What changed in this filing

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Item 1. Financial Statements

2020-10-29 compared with 2020-08-04 · 292 added, 256 removed, 670 unchanged (45% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands, except per share data) 2020 2019 2020 2019

13 unchanged sentences

Interest expense 9,055 7,951 25,059 23,183

Other income (expense), net ( 4,105 ) 5,871 1,427 11,349

Other income, net 5,417 6,355 6,844 17,704

Earnings before income taxes 80,935 103,973 194,153 277,820

12 unchanged sentences

(In thousands)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

7 unchanged sentences

Comprehensive income $ 96,410 $ 59,087 $ 161,782 $ 206,966

(1) The tax benefit included in other comprehensive income (loss) for foreign currency translation adjustments for the three and six months ended June 30, 2020 and June 30, 2019 was immaterial.

(2) The tax expense included in other comprehensive income for pension and postretirement adjustments for the three and six months ended June 30, 2020 was $ 1.3 million and $ 2.7 million, respectively.

The tax expense included in other comprehensive income for pension and postretirement adjustments for the three and six months ended June 30, 2019 was $ 0.6 million and $ 1.1 million, respectively.

(1) The tax benefit included in other comprehensive income for foreign currency translation adjustments for the three and nine months ended September 30, 2020 was $ 0.6 million and $ 1.0 million, respectively.

The tax benefit included in other comprehensive loss for foreign currency translation adjustments for both the three and nine months ended September 30, 2019 was $ 0.6 million.

(2) The tax expense included in other comprehensive income for pension and postretirement adjustments for the three and nine months ended September 30, 2020 was $ 1.3 million and $ 4.0 million, respectively.

The tax expense included in other comprehensive income for pension and postretirement adjustments for the three and nine months ended September 30, 2019 was $ 0.4 million and $ 1.5 million, respectively.

See notes to condensed consolidated financial statements

2 unchanged sentences

(In thousands, except per share data)

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Current assets:

27 unchanged sentences

Stockholders’ equity

Common stock, $ 1 par value, 100,000,000 shares authorized as of June 30, 2020 and December 31, 2019;

49,187,378 shares issued as of June 30, 2020 and December 31, 2019;

outstanding shares were 41,565,240 as of June 30, 2020 and 42,680,215 as of December 31, 2019

Common stock, $ 1 par value, 100,000,000 shares authorized as of September 30, 2020 and December 31, 2019;

49,187,378 shares issued as of September 30, 2020 and December 31, 2019;

outstanding shares were 41,502,026 as of September 30, 2020 and 42,680,215 as of December 31, 2019

49,187 49,187

2 unchanged sentences

Accumulated other comprehensive loss ( 310,891 ) ( 325,274 )

Common treasury stock, at cost ( 7,622,138 shares as of June 30, 2020 and 6,507,163 shares as of December 31, 2019)

Common treasury stock, at cost ( 7,685,352 shares as of September 30, 2020 and 6,507,163 shares as of December 31, 2019)

( 683,919 ) ( 562,722 )

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(In thousands) 2020 2019

1 unchanged sentence

Net earnings $ 147,399 $ 218,175

Adjustments to reconcile net earnings to net cash provided by (used for) operating activities

Adjustments to reconcile net earnings to net cash provided by operating activities

Depreciation and amortization 84,769 76,998

3 unchanged sentences

Foreign exchange loss on substantial liquidation of subsidiary 9,498 —

Inventory write-downs 9,015 —

Non-cash restructuring charges 10,254 —

Change in operating assets and liabilities, net of businesses acquired and divested:

7 unchanged sentences

Other current and long-term assets and liabilities 11,620 ( 17,045 )

Net cash provided by (used for) operating activities ( 52,209 ) 40,386

Net cash provided by operating activities 3,784 159,015

Cash flows from investing activities:

6 unchanged sentences

Borrowings under revolving credit facility 389,398 35,387

Payment of revolving credit facility ( 231,797 ) ( 7,561 )

Payments of revolving credit facility ( 389,398 ) ( 35,550 )

Borrowings of debt 300,000 —

Repurchases of common stock ( 137,155 ) ( 37,864 )

2 unchanged sentences

Other ( 648 ) ( 600 )

Net cash used for financing activities ( 51,942 ) ( 26,712 )

Net cash provided by (used for) financing activities 157,945 ( 41,367 )

Effect of exchange-rate changes on cash ( 10,023 ) ( 5,950 )

Net decrease in cash and cash equivalents ( 235,650 ) ( 59,722 )

Net increase in cash and cash equivalents 35,788 21,646

Cash and cash equivalents at beginning of period 391,033 276,066

6 unchanged sentences

(In thousands)

For the six months ended June 30, 2020

For the nine months ended September 30, 2020

Common Stock Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock

1 unchanged sentence

Net earnings — — 147,399 — —

Other comprehensive loss, net of tax — — — ( 17,407 ) —

Other comprehensive income, net of tax — — — 14,383 —

Dividends declared — — ( 21,221 ) — —

4 unchanged sentences

Other — ( 517 ) — — 517

June 30, 2020 $ 49,187 $ 118,467 $ 2,565,727 $ ( 342,681 ) $ ( 677,405 )

For the three months ended June 30, 2020

September 30, 2020 $ 49,187 $ 121,797 $ 2,623,289 $ ( 310,891 ) $ ( 683,919 )

For the three months ended September 30, 2020

Common Stock Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock

March 31, 2020 $ 49,187 $ 114,911 $ 2,541,777 $ ( 370,868 ) $ ( 665,170 )

June 30, 2020 $ 49,187 $ 118,467 $ 2,565,727 $ ( 342,681 ) $ ( 677,405 )

Net earnings — — 64,620 — —

4 unchanged sentences

Repurchase of common stock — — — — ( 12,542 )

June 30, 2020 $ 49,187 $ 118,467 $ 2,565,727 $ ( 342,681 ) $ ( 677,405 )

September 30, 2020 $ 49,187 $ 121,797 $ 2,623,289 $ ( 310,891 ) $ ( 683,919 )

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

1 unchanged sentence

(In thousands)

For the six months ended June 30, 2019

For the nine months ended September 30, 2019

Common Stock Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock

2 unchanged sentences

Net earnings — — 218,175 — —

Other comprehensive income, net of tax — — — 12,214 —

Other comprehensive loss, net of tax — — — ( 11,209 ) —

Dividends declared — — ( 20,947 ) — —

4 unchanged sentences

Other — ( 661 ) — — 661

June 30, 2019 $ 49,187 $ 116,835 $ 2,339,703 $ ( 302,490 ) $ ( 550,939 )

For the three months ended June 30, 2019

September 30, 2019 $ 49,187 $ 120,219 $ 2,414,956 $ ( 325,913 ) $ ( 557,309 )

For the three months ended September 30, 2019

Common Stock Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock

March 31, 2019 $ 49,187 $ 114,696 $ 2,266,902 $ ( 304,779 ) $ ( 540,426 )

June 30, 2019 $ 49,187 $ 116,835 $ 2,339,703 $ ( 302,490 ) $ ( 550,939 )

Net earnings — — 82,510 — —

Other comprehensive income, net of tax — — — 2,289 —

Other comprehensive loss, net of tax — — — ( 23,423 ) —

Dividends declared — — ( 7,257 ) — —

2 unchanged sentences

Repurchase of common stock — — — — ( 12,799 )

June 30, 2019 $ 49,187 $ 116,835 $ 2,339,703 $ ( 302,490 ) $ ( 550,939 )

September 30, 2019 $ 49,187 $ 120,219 $ 2,414,956 $ ( 325,913 ) $ ( 557,309 )

See notes to condensed consolidated financial statements

15 unchanged sentences

Accordingly, the effect of the changes on future periods of contract performance is recognized as if the revised estimate had been the original estimate.

During the three and six months ended June 30, 2020 and 2019, there were no significant changes in estimated contract costs.

During the three and nine months ended September 30, 2020 and 2019, there were no significant changes in estimated contract costs.

The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Corporation’s 2019 Annual Report on Form 10-K.

8 unchanged sentences

GAAP based on expected losses rather than incurred losses.

As the Corporation is not subject to material trade credit risk, the adoption of this standard did not result in any impact to its allowance for doubtful accounts balance as of January 1, 2020.

As a result of adoption, the Corporation will utilize current and historical collection data as well as assess current economic conditions in order to determine expected trade credit losses on a prospective basis.

As the Corporation is not subject to material trade credit risk given that a significant portion of its sales are generated from contracts with agencies of or prime contractors to the U.S.

Government , the adoption of this standard did not result in any impact to its allowance for doubtful accounts balance as of January 1, 2020.

As a result of adoption, the Corporation utilizes current and historical collection data as well as assess current economic conditions in order to determine expected trade credit losses on a prospective basis.

The Corporation recognizes revenue when control of a promised good and/or service is transferred to a customer in an amount that reflects the consideration that the Corporation expects to be entitled to in exchange for that good and/or service.

7 unchanged sentences

The Corporation’s performance obligations are satisfied either at a point-in-time or on an over-time basis.

Revenue recognized on an over-time basis for the three and six months ended June 30, 2020 accounted for approximately 54 % and 53 %, respectively, of total net sales.

Revenue recognized on an over-time basis for both the three and six months ended June 30, 2019 accounted for approximately 48 % of total net sales.

Typically, over-time revenue recognition is based on the utilization of an input measure used to measure progress, such as costs incurred to date relative to total estimated costs.

Revenue recognized at a point-in-time for the three and six months ended June 30, 2020 accounted for approximately 46 % and 47 %, respectively, of total net sales.

Revenue recognized at a point-in-time for both the three and six months ended June 30, 2019 accounted for approximately 52 % of total net sales.

Revenue for these types of arrangements is recognized at the point in time in which control is transferred to the customer, typically based upon the terms of delivery.

Point-in-time revenue is recognized at the point in time in which control is transferred to the customer, typically based upon the terms of delivery.

The following table illustrates the approximate percentage of revenue recognized for performance obligations satisfied over-time versus at a point-in-time for the three and nine months ended September 30, 2020 and 2019:

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Over-time 50 % 47 % 52 % 48 %

Point-in-time 50 % 53 % 48 % 52 %

Contract backlog represents the remaining performance obligations that have not yet been recognized as revenue.

Backlog includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods.

Total backlog was approximately $ 2.2 billion as of June 30, 2020, of which the Corporation expects to recognize approximately 89 % as net sales over the next 12-36 months .

Total backlog was approximately $ 2.2 billion as of September 30, 2020, of which the Corporation expects to recognize approximately 90 % as net sales over the next 12-36 months .

The remainder will be recognized thereafter.

1 unchanged sentence

The following table presents the Corporation’s total net sales disaggregated by end market and customer type:

Total Net Sales by End Market and Customer Type Three Months Ended Six Months Ended

June 30, June 30,

Total Net Sales by End Market & Customer Type Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2020 2019 2020 2019

10 unchanged sentences

Timing of revenue recognition and cash collection may result in billed receivables, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on the Condensed Consolidated Balance Sheet.

The Corporation’s contract assets primarily relate to its rights to consideration for work completed but not billed as of the reporting date.

The Corporation’s contract assets

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

primarily relate to its rights to consideration for work completed but not billed as of the reporting date.

Contract assets are transferred to billed receivables when the rights to consideration become unconditional.

1 unchanged sentence

The Corporation’s contract liabilities primarily consist of customer advances received prior to revenue being earned.

Revenue recognized during the three and six months ended June 30, 2020 included in the contract liabilities balance as

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of January 1, 2020 was approximately $ 71 million and $ 160 million, respectively.

Revenue recognized during the three and six months ended June 30, 2019 included in the contract liabilities balance as of January 1, 2019 was approximately $ 54 million and $ 133 million, respectively.

Revenue recognized during the three and nine months ended September 30, 2020 included in the contract liabilities balance as of January 1, 2020 was approximately $ 37 million and $ 197 million, respectively.

Revenue recognized during the three and nine months ended September 30, 2019 included in the contract liabilities balance as of January 1, 2019 was approximately $ 26 million and $ 159 million, respectively.

Contract assets and contract liabilities are reported in the "Receivables, net" and "Deferred revenue" lines, respectively, within the Condensed Consolidated Balance Sheet.

8 unchanged sentences

The Corporation will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required.

During the six months ended June 30, 2020, the Corporation acquired two businesses for an aggregate purchase price of $ 90 million, which are described in more detail below.

During the six months ended June 30, 2019, the Corporation acquired one business for an aggregate purchase price of $ 50 million, which is described in more detail below.

The Condensed Consolidated Statement of Earnings for the six months ended June 30, 2020 includes $ 7 million of total net sales and $ 1 million of net losses from the Corporation's 2020 acquisitions.

The Condensed Consolidated Statement of Earnings for the six months ended June 30, 2019 includes $ 4 million of total net sales and $ 1 million of net losses from the Corporation's 2019 acquisition.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for all acquisitions consummated during the six months ended June 30, 2020 and 2019.

During the nine months ended September 30, 2020, the Corporation acquired two businesses for an aggregate purchase price of $ 90 million, which are described in more detail below.

During the nine months ended September 30, 2019, the Corporation acquired one business for an aggregate purchase price of $ 50 million, which is described in more detail below.

The Condensed Consolidated Statement of Earnings for the nine months ended September 30, 2020 includes $ 12 million of total net sales and $ 1 million of net losses from the Corporation's 2020 acquisitions.

The Condensed Consolidated Statement of Earnings for the nine months ended September 30, 2019 includes $ 8 million of total net sales and immaterial net earnings from the Corporation's 2019 acquisition.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for all acquisitions consummated during the nine months ended September 30, 2020 and 2019.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) 2020 2019

13 unchanged sentences

Goodwill deductible for tax purposes $ 38,519 $ 22,635

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2020 Acquisitions

22 unchanged sentences

The composition of receivables is as follows:

(In thousands) June 30, 2020 December 31, 2019

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) September 30, 2020 December 31, 2019

Billed receivables:

12 unchanged sentences

Inventories are valued at the lower of cost or net realizable value.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The composition of inventories is as follows:

(In thousands) June 30, 2020 December 31, 2019

(In thousands) September 30, 2020 December 31, 2019

Raw materials $ 177,729 $ 153,876

7 unchanged sentences

Inventories, net $ 460,585 $ 424,835

(1) As of June 30, 2020 and December 31, 2019, this caption also includes capitalized contract development costs of $ 32.4 million and $ 39.1 million, respectively, related to certain aerospace and defense programs.

These capitalized costs will be liquidated as units are produced under contract.

As of June 30, 2020 and December 31, 2019, capitalized development costs of $ 16.5 million and $ 23.7 million, respectively, are not currently supported by existing firm orders.

The changes in the carrying amount of goodwill for the six months ended June 30, 2020 are as follows:

(1) As of September 30, 2020 and December 31, 2019, this caption also includes capitalized contract development costs of $ 30.9 million and $ 39.1 million, respectively, related to certain aerospace and defense programs.

These capitalized costs will be liquidated as units are produced and sold under contract.

As of September 30, 2020 and December 31, 2019, capitalized development costs of $ 16.1 million and $ 23.7 million, respectively, are not currently supported by existing firm orders.

The changes in the carrying amount of goodwill for the nine months ended September 30, 2020 are as follows:

(In thousands) Commercial/Industrial Defense Power Consolidated

3 unchanged sentences

Foreign currency translation adjustment ( 372 ) ( 536 ) ( 417 ) ( 1,325 )

June 30, 2020 $ 454,981 $ 534,256 $ 207,957 $ 1,197,194

September 30, 2020 $ 459,943 $ 539,712 $ 208,226 $ 1,207,881

OTHER INTANGIBLE ASSETS, NET

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the cumulative composition of the Corporation’s intangible assets:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

(In thousands) Gross Accumulated Amortization Net Gross Accumulated Amortization Net

5 unchanged sentences

(1) Programs include values assigned to major programs of acquired businesses and represent the aggregate value associated with the customer relationships, contracts, technology, and trademarks underlying the associated program.

During the six months ended June 30, 2020, the Corporation acquired intangible assets of $ 39.4 million.

During the nine months ended September 30, 2020, the Corporation acquired intangible assets of $ 39.4 million.

The Corporation acquired Customer-related intangibles of $ 28.9 million, Technology of $ 8.1 million, and Other intangible assets of $ 2.4 million, which have weighted average amortization periods of 19.4 years, 15.0 years, and 7.5 years, respectively.

Total intangible amortization expense for the six months ended June 30, 2020 was $ 28.7 million, as compared to $ 22.6 million in the comparable prior year period.

Total intangible amortization expense for the nine months ended September 30, 2020 was $ 43.3 million, as compared to $ 33.9 million in the comparable prior year period.

The estimated amortization expense for the five years ending December 31, 2020 through 2024 is $ 58 million, $ 48 million, $ 45 million, $ 42 million, and $ 38 million, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Forward Foreign Exchange and Currency Option Contracts

11 unchanged sentences

Effects on Condensed Consolidated Balance Sheets

As of June 30, 2020 and December 31, 2019, the fair values of the asset and liability derivative instruments were immaterial.

As of September 30, 2020 and December 31, 2019, the fair values of the asset and liability derivative instruments were immaterial.

Effects on Condensed Consolidated Statements of Earnings

Undesignated hedges

For the three and six months ended June 30, 2020 and 2019, the gains or (losses) recognized in income on forward exchange derivative contracts not designated for hedge accounting were as follows:

Three Months Ended Six Months Ended

(In thousands) June 30, June 30,

For the three and nine months ended September 30, 2020 and 2019, the gains or (losses) recognized in income on forward exchange derivative contracts not designated for hedge accounting were as follows:

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended Nine Months Ended

(In thousands) September 30, September 30,

Derivatives not designated as hedging instrument 2020 2019 2020 2019

1 unchanged sentence

General and administrative expenses $ 1,730 $ ( 1,823 ) $ ( 5,702 ) $ ( 392 )

The estimated fair value amounts were determined by the Corporation using available market information that is primarily based on quoted market prices for the same or similar issuances as of June 30, 2020.

Accordingly, all of the Corporation’s debt is valued as a Level 2 financial instrument.

1 unchanged sentence

Furthermore, the use of different methodologies to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

(In thousands) Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

Revolving credit agreement, due 2024 $ 75,000 $ 75,000 $ — $ —

3.84 % Senior notes due 2021

10 unchanged sentences

90,000 100,825 90,000 95,607

3.10 % Senior notes due 2030

150,000 155,387 — —

3.20 % Senior notes due 2032

150,000 154,622 — —

Total debt 1,050,000 1,120,678 750,000 783,792

2 unchanged sentences

Total debt, net $ 1,058,707 $ 1,129,385 $ 760,639 $ 794,431

On August 13, 2020, the Corporation issued $300 million Senior Notes (the “2020 Notes”), consisting of $150 million 3.10% Senior Notes that mature on August 13, 2030 and $150 million 3.20% Senior Notes that mature on August 13, 2032.

The 2020 Notes are senior unsecured obligations, equal in right of payment to the Corporation’s existing senior indebtedness.

The Corporation, at its option, can prepay at any time all or any part of the 2020 Notes, subject to a make-whole payment in accordance with the terms of the Note Purchase Agreement.

PENSION PLANS

1 unchanged sentence

The following table is a consolidated disclosure of all domestic and foreign defined pension plans as described in the Corporation’s 2019 Annual Report on Form 10-K.

The components of net periodic pension cost for the three and six months ended June 30, 2020 and 2019 were as follows:

Three Months Ended Six Months Ended

June 30, June 30,

The components of net periodic pension cost for the three and nine months ended September 30, 2020 and 2019 were as follows:

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2020 2019 2020 2019

5 unchanged sentences

Net periodic pension cost $ 1,172 $ 223 $ 4,075 $ 1,894

During the six months ended June 30, 2020, the Corporation made a $ 150 million voluntary contribution to the Curtiss-Wright Pension Plan.

During the nine months ended September 30, 2020, the Corporation made a $ 150 million voluntary contribution to the Curtiss-Wright Pension Plan.

The Corporation does not expect to make any further contributions to the Curtiss-Wright Pension Plan in 2020.

3 unchanged sentences

The employer contributions include both employer match and non-elective contribution components up to a maximum employer contribution of 7 % of eligible compensation.

During the three and six months ended June 30, 2020, the expense relating to the plan was $ 4.3 million and $ 10.3 million, respectively.

During the three and six months ended June 30, 2019, the expense relating to the plan was $ 4.2 million and $ 9.6 million, respectively.

The Corporation made $ 14.0 million in contributions to the plan during the six months ended June 30, 2020, and expects to make total contributions of $ 18.3 million in 2020.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the three and nine months ended September 30, 2020, the expense relating to the plan was $ 4.5 million and $ 14.8 million, respectively.

During the three and nine months ended September 30, 2019, the expense relating to the plan was $ 4.2 million and $ 13.8 million, respectively.

The Corporation made $ 16.5 million in contributions to the plan during the nine months ended September 30, 2020, and expects to make total contributions of $ 18.3 million in 2020.

EARNINGS PER SHARE

1 unchanged sentence

A reconciliation of basic to diluted shares used in the earnings per share calculation is as follows:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2020 2019 2020 2019

2 unchanged sentences

Diluted weighted-average shares outstanding 41,797 42,995 42,190 43,025

For the three and six months ended June 30, 2020 and 2019, there were no anti-dilutive equity-based awards.

For the three and nine months ended September 30, 2020 and 2019, there were no anti-dilutive equity-based awards.

SEGMENT INFORMATION

5 unchanged sentences

Net sales and operating income by reportable segment were as follows:

Three Months Ended Six Months Ended

June 30, June 30,

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2020 2019 2020 2019

13 unchanged sentences

Adjustments to reconcile operating income to earnings before income taxes are as follows:

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2020 2019 2020 2019

1 unchanged sentence

Interest expense 9,055 7,951 25,059 23,183

Other income (expense), net ( 4,105 ) 5,871 1,427 11,349

Other income, net 5,417 6,355 6,844 17,704

Earnings before income taxes $ 80,935 $ 103,973 $ 194,153 $ 277,820

(In thousands) June 30, 2020 December 31, 2019

(In thousands) September 30, 2020 December 31, 2019

Identifiable assets

6 unchanged sentences

The cumulative balance of each component of accumulated other comprehensive income (AOCI), net of tax, is as follows:

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) Foreign currency translation adjustments, net Total pension and postretirement adjustments, net Accumulated other comprehensive income (loss)

10 unchanged sentences

2,139 ( 339 ) 1,800

Amounts reclassified from accumulated other comprehensive income (loss)

Amounts reclassified from accumulated other comprehensive income

— 12,583 12,583

Net current period other comprehensive income (loss) ( 26,090 ) 8,683 ( 17,407 )

June 30, 2020 $ ( 156,109 ) $ ( 186,572 ) $ ( 342,681 )

Net current period other comprehensive income 2,139 12,244 14,383

September 30, 2020 $ ( 127,880 ) $ ( 183,011 ) $ ( 310,891 )

Details of amounts reclassified from accumulated other comprehensive income (loss) are below:

(In thousands) Amount reclassified from AOCI Affected line item in the statement where net earnings is presented

(In thousands) Amount reclassified from AOCI Affected line item in the Condensed Consolidated Statement of Earnings

Defined benefit pension and other postretirement benefit plans

Amortization of prior service costs $ 470 Other income (expense), net

Amortization of actuarial losses ( 11,497 ) Other income (expense), net

Amortization of prior service costs $ 457 Other income, net

Amortization of actuarial losses ( 17,034 ) Other income, net

( 16,577 ) Earnings before income taxes

1 unchanged sentence

Total reclassifications $ ( 12,583 ) Net earnings

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONTINGENCIES AND COMMITMENTS

In the ordinary course of business, the Corporation and its subsidiaries are subject to various pending claims, lawsuits, and contingent liabilities.

The Corporation does not believe that the disposition of any of these matters, individually or in the aggregate, will have a material adverse effect on its consolidated financial condition, results of operations, and cash flows.

Legal Proceedings

5 unchanged sentences

The Corporation enters into standby letters of credit agreements and guarantees with financial institutions and customers primarily relating to guarantees of repayment, future performance on certain contracts to provide products and services, and to secure advance payments from certain international customers.

As of June 30, 2020 and December 31, 2019, there were $ 21.8 million and $ 32.6 million of stand-by letters of credit outstanding, respectively, and $ 6.4 million and $ 10.8 million of bank guarantees outstanding, respectively.

As of September 30, 2020 and December 31, 2019, there were $ 21.9 million and $ 32.6 million of stand-by letters of credit outstanding, respectively, and $ 6.6 million and $ 10.8 million of bank guarantees outstanding, respectively.

In addition, the Corporation is required to provide the Nuclear Regulatory Commission financial assurance demonstrating its ability to cover the cost of decommissioning its Cheswick, Pennsylvania facility upon closure, though the Corporation does not intend to close this facility.

The Corporation has provided this financial assurance in the form of a $ 45.6 million surety bond.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AP1000 Program

3 unchanged sentences

The Corporation would be liable for liquidated damages under the contract if certain contractual delivery dates were not met and if the Corporation was deemed responsible for the delay.

As of June 30, 2020, the Corporation has not met certain contractual delivery dates under its AP 1000 China and U.S.

As of September 30, 2020, the Corporation has not met certain contractual delivery dates under its AP1000 China and U.S.

however there are significant uncertainties as to which parties are responsible for the delays.

The Corporation believes it has adequate legal defenses and intends to vigorously defend this matter.

Given the uncertainties surrounding the responsibility for the delays, no accrual has been made for this matter as of June 30, 2020.

As of June 30, 2020, the range of possible loss is $ 0 to $ 31 million for the AP1000 U.S.

Given the uncertainties surrounding the responsibility for the delays, no accrual has been made for this matter as of September 30, 2020.

As of September 30, 2020, the range of possible loss is $ 0 to $ 31 million for the AP1000 U.S.

contract, for a total range of possible loss of $ 0 to $ 55.5 million.

RESTRUCTURING COSTS

During the three and six months ended June 30, 2020, the Corporation executed restructuring activities across all of its segments to support its ongoing effort of improving capacity utilization and operating efficiency.

These restructuring activities, which include workforce reductions and consolidation of facilities, resulted in $ 15 million and $ 17 million of pre-tax charges for the three and six months ended June 30, 2020.

Included in the aforementioned amounts for the three and six months ended June 30, 2020 were approximately $ 6 million and $ 7 million of non-cash charges, respectively, related to inventory write-downs and impairments of property, plant, and equipment and operating lease right-of-use assets.

Inventory write-downs and asset impairments are reported in "Cost of product sales" and "Restructuring expenses," respectively, within the Condensed Consolidated Statement of Earnings.

During the three and nine months ended September 30, 2020, the Corporation executed restructuring activities across all of its segments to support its ongoing effort of improving capacity utilization and operating efficiency.

These restructuring activities, which include workforce reductions and consolidation of facilities, resulted in $ 11 million and $ 29 million of pre-tax charges for the three and nine months ended September 30, 2020.

Pre-tax restructuring charges for the year ending December 31, 2020 are expected to be $ 35 million.

The Company anticipates that these actions, which are expected to be substantially completed by the end of 2020, will result in total cost savings of approximately $ 40 million annually.

The Company anticipates that these actions, which are expected to be substantially completed by the end of 2020, will result in total cost savings of approximate ly $ 40 million ann ually.

The following tables summarize the respective accrual balances related to these restructuring activities:

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands Restructuring Accrual as of December 31, 2019 Provision Cash Payments Restructuring Accrual as of June 30, 2020

In thousands Restructuring Accrual as of December 31, 2019 Provision Cash Payments Restructuring Accrual as of September 30, 2020

Commercial/Industrial

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CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of total pre-tax restructuring charges is as follows:

Affected line item in the Condensed Consolidated Statement of Earnings

Three Months Ended Nine Months Ended

(In thousands) September 30, 2020 September 30, 2020

Inventory write-downs Cost of product sales $ 2,625 $ 7,815

Severance, facility closure, and other exit costs Restructuring expenses 7,690 18,291

Property, plant, and equipment & operating lease right of use asset impairments Restructuring expenses 851 2,439

$ 8,541 $ 20,730

Total restructuring charges Earnings before income taxes $ 11,166 $ 28,545

There were no such comparable charges for the three and nine months ended September 30, 2019.

SUBSEQUENT EVENTS

On September 24, 2020, the Corporation entered into an agreement to acquire the stock of Pacific Star Communications, Inc.

(PacStar) for $ 400 million.

PacStar is a provider of tactical communications solutions for battlefield network management.

For the year ending December 31, 2020, PacStar is expected to generate sales in excess of $ 120 million.

The transaction is anticipated to close in the fourth quarter, and is subject to customary closing conditions.

Upon close, the acquired business will operate within the Defense segment.

In October 2020, the Corporation announced that its Board of Directors has authorized an additional $ 200 million for future share repurchases, increasing total available authorization to $ 250 million.

The Corporation intends to use $ 50 million of the available authorization for opportunistic share repurchases through the remainder of the year.

The Corporation had previously completed a $ 100 million opportunistic share repurchase program executed in March 2020 and expects to complete its existing $ 50 million 10b5-1 share repurchase program authorized for 2020 by the end of the year.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

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Approximately 51% of our 2020 revenues are expected to be generated from defense-related markets.

COVID-19, which was characterized as a pandemic by the World Health Organization in March 2020, has slowed our supply chains and production levels, resulted in significant travel restrictions, and created significant disruption of the financial markets.

While the pandemic negatively impacted demand in the second quarter, primarily in the commercial aerospace and general industrial end markets, it did not have a material impact on our results of operations during the first quarter.

The commercial aerospace and general industrial end markets are expected to be negatively impacted for the foreseeable future, the extent of which is contingent upon future developments.

COVID-19, which was characterized as a pandemic by the World Health Organization in March 2020, has resulted in significant travel restrictions and disruption of the financial markets, as well as negatively impacted our supply chains and production levels.

The pandemic has caused demand in the commercial aerospace and general industrial end markets to be negatively impacted for the foreseeable future, the extent of which is contingent upon future developments.

These future developments, which are highly uncertain and unpredictable, include new information concerning the severity and duration of the outbreak as well as impacts to our supply chain, transportation networks, and customers.

The health and safety of our employees has remained our top priority throughout this crisis.

The vast majority of our manufacturing facilities have remained operational throughout the pandemic due to the critical nature of both our operations as well as our customers’ operations, with all manufacturing facilities open and operating as of June 30, 2020.

We have continued to execute safety measures at all of our facilities to protect the health and safety of our employees and visitors, including increased frequency in cleaning and disinfecting as well as implementing rigorous hygiene and social distancing practices.

In addition, a significant portion of our non-manufacturing employees are currently working remotely in an effort to minimize any potential spread of COVID-19.

We have continued to execute safety measures at all of our facilities to protect the health and safety of our employees and visitors, including increased frequency in cleaning and disinfecting.

Additionally, we have implemented rigorous hygiene and social distancing practices, inclusive of mask requirements and staggered shifts.

A significant portion of our non-manufacturing employees are currently working remotely in an effort to minimize any potential spread of COVID-19.

These working conditions have been designed to allow for the continuation of key business-critical operations, including financial reporting and internal control.

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From an operational perspective, our current cash balance, coupled with expected cash flows from operating activities for the remainder of the year as well as our current borrowing capacity under the Revolving Credit Agreement, are expected to be more than sufficient to meet operating cash requirements, planned capital expenditures, interest payments on long-term debt obligations, payments on lease obligations, pension and postretirement funding requirements, and dividend payments through at least the remainder of the year.

In May 2020, we took additional actions to strengthen our financial flexibility through the pricing of $300 million of senior notes.

The transaction is expected to close no later than August 13, 2020, with the proceeds intended to be used for general corporate purposes.

In August 2020, we took additional actions to strengthen our financial flexibility through the successful completion of a $300 million private placement debt offering.

We will continue to diligently monitor business conditions and consider additional actions, as necessary.

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RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand the results of operations and financial condition of the Corporation for the three and six month periods ended June 30, 2020.

The financial information as of June 30, 2020 should be read in conjunction with the consolidated financial statements for the year ended December 31, 2019 contained in our Form 10-K.

The financial information as of September 30, 2020 should be read in conjunction with the consolidated financial statements for the year ended December 31, 2019 contained in our Form 10-K.

The MD&A is organized into the following sections:

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Additionally, the results of operations of divested businesses are removed from the comparable prior year period for purposes of calculating “organic” and “incremental” results.

The definition of “organic” excludes the effects of restructuring-related expenses and foreign currency translation.

Condensed Consolidated Statements of Earnings

Three Months Ended Six Months Ended

June 30, June 30,

The definition of “organic” excludes the effects of total restructuring charges and foreign currency translation.

CONDENSED CONSOLIDATED STATEMENT OF EARNINGS

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2020 2019 % change 2020 2019 % change

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Interest expense 9,055 7,951 14 % 25,059 23,183 8 %

Other income (expense), net (4,105) 5,871 (170 %) 1,427 11,349 (87 %)

Other income, net 5,417 6,355 (15 %) 6,844 17,704 (61 %)

Earnings before income taxes 80,935 103,973 (22 %) 194,153 277,820 (30 %)

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Net earnings $ 64,620 $ 82,510 (22 %) $ 147,399 $ 218,175 (32 %)

Restructuring-related expenses $ 14,596 $ — NM $ 17,380 $ — NM

Total restructuring charges $ 11,166 $ — NM $ 28,545 $ — NM

New orders $ 558,899 $ 646,608 (14 %) $ 1,748,949 $ 1,994,115 (12 %)

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2019 2020 vs.

5 unchanged sentences

Total (7 %) (20 %) (6 %) (25 %)

Sales in the second quarter decreased $89 million, or 14%, to $550 million, compared with the prior year period.

Sales in the third quarter decreased $43 million, or 7%, to $572 million, compared with the prior year period.

On a segment basis, sales from the Commercial/Industrial and Power segments decreased $56 million and $7 million, respectively, with sales from the Defense segment increasing $20 million.

Sales during the six months ended June 30, 2020 decreased $66 million, or 5%, to $1,151 million, compared with the prior year period.

Sales during the nine months ended September 30, 2020 decreased $109 million, or 6%, to $1,723 million, compared with the prior year period.

On a segment basis, sales from the Commercial/Industrial and Power segments decreased $141 million and $32 million, respectively, with sales from the Defense segment increasing $64 million.

Changes in sales by segment are discussed in further detail in the results by business segment section below.

Operating income in the second quarter decreased $50 million, or 48%, to $55 million, and operating margin decreased 640 basis points to 10.1% compared with the same period in 2019.

Operating income during the six months ended June 30, 2020 decreased $50 million, or 28%, to $128 million and operating margin decreased 350 basis points to 11.1%, compared with the same period in 2019.

The decreases in operating income and operating margin for each of the respective periods were primarily due to unfavorable overhead absorption on lower sales in the Commercial/Industrial and Power segments, costs associated with our restructuring activities across all segments, and first year purchase accounting costs from our 901D acquisition in the Defense segment .

Operating income in the third quarter decreased $21 million, or 20%, to $85 million, and operating margin decreased 240 basis points to 14.8% compared with the same period in 2019.

Operating income during the nine months ended September 30, 2020 decreased $71 million, or 25%, to $212 million and operating margin decreased 320 basis points to 12.3%, compared with the same period in 2019.

The decreases in operating income and operating margin for each of the respective periods were primarily due to unfavorable overhead absorption on lower sales in the Commercial/Industrial segment as well as costs associated with our restructuring activities across all segments.

These decreases were partially offset by the benefits of our ongoing margin improvement initiatives, which were recognized across all segments.

Non-segment operating expense in the second quarter decreased $2 million, or 21 %, to $8 million, primarily due to lower corporate costs.

Non-segment operating expense during the six months ended June 30, 2020 of $20 million was essentially flat compared to the prior year period.

Interest expense during the second quarter and six months ended June 30, 2020 of $9 million and $16 million, respectively, was essentially flat against the comparable prior year periods.

Other income (expense), net in the second quarter and six months ended June 30, 2020 decreased $10 million to ($4) million and $1 million, respectively, primarily due to the recognition of accumulated foreign currency translation losses of $10 million related to the substantial liquidation of our Norwegian subsidiary.

The effective tax rate of 27.4% in the second quarter increased compared to an effective tax rate of 22.7% in the prior year period.

The effective tax rate of 26.9% for the six months ended June 30, 2020 increased as compared to an effective tax rate of 22.0% in the prior year period.

This increase was primarily due to the aforementioned foreign currency translation losses as well as additional tax expense associated with the establishment of a valuation allowance against certain foreign deferred tax assets.

Comprehensive income in the second quarter was $59 million, compared to comprehensive income of $82 million in the prior year period.

Non-segment operating expense in the third quarter and nine months ended September 30, 2020 increased $1 million, or 10%, to $8 million, and $1 million, or 4%, to $28 million, respectively, from the comparable prior year periods.

These increases were primarily due to higher corporate costs.

Interest expense in the third quarter and nine months ended September 30, 2020 increased $1 million, or 14%, to $9 million and $2 million, or 8%, to $25 million, respectively, primarily due to the issuance of $300 million Senior Notes during the third quarter as well as the impact of borrowings under our revolving credit facility.

Other income, net in the third quarter of $5 million was essentially flat against the comparable prior year period.

During the nine months ended September 30, 2020, other income, net decreased $11 million, or 61%, to $7 million, primarily due to the recognition of accumulated foreign currency translation losses of $10 million related to the substantial liquidation of our Norwegian subsidiary.

The effective tax rate of 20.2% in the third quarter decreased compared to an effective tax rate of 20.6% in the prior year period.

This decrease was primarily due to additional withholding tax expense recognized during the prior year period.

The effective tax rate of 24.1% for the nine months ended September 30, 2020 increased as compared to an effective tax rate of 21.5% in the prior year period.

This increase was primarily driven by the recognition of accumulated foreign currency translation losses related to the substantial liquidation of our Norwegian subsidiary, which are not deductible for tax purposes, as well as additional tax expense associated with the establishment of a valuation allowance against certain foreign deferred tax assets.

Comprehensive income in the third quarter was $96 million, compared to comprehensive income of $59 million in the prior year period.

The change was primarily due to the following:

• Net earnings decreased $49 million, primarily due to lower operating income and higher other expense, net.

• Net earnings decreased $18 million, primarily due to lower operating income.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

• Foreign currency translation adjustments in the second quarter resulted in a $24 million comprehensive gain, compared to a $1 million comprehensive gain in the prior year period.

The comprehensive gain during the current period was primarily attributed to increases in the Canadian dollar.

Comprehensive income for the six months ended June 30, 2020 was $65 million, compared to comprehensive income of $148 million in the prior year period.

• Foreign currency translation adjustments in the third quarter resulted in a $28 million comprehensive gain, compared to a $25 million comprehensive loss in the prior year period.

The comprehensive gain during the current period was primarily attributed to increases in the British Pound.

Comprehensive income for the nine months ended September 30, 2020 was $162 million, compared to comprehensive income of $207 million in the prior year period.

The change was primarily due to the following:

• Net earnings decreased $71 million, primarily due to lower operating income and lower other income, net.

• Foreign currency translation adjustments for the six months ended June 30, 2020 resulted in a $26 million comprehensive loss, compared to a $9 million comprehensive gain in the prior period.

The comprehensive loss during the current period was primarily attributed to decreases in the British Pound and Canadian dollar.

New orders increased $19 million during the second quarter from the comparable prior year period, primarily du e to the timing of naval defense orders in the Defense and Power segments.

These increases were partially offset by a decline in new orders for sensors and controls equipment as well as industrial vehicle and valve products in the Commercial/Industrial segment.

New orders decreased $157 million during the six months ended June 30, 2020 from the comparable prior year period.

The decrease was primarily du e to a decline in new orders for sensors and controls equipment as well as industrial vehicle and valve products in the Commercial/Industrial segment.

• Foreign currency translation adjustments for the nine months ended September 30, 2020 resulted in a $2 million comprehensive gain, compared to a $16 million comprehensive loss in the prior period.

New orders decreased $88 million during the third quarter from the comparable prior year period, primarily due to a decline in new orders for sensors and controls equipment as well as lower demand for surface treatment services in the Commercial/Industrial segment.

These decreases were partially offset by the timing of aerospace defense and naval defense orders in the Defense segment.

New orders decreased $245 million during the nine months ended September 30, 2020 from the comparable prior year period, primarily due to a decline in new orders for sensors and controls equipment as well as industrial vehicle and industrial valve products in the Commercial/Industrial segment.

In the Power segment, new orders were negatively impacted by the timing of naval defense orders.

These decreases were partially offset by the timing of aerospace defense and naval defense orders in the Defense segment.

RESULTS BY BUSINESS SEGMENT

Commercial/Industrial

The following tables summarize sales, operating income and margin, and new orders within the Commercial/Industrial segment.

Three Months Ended Six Months Ended

June 30, June 30,

The following tables summarize sales, operating income and margin, total restructuring charges, and new orders within the Commercial/Industrial segment.

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2020 2019 % change 2020 2019 % change

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Operating margin 11.2 % 15.6 % (440 bps) 10.6 % 15.5 % (490 bps)

Restructuring-related expenses $ 6,766 $ — NM $ 7,368 $ — NM

Total restructuring charges $ 6,666 $ — NM 14,034 $ — NM

New orders $ 205,006 $ 352,886 (42 %) $ 603,630 $ 899,061 (33 %)

1 unchanged sentence

Components of sales and operating income increase (decrease):

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2019 2020 vs.

5 unchanged sentences

Total (20 %) (43 %) (17 %) (43 %)

Sales in the Commercial/Industrial segment are primarily generated from the commercial aerospace and general industrial markets, and to a lesser extent the defense and power generation markets.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Sales in the second quarter decreased $79 million, or 27%, to $214 million from the prior year period, primarily due to lower sales in the commercial aerospace and general industrial markets.

In the commercial aerospace market, sales decreased $34 million, primarily due to lower demand for actuation and sensors equipment as well as surface treatment services.

Sales in the general industrial market decreased $45 million, primarily due to lower sales of industrial vehicle products, industrial valve products, and surface treatment services of $20 million, $11 million, and $8 million, respectively.

Sales during the six months ended June 30, 2020 decreased $85 million, or 15%, to $478 million from the prior year period, primarily due to lower sales in the commercial aerospace and general industrial markets.

In the commercial aerospace market, sales decreased $30 million, primarily due to lower demand for actuation and sensors equipment as well as surface treatment services.

Sales in the general industrial market decreased $67 million, primarily due to lower sales of industrial vehicle products, industrial valve products, and surface treatment services of $32 million, $14 million, and $13 million, respectively.

Sales in the Commercial/Industrial segment are primarily generated from the commercial aerospace and general industrial markets, and to a lesser extent the defense and power generation markets.

Sales in the third quarter decreased $56 million, or 20%, to $223 million from the prior year period, primarily due to lower sales in the commercial aerospace and general industrial markets.

In the commercial aerospace market, sales decreased $36 million, primarily due to lower sales of actuation and sensors equipment as well as surface treatment services.

Sales in the general industrial market decreased $27 million, primarily due to lower demand for industrial vehicle, industrial valve, and industrial control products.

These decreases were partially offset by higher sales in the aerospace defense market, primarily due to higher demand for actuation and sensors equipment on the F-35 fighter jet program.

Sales during the nine months ended September 30, 2020 decreased $141 million, or 17%, to $701 million from the prior year period, primarily due to lower sales in the commercial aerospace and general industrial markets.

In the commercial aerospace market, sales decreased $66 million, primarily due to lower sales of actuation and sensors equipment as well as surface treatment services.

Sales in the general industrial market decreased $95 million, primarily due to lower demand for industrial vehicle, industrial valve, and industrial control products as well as surface treatment services.

These decreases were partially offset by higher sales of $13 million in the aerospace defense market, primarily due to higher demand for actuation systems on the F-35 fighter jet program.

Operating income in the second quarter decreased $37 million, or 72%, to $14 million from the prior year period, and operating margin decreased 1,080 basis points to 6.7%.

Operating income during the six months ended June 30, 2020 decreased $37 million, or 43%, to $49 million from the prior year period, and operating margin decreased 510 basis points to 10.3%.

Operating income in the third quarter decreased $19 million, or 43%, to $25 million from the prior year period, and operating margin decreased 440 basis points to 11.2%.

Operating income during the nine months ended September 30, 2020 decreased $56 million, or 43%, to $74 million from the prior year period, and operating margin decreased 490 basis points to 10.6%.

The decreases in operating income and operating margin for each of the respective periods were primarily due to unfavorable overhead absorption on lower sales in the general industrial and commercial aerospace markets as well as costs associated with our restructuring activities .

These decreases were partially offset by the benefits of our ongoing margin improvement initiatives.

New orders during the second quarter and six months ended June 30, 2020 decreased $118 million and $148 million, respectively, from the comparable prior year periods, primarily due to a decline in new orders for sensors and controls equipment as well as industrial vehicle and valve products.

The following tables summarize sales, operating income and margin, and new orders within the Defense segment.

Three Months Ended Six Months Ended

June 30, June 30,

New orders in the third quarter decreased $148 million from the comparable prior year period, primarily due to a decline in new orders for sensors and controls equipment as well as lower demand for surface treatment services.

New orders during the nine months ended September 30, 2020 decreased $295 million from the comparable prior year period, primarily due to a decline in new orders for sensors and controls equipment as well as industrial vehicle and industrial valve products.

The following tables summarize sales, operating income and margin, total restructuring charges, and new orders within the Defense segment.

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2020 2019 % change 2020 2019 % change

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Operating margin 23.0 % 25.1 % (210 bps) 19.0 % 20.7 % (170 bps)

Restructuring-related expenses $ 1,648 $ — NM $ 2,447 $ — NM

Total restructuring charges $ 609 $ — NM 3,056 — NM

New orders $ 159,387 $ 103,400 54 % $ 599,717 $ 494,510 21 %

1 unchanged sentence

Components of sales and operating income increase (decrease):

Three Months Ended Six Months Ended

June 30, June 30,

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Three Months Ended Nine Months Ended

September 30, September 30,

2019 2020 vs.

5 unchanged sentences

Total 12 % 3 % 14 % 5 %

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Sales in the Defense segment are primarily to the defense markets and, to a lesser extent, the commercial aerospace and the general industrial markets.

Sales in the second quarter increased $11 million, or 7%, to $170 million from the prior year period, primarily due to higher sales in the naval defense and aerospace defense markets.

Sales in the third quarter increased $20 million, or 12%, to $180 million from the prior year period, primarily due to higher sales in the naval defense and aerospace defense markets.

Sales in the naval defense market increased $18 million, primarily due to the incremental impact of our 901D acquisition, which contributed sales of $11 million.

Excluding the impact of 901D, the naval defense market benefited from higher demand for valves and embedded computing equipment on the Virginia-class submarine platform, which resulted in higher sales of $10 million.

In the aerospace defense market, sales increased $5 million due to higher demand for embedded computing equipment on various fighter jet and unmanned aerial vehicle (UAV) platforms.

These increases were partially offset by lower sales of $7 million in the ground defense market due to lower demand on various domestic and international tank platforms.

Sales during the six months ended June 30, 2020 increased $44 million, or 15%, to $336 million from the prior year period, primarily due to higher sales in the naval defense and aerospace defense markets.

Excluding the impact of 901D, the naval defense market benefited from the timing of production on various submarine and aircraft carrier programs.

In the aerospace defense market, sales increased $7 million primarily due to higher demand for embedded computing equipment on various unmanned aerial vehicle (UAV) platforms.

Sales during the nine months ended September 30, 2020 increased $64 million, or 14%, to $516 million from the prior year period, primarily due to higher sales in the naval defense and aerospace defense markets.

Sales in the naval defense market increased $66 million, primarily due to the incremental impact of our 901D acquisition, which contributed sales of $35 million.

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These increases were partially offset by lower sales of $11 million in the commercial aerospace market, primarily due to lower demand for flight test instrumentation equipment.

Sales in the ground defense market were negatively impacted by lower demand on various domestic and international tank platforms.

Operating income in the second quarter decreased $5 million, or 15%, to $28 million compared to the prior year period, and operating margin decreased 420 basis points from the prior year period to 16.4%.

These decreases were primarily due to costs associated with our restructuring activities as well as first year purchase accounting costs from our 901D acquisition.

Operating income during the six months ended June 30, 2020 increased $3 million, or 6%, to $57 million, while operating margin decreased 140 basis points from the prior year period to 16.8%.

Favorable overhead absorption on higher sales as well as the benefits of our ongoing margin improvement initiatives were partially offset by costs associated with our restructuring activities as well as first year purchase accounting costs from our 901D acquisition.

New orders in the second quarter increased $106 million from the comparable prior year period, primarily due to the timing of naval defense orders.

This increase was partially offset by the timing of aerospace defense orders.

New orders during the six months ended June 30, 2020 increased $49 million from the comparable prior year period, primarily due to the timing of naval defense orders as well as higher orders for embedded computing equipment in the commercial aerospace market.

The following tables summarize sales, operating income and margin, and new orders within the Power segment.

Three Months Ended Six Months Ended

June 30, June 30,

Sales in the ground defense market decreased $7 million primarily due to lower demand on various domestic and international tank platforms.

Operating income in the third quarter increased $1 million, or 3%, to $42 million compared to the prior year period, while operating margin decreased 210 basis points from the prior year period to 23.0%.

Operating income during the nine months ended September 30, 2020 increased $5 million, or 5%, to $98 million, while operating margin decreased 170 basis points from the prior year period to 19.0%.

In the third quarter as well as during the nine months ended September 30, 2020, favorable overhead absorption on higher sales as well as the benefits of our ongoing margin improvement initiatives were partially offset by costs associated with our restructuring activities as well as first year purchase accounting costs from our 901D acquisition.

New orders in the third quarter increased $56 million from the comparable prior year period, primarily due to the timing of aerospace defense and naval defense orders.

New orders during the nine months ended September 30, 2020 increased $105 million from the comparable prior year period, primarily due to the timing of aerospace defense and naval defense orders.

New orders also benefited from higher demand for embedded computing equipment in the commercial aerospace market.

The following tables summarize sales, operating income and margin, total restructuring charges, and new orders within the Power segment.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2020 2019 % change 2020 2019 % change

2 unchanged sentences

Operating margin 15.4 % 16.4 % (100 bps) 13.4 % 16.0 % (260 bps)

Restructuring-related expenses $ 6,182 $ — NM $ 7,565 $ — NM

Total restructuring charges $ 3,891 $ — NM $ 11,455 $ — NM

New orders $ 194,506 $ 190,322 2 % $ 545,602 $ 600,544 (9 %)

1 unchanged sentence

Components of sales and operating income increase (decrease):

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2019 2020 vs.

6 unchanged sentences

Sales in the Power segment are primarily to the power generation and naval defense markets.

Sales in the second quarter decreased $21 million, or 11%, to $166 million from the prior year period, primarily due to lower sales in the naval defense and power generation markets.

In the naval defense market, sales decreased $7 million as higher production levels on the Columbia class submarine were more than offset by the timing of production on the CVN-80 aircraft carrier program as well as lower service center sales.

Sales in the power generation market decreased $12 million primarily due to lower domestic and international aftermarket sales.

Sales during the six months ended June 30, 2020 decreased $25 million, or 7%, to $337 million from the prior year period, primarily due to lower sales of $22 million in the power generation market.

This decrease was primarily due to the lower domestic and international aftermarket sales as well as the timing of production on the China Direct AP1000 program.

Operating income in the second quarter decreased $11 million, or 34%, to $21 million, and operating margin decreased 420 basis points from the prior year period to 12.8%.

The decreases in operating income and operating margin were primarily due to costs associated with our restructuring activities as well as unfavorable overhead absorption on lower sales in the naval defense and power generation markets.

These decreases were partially offset by the benefits of our ongoing margin improvement initiatives.

Operating income during the six months ended June 30, 2020 decreased $15 million, or 27%, to $42 million, and operating margin decreased 340 basis points from the prior year period to 12.4%.

Sales in the third quarter decreased $7 million, or 4%, to $169 million from the prior year period, primarily due to lower sales of $6 million in the power generation market.

This decrease was primarily due to lower domestic and international aftermarket sales, partially offset by higher sales on the AP1000 China Direct program.

Sales during the nine months ended September 30, 2020 decreased $32 million, or 6%, to $506 million from the prior year period, primarily due to lower sales of $28 million in the power generation market.

This decrease was primarily due to lower domestic and international aftermarket sales of $22 million.

Operating income in the third quarter decreased $3 million, or 10%, to $26 million, and operating margin decreased 100 basis points from the prior year period to 15.4%.

The decreases in operating income and operating margin were primarily due to costs associated with our restructuring activities, partially offset by the benefits of our ongoing margin improvement initiatives.

Operating income during the nine months ended September 30, 2020 decreased $18 million, or 21%, to $68 million, and operating margin decreased 260 basis points from the prior year period to 13.4%.

The decreases in operating income and operating margin were primarily due to unfavorable overhead absorption on lower sales in the power generation market, costs associated with our restructuring activities , and transition costs associated with our DRG facility in South Carolina.

These decreases were partially offset by the benefits of our ongoing margin improvement initiatives.

New orders during the second quarter and six months ended June 30, 2020 increased $32 million and decreased $59 million, respectively, from the comparable prior year periods, primarily due to the timing of naval defense orders.

New orders during the third quarter and nine months ended September 30, 2020 increased $4 million and decreased $55 million, respectively, from the comparable prior year periods, primarily due to the timing of naval defense orders.

SUPPLEMENTARY INFORMATION

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Net Sales by End Market Three Months Ended Six Months Ended

June 30, June 30,

Net Sales by End Market & Customer Type Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2020 2019 % change 2020 2019 % change

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Defense markets

Sales in the second quarter increased $14 million, or 5%, to $294 million against the comparable prior year period, primarily due to higher sales in the naval defense and aerospace defense markets.

Sales in the third quarter increased $32 million, or 11%, to $308 million against the comparable prior year period, primarily due to higher sales in the naval defense and aerospace defense markets.

The naval defense market primarily benefited from the impact of our 901D acquisition, which contributed incremental sales of $11 million.

Higher sales of $18 million on the Virginia-class and Columbia-class submarine programs were partially offset by the ti ming of production on the CVN-80 aircraft carrier program as well as lower service center demand, which collectively reduced sales $13 million.

Excluding the impact of 901D, the naval defense market benefited from higher aircraft carrier program revenues.

Sales in the aerospace defense market increased primarily due to higher demand for embedded computing equipment on various fighter jet and UAV platforms.

Sales during the six months ended June 30, 2020 increased $73 million, or 14%, to $584 million, primarily due to higher sales in the naval defense and aerospace defense markets.

Sales during the nine months ended September 30, 2020 increased $105 million, or 13%, to $892 million, primarily due to higher sales in the naval defense and aerospace defense markets.

The naval defense market benefited from the impact of our 901D acquisition, which contributed incremental sales of $35 million.

Excluding the impact of 901D, the naval defense market benefited from higher sales of $28 million on the Virginia-class and Columbia-class submarine programs.

Sales in the aerospace defense market increased primarily due to higher actuation systems sales of $11 million on the F-35 fighter jet program and higher demand for embedded computing equipment supporting UAVs, which resulted in a sales increase of $9 million.

Sales in the aerospace defense market increased primarily due to higher demand for embedded computing equipment supporting UAVs, which resulted in a sales increase of $16 million, as well as higher sales of $13 million on the F-35 fighter jet program.

Commercial markets

Sales in the second quarter decreased $103 million, or 29%, to $256 million due to lower sales across all segments.

Lower demand for actuation and sensors equipment as well as surface treatment services in the commercial aerospace market resulted in sales decreases of $27 million and $8 million, respectively.

In the power generation market, we experienced lower demand for domestic and international aftermarket products, which resulted in lower sales of $12 million.

Lower demand in the general industrial market for industrial vehicle products, industrial valve products, and surface treatment services resulted in sales decreases of $20 million, $13 million, and $8 million, respectively.

Sales during the six months ended June 30, 2020 decreased $139 million, or 20%, to $567 million due to lower sales across all markets.

Sales in the third quarter decreased $75 million, or 22%, to $264 million due to lower sales across all segments.

In the commercial aerospace market, we experienced lower demand for actuation and sensors equipment as well as surface treatment services.

Sales in the power generation market decreased primarily due to lower sales of domestic and international aftermarket products.

The general industrial market was negatively impacted by lower demand for industrial valve, industrial vehicle, and industrial control products.

Sales during the nine months ended September 30, 2020 decreased $214 million, or 20%, to $830 million due to lower sales across all markets.

In the commercial aerospace market, we experienced lower demand for actuation and sensors equipment as well as surface treatment services, which resulted in sales decreases of $49 million and $20 million, respectively.

Sales in the power generation market decreased primarily due to lower domestic and international aftermarket sales of $20 million as well as the timing of production on the China Direct AP1000 program.

Lower demand in the general industrial market for industrial vehicle products, industrial valve products, and surface treatment services resulted in sales decreases of $32 million, $15 million, and $13 million, respectively.

Sales in the power generation market decreased primarily due to lower domestic and international aftermarket sales of $30 million.

Lower demand in the general industrial market for industrial vehicle, industrial valve, and industrial control products resulted in sales decreases of $40 million, $26 million, and $14 million, respectively.

Sales in the general industrial market were also negatively impacted by lower demand for surface treatment services, which resulted in a sales decrease of $16 million.

LIQUIDITY AND CAPITAL RESOURCES

Sources and Use of Cash

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

LIQUIDITY AND CAPITAL RESOURCES

Sources and Use of Cash

We derive the majority of our operating cash inflow from receipts on the sale of goods and services and cash outflow for the procurement of materials and labor;

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We believe that our cash and cash equivalents, cash flow from operations, available borrowings under the credit facility, and ability to raise additional capital through the credit markets, are sufficient to meet both the short-term and long-term capital needs of the organization.

Condensed Consolidated Statements of Cash Flows Six Months Ended

(In thousands) June 30, 2020 June 30, 2019

Cash provided by (used in):

Condensed Consolidated Statements of Cash Flows Nine Months Ended

(In thousands) September 30, 2020 September 30, 2019

Cash provided by (used for):

Operating activities

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Effect of exchange-rate changes on cash (10,023) (5,950)

Net decrease in cash and cash equivalents (235,650) (59,722)

Net cash used in operating activities increased $93 million from the prior year period, primarily due to a voluntary pensi on contribution of $150 million as well as higher inventory in the current period.

This increase was partially offset by a reduction in receivables during the current period.

Net cash used in investing activities increased $34 million from the comparable prior year period primarily due to higher cash used for acquisitions in the current period.

The Corporation acquired two businesses during the six months ended June 30, 2020 for approximately $90 million, inclusive of $82 million cash paid plus an $8 million holdback for potential indemnification claims against the seller.

The Corporation acquired one business during the six months ended June 30, 2019 for approximately $50 million.

Net increase in cash and cash equivalents 35,788 21,646

Net cash provided by operating activities decreased $155 million from the prior year period, primarily due to a voluntary pensi on contribution of $150 million as well as higher invent ory and timing of advanced cash receipts in t he current period.

These decreases were partially offset by a reduction in receivables during the current period.

Investing Activities

The Corporation acquired two businesses during the nine months ended September 30, 2020 for approximately $90 million, inclusive of $82 million cash paid plus an $8 million holdback for potential indemnification claims against the seller.

The Corporation acquired one business during the nine months ended September 30, 2019 for approximately $50 million.

Capital Expenditures

Capital expenditures for the nine months ended September 30, 2020 and September 30, 2019 were $36 million and $50 million, respectively.

The decrease in capital expenditures was primarily due to additional investment related to the new DRG facility during the prior year period.

Financing Activities

The Corporation’s debt outstanding had an average interest rate of 3.3% and 3.4% for the three and six months ended June 30, 2020, respectively, and 3.7% for both the three and six months ended June 30, 2019.

The Corporation’s average debt outstanding was $890 million and $842 million for the three and six months ended June 30, 2020, respectively, and $750 million for both the three and six months ended June 30, 2019.

In May 2020, we announced the pricing of a private placement debt offering of $300 million for senior notes, consisting of $150 million 3.10% notes due in August 2030 and $150 million 3.20% notes due in August 2032.

The Corporation’s debt outstanding had an average interest rate of 3.3% and 3.4% for the three and nine months ended September 30, 2020, respectively.

The Corporation’s debt outstanding had an average interest rate of 3.6% and 3.7% for the three and nine months ended September 30, 2019, respectively.

The Corporation’s average debt outstanding was $939 million and $875 million for the three and nine months ended September 30, 2020, respectively, and $750 million for both the three and nine months ended September 30, 2019.

In August 2020, we issued $300 million Senior Notes, consisting of $150 million 3.10% Senior Notes that mature on August 13, 2030 and $150 million 3.20% Senior Notes that mature on August 13, 2032.

We expect to use the net proceeds from the offering for general corporate purposes, which may include reducing outstanding indebtedness under our revolving credit facility, possible future acquisitions, or funding internal growth initiatives.

The offering is expected to close no later than August 13, 2020, subject to customary closing conditions.

Revolving Credit Agreement

As of June 30, 2020, the Corporation had outstanding borrowings of $75 million under the 2018 Senior Unsecured Revolving Credit Agreement (the “Credit Agreement” or “credit facility”) and $22 million in letters of credit supported by the credit

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

The unused credit available under the Credit Agreement as of June 30, 2020 was $403 million which could be borrowed without violating any of our debt covenants.

Revolving Credit Agreement

As of September 30, 2020, the Corporation had no outstanding borrowings under the 2018 Senior Unsecured Revolving Credit Agreement (the “Credit Agreement” or “credit facility”) and $22 million in letters of credit supported by the credit facility.

The unused credit available under the Credit Agreement as of September 30, 2020 was $478 million which could be borrowed without violating any of our debt covenants.

Repurchase of common stock

During the six months ended June 30, 2020, the Corporation used $125 million of cash to repurchase approximately 1,230,000 outstanding shares under its share repurchase program.

During the six months ended June 30, 2019, the Corporation used $25 million of cash to repurchase approximately 220,000 outstanding shares under its share repurchase program.

The Corporation made dividend payments of $7 million and $6 million during the six months ended June 30, 2020 and June 30, 2019, respectively.

During the nine months ended September 30, 2020, the Corporation used $137 million of cash to repurchase approximately 1,366,000 outstanding shares under its share repurchase program.

During the nine months ended September 30, 2019, the Corporation used $38 million of cash to repurchase approximately 322,000 outstanding shares under its share repurchase program.

The Corporation made dividend payments of $14 million during both the nine months ended September 30, 2020 and September 30, 2019, respectively.

Debt Compliance

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The debt to capitalization limit is a measure of our indebtedness (as defined per the notes purchase agreement and credit facility) to capitalization, where capitalization equals debt plus equity, and is the same for and applies to all of our debt agreements and credit facility.

As of June 30, 2020, we had the ability to borrow additional debt of $1.6 billion without violating our debt to capitalization covenant.

As of September 30, 2020, we had the ability to borrow additional debt of $1.5 billion without violating our debt to capitalization covenant.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements