What changed in this filing

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Item 1. Financial Statements

2021-08-04 compared with 2021-05-06 · 337 added, 207 removed, 597 unchanged (48% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(In thousands, except per share data) 2021 2020 2021 2020

13 unchanged sentences

Interest expense 10,180 8,515 20,139 16,004

Other income, net 4,843 5,532

Other income (expense), net 440 ( 4,105 ) 5,283 1,427

Earnings before income taxes 84,843 42,729 164,793 113,218

12 unchanged sentences

(In thousands)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Net earnings $ 61,408 $ 31,018 $ 120,877 $ 82,779

3 unchanged sentences

Pension and postretirement adjustments, net of tax (2)

4,442 4,002 10,042 8,683

Other comprehensive income (loss), net of tax 11,685 28,187 13,325 ( 17,407 )

Comprehensive income $ 73,093 $ 59,205 $ 134,202 $ 65,372

(1) The tax benefit (expense) included in foreign currency translation adjustments for the three months ended March 31, 2021 and 2020 was immaterial.

(2) The tax expense included in pension and postretirement adjustments for the three months ended March 31, 2021 and 2020 was $ 1.7 million and $ 1.3 million, respectively.

(1) The tax benefit included in foreign currency translation adjustments for the three and six months ended June 30, 2021 and June 30, 2020 was immaterial.

(2) The tax expense included in pension and postretirement adjustments for the three and six months ended June 30, 2021 was $ 1.5 million and $ 3.1 million, respectively.

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

See notes to condensed consolidated financial statements

2 unchanged sentences

(In thousands, except per share data)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Current assets:

16 unchanged sentences

Accrued expenses 133,264 146,833

Income taxes payable 18,399 6,633

Deferred revenue 260,358 253,411

11 unchanged sentences

Stockholders’ equity

Common stock, $ 1 par value, 100,000,000 shares authorized as of March 31, 2021 and December 31, 2020;

49,187,378 shares issued as of March 31, 2021 and December 31, 2020;

outstanding shares were 40,943,314 as of March 31, 2021 and 40,916,429 as of December 31, 2020

Common stock, $ 1 par value, 100,000,000 shares authorized as of June 30, 2021 and December 31, 2020;

49,187,378 shares issued as of June 30, 2021 and December 31, 2020;

outstanding shares were 40,871,691 as of June 30, 2021 and 40,916,429 as of December 31, 2020

49,187 49,187

2 unchanged sentences

Accumulated other comprehensive loss ( 297,531 ) ( 310,856 )

Common treasury stock, at cost ( 8,244,064 shares as of March 31, 2021 and 8,270,949 shares as of December 31, 2020)

Common treasury stock, at cost ( 8,315,687 shares as of June 30, 2021 and 8,270,949 shares as of December 31, 2020)

( 753,782 ) ( 743,620 )

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(In thousands) 2021 2020

1 unchanged sentence

Net earnings $ 120,877 $ 82,779

Adjustments to reconcile net earnings to net cash used for operating activities

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

Depreciation and amortization 57,616 56,568

2 unchanged sentences

Share-based compensation 6,725 7,140

Inventory write-down — 1,205

Foreign exchange loss on substantial liquidation of subsidiary — 9,550

Inventory write-downs — 9,015

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

4 unchanged sentences

Deferred revenue 6,663 ( 12,622 )

Income taxes payable 16,247 22,783

Pension and postretirement liabilities, net ( 4,017 ) ( 149,514 )

Other current and long-term assets and liabilities ( 15,193 ) 6,109

Net cash used for operating activities ( 26,603 ) ( 192,576 )

Net cash provided by (used for) operating activities 48,476 ( 52,209 )

Cash flows from investing activities:

1 unchanged sentence

Additions to property, plant, and equipment ( 17,771 ) ( 29,324 )

Acquisition of business, net of cash acquired — ( 51,043 )

Acquisition of businesses, net of cash acquired — ( 82,003 )

Additional consideration paid on prior year acquisitions ( 5,340 ) —

5 unchanged sentences

Proceeds from share-based compensation 4,919 5,189

Dividends paid ( 6,961 ) ( 7,089 )

Other ( 462 ) ( 429 )

Net cash provided by (used for) financing activities ( 7,107 ) 39,268

Net cash used for financing activities ( 26,899 ) ( 51,942 )

Effect of exchange-rate changes on cash ( 2,188 ) ( 22,583 )

6 unchanged sentences

(In thousands)

For the three months ended March 31, 2020

For the six months ended June 30, 2021

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

1 unchanged sentence

Net earnings — — 120,877 — —

Other comprehensive loss, net of tax — — — ( 45,594 ) —

Other comprehensive income, net of tax — — — 13,325 —

Dividends declared — — ( 14,321 ) — —

5 unchanged sentences

Other — ( 597 ) — — 597

June 30, 2021 $ 49,187 $ 119,946 $ 2,776,884 $ ( 297,531 ) $ ( 753,782 )

For the three months ended June 30, 2021

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

March 31, 2021 $ 49,187 $ 119,172 $ 2,722,829 $ ( 309,216 ) $ ( 743,808 )

For the three months ended March 31, 2021

Net earnings — — 61,408 — —

Other comprehensive income, net of tax — — — 11,685 —

Dividends declared — — ( 7,353 ) — —

Restricted stock — ( 2,600 ) — — 2,600

Share-based compensation — 3,374 — — 24

Repurchase of common stock (1)

— — — — ( 12,598 )

June 30, 2021 $ 49,187 $ 119,946 $ 2,776,884 $ ( 297,531 ) $ ( 753,782 )

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

For the six months ended June 30, 2020

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

1 unchanged sentence

Net earnings — — 82,779 — —

Other comprehensive income, net of tax — — — 1,640 —

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

Dividends declared — — ( 14,163 ) — —

5 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

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 )

(1) For the three months ended March 31, 2021 and 2020, the Corporation repurchased approximately 0.1 million and 1.1 million shares of its common stock, respectively.

Net earnings — — 31,018 — —

Other comprehensive income, net of tax — — — 28,187 —

Dividends declared — — ( 7,068 ) — —

Employee stock purchase plan and stock options exercised — ( 244 ) — — 365

Share-based compensation — 3,800 — — —

Repurchase of common stock (1)

— — — — ( 12,600 )

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

See notes to condensed consolidated financial statements

(1) For the three and six months ended June 30, 2021, the Corporation repurchased approximately 0.1 million and 0.2 million shares of its common stock, respectively.

For the three and six months ended June 30, 2020, the Corporation repurchased approximately 0.1 million and 1.2 million shares of its common stock, respectively.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

14 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 months ended March 31, 2021 and 2020, there were no significant changes in estimated contract costs.

During the three and six months ended June 30, 2021 and 2020, there were no significant changes in estimated contract costs.

In the opinion of management, all adjustments considered necessary for a fair presentation have been reflected in these financial statements.

13 unchanged sentences

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

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.

If a performance obligation does not qualify for over-time revenue recognition, revenue is then

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

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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 months ended March 31, 2021 and 2020:

Three Months Ended

relative to total estimated costs.

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.

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 six months ended June 30, 2021 and 2020:

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Over-time 52 % 54 % 52 % 53 %

2 unchanged sentences

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

Total backlog was approximately $ 2.1 billion as of March 31, 2021, of which the Corporation expects to recognize approximately 88 % as net sales over the next 36 months .

Total backlog was approximately $ 2.2 billion as of June 30, 2021, of which the Corporation expects to recognize approximately 87 % 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 Three Months Ended

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

June 30, June 30,

(In thousands) 2021 2020 2021 2020

15 unchanged sentences

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

Revenue recognized during the three months ended March 31, 2021 and 2020 included in contract liabilities at the beginning of the respective years was approximately $ 77 million and $ 89 million, respectively.

Revenue recognized during the three and six months ended June 30, 2021 included in the contract liabilities balance as of January 1, 2021 was approximately $ 65 million and $ 142 million, respectively.

Revenue recognized during the three and six months ended June 30, 2020 included in the contract liabilities balance as of January 1, 2020 was approximately $ 71 million and $ 160 million, respectively.

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

10 unchanged sentences

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

During the three months ended March 31, 2021, the Corporation paid $ 5 million in regard to prior period acquisitions, which included a working capital adjustment on the acquisition of Pacific Star Communications, Inc.

During the six months ended June 30, 2021, the Corporation did not complete any acquisitions.

However, the Corporation paid $ 5 million during the six months ended June 30, 2021 in regard to prior period acquisitions, which included a working capital adjustment on the acquisition of Pacific Star Communications, Inc.

(PacStar), as well as a portion of the purchase price on the acquisition of Dyna-Flo Control Valve Services Ltd.

(Dyna-Flo), which was initially held back in accordance with the terms of the Purchase Agreement.

During the three months ended March 31, 2020, the Corporation acquired one business for an aggregate purchase price of $ 60 million, which is described in more detail below.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the acquisition consummated during the three months ended March 31, 2020.

(Dyna-Flo), which was initially held back as security for potential indemnification claims against the seller in accordance with the terms of the Purchase Agreement.

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.

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

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

(In thousands) 2020

10 unchanged sentences

Goodwill deductible for tax purposes $ 38,469

2020 Acquisition

2020 Acquisitions

On October 30, 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.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

acquired business operates within the Defense Electronics segment.

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

Interactive Analysis and Display 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.

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

The acquired product line operates within the Defense Electronics segment.

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

3 unchanged sentences

ASSETS HELD FOR SALE

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 Naval & Power segment.

2 unchanged sentences

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 million in the fourth quarter of 2020.

No impairment loss was recorded on the assets or liabilities held for sale during the three months ended March 31, 2021.

No impairment loss was recorded on the assets or liabilities held for sale during the six months ended June 30, 2021.

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

(In thousands) March 31, 2021 December 31, 2020

(In thousands) June 30, 2021 December 31, 2020

Assets held for sale:

16 unchanged sentences

The composition of receivables is as follows:

(In thousands) March 31, 2021 December 31, 2020

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) June 30, 2021 December 31, 2020

Billed receivables:

12 unchanged sentences

The composition of inventories is as follows:

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) March 31, 2021 December 31, 2020

(In thousands) June 30, 2021 December 31, 2020

Raw materials $ 193,066 $ 177,828

7 unchanged sentences

Inventories, net $ 446,689 $ 428,879

(1) As of March 31, 2021 and December 31, 2020, this caption also includes capitalized development costs of $ 28.5 million and $ 29.7 million, respectively, related to certain aerospace and defense programs.

(1) As of June 30, 2021 and December 31, 2020, this caption also includes capitalized development costs of $ 27.5 million and $ 29.7 million, respectively, related to certain aerospace and defense programs.

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

As of March 31, 2021 and December 31, 2020, capitalized development costs of $ 12.6 million and $ 13.0 million, respectively, are not currently supported by existing firm orders.

In connection with the change in reportable segments, the Corporation recast its previously reported goodwill balances as of December 31, 2020 on a relative fair value basis.

As a result, the Corporation performed an interim quantitative impairment assessment of each of its reporting units, and concluded that no impairment existed as of March 31, 2021.

As of June 30, 2021 and December 31, 2020, capitalized development costs of $ 12.6 million and $ 13.0 million, respectively, are not currently supported by existing firm orders.

In connection with the change in reportable segments on January 1, 2021, the Corporation recast its previously reported goodwill balances as of December 31, 2020 on a relative fair value basis.

As a result, the Corporation performed an interim quantitative impairment assessment as of March 31, 2021 on each of its reporting units, and concluded that no impairment exists.

Refer to Note 12 to the Condensed Consolidated Financial Statements for additional information on the Corporation’s reportable segments.

The changes in the carrying amount of goodwill for the three months ended March 31, 2021 are as follows:

The changes in the carrying amount of goodwill for the six months ended June 30, 2021 are as follows:

(In thousands) Aerospace & Industrial Defense Electronics Naval & Power Consolidated

December 31, 2020 $ 316,921 $ 703,915 $ 434,301 $ 1,455,137

$ 316,921 $ 703,915 $ 434,301 $ 1,455,137

Adjustments (1)

1 unchanged sentence

Foreign currency translation adjustment 650 250 853 1,753

March 31, 2021 $ 317,353 $ 713,823 $ 434,048 $ 1,465,224

(1) Amount relates to post-closing adjustments on the Corporation's acquisition of PacStar in October 2020.

June 30, 2021 $ 317,571 $ 714,010 $ 435,154 $ 1,466,735

(1) Amount primarily relates to post-closing adjustments on the Corporation's acquisition of PacStar in October 2020.

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:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(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.

Total intangible amortization expense for the three months ended March 31, 2021 was $ 14.9 million as compared to $ 14.1 million in the comparable prior year period.

Total intangible amortization expense for the six months ended June 30, 2021 was $ 30.1 million, as compared to $ 28.7 million in the comparable prior year period.

The estimated amortization expense for the five years ending December 31, 2021 through 2025 is $ 60 million, $ 55 million, $ 52 million, $ 48 million, and $ 46 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

8 unchanged sentences

Effects on Condensed Consolidated Balance Sheets

As of March 31, 2021 and December 31, 2020, the fair values of the asset and liability derivative instruments were immaterial.

As of June 30, 2021 and December 31, 2020, the fair values of the asset and liability derivative instruments were immaterial.

Effects on Condensed Consolidated Statements of Earnings

1 unchanged sentence

The gains and losses on forward exchange derivative contracts not designated for hedge accounting are recognized to general and administrative expenses within the Condensed Consolidated Statements of Earnings.

The gain for the three months ended March 31, 2021 was immaterial.

The loss for the three months ended March 31, 2020 was $ 8.1 million.

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 March 31, 2021.

The gains for the three and six months ended June 30, 2021 were immaterial.

The gains and (losses) for the three and six months ended June 30, 2020 were $ 0.7 million and ($ 7.4 ) million, respectively.

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.

March 31, 2021 December 31, 2020

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 December 31, 2020

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

21 unchanged sentences

Defined Benefit Pension Plans

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table is a consolidated disclosure of all domestic and foreign defined pension plans as described in the Corporation’s 2020 Annual Report on Form 10-K.

The components of net periodic pension cost for the three months ended March 31, 2021 and 2020 were as follows:

Three Months Ended

The components of net periodic pension cost for the three and six months ended June 30, 2021 and 2020 were as follows:

Three Months Ended Six Months Ended

June 30, June 30,

(In thousands) 2021 2020 2021 2020

4 unchanged sentences

Amortization of unrecognized actuarial loss 7,574 5,750 14,717 11,499

Cost of settlements 3,075 — 3,075 —

Net periodic pension cost $ 6,720 $ 1,452 $ 9,796 $ 2,903

1 unchanged sentence

Contributions to the foreign benefit plans are not expected to be material in 2021.

During the three months ended March 31, 2020, the Corporation made a $ 150 million voluntary contribution to the Curtiss-Wright Pension Plan.

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

During the three and six months ended June 30, 2021, the Company recognized a settlement charge related to the retirement of a former executive.

The settlement charge represents an event that is accounted for under guidance on employers’ accounting for settlements and curtailments of defined benefit pension plans.

Defined Contribution Retirement Plan

1 unchanged sentence

subsidiaries.

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

During the three months ended March 31, 2021 and 2020, the expense relating to the plan was $ 5.3 million and $ 6.0 million, respectively.

The Corporation made $ 11.8 million in contributions to the plan during the three months ended March 31, 2021 and expects to make total contributions of $ 19.0 million in 2021.

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, 2021, the expense relating to the plan was $ 4.3 million and $ 9.6 million, respectively.

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.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Corporation made $ 13.9 million in contributions to the plan during the six months ended June 30, 2021, and expects to make total contributions of $ 19.0 million in 2021.

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

Three Months Ended Six Months Ended

June 30, June 30,

(In thousands) 2021 2020 2021 2020

2 unchanged sentences

Diluted weighted-average shares outstanding 41,088 41,855 41,092 42,362

For the three months ended March 31, 2021, approximately 88,000 shares issuable under equity-based awards were excluded from the calculation of diluted earnings per share as they were anti-dilutive based on the average stock price during the period.

There were no anti-dilutive equity-based awards for three months ended March 31, 2020.

For the three and six months ended June 30, 2021, approximately 34,000 and 61,000 shares, respectively, issuable under equity-based awards were excluded from the calculation of diluted earnings per share as they were anti-dilutive based on the average stock price during the period.

There were no anti-dilutive equity-based awards for three and six months ended June 30, 2020.

SEGMENT INFORMATION

5 unchanged sentences

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.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Corporation’s measure of segment profit or loss is operating income.

1 unchanged sentence

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

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(In thousands) 2021 2020 2021 2020

12 unchanged sentences

(1) Includes pension and other postretirement benefit expense, certain environmental costs related to remediation at legacy sites, foreign currency transactional gains and losses, and certain other expenses.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(In thousands) 2021 2020 2021 2020

1 unchanged sentence

Interest expense 10,180 8,515 20,139 16,004

Other income, net 4,843 5,532

Other income (expense), net 440 ( 4,105 ) 5,283 1,427

Earnings before income taxes $ 84,843 $ 42,729 $ 164,793 $ 113,218

(In thousands) March 31, 2021 December 31, 2020

(In thousands) June 30, 2021 December 31, 2020

Identifiable assets

7 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)

4 unchanged sentences

— 17,649 17,649

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

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

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

1 unchanged sentence

3,283 ( 3,126 ) 157

Amounts reclassified from accumulated other comprehensive income (loss) (1)

Amounts reclassified from accumulated other comprehensive loss (1)

— 13,168 13,168

Net current period other comprehensive income (loss) ( 3,960 ) 5,600 1,640

March 31, 2021 $ ( 92,697 ) $ ( 216,519 ) $ ( 309,216 )

Net current period other comprehensive income 3,283 10,042 13,325

June 30, 2021 $ ( 85,454 ) $ ( 212,077 ) $ ( 297,531 )

(1) All amounts are after tax.

4 unchanged sentences

Amortization of actuarial losses ( 14,717 ) Other income, net

Settlements ( 3,075 ) Other income, net

( 17,360 ) Earnings before income taxes

1 unchanged sentence

Total reclassifications $ ( 13,168 ) 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.

From time to time, the Corporation and its subsidiaries are involved in legal proceedings that are incidental to the operation of our business.

Some of these proceedings allege damages relating to asbestos and environmental exposures, intellectual property matters, copyright infringement, personal injury claims, employment and employee benefit matters, government contract issues, commercial or contractual disputes, and acquisitions or divestitures.

The Corporation continues to defend vigorously against all claims.

Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including assessment of the merits of the particular claim, as well as current accruals and insurance coverage, the Corporation does not expect that such legal proceedings will have a material adverse impact on its condensed consolidated financial statements.

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 March 31, 2021 and December 31, 2020, there were $ 19.7 million and $ 21.1 million of stand-by letters of credit outstanding, respectively.

As of both March 31, 2021 and December 31, 2020, there were $ 5.6 million of bank guarantees outstanding.

In addition, the Corporation is required to provide the Nuclear

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

As of June 30, 2021 and December 31, 2020, there were $ 23.4 million and $ 21.1 million of stand-by letters of credit outstanding, respectively, and $ 4.7 million and $ 5.6 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.

AP1000 Program

Within the Corporation’s Naval & Power segment, Electro-Mechanical Division (EMD) is the RCP supplier for the Westinghouse Electric Company (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 did not meet certain contractual delivery dates under its AP1000 U.S.

Within the Corporation’s Naval & Power segment, Electro-Mechanical Division (EMD) is the reactor coolant pump (RCP) supplier for the Westinghouse Electric Company (WEC) AP1000 nuclear power plants in China and the United States.

The terms of the AP1000 U.S.

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

While the Corporation did not meet certain contractual delivery dates under its AP1000 U.S.

and China contracts, there are significant counterclaims and uncertainties as to which parties are responsible for the delay.

In June 2021, the Corporation and WEC participated in non-binding mediation in an effort to settle all open disputes under the U.S.

and China contracts.

however, there are significant counterclaims and uncertainties as to which parties are responsible for the delay.

In January 2021, the Corporation and WEC agreed to participate in formal non-binding mediation to settle all open disputes under both contracts.

The mediation is tentatively scheduled to start late in the second quarter of 2021.

As of March 31, 2021, the range of possible loss for liquidated damages on these two contracts is $ 0 to $ 55.5 million , consisting of $ 0 to $ 25 million on the China contract and $ 0 to $ 31 million on the U.S.

The Corporation believes that the ultimate resolution of these two matters will not have a material impact on its consolidated financial statements.

The mediation efforts were ultimately unsuccessful.

WEC has filed a notice of arbitration in regard to the China contract, asserting that it is entitled to liquidated damages of $ 25 million.

Additionally, WEC has also filed claims in Georgia claiming damages on the U.S.

The Corporation believes that it has adequate legal defenses and intends to vigorously defend these matters.

As it relates to the U.S.

contract, the range of possible loss is $ 0 to $ 31 million.

The Corporation believes that the likelihood of any potential liability stemming from liquidated damages on the U.S.

contract is remote.

As it relates to the China contract, the range of possible loss is $ 0 to $ 25 million.

As of June 30, 2021, the Corporation believes that it is adequately accrued regarding this matter, and that the ultimate resolution will not have a significant impact on its condensed consolidated financial statements.

RESTRUCTURING COSTS

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These restructuring activities, which included workforce reductions and consolidation of facilities, were substantially completed as of December 31, 2020.

As of March 31, 2021 and December 31, 2020, the restructuring liability associated with these restructuring activities was $ 4.1 million and $ 6.9 million, respectively, with such liability expected to be substantially settled as of December 31, 2021.

As of June 30, 2021 and December 31, 2020, the restructuring liability associated with these restructuring activities was $ 2.1 million

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

and $ 6.9 million, respectively, with such liability expected to be substantially settled as of December 31, 2021.

These balances are reported within Other Current Liabilities on the Condensed Consolidated Balance Sheet.

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In March 2020, the World Health Organization characterized the outbreak of COVID-19 as a pandemic.

Over the last twelve months, the pandemic has adversely affected certain elements of our business, including our supply chain and production levels, due to significant decreases in air traffic, temporary shutdowns of our customers’ and suppliers’ facilities, as well as decreased demand from our general industrial customers.

We have experienced, and expect to continue to experience, unpredictable volatility in demand in our commercial aerospace and general industrial end markets.

The pandemic has adversely affected certain elements of our business, including our supply chain and production levels, due to temporary shutdowns of our customers’ and suppliers’ facilities.

The extent to which COVID-19 continues to adversely impact our operations depends on future developments, including the impact of the global rollout of COVID-19 vaccines, as well as the emergence and impact of any new COVID-19 variants.

However, given the diversified breadth of our company, we believe that we are well-positioned to mitigate any material risks arising as a result of COVID-19.

However, given the diversified breadth of our company, we believe that we are well-positioned to mitigate any material risks arising as a result of COVID-19 or any of its variants.

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 the current year and beyond.

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 months ended March 31, 2021.

The financial information as of March 31, 2021 should be read in conjunction with the financial statements for the year ended December 31, 2020 contained in our Form 10-K.

The financial information as of June 30, 2021 should be read in conjunction with the financial statements for the year ended December 31, 2020 contained in our Form 10-K.

The MD&A is organized into the following sections:

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The results of operations for acquisitions are incremental for the first twelve months from the date of acquisition.

Additionally, the results of operations of divested businesses are removed from the

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.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

comparable prior year period for purposes of calculating “organic” and “incremental” results.

The definition of “organic” excludes the effect of foreign currency translation.

Condensed Consolidated Statements of Earnings

Three Months Ended

(In thousands) 2021 2020 % change

Three Months Ended Six Months Ended

June 30, June 30,

(In thousands) 2021 2020 % change 2021 2020 % change

Aerospace & Industrial $ 199,713 $ 177,411 13 % $ 380,044 $ 404,139 (6 %)

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Interest expense 10,180 8,515 (20 %) 20,139 16,004 (26 %)

Other income, net 4,843 5,532 (12) %

Other income (expense), net 440 (4,105) 111 % 5,283 1,427 270 %

Earnings before income taxes 84,843 42,729 99 % 164,793 113,218 46 %

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Net earnings $ 61,408 $ 31,018 $ 120,877 $ 82,779

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

New orders $ 689,728 $ 620,249 11 % $ 1,269,175 $ 1,190,050 7 %

Components of sales and operating income increase (decrease):

Three Months Ended

Sales Operating Income

Three Months Ended Six Months Ended

June 30, June 30,

2020 2021 vs.

Sales Operating Income Sales Operating Income

Organic 6 % 46 % (1 %) 26 %

Acquisitions 6 % 4 % 6 % 4 %

Restructuring — % 26 % — % 14 %

Foreign currency 1 % (5 %) 1 % (3 %)

Total 13 % 71 % 6 % 41 %

Sales during the three months ended March 31, 2021 decreased $4 million, or 1%, to $597 million, compared with the prior year period.

On a segment basis, a sales increase of $42 million from the Defense Electronics segment was more than offset by lower sales of $46 million from the Aerospace & Industrial segment.

Sales from the Naval & Power segment were essentially flat against the prior year period.

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

Sales in the second quarter increased $71 million, or 13%, to $621 million, compared with the prior year period.

On a segment basis, sales from the Aerospace & Industrial, Defense Electronics, and Naval & Power segments increased $22 million, $23 million, and $26 million, respectively.

Sales during the six months ended June 30, 2021 increased $67 million, or 6%, to $1,219 million, compared with the prior year period.

On a segment basis, sales from the Defense Electronics and Naval & Power segments increased $64 million and $27

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Operating income during the three months ended March 31, 2021 increased $13 million, or 17%, to $85 million, compared with the prior year period, while operating margin increased 220 basis points to 14.2%, compared with the same period in 2020.

In the Defense Electronics segment, operating income and operating margin benefited from favorable overhead absorption on higher sales, a favorable shift in mix within our defense electronics products, and the benefits of our cost containment initiatives, partially offset by higher research and development costs.

Operating income and operating margin in the Naval & Power segment increased primarily due to a favorable shift in mix within our naval defense products, current year savings recognized as a result of our prior year restructuring actions, as well as the absence of prior period transition costs associated with our Dresser-Rand Government Business (DRG) facility.

These increases were partially offset by lower operating income and operating margin in the Aerospace & Industrial segment primarily due to unfavorable overhead absorption on lower sales in the commercial aerospace market, partially offset by current year savings recognized as a result of our prior year restructuring actions.

Non-segment operating expense during the three months ended March 31, 2021 decreased $3 million , or 27%, to $9 million , primarily due to lower foreign currency losses.

Interest expense during the three months ended March 31, 2021 increased $2 million , or 33%, to $10 million, primarily due to the issuance of $300 million Senior Notes in August 2020.

Other income, net of $5 million was essentially flat compared to the prior year period.

The effective tax rate for the three months ended March 31, 2021 of 25.6% decreased as compared to an effective tax rate of 26.6% in the prior year period, primarily due to additional tax expense associated with the establishment of a valuation allowance against certain foreign deferred tax assets in the prior year period.

Comprehensive income for the three months ended March 31, 2021 was $61 million, compared to comprehensive income of $6 million in the prior year period.

million, respectively, with sales from the Aerospace & Industrial segment decreasing $24 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 increased $39 million, or 71%, to $95 million, and operating margin increased 510 basis points to 15.2% compared with the same period in 2020.

In the Aerospace & Industrial segment, increases in operating income and operating margin were primarily due to favorable overhead absorption on higher sales in the general industrial market, as well as the benefits from our ongoing operational excellence and prior year restructuring initiatives.

Operating income and operating margin in the Defense Electronics segment also benefited from our operational excellence initiatives, as well as the incremental impact from our PacStar acquisition.

These increases were partially offset by unfavorable mix in defense electronics and higher research and development costs.

In the Naval & Power segment, increases in operating income and operating margin were primarily due to favorable overhead absorption on higher sales as well as current year savings recognized as a result of our prior year restructuring initiatives.

Operating income during the six months ended June 30, 2021 increased $52 million, or 41%, to $180 million and operating margin increased 360 basis points to 14.7%, compared with the same period in 2020.

In the Aerospace & Industrial segment, increases in operating income and operating margin were primarily due to the benefits from our ongoing operational excellence and prior year restructuring initiatives.

Operating income and operating margin in the Defense Electronics segment benefited from our operational excellence initiatives, the incremental impact from our PacStar acquisition, as well as the absence of first year purchase accounting costs from our 901D acquisition.

These increases were partially offset by higher research and development costs and unfavorable foreign currency translation.

In the Naval & Power segment, increases in operating income and operating margin were primarily due to favorable overhead absorption as well as current year savings recognized as a result of our prior year restructuring initiatives.

Non-segment operating expense in the second quarter increased $2 million, or 20%, to $10 million, primarily due to higher environmental and other corporate costs.

Non-segment operating expense during the six months ended June 30, 2021 decreased $2 million, or 8%, to $18 million, primarily due to lower foreign exchange losses.

Interest expense in the second quarter and six months ended June 30, 2021 increased $2 million, or 20%, to $10 million, and $4 million , or 26%, to $20 million, respectively, primarily due to the issuance of $300 million Senior Notes in August 2020.

Other income, net in the second quarter and six months ended June 30, 2021 increased $5 million, or 111%, to $1 million, and $4 million, or 270%, to $5 million, respectively, primarily due to the prior year recognition of accumulated foreign currency translation losses of $10 million related to the substantial liquidation of our Norwegian subsidiary.

These increases were partially offset by a one-time pension settlement charge related to the retirement of a former executive, which was recognized in the current period.

The effective tax rate of 27.6% in the second quarter increased compared to an effective tax rate of 27.4% in the prior year period.

This increase was primarily driven by a provisional charge related to the remeasurement of deferred tax liabilities due to a corporate tax rate change in the United Kingdom.

The effective tax rate of 26.6% for the six months ended June 30, 2021 decreased as compared to an effective tax rate of 26.9%, primarily due to the recognition of accumulated foreign currency translation losses in the prior year period related to the substantial liquidation of our Norwegian subsidiary, which are not deductible for tax purposes.in the prior year period.

Comprehensive income in the second quarter was $73 million, compared to comprehensive income of $59 million in the prior year period.

The change was primarily due to the following:

• Net earnings increased $30 million, primarily due to higher operating income.

• Foreign currency translation adjustments for the three months ended March 31, 2021 resulted in a $4 million comprehensive loss, compared to a $50 million comprehensive loss in the prior period.

The comprehensive loss during the current period was primarily attributed to decreases in the Euro.

New orders increased $10 million during the three months ended March 31, 2021 from the comparable prior year period, primarily due to the incremental impact of our PacStar acquisition in the Defense Electronics segment.

This increase was partially offset by the timing of naval defense orders in the Naval & Power segment and a decline in new orders for sensors and controls equipment as well as surface treatment services in the Aerospace & Industrial segment.

• Foreign currency translation adjustments in the second quarter resulted in a $7 million comprehensive gain, compared to a $24 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 during the six months ended June 30, 2021 was $134 million, compared to comprehensive income of $65 million in the prior year period.

The change was primarily due to the following:

• Net earnings increased $38 million, primarily due to higher operating income.

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• Foreign currency translation adjustments for the six months ended June 30, 2021 resulted in a $3 million comprehensive gain, compared to a $26 million comprehensive loss in the prior period.

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

New orders in the second quarter and six months ended June 30, 2021 increased $69 million and $79 million, respectively, from the comparable prior year periods, primarily du e an increase in new orders for industrial vehicles and sensors and actuation equipment i n the Aerospace & Industrial segment, as well as the incremental impact of our PacStar acquisition in the Defense Electronics segment .

These increases were partially offset by the timing of naval defense orders in the Naval & Power segment.

RESULTS BY BUSINESS SEGMENT

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

Three Months Ended

(In thousands) 2021 2020 % change

Three Months Ended Six Months Ended

June 30, June 30,

(In thousands) 2021 2020 % change 2021 2020 % change

Sales $ 199,713 $ 177,411 13 % $ 380,044 $ 404,139 (6 %)

Operating income 31,977 9,615 233 % 51,002 41,755 22 %

Operating margin 10.6 % 14.2 % (360 bps)

Operating margin 16.0 % 5.4 % 1,060 bps 13.4 % 10.3 % 310 bps

Restructuring-related expenses $ — $ 5,586 NM $ — $ 5,870 NM

New orders $ 222,825 $ 121,068 84 % $ 421,940 $ 325,407 30 %

Components of sales and operating income increase (decrease):

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Three Months Ended

Sales Operating Income

Three Months Ended Six Months Ended

June 30, June 30,

2020 2021 vs.

Sales Operating Income Sales Operating Income

Organic 10 % 174 % (8 %) 8 %

Acquisitions — % — % — % — %

Restructuring — % 59 % — % 14 %

Foreign currency 3 % — % 2 % — %

1 unchanged sentence

Sales in the Aerospace & Industrial segment are primarily generated from the commercial aerospace and general industrial markets, and to a lesser extent the defense and power & process markets.

Sales during the three months ended March 31, 2021 decreased $46 million, or 20%, to $180 million from the prior year period, primarily due to the ongoing impact of the COVID-19 pandemic on the commercial aerospace market.

Sales in the commercial aerospace market decreased $44 million primarily due to lower sales of actuation and sensors equipment and surface treatment services, as well as the exit of our build-to-print actuation product line during the prior year.

Operating income decreased $13 million, or 41%, to $19 million during the three months ended March 31, 2021 compared to the prior year period, while operating margin decreased 360 basis points to 10.6%.

The decreases in operating income and operating margin were primarily due to unfavorable overhead absorption on lower sales in the commercial aerospace market, partially offset by current year savings recognized as a result of our prior year restructuring actions.

New orders during the three months ended March 31, 2021 decreased $5 million from the comparable prior year period.

This decrease was primarily due to a decline in new orders for sensors and controls equipment as well as surface treatment services, partially offset by higher demand for industrial vehicle products.

Sales in the second quarter increased $22 million, or 13%, to $200 million from the prior year period.

Sales in the general industrial market increased $25 million, primarily due to higher industrial vehicle sales.

This increase was partially offset by lower sales in the commercial aerospace market, primarily due to the exit of our build-to-print product line in the fourth quarter of 2020.

Sales during the six months ended June 30, 2021 decreased $24 million, or 6%, to $380 million from the prior year period, primarily due to the impact of the COVID-19 pandemic on the commercial aerospace market.

In the commercial aerospace market, sales decreased $50 million, the majority of which occurred in the first quarter of 2021 due to lower demand for actuation and sensors equipment as well as surface treatment services.

Sales in the commercial aerospace market were also negatively impacted by the exit of our build-to-print product line in the fourth quarter of 2020.

These decreases were partially

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

offset by sales increases of $28 million in the general industrial market, primarily due to higher demand for industrial vehicle products and surface treatment services.

Operating income in the second quarter increased $22 million, or 233%, to $32 million from the prior year period, and operating margin increased 1,060 basis points to 16.0%.

The increases in operating income and operating margin were primarily due to favorable overhead absorption on higher sales in the general industrial market, as well as the benefits from our ongoing operational excellence and prior year restructuring initiatives.

Operating income during the six months ended June 30, 2021 increased $9 million, or 22%, to $51 million from the prior year period, and operating margin increased 310 basis points to 13.4%.

The increases in operating income and operating margin were primarily due to current year savings recognized as a result of our ongoing operational excellence and prior year restructuring initiatives.

New orders in the second quarter and six months ended June 30, 2021 increased $102 million and $97 million, respectively, from the comparable prior year periods, primarily due to an increase in new orders for industrial vehicles and sensors and actuation equipment.

Defense Electronics

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

Three Months Ended

(In thousands) 2021 2020 % change

Three Months Ended Six Months Ended

June 30, June 30,

(In thousands) 2021 2020 % change 2021 2020 % change

Sales $ 162,351 $ 139,613 16 % $ 343,563 $ 279,194 23 %

Operating income 29,271 24,736 18 % 65,894 48,799 35 %

Operating margin 20.2 % 17.2 % 300 bps

Operating margin 18.0 % 17.7 % 30 bps 19.2 % 17.5 % 170 bps

Restructuring-related expenses $ — $ 1,671 NM $ — $ 2,470 NM

New orders $ 174,791 $ 165,995 5 % $ 357,091 $ 313,896 14 %

Components of sales and operating income increase (decrease):

Three Months Ended

Sales Operating Income

Three Months Ended Six Months Ended

June 30, June 30,

2020 2021 vs.

Sales Operating Income Sales Operating Income

Organic (6 %) 12 % (1 %) 26 %

Acquisitions 22 % 9 % 23 % 12 %

Restructuring — % 7 % — % 5 %

Foreign currency — % (10 %) 1 % (8 %)

Total 16 % 18 % 23 % 35 %

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

Sales in the second quarter increased $23 million, or 16%, to $162 million from the prior year period, primarily due to higher sales in the ground defense and commercial aerospace markets.

Sales in the ground defense market increased $28 million primarily due to the incremental impact of our PacStar acquisition.

In the commercial aerospace market, sales increased $7 million due to higher demand for avionics and flight test equipment on various domestic and international platforms.

Thes e increases were partially offset by lower sales of $13 million in the aerospace defense market, primarily due to the timing of orders for embedded computing equipment on various domestic programs.

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

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

Sales during the three months ended March 31, 2021 increased $42 million, or 30%, to $181 million from the prior year period.

Sales in the ground defense market increased $33 million primarily due to the incremental impact of our PacStar acquisition.

In the aerospace defense market, sales increased $10 million primarily due to higher demand for embedded computing equipment on various helicopter and Unmanned Aerial Vehicle (UAV) platforms, including the Blackhawk and Global Hawk.

Operating income during the three months ended March 31, 2021 increased $13 million, or 52%, to $37 million, and operating margin increased 300 basis points from the prior year period to 20.2%.

The increases in operating income and operating margin were primarily due to favorable overhead absorption on higher sales, a favorable shift in mix within our defense electronics products, and the benefits of our cost containment initiatives, partially offset by higher research and development costs.

New orders during the three months ended March 31, 2021 increased $34 million from the comparable prior year period, primarily due to the incremental impact of our PacStar acquisition.

Sales during the six months ended June 30, 2021 increased $64 million, or 23%, to $344 million from the prior year period, primarily due to the incremental impact of our PacStar acquisition in the ground defense market, which contributed sales of $64 million.

Operating income in the second quarter increased $5 million, or 18%, to $29 million compared to the prior year period, and operating margin increased 30 basis points from the prior year period to 18.0%.

Operating income during the six months ended June 30, 2021 increased $17 million, or 35%, to $66 million, while operating margin increased 170 basis points from the prior year period to 19.2%.

The increases in operating income and operating margin for each of the respective periods were primarily due to the benefits from our ongoing operational excellence and prior year restructuring initiatives, the incremental impact of our PacStar acquisition, as well as the absence of first year purchase accounting costs from our 901D acquisition.

These increases were partially offset by unfavorable mix in defense electronics and higher research and development costs.

New orders in the second quarter and six months ended June 30, 2021 increased $9 million and $43 million, respectively, from the comparable prior year periods, primarily due to the incremental impact of our PacStar acquisition.

These increases were partially offset by the timing of naval defense and aerospace defense orders.

Naval & Power

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

Three Months Ended

(In thousands) 2021 2020 % change

Three Months Ended Six Months Ended

June 30, June 30,

(In thousands) 2021 2020 % change 2021 2020 % change

Sales $ 259,431 $ 233,023 11 % $ 494,947 $ 467,945 6 %

Operating income 43,095 29,146 48 % 81,152 57,256 42 %

Operating margin 16.2 % 12.0 % 420 bps

Operating margin 16.6 % 12.5 % 410 bps 16.4 % 12.2 % 420 bps

Restructuring-related expenses $ — $ 7,339 NM $ — $ 9,040 NM

New orders $ 292,112 $ 333,186 (12 %) $ 490,144 $ 550,747 (11 %)

Components of sales and operating income increase (decrease):

Three Months Ended

Sales Operating Income

Three Months Ended Six Months Ended

June 30, June 30,

2020 2021 vs.

Sales Operating Income Sales Operating Income

Organic 10 % 24 % 4 % 28 %

Acquisitions — % — % — % — %

Restructuring — % 26 % — % 16 %

Foreign currency 1 % (2 %) 2 % (2 %)

Total 11 % 48 % 6 % 42 %

Sales in the Naval & Power segment are primarily to the power & process and naval defense markets.

Sales during the three months ended March 31, 2021 of $236 million were essentially flat against the comparable prior year period.

In the naval defense market, sales increased $18 million primarily due to higher production on the Virginia-class submarine and CVN-81 aircraft carrier programs, as well as higher foreign military sales.

This increase was essentially offset by lower sales of $17 million in the power & process market, primarily due to lower domestic aftermarket sales and lower demand for industrial valve products.

Operating income during the three months ended March 31, 2021 increased $10 million, or 35%, to $38 million, and operating margin increased 420 basis points from the prior year period to 16.2%.

The increases in operating income and operating margin were primarily due to current year savings recognized as a result of our prior year restructuring actions, a favorable shift in mix within our naval defense products, a nd the absence of prior period transition costs associated with our DRG facility.

Sales in the Naval & Power segment are primarily to the naval defense and power & process markets.

Sales in the second quarter increased $26 million, or 11%, to $259 million from the prior year period, primarily due to higher sales in the naval defense and power & process markets.

In the naval defense market, sales increased $14 million primarily due to higher production on the CVN-80 and CVN-81 aircraft carrier programs as well as higher service center sales.

In the power & process market, sales increased $12 million primarily due to higher nuclear aftermarket sales and increased demand for industrial valve products.

Sales during the six months ended June 30, 2021 increased $27 million, or 6%, to $495 million from the prior year period.

In the naval defense market, sales increased $32 million primarily due to increased production on the CVN-81 aircraft carrier

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

New orders decreased $20 million during the three months ended March 31, 2021 from the comparable prior year period, primarily due to the timing of naval defense orders.

program as well as higher service center and foreign military sales.

This increase was partially offset by lower sales in the power & process market primarily due to lower sales of industrial valve products.

Operating income in the second quarter increased $14 million, or 48%, to $43 million, and operating margin increased 410 basis points from the prior year period to 16.6%.

Operating income during the six months ended June 30, 2021 increased $24 million, or 42%, to $81 million, and operating margin increased 420 basis points from the prior year period to 16.4%.

The increases in operating income and operating margin for each of the respective periods were primarily due to favorable overhead absorption on higher sales as well as current year savings recognized as a result of our prior year restructuring initiatives.

Operating income and operating margin during the six months ended June 30, 2021 also benefited from the absence of prior period transition costs associated with our DRG facility.

New orders in the second quarter and six months ended June 30, 2021 decreased $41 million and $61 million, respectively, from the comparable prior year periods, primarily due to the timing of naval defense orders.

SUPPLEMENTARY INFORMATION

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The table has been included to supplement the discussion of our consolidated operating results.

Net Sales by End Market and Customer Type Three Months Ended

(In thousands) 2021 2020 % change

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

June 30, June 30,

(In thousands) 2021 2020 % change 2021 2020 % change

Aerospace & Defense markets:

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Aerospace & Defense markets

Sales during the three months ended March 31, 2021 increased $11 million, or 3%, to $402 million, primarily due to higher sales in the ground defense, naval defense, and aerospace defense markets.

Sales in the ground defense market benefited $33 million due to the incremental impact of our PacStar acquisition.

Sales in the naval defense market increased primarily due to higher production on the Virginia-class submarine and CVN-81 aircraft carrier programs, as well as higher foreign military sales.

Sales in the aerospace defense market increased primarily d ue to higher demand for embedded computing equipment on various helicopter and UAV platforms, including the Blackhawk and Global Hawk.

These increases were partially offset by lower sales in the commercial aerospace market primarily due to a pandemic-driven decline in demand for sensors equipment and surface treatment services, as well as the exit of our build-to-print actuation product line during the prior year.

Sales in the second quarter increased $32 million, or 9%, to $397 million against the comparable prior year period, primarily due to higher sales in the ground defense and naval defense markets.

The ground defense market benefited from the impact of our PacStar acquisition, which contributed incremental sales of $31 million.

Sales in the naval defense market increased primarily due to h igher production on the CVN-80 and CVN-81 aircraft carrier programs .

These increases were partially offset by the timing of orders for embedded computing equipment on various domestic programs in the aerospace defense market.

Sales during the six months ended June 30, 2021 increased $43 million, or 6%, to $799 million, primarily due to higher sales in the ground defense and naval defense markets.

The ground defense market benefited from the impact of our PacStar acquisition, which contributed incremental sales of $64 million.

In the naval defense market, sales benefited from increased production on the CVN-81 aircraft carrier program as well as higher service center and foreign military sales.

These increases were partially offset by lower sales in the commercial aerospace market during the first quarter of 2021 due to a pandemic-driven decline in demand for sensors products and surface treatment services.

Sales in the commercial aerospace market were also negatively impacted by the exit of our build-to-print product line in the fourth quarter of 2020.

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Commercial markets

Sales during the three months ended March 31, 2021 decreased $15 million, or 7%, to $195 million, primarily due to lower domestic aftermarket sales and lower demand for industrial valve products in the power & process market.

This decrease was partially offset by higher demand for our industrial vehicle products in the general industrial market.

Sales in the second quarter increased $39 million, or 21%, to $224 million primarily due to higher sales in both the general industrial and power & process markets.

In the general industrial market, sales benefited from higher demand for industrial vehicle products and surface treatment services.

In the power & process market, sales increased primarily due to higher nuclear aftermarket sales and increased demand for industrial valve products.

Sales during the six months ended June 30, 2021 increased $24 million, or 6%, to $419 million primarily due to higher demand for our industrial vehicle products in the general industrial market.

This increase was partially offset by lower sales in the power & process market primarily due to lower sales of industrial valve products.

LIQUIDITY AND CAPITAL RESOURCES

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In some cases, these payments can exceed the costs incurred on a project.

Management continually evaluates cash utilization alternatives, including share repurchases, acquisitions, increased dividends, and paying down debt, to determine the most beneficial use of

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PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

available capital resources.

Management continually evaluates cash utilization alternatives, including share repurchases, acquisitions, increased dividends, and paying down debt, to determine the most beneficial use of available capital resources.

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 Three Months Ended

(In thousands) March 31, 2021 March 31, 2020

Condensed Consolidated Statements of Cash Flows Six Months Ended

(In thousands) June 30, 2021 June 30, 2020

Cash provided by (used in):

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Net decrease in cash and cash equivalents (740) (235,650)

Net cash used in operating activities decreased $166 million from the prior year period, primarily due to a prior year voluntary pension contribution of $150 million and higher cash earnings during the current period.

Net cash used in investing activities decreased $55 million from the comparable prior year period, primarily due to a prior period acquisition and lower current period capital expenditures.

The Corporation acquired one business during the three months ended March 31, 2020 for approximately $60 million, inclusive of $51 million cash paid in the prior year period.

The Corporation did not make any acquisitions during the three months ended March 31, 2021.

Capital expenditures for the three months ended March 31, 2021 and March 31, 2020 were $9 million and $19 million, respectively, with the decrease primarily due to lower capital spending during the current period as well as lower current period investment related to the new DRG facility.

Net cash provided by operating activities increased $101 million from the prior year period, primarily due to a prior year voluntary pensi on contribution of $150 million and higher net earnings during the current period.

This increase was partially offset by higher outstanding receivables during the current period.

Net cash used in investing activities decreased $89 million from the comparable prior year period primarily due to prior period acquisitions and lower current period capital expenditures.

The Corporation acquired two businesses during the six months ended June 30, 2020 for approximately $90 million.

The Corporation did not make any acquisitions during the six months ended June 30, 2021.

Capital expenditures for the six months ended June 30, 2021 and June 30, 2020 were $18 million and $29 million, respectively, with the decrease primarily due to lower capital spending during the current period as well as lower current period investment related to the new DRG facility.

Financing Activities

The Corporation’s debt outstanding had an average interest rate of 3.5% and 3.6% for the three months ended March 31, 2021 and 2020, respectively.

The Corporation’s average debt outstanding was $1,057 million and $795 million for the three months ended March 31, 2021 and 2020, respectively.

The Corporation’s debt outstanding had an average interest rate of 3.5% for both the three and six months ended June 30, 2021, and 3.3% and 3.4% for the three and six months ended June 30, 2020, respectively.

The Corporation’s average debt outstanding was $1,062 million and $1,059 million for the three and six months ended June 30, 2021, respectively, and $890 million and $842 million for the three and six months ended June 30, 2020, respectively.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Credit Agreement

As of March 31, 2021, the Corporation had no outstanding borrowings under the 2012 Senior Unsecured Revolving Credit Agreement (the “Credit Agreement” or “credit facility”) and $20 million in letters of credit supported by the credit facility.

The unused credit available under the Credit Agreement as of March 31, 2021 was $480 million which could be borrowed without violating any of our debt covenants.

As of June 30, 2021, the Corporation had no outstanding borrowings under the 2018 Senior Unsecured Revolving Credit Agreement (the “Credit Agreement” or “credit facility”) and $23 million in letters of credit supported by the credit facility.

The unused credit available under the Credit Agreement as of June 30, 2021 was $477 million, which could be borrowed without violating any of our debt covenants.

Repurchase of common stock

During the three months ended March 31, 2021, the Corporation used $12 million of cash to repurchase approximately 0.1 million outstanding shares under its share repurchase program.

During the three months ended March 31, 2020, the Corporation used $112 million of cash to repurchase approximately 1.1 million outstanding shares under its share repurchase program.

During the six months ended June 30, 2021, the Corporation used $24 million of cash to repurchase approximately 0.2 million outstanding shares under its share repurchase program.

During the six months ended June 30, 2020, the Corporation used $125 million of cash to repurchase approximately 1.2 million outstanding shares under its share repurchase program.

Cash Utilization

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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.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

The Corporation made dividend payments of $7 million during both the six months ended June 30, 2021 and June 30, 2020.

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 March 31, 2021, we had the ability to borrow additional debt of $1.6 billion without violating our debt to capitalization covenant.

As of June 30, 2021, we had the ability to borrow additional debt of $1.7 billion without violating our debt to capitalization covenant.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our market risk during the three months ended March 31, 2021.

There have been no material changes in our market risk during the six months ended June 30, 2021.

Information regarding market risk and market risk management policies is more fully described in "Item 7A.

1 unchanged sentence

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