What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-02-25 compared with 2020-02-27 · 237 added, 189 removed, 1107 unchanged (28% of the section changed)

14 unchanged sentences

General and administrative expenses 303,288 301,411 306,469

Impairment of assets held for sale 33,043 — —

Restructuring expenses 31,695 — —

Operating income 288,848 403,953 373,626

23 unchanged sentences

Comprehensive income $ 215,810 $ 297,013 $ 204,142

(1) The tax benefit (expense) included in other comprehensive income for foreign currency translation adjustments for 2019, 2018, and 2017 were ($ 0.1 ) million, $ 0.8 million, and ($ 1.9 ) million, respectively.

(2) The tax benefit included in other comprehensive income for pension and postretirement adjustments for 2019, 2018, and 2017 were $ 8.5 million, $ 7.0 million, and $ 2.8 million, respectively.

(1) The tax benefit (expense) included in other comprehensive income for foreign currency translation adjustments for 2020, 2019, and 2018 was immaterial.

(2) The tax benefit included in other comprehensive income for pension and postretirement adjustments for 2020, 2019, and 2018 was $ 8.3 million, $ 8.5 million, and $ 7.0 million, respectively.

See notes to consolidated financial statements

6 unchanged sentences

Inventories, net 428,879 424,835

Assets held for sale 27,584 —

Other current assets 57,395 81,729

4 unchanged sentences

Operating lease right-of-use assets, net 150,898 165,490

Prepaid pension asset 92,531 —

Other assets 34,114 36,800

6 unchanged sentences

Deferred revenue 253,411 276,115

Liabilities held for sale 10,141 —

Other current liabilities 98,755 74,202

12 unchanged sentences

outstanding shares were 40,916,429 as of December 31, 2020 and 42,680,215 as of December 31, 2019

49,187 49,187

Additional paid in capital 122,535 116,070

2 unchanged sentences

Common treasury stock, at cost ( 8,270,949 shares as of December 31, 2020 and 6,507,163 shares as of December 31, 2019)

( 743,620 ) ( 562,722 )

Total stockholders' equity 1,787,574 1,774,372

12 unchanged sentences

Share-based compensation 14,437 13,669 14,094

Impairment of assets held for sale 33,043 — —

Foreign exchange loss on substantial liquidation of subsidiary 9,351 — —

Non-cash restructuring charges 15,628 — —

Changes in operating assets and liabilities, net of businesses acquired and disposed of:

17 unchanged sentences

Payment of revolving credit facilities ( 570,675 ) ( 37,934 ) ( 372,887 )

Borrowings of debt 300,000 — —

Principal payments on debt — — ( 50,000 )

3 unchanged sentences

Other ( 874 ) ( 812 ) ( 752 )

Net cash used for financing activities ( 68,145 ) ( 263,639 ) ( 213,898 )

Net cash provided by (used for) financing activities 82,081 ( 68,145 ) ( 263,639 )

Effect of exchange-rate changes on cash ( 3,516 ) 1,748 ( 16,172 )

2 unchanged sentences

Cash and cash equivalents at end of year $ 198,248 $ 391,033 $ 276,066

Supplemental disclosure of non-cash activities:

Capital expenditures incurred but not yet paid 2,015 2,193 976

See notes to consolidated financial statements

5 unchanged sentences

January 1, 2018 $ 49,187 $ 120,609 $ 1,944,324 $ ( 216,840 ) $ ( 369,480 )

Cumulative effect from adoption of ASC 606 — — ( 2,274 ) — —

Net earnings — — 275,749 — —

Other comprehensive income, net of tax — — — 74,916 —

Other comprehensive loss, net of tax — — — ( 71,607 ) —

Dividends paid — — ( 26,328 ) — —

4 unchanged sentences

Repurchase of common stock (1)

— — — — ( 198,592 )

December 31, 2018 $ 49,187 $ 118,234 $ 2,191,471 $ ( 288,447 ) $ ( 539,664 )

Cumulative effect from adoption of ASC 606 — — ( 2,274 ) — —

Cumulative effect from adoption of ASU 2018-02 — — 26,257 ( 26,257 ) —

Net earnings — — 307,583 — —

8 unchanged sentences

December 31, 2019 $ 49,187 $ 116,070 $ 2,497,111 $ ( 325,274 ) $ ( 562,722 )

Cumulative effect from adoption of ASU 2018-02 — — 26,257 ( 26,257 ) —

Net earnings — — 201,392 — —

Other comprehensive loss, net of tax — — — ( 10,570 ) —

Other comprehensive income, net of tax — — — 14,418 —

Dividends paid — — ( 28,175 ) — —

4 unchanged sentences

Repurchase of common stock (1)

— — — — ( 200,018 )

December 31, 2020 $ 49,187 $ 122,535 $ 2,670,328 $ ( 310,856 ) $ ( 743,620 )

(1) For the years ended December 31, 2020, 2019, and 2018, the Corporation repurchased approximately 2.0 million, 0.4 million, and 1.7 million shares of its common stock, respectively.

See notes to consolidated financial statements

9 unchanged sentences

GAAP), which requires management to make estimates and judgments that affect the reported amount of assets, liabilities, revenue, and expenses and disclosure of contingent assets and liabilities in the accompanying financial statements.

The most significant of these estimates includes the estimate of costs to complete long-term contracts, the estimate of useful lives for property, plant, and equipment, cash flow estimates used for testing the recoverability of assets, pension plan and postretirement obligation assumptions, estimates for inventory obsolescence, estimates for the valuation and useful lives of intangible assets and legal reserves.

The most significant of these estimates includes the estimate of costs to complete on certain contracts using the over-time revenue recognition accounting method, cash flow estimates used for testing the recoverability of assets, pension plan and postretirement obligation assumptions, estimates for inventory obsolescence, fair value estimates around assets and assumed liabilities from acquisitions, estimates for the valuation and useful lives of intangible assets, legal reserves, and the estimate of future environmental costs.

Actual results may differ from these estimates.

65 unchanged sentences

The purpose of the Corporation’s foreign currency risk management program is to reduce volatility in earnings caused by exchange rate fluctuations.

All of the derivative financial instruments are recorded at fair value based upon quoted market prices for comparable instruments, with the gain or loss on these transactions recorded into earnings in the period in which they occur.

All derivative financial instruments are recorded at fair value based upon quoted market prices for comparable instruments, with the gain or loss on these transactions recorded into earnings in the period in which they occur.

These (gains) and losses are classified as General and administrative expenses in the Consolidated Statement of Earnings and amounted to $ 2.3 million, ($ 2.1 ) million, and $ 6.6 million for the years ended December 31, 2020, 2019, and 2018, respectively.

9 unchanged sentences

Recent accounting standards adopted

ASU 2016-02 - Leases - On January 1, 2019, the Corporation adopted ASC 842, Leases, using the optional transition method of adoption which permits the entity to continue presenting all periods prior to January 1, 2019 under previous lease accounting guidance.

In conjunction with the adoption, the Corporation elected the package of practical expedients which permits the entity to forgo reassessment of conclusions reached regarding lease existence and lease classification under previous guidance, as well as the practical expedient to not separate non-lease components.

Further, the Corporation made an accounting policy election to

account for short-term leases in a manner consistent with the methodology applied under previous guidance.

The adoption of this standard resulted in an increase of approximately $ 151 million in both total assets and total liabilities in the Corporation’s Consolidated Balance Sheet as of January 1, 2019.

ASU 2018-02 - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income - On January 1, 2019, the Corporation adopted ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which permits the reclassification of tax effects stranded in accumulated other comprehensive income to retained earnings as a result of the 2017 Tax Cuts and Jobs Act (the Tax Act).

The adoption of this standard resulted in a reclassification of $ 26 million from accumulated other comprehensive loss to retained earnings in the Corporation’s Consolidated Balance Sheet as of January 1, 2019.

ASU 2018-14 - Changes to the Disclosure Requirements for Defined Benefit Plans - In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20):

Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans .

Specifically, the amendment removes disclosure requirements for amounts classified in accumulated other comprehensive income expected to be recognized over the next year and the effects of a one-percentage-point change in the assumed health care cost trend rate on service cost, interest cost, and the benefit obligation for postretirement benefits.

The amendment also requires additional disclosure around weighted-average interest crediting rates for cash balance plans, a narrative description of the reasons for significant gains and losses, and an explanation of any other significant changes in the benefit obligation or plan assets.

The Corporation early adopted this standard as of December 31, 2019 and included revised disclosures within Note 16 of the Consolidated Financial Statements.

Recent accounting standards to be adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments .

This ASU adds a current expected credit loss impairment model to U.S.

GAAP that is based on expected losses rather than incurred losses whereby a broader range of reasonable and supportable information is required to be utilized in order to derive credit loss estimates.

The Corporation plans to adopt the ASU as of January 1, 2020 as the standard is effective for fiscal years beginning after December 15, 2019.

The Corporation is currently evaluating the impact of adopting this standard, but does not expect the adoption to have a material impact on its Consolidated Financial Statements.

ASU 2016-13- Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.

On January 1, 2020, the Company adopted ASU 2016-13 -Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.

This ASU added a current expected credit loss impairment model to U.S.

GAAP based on expected losses rather than incurred losses.

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 have a material impact on the Corporation's consolidated financial statements as of January 1,

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

The Corporation accounts for revenues in accordance with ASC 606, Revenue from Contracts with Customers , which was adopted as of January 1, 2018 on a modified retrospective basis.

9 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 year ended December 31, 2019 and 2018 accounted for approximately 49 % and 46 %, respectively, 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.

Changes in total estimated costs are recognized using the cumulative catch-up method of accounting which recognizes the cumulative effect of the changes on current and prior periods in the current period.

Accordingly, the effect of the changes on future periods of contract performance is recognized as

if the revised estimate had been the original estimate.

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

A significant change in an estimate on one or more contracts could have a material effect on the Corporation's consolidated financial position, results or operations, or cash flows.

However, there were no significant changes in estimated contract costs during 2019, 2018, or 2017.

There were no significant changes in estimated contract costs during 2020, 2019, or 2018.

If a performance obligation does not qualify for over-time revenue recognition, revenue is then recognized at the point-in-time in which control of the distinct good or service is transferred to the customer, typically based upon the terms of delivery.

Revenue recognized at a point-in-time for the year ended December 31, 2019 and 2018 accounted for approximately 51 % and 54 %, respectively, of total net sales.

The following table illustrates the approximate percentage of revenue recognized for performance obligations satisfied over-time versus at a point-in-time for the years ended December 31, 2020, 2019, and 2018:

2020 2019 2018

Over-time 52 % 49 % 46 %

Point-in-time 48 % 51 % 54 %

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 December 31, 2019, of which the Corporation expects to recognize approximately 92 % as net sales over the next 12-36 months .

Total backlog was approximately $ 2.2 billion as of December 31, 2020, of which the Corporation expects to recognize approximatel y 85 % as net sales over the next 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 Year Ended December 31,

Total Net Sales by End Market and Customer Type

Year Ended December 31,

(In thousands) 2020 2019 2018

14 unchanged sentences

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

Revenues recognized for the years ended December 31, 2019 and 2018 included in the contract liabilities balance at the beginning of the respective years were approximately $ 198 million and $ 164 million, respectively.

Revenues recognized for the years ended December 31, 2020, 2019, and 2018 included in the contract liabilities balance at the beginning of the respective years were approximately $ 224 million, $ 198 million, and $ 164 million, respectively.

Changes in contract assets and contract liabilities as of December 31, 2020 were not materially impacted by any other factors.

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

Pre-adoption of ASC 606

As the Corporation adopted ASC 606 using the modified retrospective method, the Consolidated Financial Statements for the year ended December 31, 2017 were not retrospectively adjusted.

For the year ended December 31, 2017, revenue was recognized when the earnings process was considered substantially complete with all of the following criteria met:

1) persuasive evidence of an arrangement existed;

2) delivery occurred or services were rendered;

3) the Corporation's price to its customer was fixed or determinable;

and 4) collectability was reasonably assured.

The Corporation determined the appropriate revenue recognition method by analyzing the terms and conditions of each contract.

Revenue was recognized on product sales

as production units were shipped and title and risk of loss was transferred.

Revenue was recognized on service-type contracts as services were rendered.

The significant estimates made in recognizing revenue were primarily for long-term contracts, which were generally accounted for using the cost-to-cost method of percentage of completion accounting.

Under the cost-to-cost method, profits were recorded pro-rata, based upon estimates of direct and indirect costs to complete such contracts.

Any changes in estimates of contract sales, costs, or profits were recognized using the cumulative catch-up method of accounting.

The Corporation continually evaluates potential acquisitions that either strategically fit within the Corporation’s existing portfolio or expand the Corporation’s portfolio into new product lines or adjacent markets.

The Corporation has completed a number of acquisitions that have been accounted for as business combinations and have resulted in the recognition of goodwill in the Corporation's financial statements.

The Corporation has completed numerous acquisitions that have been accounted for as business combinations and have resulted in the recognition of goodwill in the Corporation's financial statements.

This goodwill arises because the purchase prices for these businesses reflect the future earnings and cash flow potential in excess of the earnings and cash flows attributable to the current product and customer set at the time of acquisition.

4 unchanged sentences

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

During the twelve months ended December 31, 2019, the Corporation acquired two businesses for an aggregate purchase price of $ 185 million, net of cash acquired.

During the twelve months ended December 31, 2018, the Corporation acquired one business for an aggregate purchase price of $ 210 million, net of cash acquired.

For the year ended December 31, 2020, the Corporation acquired three businesses for an aggregate purchase price of $ 496 million, net of cash acquired.

For the year ended December 31, 2019, the Corporation acquired two businesses for an aggregate purchase price of $ 185 million, net of cash acquired.

These acquisitions are described in more detail below.

For the year ended December 31, 2019 and 2018, included within the Consolidated Statement of Earnings, the Corporation's acquisitions contributed $ 11 million and $ 64 million of total net sales, respectively, and immaterial net earnings in both periods.

The Corporation's current period acquisitions contributed $ 40 million of total net sales and $ 5 million of net losses for the year ended December 31, 2020, which are included in the Consolidated Statement of Earnings.

The Corporation's prior period acquisitions contributed $ 11 million of total net sales and immaterial net earnings for the year ended December 31, 2019.

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 2020 and 2019:

8 unchanged sentences

Net tangible and intangible assets 210,347 113,565

Purchase price 185,209 210,167

Goodwill 285,200 71,644

Total Purchase price $ 495,547 $ 185,209

Cash paid to date, net of cash acquired $ 487,944 $ 185,209

Due to seller 7,603 —

Total purchase price $ 495,547 $ 185,209

Goodwill deductible for tax purposes $ 37,234 $ 72,777

2020 Acquisitions

Pacific Star Communications, Inc.

On November 2, 2020 , the Corporation acquired 100% of the issued and outstanding stock of PacStar for $ 406 million.

The Purchase Agreement contains a purchase price adjustment mechanism and representations and warranties customary for a transaction of this type, including a portion of the purchase price deposited in escrow as security for potential indemnification claims against the seller.

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

The acquired business operates within the Defense segment.

The acquisition is subject to post-closing adjustments with the purchase price allocation not yet complete.

Integrated Air Defense System (IADS)

On April 20, 2020 , the Corporati on acquired the IADS product line for approximately $ 29 million.

The Asset Purchase Agreement contains representations and warranties customary for a transaction of this type, including a portion of the purchase price deposited in escrow as security for potential indemnification claims against the seller.

IADS is a real-time display and post-test analysis product for flight tests.

The acquired product line operates within the Defense segment.

The acquisition is subject to post-closing adjustments with the purchase price allocation not yet complete.

Dyna-Flo Control Valve Services Ltd.

On February 28, 2020 , the Corporati on acquired 100% of the issued and outstanding share capital of Dyna- Flo for approximately $ 60 million, net of cash acquired.

The Purchase Agreement contains representations and warranties customary for a transaction of this type, including a portion of the purchase price held back as security for potential indemnification claims against the seller.

Dyna-Flo specializes in control valves, actuators, and control systems for the chemical, petrochemical, and oil and gas markets.

The acquired business operates within the Commercial/Industrial segment.

The acquisition is subject to post-closing adjustments with the purchase price allocation not yet complete.

2019 Acquisitions

901D Holdings, LLC (901D)

1 unchanged sentence

901D is a designer and manufacturer of mission-critical integrated electronic systems,

subsystems, and ruggedized shipboard enclosure solutions supporting every major U.S.

Navy shipbuilding program.

The acquired business will operate within the Defense segment.

The acquisition is subject to post-closing adjustments with the purchase price allocation not yet complete.

901D, a designer and manufacturer of mission-critical integrated electronic systems, subsystems, and ruggedized shipboard enclosure solutions supporting every major U.S.

Navy shipbuilding program, operates within the Defense segment.

Tactical Communications Group (TCG)

On March 15, 2019 , the Corporation acquired 100% of the membership interests of TCG for $ 50 million, net of cash acquired.

TCG is a designer and manufacturer of tactical data link software solutions for critical military communications systems.

The acquired business operates within the Defense segment.

2018 Acquisitions

Dresser-Rand Government Business (DRG)

On April 2, 2018 , the Corporation acquired certain assets and assumed certain liabilities of DRG for $ 210.2 million in cash.

The Asset Purchase Agreement contains a purchase price adjustment mechanism and representations and warranties customary for a transaction of this type.

DRG is a designer and manufacturer of mission-critical, high-speed rotating equipment solutions and also acts as the sole supplier of steam turbines and main engine guard valves on all aircraft carrier programs.

The acquired business operates within the Power segment.

TCG, a designer and manufacturer of tactical data link software solutions for critical military communications systems, operates within the Defense segment.

ASSETS HELD FOR SAL E

During the fourth quarter of 2020, the Corporation committed to a plan to sell its industrial valve business in Germany, which is reported within its Commercial/Industrial segment.

The business met the criteria to be classified as held for sale in the fourth quarter of 2020.

Accordingly, the assets and liabilities of the business are presented as held for sale in the Corporation's Consolidated Balance Sheet as of December 31, 2020.

The aforementioned assets and liabilities classified as held for sale have been measured at the lower of carrying value or fair value less costs to sell, which resulted in an impairment loss of $ 33.0 million for the year ended December 31, 2020.

Such amount has been reported in the "Impairment of assets held for sale" caption within the Corporation’s Consolidated Statement of Earnings.

The aggregate components of assets and liabilities classified as held for sale are as follows:

(In thousands) As of December 31, 2020

Assets held for sale:

Receivables, net $ 9,902

Inventories, net 16,401

Other current assets 1,798

Property, plant, and equipment, net 4,821

Reserve for assets held for sale ( 5,338 )

Total assets held for sale, current $ 27,584

Liabilities held for sale:

Accounts payable $ ( 2,654 )

Accrued expenses ( 1,375 )

Other current liabilities ( 748 )

Accrued pension and other postretirement benefit costs ( 5,364 )

Total liabilities held for sale, current $ ( 10,141 )

Receivables include current notes, amounts billed to customers, claims, other receivables, and unbilled revenue on long-term contracts, which consists of amounts recognized as sales but not billed.

2 unchanged sentences

The amount of claims and unapproved change orders within our receivables balances are immaterial.

Credit risk is diversified due to the large number of entities comprising the Corporation’s customer base and their geographic dispersion.

The Corporation is either a prime contractor or subcontractor to various agencies of the U.S.

8 unchanged sentences

Trade and other receivables $ 361,460 $ 418,968

Allowance for doubtful accounts ( 8,733 ) ( 7,436 )

Net billed receivables 410,235 382,870

Unbilled receivables:

2 unchanged sentences

Net unbilled receivables 235,018 221,959

Allowance for doubtful accounts ( 7,760 ) ( 8,733 )

Receivables, net $ 588,718 $ 632,194

5 unchanged sentences

(In thousands) 2020 2019

Raw material $ 183,576 $ 214,442

Raw materials $ 177,828 $ 153,876

Work-in-process 80,729 100,359

3 unchanged sentences

56,599 70,414

Gross inventories 491,572 486,189

Inventory reserves ( 58,594 ) ( 55,776 )

Inventories, net of reserves 435,923 432,978

Progress payments applied ( 7,044 ) ( 8,143 )

1 unchanged sentence

(1) As of December 31, 2020 and 2019, this caption also includes capitalized development costs of $ 29.7 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.

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

As of December 31, 2020 and 2019, capitalized development costs of $ 13.0 million and $ 23.7 million, respectively, are not currently supported by existing firm orders.

13 unchanged sentences

Acquisitions — 71,644 — 71,644

Divestitures ( 111 ) ( 1,594 ) — ( 1,705 )

Adjustments — ( 208 ) — ( 208 )

Foreign currency translation adjustment 2,099 4,404 709 7,212

1 unchanged sentence

Acquisitions 28,467 256,733 — 285,200

Impairment on assets held for sale ( 9,598 ) — — ( 9,598 )

Adjustments — ( 1,385 ) — ( 1,385 )

6 unchanged sentences

The Corporation completed its annual goodwill impairment testing as of October 31, 2020, 2019, and 2018 and concluded that there was no impairment of goodwill.

In connection with classifying its German industrial valves business as held for sale in December 2020, the Corporation recognized a goodwill impairment loss of $ 9.6 million associated with the disposal group for the year ended December 31, 2020.

OTHER INTANGIBLE ASSETS, NET

4 unchanged sentences

Technology (2)

$ 280,595 $ ( 148,064 ) $ 132,531 $ 257,676 $ ( 140,390 ) $ 117,286

Customer related intangibles (2)

573,722 ( 239,798 ) 333,924 , 434,492 ( 215,855 ) 218,637

144,000 ( 19,800 ) 124,200 144,000 ( 12,600 ) 131,400

Other intangible assets

51,493 ( 32,518 ) 18,975 43,729 ( 31,145 ) 12,584

Total $ 1,049,810 $ ( 440,180 ) $ 609,630 $ 879,897 $ ( 399,990 ) $ 479,907

(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.

(2) During the year ended December 31, 2020, the Corporation recognized an impairment loss of $ 18.3 million pertaining to technology and customer-related intangibles of its industrial valve business in Germany, which was classified as held for sale during the fourth quarter of 2020.

During the year ended December 31, 2020, the Corporation acquired intangible assets of $ 204.4 million, which included Customer-related intangibles of $ 159.9 million, Technology of $ 34.6 million, and Other intangible assets of $ 9.9 million.

2 unchanged sentences

The estimated future amortization expense of intangible assets over the next five years is as follows:

(In thousands)

2020 $ 55,360

(In millions)

The Corporation conducts a portion of its operations from leased facilities, which include manufacturing and service facilities, administrative offices, and warehouses.

In addition, the Corporation leases vehicles, machinery, and office equipment under operating leases.

Our leases have remaining lease terms of 1 year to 25 years, some of which include options for renewals, escalations, or terminations.

Rental expenses for all operating leases amounted to $ 37.2 million, $ 38.4 million, and $ 37.1 million in 2019, 2018, and 2017, respectively.

Our leases have remaining lease terms ranging from approximately 1 year to 15 years, some of which include options for renewals, escalations, or terminations.

Rental expenses for all operating leases amounted to $ 41.0 million, $ 37.2 million, and $ 38.4 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Generally, the Corporation's lease contracts do not provide a readily determinable interest rate.

2 unchanged sentences

The components of lease expense were as follows:

(In thousands) December 31, 2019

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

Operating lease cost $ 40,961 $ 37,229

4 unchanged sentences

Supplemental cash flow information related to leases was as follows:

(In thousands) December 31, 2019

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

Cash used for operating activities:

4 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

(In thousands, except lease term and discount rate) As of December 31, 2019

As of December 31,

(In thousands, except lease term and discount rate) 2020 2019

Operating Leases

11 unchanged sentences

Weighted average remaining lease term

Operating leases 9.2 years

Finance leases 9.7 years

Operating leases 8.6 years 9.2 years

Finance leases 8.7 years 9.7 years

Weighted average discount rate

13 unchanged sentences

Total $ 160,332 $ 10,986

As of December 31, 2018, the approximate future minimum rental commitments under operating leases that had initial or remaining non-cancelable lease terms in excess of one year were as follows:

(In thousands) Rental Commitments

2019 $ 29,562

Thereafter 93,974

Total $ 216,325

FAIR VALUE OF FINANCIAL INSTRUMENTS

40 unchanged sentences

Warranty reserves $ 25,091 $ 17,512

Restructuring liability 6,944 —

Pension and other postretirement liabilities 7,715 6,690

9 unchanged sentences

The Corporation has applied an accounting policy election to provide for the tax expense related to GILTI in the year in which the tax is incurred.

The Corporation has summarized the most significant impacts from the Tax Act below:

Reduction of the U.S.

Corporate Income Tax Rate

The Corporation measures deferred tax assets and liabilities using enacted tax rates that are applicable in the years in which the temporary differences are expected to be recovered or paid.

Accordingly, the Corporation’s deferred tax assets and liabilities were remeasured to reflect the reduction of the U.S.

corporate income tax rate from 35 percent to 21 percent, resulting in a provisional $ 13.4 million decrease in income tax expense for the year ended December 31, 2017.

Transition Tax on Foreign Earnings

The Corporation recorded provisional income tax expense of $ 18.2 million for the year ended December 31, 2017 related to the one-time transition tax on certain foreign earnings.

The finalized transition tax of $ 23.6 million was to be paid over eight years pursuant to the Tax Act, with $ 1.9 million paid in 2018.

The finalized transition tax of $ 23.6 million was to be paid over 8 years pursuant to the Tax Act, with $ 1.9 million paid in 2018.

An additional $ 12.7 million carryforward from the 2017 income tax return further reduced the transition tax liability to $ 9.0 million as of December 31, 2018.

The liability of $ 9.0 million, which is expected to be paid in 2024 and 2025, remained unchanged as of December 31, 2020.

Given that foreign undistributed earnings are no longer considered permanently reinvested, the Corporation also recorded provisional income tax expense of $ 3.8 million for the year ended December 31, 2017 for withholding taxes that would arise upon distribution of the Corporation’s foreign undistributed earnings.

During the year ended December 31, 2018, the Corporation recorded additional tax expense of $ 9.3 million for foreign withholding taxes associated with the Tax Act, $ 6.5 million of which related to the prior period.

During the year ended December 31, 2019, the Corporation recorded tax expense of $ 4.4 million for foreign withholding taxes.

The Corporation is considered permanently reinvested to the extent of any outside basis differences in its foreign subsidiaries in excess of the amount of undistributed earnings.

Given that foreign undistributed earnings are no longer considered permanently reinvested, the Corporation has recorded a liability for withholding taxes that would arise upon distribution of the Corporation’s foreign undistributed earnings.

During the fourth quarter of 2020, the Corporation committed to a plan to sell its industrial valve business in Germany.

As a result, the tax consequences from those temporary differences resulting from the held for sale designation are no longer considered to be permanently reinvested.

However, the Corporation has not recorded any provision, as it expects under tax law to recover the outside basis difference in a tax-free manner.

The Corporation will record tax expense related to GILTI in the period in which the future sale is completed.

Except as noted above, the Corporation remains permanently reinvested to the extent of any outside basis differences in its foreign subsidiaries in excess of the amount of undistributed earnings.

Earnings before income taxes for the years ended December 31 consist of:

1 unchanged sentence

Domestic $ 212,613 $ 273,036 $ 217,374

Foreign 123,426 138,865 120,613

50,438 123,426 138,865

$ 263,051 $ 396,462 $ 356,239

(1) During the year ended December 31, 2020, the Corporation recognized a pre-tax impairment loss of $ 33.0 million pertaining to its industrial valve business in Germany, which was classified as held for sale during the fourth quarter of 2020.

The provision for income taxes for the years ended December 31 consists of:

15 unchanged sentences

State and local taxes, net of federal benefit 3.7 2.4 2.2

Impairment of goodwill (held-for-sale) 1.2 — —

Valuation allowance for foreign assets held for sale 1.3 — —

R&D tax credits ( 0.9 ) ( 1.2 ) ( 1.0 )

1 unchanged sentence

( 0.9 ) 1.4 0.9

Stock compensation - excess tax benefits ( 0.8 ) ( 1.3 ) ( 2.6 )

Impacts related to the Tax Act — — 1.8

3 unchanged sentences

(1) Foreign earnings primarily include the net impact of differences between local statutory rates and the U.S.

Federal statutory rate, the cost of repatriating foreign earnings, and the impact of changes to foreign valuation allowances.

Federal statutory rate, the cost of repatriating foreign earnings, and the impact of changes to foreign valuation allowances, excluding items related to foreign assets classified as held for sale.

The components of the Corporation’s deferred tax assets and liabilities as of December 31 are as follows:

26 unchanged sentences

The Corporation has income tax net operating loss carryforwards related to international operations of $ 3.7 million, of which $ 0.3 million have an indefinite life and $ 3.4 million which expire through 2026.

The Corporation has federal and state income tax net loss carryforwards of $ 67.3 million, of which $ 63.4 million are net operating losses which expire through 2038 and $ 3.9 million are capital loss carryforwards which expire through 2020.

The Corporation has federal and state income tax net loss carryforwards of $ 77.3 million, all of which are net operating losses that expire through 2039.

The Corporation has recorded a deferred tax asset of $ 5.5 million, reflecting the benefit of the loss carryforwards.

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets.

A significant piece of objective negative evidence evaluated was the

cumulative loss incurred over the three-year period ended December 31, 2019 in certain of the Corporation’s foreign locations.

A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2020 in certain of the Corporation’s foreign locations.

Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth.

The Corporation decreased its valuation allowance by $ 8.3 million to $ 3.4 million, as of December 31, 2019, in order to measure only the portion of the deferred tax asset that more likely than not will be realized.

As of December 31, 2020, the Corporation decreased its valuation allowance by $ 2.2 million to $ 1.2 million, in order to measure only the portion of the deferred tax asset that more likely than not will be realized.

The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as projections for growth.

As of December 31, 2020, the Corporation recorded a deferred tax asset of $ 3.8 million on net operating losses of $ 12.6 million related to the held for sale industrial valve business.

A provision of $ 3.3 million was recorded during the year ended December 31, 2020, resulting in a full valuation allowance against the deferred tax asset, as it is more likely than not that the losses will be forfeited.

Income tax payments, net of refunds, of $ 54.0 million, $ 63.9 million, and $ 79.1 million were made in 2020, 2019, and 2018, respectively.

20 unchanged sentences

3.84 % Senior notes due 2021

100,000 102,173 100,000 102,079

3.70 % Senior notes due 2023

202,500 211,790 202,500 207,882

3.85 % Senior notes due 2025

90,000 97,429 90,000 93,838

4.24 % Senior notes due 2026

200,000 224,390 200,000 213,126

4.05 % Senior notes due 2028

67,500 75,440 67,500 71,260

4.11 % Senior notes due 2028

Other debt — — 243 243

90,000 101,047 90,000 95,607

3.10 % Senior notes due 2030

150,000 155,805 — —

3.20 % Senior notes due 2032

150,000 155,048 — —

Total debt 1,050,000 1,123,122 750,000 783,792

3 unchanged sentences

Total debt, net 1,058,292 1,131,414 760,639 794,431

current portion of long-term debt and short-term debt — — 243 243

current portion of long-term debt 100,000 100,000 — —

Total long-term debt $ 958,292 $ 1,031,414 $ 760,639 $ 794,431

1 unchanged sentence

The weighted-average interest rate of the Corporation's Revolving Credit Agreement in 2020 and 2019 was 1.4 % and 3.3 %, respectively.

The Corporation's total debt outstanding had a weighted-average interest rate of 3.7 % in both 2019 and 2018, respectively.

The Corporation's total debt outstanding had a weighted-average interest rate of 3.4 % and 3.7 % in 2020 and 2019, respectively.

Aggregate maturities of debt are as follows:

(In thousands)

2021 $ 100,000

Thereafter 657,500

15 unchanged sentences

In connection with the Credit Agreement, the Corporation paid customary transaction fees that have been deferred and are being amortized over the term of the Credit Agreement.

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

In connection with the issuance of the 2020 Notes, the Corporation paid customary fees that have been deferred and are being amortized over the term of the 2020 Notes.

Under the terms of the Note Purchase Agreements, the Corporation is required to maintain certain financial ratios, the most restrictive of which are a debt to capitalization limit of 60 % and an interest coverage ratio of less than 3 to 1.

The debt to capitalization ratio (as defined per the Notes Purchase Agreement and Credit Agreement) is calculated using the same formula for all of the Corporation’s debt agreements and is a measure of the Corporation’s indebtedness to capitalization, where capitalization equals debt plus equity.

The 2020 Notes also contain a cross default provision with respect to the Corporation’s other senior indebtedness.

On February 26, 2013 , the Corporation issued $ 500 million of Senior Notes (the “2013 Notes”).

5 unchanged sentences

In connection with the issuance of the 2013 Notes, the Corporation paid customary fees that have been deferred and are being amortized over the term of the 2013 Notes.

Under the terms of the Note Purchase Agreement, the Corporation is required to maintain certain financial ratios, the most restrictive of which is a debt to capitalization limit of 60 %.

As of December 31, 2019, the Corporation had the ability to borrow additional debt of $ 1.8 billion without violating our debt to capitalization covenant.

The 2013 Notes also contain a cross default provision with respect to the Corporation’s other senior indebtedness.

3 unchanged sentences

The Corporation, at its option, can prepay at any time all or any part of our 2011 Notes, subject to a make-whole payment in accordance with the terms of the Note Purchase Agreement.

In connection with our 2011 Notes, the Corporation paid customary fees that have been deferred and are being amortized over the term of our 2011 Notes.

In connection with the 2011 Notes, the Corporation paid customary fees that have been deferred and are being amortized over the term of the 2011 Notes.

Under the Note Purchase Agreement, the Corporation is required to maintain certain financial ratios, the most restrictive of which is a debt to capitalization limit of 60 %.

The 2011 Notes also contain a cross default provision with our other senior indebtedness.

As of December 31, 2020, the Corporation had the ability to borrow additional debt of $ 1.5 billion without violating our debt to capitalization covenant.

EARNINGS PER SHARE

38 unchanged sentences

Cash received from share-based awards $ 11,148 $ 11,770 $ 11,940

A summary of employee stock option activity is as follows:

(000’s) Weighted-

Price Weighted-

Years Aggregate

Outstanding as of December 31, 2018 158 $ 30.34

Exercised ( 91 ) 30.64

Forfeited ( 1 ) 30.90

Outstanding as of December 31, 2019 66 $ 29.93 0.9 $ 7,396

Exercisable as of December 31, 2019 66 $ 29.93 0.9 $ 7,396

Stock Options

As of December 31, 2020, the Corporation's did not have any stock options outstanding.

For the year ended December 31, 2020, approximately 66,000 stock options were exercised, with a weighted average exercise price of $ 29.89 .

The total intrinsic value of stock options exercised during 2020, 2019, and 2018 was $ 5.2 million, $ 8.7 million, and $ 10.1 million, respectively.

Performance Share Units

The Corporation has granted performance share units to certain employees, whose three-year cliff vesting is contingent upon the Corporation's total shareholder return over the three-year term of the awards compared to a self-constructed peer group.

The Corporation has granted performance share units to certain employees, whose three year cliff vesting is contingent upon the Corporation's total shareholder return over the three-year term beginning at the start of the fiscal year following the date of grant.

Performance is measured by determining the percentile rank of the total shareholder return of the Corporation's common stock in relation to the total shareholder return of the S&P Midcap 400 Index (for award granted in 2020) or compared to a self-constructed peer group (for awards granted in 2018 through 2019).

The non-vested shares are subject to forfeiture if established performance goals are not met or employment is terminated other than due to death, disability, or retirement.

46 unchanged sentences

Subsequent to the original amendment, the Corporation successfully negotiated the sunset provision into the bargaining agreements for all represented employees that received benefits through this plan.

As of December 31, 2019 and 2018, the Corporation had a noncurrent pension liability of $ 50.2 million and $ 26.6 million, respectively.

This increase was driven by a decrease in the discount rate as of December 31, 2019, partially offset by favorable asset experience due to strong market returns during 2019.

On January 8, 2020, the Corporation made a voluntary contribution of $ 150 million to the plan.

The Corporation does not expect to make any required contributions through 2024.

As of December 31, 2020, and 2019, the Corporation had a noncurrent pension asset of $ 80.8 million and a noncurrent pension liability of $ 50.2 million, respectively.

The change in balance was primarily due to a voluntary contribution of $ 150 million to the plan on January 8, 2020 as well as favorable asset experience due to strong market returns during 2020, partially offset by a decrease in the discount rate as of December 31, 2020.

Nonqualified Pension Plan

5 unchanged sentences

the CW Grandfathered plan, and plans assumed in the acquisitions of EMD and Williams Controls.

The Corporation also provides retiree health and life insurance benefits for substantially all of the Curtiss-Wright EMD employees.

The Corporation also provides retiree health and life insurance benefits for substantially all Curtiss-Wright EMD employees.

The plan provides basic health and welfare coverage for pre-65 participants based on years of service and are subject to certain caps.

7 unchanged sentences

As of December 31, 2020 and 2019, the total projected benefit obligation related to all foreign plans was $ 115.5 million and $ 102.7 million, respectively.

As of December 31, 2019 and 2018, the Corporation had a net pension (liability)/asset of $( 0.2 ) million and $ 2.7 million, respectively.

As of December 31, 2020 and 2019, the Corporation had a net pension liability of $ 2.6 million and $ 0.2 million, respectively.

The Corporation's contributions to the foreign plans are expected to be $ 1.5 million in 2021.

Components of net periodic benefit expense

The net pension and net postretirement benefit costs (income) consisted of the following:

The net pension and net postretirement benefit costs consisted of the following:

Pension Benefits Postretirement Benefits

6 unchanged sentences

Cost of settlements/curtailments 2,395 — 337 — — —

Net periodic benefit cost (income) $ 2,557 $ 11,576 $ 10,588 $ 374 $ 422 $ 318

Net periodic benefit cost $ 7,831 $ 2,557 $ 11,576 $ 453 $ 374 $ 422

The cost of settlements/curtailments indicated above represents events that are accounted for under guidance on employers’ accounting for settlements and curtailments of defined benefit pension plans.

In 2018, a settlement charge was incurred in connection with a restructuring in Switzerland.

In 2017, there were settlement charges incurred in both the U.K.

and Switzerland.

In 2020, settlement charges were incurred in Mexico and Switzerland.

In addition, a curtailment was recognized in Mexico as a result of the Corporation's restructuring initiatives.

In 2018, a settlement charge was incurred in connection with restructuring in Switzerland.

The following table outlines the Corporation's consolidated disclosure of the pension benefits and postretirement benefits information described previously.

11 unchanged sentences

Actual expenses ( 1,526 ) ( 1,846 ) — —

Curtailments 1,636 — — —

Settlements ( 3,867 ) — — —

8 unchanged sentences

Actual expenses ( 1,526 ) ( 1,846 ) — —

Settlements ( 3,867 ) — — —

Currency translation adjustments 4,835 3,386 — —

24 unchanged sentences

Rate assumed for subsequent year N/A N/A 7.25 % 7.50 %

Ultimate rate reached in 2026 N/A N/A 4.50 % 4.50 %

Ultimate rate reached in 2026

N/A N/A 4.50 % 4.50 %

Weighted-average assumptions in determination of net periodic benefit cost:

4 unchanged sentences

Rate assumed for subsequent year N/A N/A 7.50 % 7.85 %

Ultimate rate reached in 2026 N/A N/A 4.50 % 4.50 %

Effective December 31, 2016, the Corporation adopted the spot rate, or full yield curve, approach for developing discount rates.

Ultimate rate reached in 2026

N/A N/A 4.50 % 4.50 %

The Corporation applies the spot rate, or full yield curve, approach for developing discount rates.

The discount rate for each plan's past service liabilities and service cost is determined by discounting the plan’s expected future benefit payments using a yield curve developed from high quality bonds that are rated Aa or better by Moody’s as of the measurement date.

23 unchanged sentences

As of December 31, 2020 and 2019, cash funds in the CW Pension Plan represented approximately 2 % and 3 % of portfolio assets, respectively.

Foreign plan assets represent 12 % of consolidated plan assets, with the majority of the assets supporting the U.K.

Foreign plan assets represent 11 % of consolidated plan assets, with most of the assets supporting the U.K.

Generally, the foreign plans follow a similar asset allocation strategy and are more heavily weighted in fixed income resulting in a weighted expected return on assets assumption of 3.5 % for all foreign plans.

2 unchanged sentences

Fair Value Measurements

The following table presents consolidated plan assets (in thousands) as of December 31, 2019 using the fair value hierarchy, as described in Note 10 to the Consolidated Financial Statements.

The following table presents consolidated plan assets (in thousands) using the fair value hierarchy as of December 31, 2020.

Asset Category Total Quoted Prices

6 unchanged sentences

273,979 211,372 62,607 —

Insurance Contracts (3)

4,224 — — 4,224

2,313 — — 2,313

December 31, 2019 $ 835,139 $ 640,773 $ 190,142 $ 4,224

4 unchanged sentences

341,140 242,627 98,513 —

Insurance Contracts (3)

4,402 — — 4,402

10 unchanged sentences

based pension plans.

(3) This category had consisted of a guaranteed investment contract (GIC) in Switzerland.

Effective January 2019, the Corporation replaced the collective foundation administering the plan and the GIC was not an available offering in the new plan.

(3) This category consists primarily of real estate investment trusts in Switzerland.

16 unchanged sentences

Relating to assets still held at the reporting date 5 ( 20 ) ( 15 )

Relating to assets sold during the period — ( 58 ) ( 58 )

Purchases, sales, and settlements 523 ( 680 ) ( 157 )

12 unchanged sentences

Defined Contribution Retirement Plans

The Corporation offers all of its domestic employees the opportunity to participate in a defined contribution plan.

The Corporation offers all of its full-time domestic employees the opportunity to participate in a defined contribution plan.

Costs incurred by the Corporation in the administration and record keeping of the defined contribution plan are paid for by the Corporation and are not considered material.

Effective January 1, 2014, all non-union employees who were not currently receiving final or career average pay benefits became eligible to receive employer contributions in the Corporation's sponsored 401(k) plan, including both employer match and non-elective contribution components.

Effective January 1, 2019, the employer contribution was increased to a maximum of 7 % of eligible compensation from 6% previously.

During the year ended December 31, 2019, the expense relating to the plan was $ 17.8 million, consisting of $ 9.1 million in matching contributions to the plan in 2019, and $ 8.7 million in non-elective contributions paid in January 2020.

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 year ended December 31, 2020, the expense relating to the plan was $ 19.3 million, consisting of $ 10.0 million in matching contributions to the plan in 2020, and $ 9.3 million in non-elective contributions, primarily paid in January 2021.

Cumulative contributions of approximately $ 104 million are expected to be made from 2021 through 2025.

In addition, the Corporation had foreign pension costs under various defined contribution plans of $ 5.3 million, $ 5.3 million, and $ 4.2 million in 2019, 2018, and 2017, respectively.

In addition, the Corporation had foreign pension costs under various defined contribution plan s of $ 5.3 million in each of 2020, 2019, and 2018, respectively.

SEGMENT INFORMATION

6 unchanged sentences

The products offered include commercial off-the-shelf (COTS) embedded computing board level modules, integrated subsystems, turret aiming and stabilization products, weapons handling systems, avionics and electronics, flight test equipment, and aircraft data management solutions.

The Power segment is comprised of businesses that primarily provide products to the power generation markets and to a lesser extent the naval defense market.

The Power reportable segment is comprised of businesses that primarily provide products to the power generation markets and to a lesser extent the naval defense market.

The products offered include main coolant pumps, power-dense compact motors, generators, secondary propulsion systems, pumps, pump seals, control rod drive mechanisms, fastening systems, specialized containment doors, airlock hatches, spent fuel management products, and fluid sealing products.

1 unchanged sentence

Interest expense and income taxes are not reported on an operating segment basis as they are not considered in the segments’ performance evaluation by the Corporation’s chief operating decision-maker, its Chief Executive Officer.

On January 1, 2020, the Corporation implemented an organizational change to align its reportable segments more closely with its current business structure.

This change resulted in the transfer of two business units, one from the Commercial/Industrial segment to the Defense segment and the other from the Defense segment to the Power segment.

While this organizational change resulted in the recasting of previously reported amounts across all reportable segments, it did not impact the Corporation’s previously reported consolidated financial statements.

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

25 unchanged sentences

Corporate 175,445 305,236 175,413

Assets held for sale 27,584 — —

Total Consolidated $ 4,021,334 $ 3,764,261 $ 3,255,385

18 unchanged sentences

Total assets for reportable segments $ 3,818,305 $ 3,459,025 $ 3,079,972

Assets held for sale 27,584 — —

Non-segment cash 49,157 235,260 138,053

26 unchanged sentences

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

3 unchanged sentences

The Corporation maintains insurance coverage for these potential liabilities and believes adequate coverage exists to cover any unanticipated asbestos liability.

In December 2013, the Corporation, along with other unaffiliated parties, received a claim from Canadian Natural Resources Limited (CNRL) filed in the Court of Queen's Bench of Alberta, Judicial District of Calgary.

The claim pertains to a January 2011 fire and explosion at a delayed coker unit at its Fort McMurray refinery that resulted in the injury of five CNRL employees, damage to property and equipment, and various forms of consequential loss such as loss of profit, lost opportunities, and business interruption.

The fire and explosion occurred when a CNRL employee bypassed certain safety controls and opened an operating coker unit.

In November 2019, all parties participated in a formal mediation and agreed to settle the claim for approximately $ 38 million.

The Corporation’s portion of the settlement amount was $ 6 million, which was fully paid in

2020 by the Corporation's primary and excess insurance coverage.

No admission of liability was made by the Corporation as part of the settlement agreement.

The Corporation does not expect to incur any additional liabilities related to this claim.

The Corporation is party to a number of other legal actions and claims, none of which individually or in the aggregate, in the opinion of management, are expected to have a material effect on the Corporation’s results of operations or financial position.

11 unchanged sentences

AP1000 Program

Within the Corporation’s Power segment, EMD is the RCP supplier for the WEC AP1000 nuclear power plants under construction in China and the United States.

Within the Corporation’s Power segment, EMD is the RCP supplier for the WEC AP1000 nuclear power plants in China and the United States.

The terms of the AP1000 China and U.S.

contracts include liquidated damage provisions for failure to meet contractual delivery dates if the Corporation caused the delay and the delay was not excusable.

The Corporation would be liable for liquidated damages if the Corporation was deemed responsible for not meeting the delivery dates.

The Corporation would be liable for liquidated damages if the Corporati on was deemed responsible for not meeting the delivery dates.

On October 10, 2013, the Corporation received a letter from WEC stating entitlements to the maximum amount of liquidated damages allowable under the AP1000 China contract from WEC of approximately $ 25 million.

2 unchanged sentences

however, there are significant counterclaims and 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 December 31, 2019.

As of December 31, 2019, the range of possible loss is $ 0 million to $ 31 million for the AP1000 U.S.

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

In January 2021, the Corporation and WEC agreed to participate in formal non-binding mediation.

The Corporation believes that the ultimate resolution of the matter will not have a material impact on its consolidated financial stateme nts.

As of December 31, 2020, the range of possible loss for these two matters is $ 0 to $ 55.5 million.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 unchanged sentences

— 6,195 6,195

Net current period other comprehensive loss ( 52,440 ) ( 19,167 ) ( 71,607 )

Net current period other comprehensive income (loss) 18,447 ( 29,017 ) ( 10,570 )

Cumulative effect from adoption of ASU 2018-02 $ ( 1,318 ) $ ( 24,939 ) $ ( 26,257 )

December 31, 2019 $ ( 130,019 ) $ ( 195,255 ) $ ( 325,274 )

4 unchanged sentences

Net current period other comprehensive income (loss) 41,282 ( 26,864 ) 14,418

Cumulative effect from adoption of ASU 2018-02 (2)

$ ( 1,318 ) $ ( 24,939 ) $ ( 26,257 )

December 31, 2020 $ ( 88,737 ) $ ( 222,119 ) $ ( 310,856 )

(1) All amounts are after tax.

(2) Reclassification to retained earnings due to adoption of ASU No.

2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income .

See Note 1 for additional information.

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

2 unchanged sentences

Defined benefit pension and postretirement plans

Amortization of prior service costs 939 908 (1)

Amortization of net actuarial losses ( 9,112 ) ( 16,736 ) (1)

Settlements — ( 337 ) (1)

( 8,173 ) ( 16,165 ) Total before tax

1,978 3,952 Income tax effect

Total reclassifications $ ( 6,195 ) $ ( 12,213 ) Net of tax

(1) These items are included in the computation of net periodic pension cost.

See Note 16, Pension and Other Postretirement Benefit Plans.

Amortization of prior service costs 926 939 Other income, net

Amortization of net actuarial losses ( 23,057 ) ( 9,112 ) Other income, net

Settlements ( 1,086 ) — Other income, net

( 23,217 ) ( 8,173 ) Earnings before income taxes

5,568 1,978 Provision for income taxes

Total reclassifications $ ( 17,649 ) $ ( 6,195 ) Net earnings

RESTRUCTURING COSTS

During the year ended December 31, 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 $ 43 million of pre-tax charges for the year ended December 31, 2020.

The Company anticipates that these actions, which have been substantially completed as of December 31, 2020, will result in total cost savings of approximate ly $ 40 million ann ually.

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

In thousands Restructuring Liability as of December 31, 2019 Provision Cash Payments Restructuring Liability as of December 31, 2020

Commercial/Industrial

Severance $ — $ 12,075 $ ( 9,796 ) $ 2,279

Facility closure and other exit costs — 4,534 ( 4,057 ) 477

Total Commercial/Industrial $ — $ 16,609 $ ( 13,853 ) $ 2,756

Severance $ — $ 3,150 $ ( 2,937 ) $ 213

Facility closure and other exit costs — 40 ( 40 ) —

Total Defense $ — $ 3,190 $ ( 2,977 ) $ 213

Severance $ — $ 5,972 $ ( 2,131 ) $ 3,841

Facility closure and other exit costs — 1,357 ( 1,223 ) 134

Total Power $ — $ 7,329 $ ( 3,354 ) $ 3,975

Severance $ — $ 21,197 $ ( 14,864 ) $ 6,333

Facility closure and other exit costs — 5,931 ( 5,320 ) 611

Total consolidated $ — $ 27,128 $ ( 20,184 ) $ 6,944

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

Affected line item in the Consolidated Statement of Earnings

(In thousands) December 31, 2020

Inventory write-downs Cost of product sales $ 9,184

Severance, facility closure, and other exit costs Restructuring expenses 27,128

Property, plant, and equipment & operating lease right-of-use asset impairments Restructuring expenses 4,567

Pension-related charges Other income, net $ 1,846

Total restructuring charges Earnings before income taxes $ 42,725

There were no such comparable charges for the year ended December 31, 2019.

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

15 unchanged sentences

SUBSEQUENT EVENTS

On January 8, 2020, the Corporation made a voluntary $ 150 million contribution to the CW Pension Plan

On February 26, 2020, the Corporation signed a definitive agreement to acquire Dyna-Flo Control Valve Services Ltd.

(Dyna-Flo) for CAD$ 81 million (approximately $ 61 million).

Dyna-Flo, which specializes in control valves, actuators, and control systems for the chemical, petrochemical, and oil and gas markets, generated sales of approximately $ 25 million for the year ended December 31, 2019.

The acquired business will operate within the Commercial/Industrial segment.

Beginning in the first quarter of 2021, the Corporation implemented organizational changes to better align its reportable segments and end markets.

These changes resulted in the transfer of the Corporation's valve division from the Commercial/Industrial segment to the Power segment as well as the transfer of one of the Corporation's naval valves businesses from the Defense segment to the Power segment.

In conjunction with these changes, the Commercial/Industrial, Defense, and Power segments will now be referred to as Aerospace & Industrial, Defense Electronics, and Naval & Power, respectively.

aforementioned changes will be reflected in the Corporation's condensed consolidated financial statements for the quarterly period ended March 31, 2021.

Report of the Corporation

30 unchanged sentences

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

31 unchanged sentences

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated February 25, 2021, expressed an unqualified opinion on those financial statements.

As described in Management’s Annual Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Dyna-Flo Control Valve Services Ltd, Integrated Air Defense System product line, and Pacific Star Communications, Inc., which were acquired on February 26, 2020, April 20, 2020, and October 30, 2020 respectively, and whose financial statements constitute 2% of total net sales and 2% of total assets of the consolidated financial statement amounts (excluding acquired intangible assets and goodwill) as of and for year ended December 31, 2020.

Accordingly, our audit did not include the internal control over financial reporting at Dyna-Flo Control Valve Services Ltd, Integrated Air Defense System product line, and Pacific Star Communications, Inc..

Basis for Opinion

19 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-K

Item 8. Financial Statements and Supplementary Data