total deferred tax liabilities (7,966) (7,095)
-------- -------
$ 13,665 $ 12,362
======== ========
</TABLE>
A valuation allowance was not required due to the nature of and
circumstances associated with the temporary tax differences.
A reconciliation of the United States federal statutory income tax rate
to the effective income tax rate was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
U.S. statutory income tax rate 34.0% (34.0)% 34.0%
State income taxes 6.6 (1.1) 3.6
Foreign tax rates 2.5 .7 (2.8)
Tax settlement (22.7) -- --
Other, net (6.2) 1.8 2.7
----- ----- ----
Effective income tax rate 14.2% (32.6)% 37.5%
====== ======= =====
</TABLE>
No provision for federal income taxes has been made on
accumulated earnings of foreign subsidiaries, since such
earnings have either been permanently reinvested or would
be substantially offset by foreign tax credits. Foreign
earnings before income taxes were $1,605,000, $1,157,000
and $4,555,000 in 1994, 1993 and 1992, respectively.
<PAGE> 21
The deferred portion of income tax expense for 1992 was
as follows:
In thousands
<TABLE>
<CAPTION>
1992
<S> <C>
Depreciation and amortization $ (201)
Accrued expenses 534
Alternative minimum tax 227
All other, net (229)
------
$ 331
======
</TABLE>
7. CONTINGENCIES
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. Liabilities have been accrued for environmental
remediation costs expected to be incurred in the disposition of
manufacturing facilities. No provision has been recorded for
environmental remediation costs which could result from
changes in laws or other circumstances currently not
contemplated by the Company.
8. OPERATING LEASES
Net rental expense for operating leases amounted to
approximately $3,170,000, $3,241,000 and $3,748,000
in 1994, 1993 and 1992, respectively.
<PAGE> 22
The Company's rental commitments for noncancelable operating
leases with a duration in excess of one year are as
follows:
In thousands
<TABLE>
<S> <C>
1995 $ 2,706
1996 2,266
1997 2,076
1998 2,006
1999 2,021
2000 and thereafter 1,815
--------
$ 12,890
========
</TABLE>
9. STOCK OPTION PLANS
At October 31, 1994, the Company had 1,079,625 shares of
common stock reserved for issuance to officers, directors
and key employees under its stock option plans, of which
41,125 shares were available for future grant.
Options granted under the plans are exercisable over a
period of four years following the date of grant and expire
not later than the tenth anniversary of the grant.
The option prices are at fair market value on the date of
grant.
<PAGE> 23
The following summarizes the changes in outstanding
options granted under the Company's stock option plans:
<TABLE>
<CAPTION>
Option Prices
Shares Per Share
<S> <C> <C> <C>
Balance - October 31, 1991 660,550 $ 8.00 - $ 18.00
Granted 277,500 11.00 - 11.25
Canceled (12,050) 8.00 - 18.00
Exercised (14,375) 8.00
------- ----------------
Balance - October 31, 1992 911,625 8.00 - 11.25
Granted 117,500 7.63 - 9.38
Canceled (25,625) 8.00 - 11.25
Exercised (25,000) 8.00
------- ----------------
Balance - October 31, 1993 978,500 7.63 - 11.25
Granted 119,000 7.38 - 9.88
Canceled (54,000) 7.38 - 11.25
Exercised (5,000) 9.00
------- ---------------
Balance - October 31, 1994 1,038,500 $ 7.38 - $ 11.25
========= ================
Exercisable at October 31, 1994 734,500 $ 7.63 - $ 11.25
========= ================
</TABLE>
10. CAPITAL STOCK
The authorized capital stock of the Company consists of
500,000 shares of preferred stock, including 25,000 shares
($100 par value) and 475,000 shares ($1.00 par value)
issuable in series, and 30,000,000 shares of common stock ($.20
par value). At October 31, 1994, there were no shares of
preferred stock outstanding, 504,201 shares of common stock
were reserved for issuance upon conversion of the 8.25%
convertible debentures and 1,079,625 shares of common stock
were reserved for issuance under the Company's stock option
plans.
On December 9, 1992, the Board of Directors adopted
a Shareholder Rights Plan providing for the distribution
of one Preferred Stock Purchase Right for each share of
common stock held on December 23, 1992. Each Right entitles
the holder to purchase one-one hundredth of a share of
Series A Serial Preferred Stock at an exercise price of $56.
The Rights expire December 23, 2002.
The Rights will be exercisable and transferable apart
from the common stock only if a person or group acquires
beneficial ownership of 10% or more of the Company's common
stock or commences a tender offer or exchange offer which
would result in a person or group beneficially owning 10% or
more of the Company's common stock. The Rights will be
redeemable by the Company for $.01 each at any time prior
to the tenth day after an announcement that a person or group
beneficially owns 10% or more of the common stock.
<PAGE> 24
Upon the occurrence of certain events, the holder of a Right
can purchase, for the then current exercise price of the Right,
shares of common stock of the Company (or under certain
circumstances, as determined by the Board of Directors,
cash, other securities or property) having a value of twice
the Right's exercise price. Upon the occurrence of certain
other events, the holder of each Right would be entitled to
purchase, at the exercise price of the Right, shares of
common stock of a corporation or other entity acquiring the
Company or engaging in certain transactions involving the
Company, that has a market value of twice the Right's
exercise price.
11. RESTRUCTURING PROVISION
In the fourth quarter of 1993 the Company recorded a $40.6
million restructuring charge ($27.2 million net of income
tax effect), based on management's estimate of the effects
of the contemplated actions. The provision provided for
sale or shutdown of certain small operating companies,
consolidation of plants and product lines, employees' sever-
ance, write-off of intangible assets which no longer had
value and the write-down and sale of two vacant facilities.
The charges reduced 1993 earnings per share by $4.14.
Restructuring actions completed through 1994 included the
sale of one small subsidiary, the sale of a vacant facility,
employees' severance and the intangibles write-off, and
comprised $19.1 million (before tax) of the recorded
provision.
12. BUSINESS SEGMENT INFORMATION
Details of the Company's operations by business segment for
the years ended October 31 were as follows:
<PAGE> 25
BUSINESS SEGMENT
In thousands
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Net Sales
Automation $ 108,642 $ 94,460 $ 91,449
Aerospace and Defense 93,370 99,071 111,077
Instrumentation 92,032 91,621 102,301
--------- -------- --------
$ 294,044 $ 285,152 $ 304,827
========= ========= =========
Earnings (Loss) Before Income Taxes
Automation $ 11,913 $ 7,887 $ 957
Aerospace and Defense 9,809 7,259 14,856
Instrumentation 1,537 935 7,509
--------- --------- ---------
Operating Earnings 23,259 16,081 23,322
--------- --------- ---------
Corporate expense (8,457) (7,166) (7,932)
Restructuring provision(1) -- (40,626) --
Interest expense, net (5,985) (6,324) (7,246)
--------- --------- ---------
$ 8,817 $ (38,035) $ 8,144
========== ========= =========
Identifiable Assets
Automation $ 49,540 $ 41,752 $ 52,853
Aerospace and Defense 76,681 77,419 96,248
Instrumentation 49,822 55,744 67,818
Corporate(2) 39,932 30,757 15,105
---------- --------- ---------
$ 215,975 $ 205,672 $ 232,024
========== ========= =========
Capital Expenditures
Automation $ 4,214 $ 2,402 $ 3,788
Aerospace and Defense 3,158 4,125 3,821
Instrumentation 3,847 2,935 3,063
Corporate 69 94 90
---------- --------- ---------
$ 11,288 $ 9,556 $ 10,762
========== ========= =========
Depreciation and Amortization
Automation $ 3,546 $ 3,982 $ 4,335
Aerospace and Defense 6,128 7,829 7,129
Instrumentation 6,257 7,158 7,984
Corporate 483 290 375
---------- --------- ---------
$ 16,414 $ 19,259 $ 19,823
========== ========= =========
</TABLE>
(1) Automation Group ($8,429), Aerospace and Defense Group ($21,117),
Instrumentation Group ($8,866), Non-Group related ($2,214).
(2) Primarily prepaid pension expense (see Note 5) and cash. Also,
1994 and 1993 include net deferred tax assets (see Note 6).
<PAGE> 26
12. BUSINESS SEGMENT INFORMATION (CONTINUED)
Details of the Company's operations by geographic area for the
years ended October 31 were as follows:
GEOGRAPHIC AREA
In thousands
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Sales
Domestic
Unaffiliated customers - U.S. $ 203,010 $ 195,808 $ 211,313
Unaffiliated customers - export 34,248 33,163 33,126
Intercompany 6,231 4,163 4,300
--------- --------- ---------
$ 243,489 $ 233,134 $ 248,739
--------- --------- ---------
Foreign
Unaffiliated customers $ 56,786 $ 56,181 $ 60,388
Intercompany 628 29 --
--------- --------- ---------
$ 57,414 $ 56,210 $ 60,388
--------- --------- ---------
Eliminations $ (6,859) $ (4,192) $ (4,300)
--------- --------- ---------
Net Sales $ 294,044 $ 285,152 $ 304,827
========= ========= =========
Operating earnings (1)
Domestic $ 20,449 $ 13,042 $ 18,888
Foreign 2,994 2,833 3,864
Eliminations (184) 206 570
--------- --------- ---------
$ 23,259 $ 16,081 $ 23,322
========= ========= =========
Identifiable assets (2)
Domestic $ 133,200 $ 142,644 $ 187,860
Foreign 42,843 33,604 29,059
--------- --------- ---------
$ 176,043 $ 176,248 $ 216,919
========= ========= =========
</TABLE>
(1) Before 1993 restructuring provision, shown on page 41.
(2) Excludes Corporate, shown on page 41.
The above sales are based upon geographic origin of sale.
Intercompany sales are made at selling prices comparable
to those to unaffiliated customers. Sales to any single customer
or government entity did not exceed 10% of consolidated sales.
Operating earnings are net sales less operating expenses.
<PAGE> 27
Product lines contributing more than 10% of total sales
in any of the years ended October 31 were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Printed circuit board drilling equipment 18% 16% 12%
Gauge products 13% 13% 13%
Combustible ordnance components 9% 9% 12%
</TABLE>
13. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of unaudited quarterly financial information:
In thousands, except per share amounts
<TABLE>
<CAPTION>
YEAR ENDED October 31, 1994 FOURTH THIRD SECOND FIRST
<S> <C> <C> <C> <C>
Net sales $ 93,629 $ 71,676 $ 70,867 $ 57,872
Gross margin 37,559 28,496 27,867 21,725
Net earnings (loss) 5,298 1,515 1,154 (404)
Net earnings (loss) per share $ .80 $ .23 $ .18 $ (.06)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED October 31, 1993
<S> <C> <C> <C> <C>
Net sales $ 77,109 $ 69,131 $ 71,588 $ 67,324
Gross margin 30,155 26,730 27,288 25,411
Net earnings (loss) (26,853) 404 483 331
Net earnings (loss) per share $ (4.08) $ .06 $ .07 $ .05
</TABLE>
<PAGE> 28
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and the Board of Directors
Esterline Technologies Corporation
Bellevue, Washington
We have audited the accompanying consolidated balance sheets
of Esterline Technologies Corporation and its subsidiaries as of
October 31, 1994 and 1993, and the related consolidated statements
of operations, shareholders' equity, and cash flows for each of
the three years in the period ended October 31, 1994. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of
Esterline Technologies Corporation and its subsidiaries as
of October 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years
in the period ended October 31, 1994 in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
- -------------------------
Seattle, Washington
December 5, 1994
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES
The subsidiaries of the Company as of October 31, 1994 are as follows:
<TABLE>
<CAPTION>
Jurisdiction of
Name of Subsidiary Incorporation
- ------------------ --------------
<S> <C>
Angus Electronics Co. Delaware
Armtec Defense Products Co. Delaware
Auxitrol Co. Delaware
Equipment Sales Co. Connecticut
Esterline International Finance N.V. Netherlands Antilles
Excellon Automation Co. California
Tulon Co. California
Excellon U.K. California
Excellon Europa GmbH Germany
Amtech Utah
Federal Products Co. Delaware
Federal Products U.K. Delaware
Hytek Finishes Co. Delaware
Scientific Columbus Co. Delaware
Korry Electronics Co. Delaware
Midcon Cables Co. Delaware
TA Mfg. Co. California
W.A. Whitney Co. Illinois
Auxitrol Technologies S.A. France
Auxitrol S.A. France
</TABLE>
The above list excludes certain subsidiaries that in the aggregate
would not constitute a significant subsidiary as of the fiscal year ended
October 31, 1994.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We consent to the incorporation by reference in Registration
Statement No. 2-89293, No. 33-22321, No. 33-22322, No. 33-37134 and
No. 33-52851 of Esterline Technologies Corporation on Form S-8 of our
report dated December 5, 1994 appearing in this Annual Report on Form
10-K of Esterline Technologies Corporation for the year ended
October 31, 1994.
/s/ Deloitte & Touche LLP
- -------------------------
Seattle, Washington
January 25, 1995
<PAGE> 1
ESTERLINE TECHNOLOGIES CORPORATION EXHIBIT 10.16D
----------------------------------
LONG-TERM INCENTIVE COMPENSATION PLAN--CYCLE IV
-----------------------------------------------
FISCAL YEARS 1994 through 1997
------------------------------
PURPOSE OF PLAN
---------------
This Plan is for the fiscal years 1994 through 1997 and is
intended to provide a program to retain and compensate Esterline
officers based on the long-term performance of Esterline
Technologies. The Plan is designed to reward successful
management employment of Esterline's resources to achieve
superior performance, measured by: (1) continuous increase in
Esterline earnings, and (2) increase in the long-term return on
shareholders' equity.
MEMBERSHIP IN PLAN
------------------
Esterline officers shall be eligible for membership in the Plan
after appointment and return of a signed acceptance of the
appointment letter specifying the member's award level.
The Plan may be modified, amended or terminated at any time; but
any such modification, amendment or termination shall not,
without a member's written consent, affect his/her incentive
compensation accrued prior to such modification, amendment or
termination of the Plan. Nothing in this Plan limits Esterline
from exercising the right to terminate an employee at any time
for any reason.
APPOINTMENTS AND PERFORMANCE TARGETS
------------------------------------
Each appointee to the Plan shall be entitled to incentive
compensation based on Esterline's combined performance on two
equally weighted specific criteria adjusted for relative industry
performance of Esterline's "industry peer group" (see Exhibit 1).
Additionally, if directed, the above computed awards for officers
may be further adjusted, up or down, by the Compensation & Stock
Option Committee of the Board of Directors by an amount not to
exceed the greater of 25% of the computed award or target award,
whichever is greater.
<PAGE> 2
The industry peer group criteria are:
A. Cumulative earnings per share for the four years ending
-------------------------------------------------------
October 31, 1997, excluding any gains or losses from the
--------------------------------------------------------
divestiture of any primary operating subsidiary.
------------------------------------------------
All earnings per share computations shall be adjusted for
stock dividends, splits or reverse splits. The four-year
earnings per share target is $5.66 if the average annualized
growth rate achieved by Esterline's industry peer group is
9% to 13%. (See Attachment A for other targets for varying
levels of industry peer group performance.)
B. Average return on common shareholders' equity for the four
----------------------------------------------------------
years ending October 31, 1997.
------------------------------
The four-year mathematical average shall be based on each
year's audited beginning and ending common shareholders'
equity, excluding any amounts for any preferred shares.
* The minimum return on equity criteria is three
percentage points less than the four-year return on
shareholders' equity of Esterline's industry peer
group.
* The target return on equity criteria is one percentage
point more than the four-year return on shareholders'
equity of Esterline's industry peer group.
* The maximum return on equity criteria is four
percentage points more than the four-year return on
shareholders' equity of Esterline's industry peer
group.
No award will be earned for a target if the performance is less
than minimum. No additional award will be earned for any
performance above the maximum. Awards will be prorated for other
performance levels.
COMPUTATION OF FOUR-YEAR AWARDS
-------------------------------
Esterline's performance is calculated relative to each
performance target individually. Achievement of each criteria at
the target level earns 100% of the individual's total award--50%
for each performance target. (See Attachment B for award
percentages at the target, less than minimum, minimum and maximum
levels for each performance target.) Awards for performance
between a target and its minimum or between a target and its
maximum will be prorated.
<PAGE> 3
BASIS FOR COMPUTATION OF PARTIAL PAYMENTS
-----------------------------------------
<TABLE>
<CAPTION>
Cumulative
Four-Year Relative Earned Performance
Performance Basis of Four-Year Award Level
------------------ ------------------------
<S> <C>
Estimated based on 1/3
FY 1994 & 1995
Estimated based on
FY 1994, 1995 & 1996 2/3
</TABLE>
PAYMENT OF AWARDS
-----------------
Payment shall be made at three intervals in the cycle. Partial
payment shall be computed based on the latest estimate of the
four-year outcome and shall be paid after completion of fiscal
1995 and 1996; these payments shall be made no later than
March 1, 1996 and March 1, 1997, respectively. Final payment
shall be made after completion of fiscal 1997, and no later
than March 1, 1998.
The amount of each payment, if any, shall be the amount earned
for the cumulative performance for the cycle-to-date period less
any amounts previously paid. Partial payments, once paid, are
not refundable to Esterline Technologies.
A Plan member must be an employee on October 31, 1995, 1996 or
1997 to receive payment related to that portion of the Cycle.
However, if an employee's participation in the Plan is terminated
during any Plan year due to normal retirement, death or
disability, a pro rata share of his/her award will be determined
after completion of fiscal 1997, and paid no later than
March 1, 1998. In the case of death, payments shall be made
to his/her estate.
/s/ W. P. Hurlbut
_____________________________________
W. P. Hurlbut
Chairman, President and
Chief Executive Officer
<PAGE> 4
ATTACHMENT A
ESTERLINE TECHNOLOGIES CORPORATION
LONG-TERM INCENTIVE COMPENSATION PLAN--CYCLE IV
ADJUSTMENTS FOR VARYING LEVELS OF
INDUSTRY PEER GROUP PERFORMANCE
EPS PERFORMANCE TARGETS(A)
<TABLE>
<CAPTION>
Average Annual EPS Minimum EPS Maximum EPS
Compounded EPS Growth Rate Performance Performance Performance
of Industry Peer Group Targets Targets Targets
- -------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Less than 4% $4.66 $3.65 $6.37
4 - 9% 5.16 4.15 6.87
9 - 13%(B) 5.66 4.65 7.37
More than 13% 6.16 5.15 7.87
</TABLE>
(A)As amended 12/6/94.
(B)Esterline base EPS target.
<PAGE> 5
EXHIBIT 1
ESTERLINE TECHNOLOGIES CORPORATION
LONG-TERM INCENTIVE COMPENSATION PLAN--CYCLE IV
INDUSTRY PEER GROUP
Value Line
Industry Group*
---------------
Machine Tool
Computer and Peripherals
Electronics
Aerospace/Defense
*As reported by Value Line in their latest report at time of
calculation of awards under the cycle.
<PAGE> 6
ATTACHMENT B
ESTERLINE TECHNOLOGIES CORPORATION
LONG-TERM INCENTIVE COMPENSATION PLAN--CYCLE IV
PERCENTAGE OF APPOINTEE'S AWARD EARNED AT VARYING
LEVELS OF COMPANY PERFORMANCE
<TABLE>
<CAPTION>
Performance
Relative to % of Award % of Award Total % of Appointee's
Target Level from ROE Target from EPS Target Award Earned
- ------------ --------------- --------------- ----------------------
<S> <C> <C> <C>
Less than Minimum 0% 0% 0%
Minimum Level 12.5 12.5 25
Target Level 50 50 100
Maximum Level 100 100 200
</TABLE>
<PAGE> 1
EXHIBIT 10.20B
ESTERLINE TECHNOLOGIES CORPORATION
----------------------------------
CORPORATE MANAGEMENT INCENTIVE COMPENSATION PLAN
------------------------------------------------
FISCAL YEAR 1994
----------------
PURPOSE OF PLAN
- ---------------
This Plan is intended to reward eligible officers and key employees of
Esterline's corporate staff for successful management in fiscal year 1994.
It is believed that the Plan will provide incentives to put forth maximum
efforts to employ Esterline's assets effectively.
MEMBERSHIP IN PLAN
- ------------------
Officers and key employees of the Esterline corporate staff shall be eligible
for membership in the Plan after appointment and return of a signed acceptance
of the appointment letter.
The Plan may be modified, amended or terminated at any time; but any such
modification, amendment or termination shall not, without a member's written
consent, affect his/her incentive compensation accrued prior to such
modification, amendment or termination of the Plan. Nothing in this Plan
limits Esterline from exercising the right to terminate an employee at any
time for any reason.
TERMS AND CONDITIONS
- --------------------
1. Individual participants payouts will vary from 10% to 60%, as
stipulated in his/her appointment letter, of fiscal year-end salary.
These target nomination awards will be earned if earnings per share
of $1.00 are achieved.
2. Actual earnings per share will be as audited before extraordinary
items for the year ending October 31, 1994.
3. Awards will be pro-rated for performance and will be interpolated
on the following basis.
<TABLE>
<CAPTION>
EPS Award
--------------------- ------------------------------
<S> <C>
Below $1.00 Pro-rata share of target award
At $1.00 performance 100% of target award
120% or more of $1.00 150% of target award
</TABLE>
4. Actual individual payouts earned from earnings per share computations
are limited to 150% of target nomination.
<PAGE> 2
5. If directed, computed awards for officers may be further adjusted,
up or down, by the Compensation & Stock Option Committee of the Board
of Directors by an amount not to exceed greater than 25% of the
computed award or target award for the Plan, whichever is greater.
6. Payout of awards will be no later than March 1, 1995.
7. If a Plan member is terminated for any reason other than death or
disability prior to the end of fiscal 1994, he/she shall not receive
the benefits provided by the Plan. (However, Esterline retains the
right to grant a pro-rata award to a terminated employee, based upon
salary earned prior to termination, except those terminated for cause.)
a. If the company in its sole discretion specifically determines
that the employment of a Plan member has been terminated prior
to the end of such fiscal year because of disability, the Plan
member will be paid a pro-rata amount based on the time he/she
was a Plan member prior to his/her termination for disability.
b. For any Plan member who dies prior to the end of Esterline's
fiscal 1994, a pro-rata amount based on the time he/she was a
Plan member prior to the date of death will be paid to his/her
estate.
8. An employee who becomes a Plan member as of a date after the beginning
of Esterline's fiscal 1994 will be paid a pro-rata amount based on the
time the employee participates in the Plan.
/s/ W. P. Hurlbut
- ---------------------------
Wendell P. Hurlbut
Chairman, President
and Chief Executive Officer
<PAGE> 3
ESTERLINE TECHNOLOGIES CORPORATION
PAYOUT AS A % OF TARGET AWARD FOR VARIOUS EARNINGS PER SHARE
CORPORATE MANAGEMENT FISCAL 1994 ANNUAL INCENTIVE COMPENSATION PLAN
Payout as a % of Target Award
The following is a narrative description of graphic material contained
in the paper format document:
The graph illustrates the appropriate payout under the Corporate
Management Fiscal 1994 Annual Incentive Compensation Plan as a
percent of target award for various earnings per share levels.
Earnings per share ranging from $0.00 per share to $3.00 per share
is depicted on the "x" axis. Payout as a percent of target award
ranging from 0% to 160% is depicted on the "y" axis.
At $0.00 earnings per share, payout is 0% of target award. At $1.00
earnings per share, payout is 100% of target award. Payouts on
earnings per share levels between $0.00 earnings per share and $1.00
earnings per share are plotted on a straight line. At $1.20
earnings per share (120% of target earnings per share), payout is
150% of target award (the maximum payout possible under the plan).
Payouts on earnings per share levels between $1.00 earnings per share
and $1.20 earnings per share are also plotted on a straight line.
- - EPS is before extraordinary items
- - Payout based on audited results but no later than March 1, 1996
- - Awards will be pro-rated for performance and will be interpolated on
the following basis.
<TABLE>
<CAPTION>
EPS Award
------------------- ------------------------------
<S> <C>
Below $1.00 Pro-rata share of target award
At $1.00 performance 100% of target award
120% or more of $1.00 150% of target award
</TABLE>
- - If directed, computed awards may be further adjusted, up or down, by
the Compensation & Stock Option Committee of the Board of Directors by
an amount not to exceed greater than 25% of the computed award or 25%
of the target award for the Plan, whichever is greater.
<PAGE> 4
ESTERLINE TECHNOLOGIES CORPORATION
FORM 10-K REPORT FOR FISCAL YEAR ENDED
October 31, 1994
APPENDIX
--------
GRAPHIC AND IMAGE INFORMATION
-----------------------------
Refer to narrative description of graphic material contained in
Exhibit 10.20b to the above report, in accordance with Section 232.304 of
Regulation S-T.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> The schedule contains summary financial information
extracted from the Esterline Technologies Corporation
Consolidated Balance Sheet at October 31, 1994 and the
related Consolidated Statement of Operations for the
year then ended and is qualified in its entirety by
reference to such financial statements.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-START> NOV-01-1993
<PERIOD-END> OCT-31-1994
<PERIOD-TYPE> YEAR
<CASH> 9,076
<SECURITIES> 0
<RECEIVABLES> 65,886
<ALLOWANCES> 2,201
<INVENTORY> 31,673
<CURRENT-ASSETS> 119,312
<PP&E> 145,673
<DEPRECIATION> 94,070
<TOTAL-ASSETS> 215,975
<CURRENT-LIABILITIES> 108,770
<BONDS> 41,714
0
0
<COMMON> 1,302
<OTHER-SE> 64,189
<TOTAL-LIABILITY-AND-EQUITY> 215,975
<SALES> 294,044
<TOTAL-REVENUES> 294,044
<CGS> 178,397
<TOTAL-COSTS> 178,397
<OTHER-EXPENSES> 100,845
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,985
<INCOME-PRETAX> 8,817
<INCOME-TAX> 1,254
<INCOME-CONTINUING> 7,563
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,563
<EPS-PRIMARY> 1.15
<EPS-DILUTED> 1.15
</TABLE>
