Executive Summary

High market share in target niches Financially stable, solid balance sheet and Strong

banking relationship

1/3/2005

5/3/2005

9/3/2005

1/3/2006

5/3/2006

9/3/2006

1/3/2007

5/3/2007

9/3/2007

1/3/2008

5/3/2008

9/3/2008

1/3/2009

5/3/2009

9/3/2009

1/3/2010

5/3/2010

9/3/2010

1/3/2011

5/3/2011

9/3/2011

1/3/2012

5/3/2012

9/3/2012

1/3/2013

5/3/2013

9/3/2013

1/3/2014

5/3/2014

9/3/2014

1/3/2015

5/3/2015

9/3/2015

1/3/2016 $-

$20 $40 $60 $80

$100 $120 $140

Share Price Movement

ESL: $81.2

Market Profile (02/23/2016)Closing Price $55.7152-Week High/Low $45.12/$120.45 Avg. Volume (3M) 316,127 Diluted Shares Out. 31,215,xxx Market Cap $1.65BBeta 1.4EV/EBITDA 14.27x

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

BUY

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

Seals & DuctsWire Management

Countermeasure FlaresChaff & Combustible Ordnance

Aerospace SwitchesMilitary Trainer Cockpits

Enhanced Vision Systems

Power Distribution & Components

Pressure & Temperature Engine Sensors

Commercial Aerospace Connectors

Advanced Materials

Avionics & Controls

Sensors & Systems

Business Segments & Products

US50%

Outside US50%

Manufacture Balance

Commercial Aerospace

50%Defense

30%

Others20%

Product Balance

Avionics & Controls

41%

Sensors36%

Advanced Materials

23%

Revenue by Segment

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

Company Overview

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

Strategic Acquisitions

& Divestitures

Stable R&D Capital

Injection

Lean Transformation Restructure

20082009

20102011

20122013

20142015

2016E2017E

2018E2019E

2020E$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

-15%-10%-5%0%5%10%15%20%

Projected Growth and Revenue

Weight Adjusted Revenue Weight Adjusted Growth

Growth Strategy

Commercial Aerospace Replacement of obsolete aircraft Increase demand for air travel Large commercial aircraft expected to grow

5% through 2019 Defense

U.S. spending cut (39% of global expenditure) Spending is expected to decline by 3-5% in

2016

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

Com-mercial Aero-space79%

Defense21%

Revenue by Industry Sectors

Industry Overview

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

Consumers

Operations Products

• High Switching Cost

• Premium Quality & Reputation

• Lean Manufacturing Process

• Restructuring• Strategic Sourcing• Global Footprint• Average

management experience in Esterline – 10 years

• Diverse Product lines

• #1 or #2 market share in target niche

• High quality products

• Strong Intellectual Properties

Competitive Advantages

Revenue AnalysisSegmented Revenue (Statistical)

$- $500,000

$1,000,000 $1,500,000 $2,000,000 $2,500,000

Revenue Projection (Billions)

Net Sales

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

$500,000$700,000$900,000

Avionics & Controls (Millions)

2008 2010 2012 2014 2016 2018 2020$200,000$400,000$600,000$800,000

$1,000,000$1,200,000

Sensors & Systems (Millions)

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

$200,000$300,000$400,000$500,000$600,000

Advanced Materials (Millions)

0.04%

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

3.15%

10.52%

Adjusted Growth: 4.17%

Acquisitions & Divestitures01/03/2011

Acquired Eclipse

Electronic Systems

07/26/2011 Acquir

ed Souria

u Group

02/15/2013 Acquired

Gamesman (Sensors & System)

12/20/2013

Acquired Sunbank

(AC)

02/02/2015 Acquired

Barco $175M (AC)

06/09/2015

Divestiture of

Eclipse Electroni

cs Systems

07/20/2015

Divestiture of

Pacific Aerospac

e & Electronic

s

11/25/2015

Divestiture of

Wallop Defense System Assets

(Defense)

2010 2011 2012 2013 2014 2015$0$50,000

$100,000$150,000$200,000Acquisition Amt. (Millions)Strategic divestitures

and acquisitions showing potential synergy in the

futureCompany Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

Profitability & Liquidity

2010

2011

2012

2013

2014

201520

16E20

17E20

18E20

19E20

20E

$0$20,000$40,000$60,000$80,000

$100,000$120,000$140,000$160,000$180,000

0.00%2.00%4.00%6.00%8.00%10.00%12.00%

Net Income vs. Profit Margin Ratio (Millions)

Net Income Profit margin Ratio 2010201

1201

2201

3201

4201

5201

6E201

7E201

8E201

9E202

0E -

0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 Current Ratio

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

Capitalization Analysis

2010

2011

2012

2013

2014

2015

2016

E20

17E

2018

E20

19E

2020

E$0

$500,000$1,000,000$1,500,000$2,000,000$2,500,000$3,000,000

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

Total Long-term Debt to Equity (Billion)

Long-term Debt, net of Current Maturities Total Shareholders' EquityTotal Long-term Debt to Equity

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

Valuation Methodology

Discounted Cash Flow

Relative Valuation

Weighted Valuation

• Terminal value analysis• FCF analysis

• EV/EBITDA • 60% DCF• 40% Relative Valuation

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

2016 2017 2018 2019 2020$0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

$3,000,000,000

0.0%2.0%4.0%6.0%8.0%10.0%12.0%14.0%16.0%18.0%20.0%

Segmented Revenue Growth Analysis (Billions)

Avionics & Controls Sensors & SystemsAdvanced materials Segment Adjusted Growth

ProbabilityWbull 10%Wbase 20%

Wconservative 70%Total 100%

2016E 2017E 2018E 2019E 2020E

Projected Revenue

2,022,220 2,101,560 2,182,028 2,261,995 2,339,521 Projected Growth 14.0% 3.9% 3.8% 3.7% 3.4%

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

DCF Growth Analysis

Cost of EquityRisk Free Rate 2.3%

Adjusted Beta 1.4

Market Return 9.5%

Cost of Equity 12.6%

Cost of Debt KdFor Fiscal Year 2011 2012 2013 2014 2015 5Y F

Interest Expense 40,633 46,238 39,638 33,010 30,090 N/Adebt issuance cost 1,069 8,818 6,211 4,295 8,467 N/A

Total Debt, Fiscal Year End 1,000,000 848,700 689,100 622,500 881,400 N/AAverage Debt 806,800 924,350 768,900 655,800 751,950 N/A

Tax Rate 15.7% 20.9% 16.2% 20.9% 16.3% N/ACost of debt 4.4% 4.9% 5.1% 4.6% 4.5% 4.7%

WACC: 10.5%

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

DCF WACC Assumption

24%

76%

Total Debt

Total Equity

DCF CalculationMarket Capitalization

(DCF) $2,735,385,931

Shares Outstanding 29,630,000

Share Price $92.3

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

2015 2016E 2017E 2018E 2019E 2020E (TV) Cash Flow $236,231 $98,601 $170,759 $173,937 $206,230 $3,297,397

WACC: 10.5%

DCF Valuation Output

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

2010 2011 2012 2013 2014 2015ESL 8.7x 9.1x 8.9x 10.4x 10.9x 14.3x

MGGT 7.1x 6.9x 6.8x 10.1x 12.3x 8.7xBAE 4.6x 4.3x 5.1x 7.6x 8.3x 10.8x

2010 2011 2012 2013 2014 20150.0x2.0x4.0x6.0x8.0x

10.0x12.0x14.0x16.0xHistorical EV/EBITDA

ESL MGGT BAE

Relative Valuation – EV/EBITDA

Bull (14.3x)EV from EBITDA 4.0 B Equity Value 3.3B Fully Diluted Shares Outstanding 29,630,000 Intrinsic Value per Share $112.5

Base (11.2x)EV from EBITDA 3.2 B Equity Value 2.5 B Fully Diluted Shares Outstanding 29,630,000 Intrinsic Value per Share $84.0

Conservative (8.7x)EV from EBITDA 2.5 B Equity Value 1.8 B Fully Diluted Shares Outstanding 29,630,000

Intrinsic Value per Share $59.7

Bull Base Conservation$0$20$40$60$80

$100$120

Intrinsic Value per Share

Bull Base ConservationShare Price $112.5 $84.0 $59.7

Weight 15% 25% 60%Weighted $16.9 $21.0 $35.8

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

$73.7

Relative Valuation Output

Discounted Cash Flow

$92.3

Relative Valuation

$73.7

Weighted Valuation

$81.2

60% 40%

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

Target Price

Feb. 2016 Potential federal securities laws violations

2013$20 million penalty with DDTC to resolve the

violation of International Traffic in Arms Regulations

Probability

 High          

ER1 MR3     OR2

Medium     MR2

OR1MR1ER2  

  RR3 RR2    

Low         RR1

  Low Medium High  Impact

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

Regulatory Risk

Failure to meet regulatory requirements (RR1)

2010 2011 2012 2013 2014 2015$0$50,000

$100,000$150,000$200,000Acquisition Amt.

Probability

 High          

ER1 MR3     OR2

Medium

    MR2OR1

MR1ER2  

  RR3 RR2    

Low         RR1

  Low Medium High  Impact

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

Operation Risks Acquisition and integration Risk (OR1)

Backlog (OR2)

Unfavorable market conditions due to demand reductions (MR1)

50%30%

20%

Market BalanceCommercial AerospaceDefenseHigh-end, Non-aero applications

• Budget Control Act of 2011 (BCA)• Aircraft delivery

Probability

 High          

ER1 MR3     OR2

Medium

    MR2OR1

MR1ER2  

  RR3 RR2    

Low         RR1

  Low Medium High  Impact

2015 2016 2017 2018 2019 2020125013001350140014501500155016001650

Aircraft Delivery Forecast

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

Market Risks

ConclusionStrong

Competitive Patented

Technology

Large Market Share in Niche

Market

Strategic Acquisitions and

Divestitures

Strong Liquidity Measures BUY

Company Overview Industry Financial

Analysis Valuation Risk Analysis Conclusion

Backlog Risk Subject to cancel

Exposure from Strict Regulatory Risk

Q&A

Company Overview Industry Valuation Financial

Analysis Risk Analysis Conclusion

Opportunities• Robust new contracts• Growth in demand for commercial

aircraft• Surge in defense spending by

developing countries

Threats• Intense competition• Heavy regulations in airline

industry• Large Backlog subject to cancel

Weaknesses• Highly dependent on US

government contracts and subcontracts

Strengths• Diversification• Stable Customer Source• Strong R&D Power• Actively Managed

Acquisitions & Divestiture

Appendix: SWOT Analysis

Bargaining Power of Customers

Bargaining Power of Suppliers

Threat of SubstitutesThreat of New Market Entrants

Competitive Rivalry

0

1

2

3

4

5

Porter’s Five Forces

Company Overview Industry Valuation Financial

Analysis Risk Analysis Conclusion

Appendix: Competition