What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-08-04 · 221 added, 213 removed, 721 unchanged (38% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

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

10 unchanged sentences

General and administrative expenses 78,998 77,251 229,608 230,515

Impairment of assets held for sale 8,656 — 8,656 —

Restructuring expenses — 8,541 — 20,730

1 unchanged sentence

Interest expense 9,955 9,055 30,094 25,059

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

Other income, net 3,627 5,417 8,910 6,844

Earnings before income taxes 91,341 80,935 256,134 194,153

12 unchanged sentences

(In thousands)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

7 unchanged sentences

Comprehensive income $ 58,424 $ 96,410 $ 192,626 $ 161,782

(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.

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

(2) The tax expense included in pension and postretirement adjustments for the three and nine months ended September 30, 2021 was $ 2.0 million and $ 5.1 million, respectively.

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

See notes to condensed consolidated financial statements

2 unchanged sentences

(In thousands, except per share data)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets:

29 unchanged sentences

Stockholders’ equity

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

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

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

outstanding shares were 40,473,516 as of September 30, 2021 and 40,916,429 as of December 31, 2020

49,187 49,187

2 unchanged sentences

Accumulated other comprehensive loss ( 308,810 ) ( 310,856 )

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

Common treasury stock, at cost ( 8,713,862 shares as of September 30, 2021 and 8,270,949 shares as of December 31, 2020)

( 804,143 ) ( 743,620 )

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(In thousands) 2021 2020

1 unchanged sentence

Net earnings $ 190,580 $ 147,399

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

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

Depreciation and amortization 86,240 84,769

2 unchanged sentences

Share-based compensation 10,861 11,777

Impairment of assets held for sale 8,656 —

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

Inventory write-downs — 9,015

Non-cash restructuring charges — 10,254

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

6 unchanged sentences

Other current and long-term assets and liabilities ( 4,768 ) 11,620

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

Net cash provided by operating activities 155,761 3,784

Cash flows from investing activities:

7 unchanged sentences

Payment of revolving credit facility ( 166,771 ) ( 389,398 )

Borrowings on debt — 300,000

Repurchases of common stock ( 79,092 ) ( 137,155 )

2 unchanged sentences

Other ( 699 ) ( 648 )

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

Net cash (used for)/provided by financing activities ( 84,406 ) 157,945

Effect of exchange-rate changes on cash ( 5,378 ) ( 10,023 )

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

Net increase in cash and cash equivalents 36,168 35,788

Cash and cash equivalents at beginning of period 198,248 391,033

4 unchanged sentences

(In thousands)

For the six months ended June 30, 2021

For the nine months ended September 30, 2021

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

9 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

September 30, 2021 $ 49,187 $ 124,532 $ 2,839,294 $ ( 308,810 ) $ ( 804,143 )

For the three months ended September 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 )

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

Net earnings — — 69,703 — —

1 unchanged sentence

Dividends declared — — ( 7,293 ) — —

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

Employee stock purchase plan — 466 — — 4,320

Share-based compensation — 4,120 — — 16

1 unchanged sentence

— — — — ( 54,697 )

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

September 30, 2021 $ 49,187 $ 124,532 $ 2,839,294 $ ( 308,810 ) $ ( 804,143 )

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

1 unchanged sentence

(In thousands)

For the six months ended June 30, 2020

For the nine months ended September 30, 2020

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

1 unchanged sentence

Net earnings — — 147,399 — —

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

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

Dividends declared — — ( 21,221 ) — —

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

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

For the three months ended September 30, 2020

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

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

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

Net earnings — — 64,620 — —

5 unchanged sentences

— — — — ( 12,542 )

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

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

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.

(1) For the three and nine months ended September 30, 2021, the Corporation repurchased approximately 0.4 million and 0.6 million shares of its common stock, respectively.

For the three and nine months ended September 30, 2020, the Corporation repurchased approximately 0.1 million and 1.4 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 and six months ended June 30, 2021 and 2020, there were no significant changes in estimated contract costs.

During the three and nine months ended September 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.

18 unchanged sentences

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,

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

3 unchanged sentences

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

Total backlog was approximately $ 2.2 billion as of June 30, 2021, of which the Corporation expects to recognize approximately 87 % as net sales over the next 36 months .

Total backlog was approximately $ 2.2 billion as of September 30, 2021, of which the Corporation expects to recognize approximately 84 % 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 Six Months Ended

June 30, June 30,

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

September 30, September 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 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.

Revenue recognized during the three and nine months ended September 30, 2021 included in the contract liabilities balance as of January 1, 2021 was approximately $ 46 million and $ 188 million, respectively.

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

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 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.

During the nine months ended September 30, 2021, the Corporation did not complete any acquisitions.

However, the Corporation paid $ 5 million during the nine months ended September 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 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.

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

The Condensed Consolidated Statement of Earnings for the nine months ended September 30, 2020 included $ 12 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 nine months ended September 30, 2020.

(In thousands) 2020

18 unchanged sentences

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.

11 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 six months ended June 30, 2021.

An additional impairment loss of $ 9 million was recorded during the three and nine months ended September 30, 2021.

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

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

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

Assets held for sale:

18 unchanged sentences

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Billed receivables:

12 unchanged sentences

The composition of inventories is as follows:

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

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

Raw materials $ 194,887 $ 177,828

7 unchanged sentences

Inventories, net $ 433,140 $ 428,879

(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.

(1) As of September 30, 2021 and December 31, 2020, this caption also includes capitalized development costs of $ 26.3 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 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.

As of September 30, 2021 and December 31, 2020, capitalized development costs of $ 12.1 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.

1 unchanged sentence

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 six months ended June 30, 2021 are as follows:

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

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

3 unchanged sentences

Foreign currency translation adjustment ( 967 ) ( 3,293 ) ( 1,172 ) ( 5,432 )

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

September 30, 2021 $ 315,954 $ 712,230 $ 433,129 $ 1,461,313

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

3 unchanged sentences

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

June 30, 2021 December 31, 2020

September 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 six months ended June 30, 2021 was $ 30.1 million, as compared to $ 28.7 million in the comparable prior year period.

Total intangible amortization expense for the nine months ended September 30, 2021 was $ 45 million, as compared to $ 43 million in the comparable prior year period.

The estimated amortization expense for the five years ending December 31, 2021 through 2025 is $ 59 million, $ 55 million, $ 51 million, $ 48 million, and $ 45 million, respectively.

10 unchanged sentences

Effects on Condensed Consolidated Balance Sheets

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

As of September 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 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.

The estimated fair value amounts were determined by the Corporation using available market information that is primarily based on quoted market prices for the same or similar issuances as of June 30, 2021.

The (losses) for the three and nine months ended September 30, 2021 were ($ 2.2 ) million and ($ 1.7 ) million, respectively.

The gains and (losses) for the three and nine months ended September 30, 2020 were $ 1.7 million and ($ 5.7 ) million, respectively.

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

3 unchanged sentences

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

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

22 unchanged sentences

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 and six months ended June 30, 2021 and 2020 were as follows:

Three Months Ended Six Months Ended

June 30, June 30,

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

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2021 2020 2021 2020

8 unchanged sentences

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

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.

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

During the three and nine months ended September 30, 2021, the Company recognized settlement charges related to the retirement of former executives.

The settlement charges represent events that are accounted for under guidance on employers’ accounting for settlements and curtailments of defined benefit pension plans.

Defined Contribution Retirement Plan

2 unchanged sentences

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

During the three and six months ended June 30, 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.

During the three and nine months ended September 30, 2021, the expense relating to the plan was $ 4.6 million and $ 14.2 million, respectively.

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

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.

respectively.

The Corporation made $ 16.4 million in contributions to the plan during the nine months ended September 30, 2021, and expects to make total contributions of approximately $ 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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2021 2020 2021 2020

2 unchanged sentences

Diluted weighted-average shares outstanding 40,950 41,797 41,040 42,190

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.

There were no anti-dilutive equity-based awards for the three months ended September 30, 2021.

For the nine months ended September 30, 2021, approximately 41,000 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 and nine months ended September 30, 2020.

SEGMENT INFORMATION

8 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2021 2020 2021 2020

11 unchanged sentences

Total consolidated $ 97,669 $ 84,573 $ 277,318 $ 212,368

(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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2021 2020 2021 2020

1 unchanged sentence

Interest expense 9,955 9,055 30,094 25,059

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

Other income, net 3,627 5,417 8,910 6,844

Earnings before income taxes $ 91,341 $ 80,935 $ 256,134 $ 194,153

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

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

Identifiable assets

15 unchanged sentences

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

Other comprehensive income (loss) before reclassifications (1)

Other comprehensive loss before reclassifications (1)

( 12,990 ) ( 3,442 ) ( 16,432 )

1 unchanged sentence

— 18,478 18,478

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

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

Net current period other comprehensive income (loss) ( 12,990 ) 15,036 2,046

September 30, 2021 $ ( 101,727 ) $ ( 207,083 ) $ ( 308,810 )

(1) All amounts are after tax.

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

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

6 unchanged sentences

Total reclassifications $ ( 18,478 ) Net earnings

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONTINGENCIES AND COMMITMENTS

10 unchanged sentences

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

As of June 30, 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.

As of September 30, 2021 and December 31, 2020, there were $ 22.3 million and $ 21.1 million of stand-by letters of credit outstanding, respectively, and $ 4.8 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.

12 unchanged sentences

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

The Corporation is also aggressively pursuing a counterclaim against WEC.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As it relates to the U.S.

3 unchanged sentences

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.

As of September 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

1 unchanged sentence

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

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.

As of September 30, 2021 and December 31, 2020, the restructuring liability associated with these restructuring activities was $ 1.1 million 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.

28 unchanged sentences

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

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.

The pandemic has adversely affected certain elements of our business, including our supply chain, transportation networks, and production levels.

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, the emergence and impact of any new COVID-19 variants, as well as the issuance of vaccine mandates by the Biden administration.

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.

1 unchanged sentence

RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand the results of operations and financial condition of the Corporation for the three and six month periods ended June 30, 2021.

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 financial information as of September 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:

15 unchanged sentences

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.

The definition of “organic” excludes the effects of restructuring-related expenses, impairment of assets held for sale, and foreign currency translation.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

3 unchanged sentences

Condensed Consolidated Statements of Earnings

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

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

10 unchanged sentences

Interest expense 9,955 9,055 (10 %) 30,094 25,059 (20 %)

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

Other income, net 3,627 5,417 (33 %) 8,910 6,844 30 %

Earnings before income taxes 91,341 80,935 13 % 256,134 194,153 32 %

4 unchanged sentences

Components of sales and operating income increase (decrease):

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2021 vs.

2 unchanged sentences

Acquisitions 7 % 9 % 6 % 6 %

Impairment of assets held for sale — % (10 %) — % (4 %)

Restructuring — % 13 % — % 13 %

1 unchanged sentence

Total 9 % 15 % 7 % 31 %

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

Sales in the third quarter increased $49 million, or 9%, 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 $8 million, $33 million, and $8 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

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

2 unchanged sentences

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

million, respectively, with sales from the Aerospace & Industrial segment decreasing $24 million.

Sales during the nine months ended September 30, 2021 increased $116 million, or 7%, to $1,839 million, compared with the prior year period.

On a segment basis, sales from the Defense Electronics and Naval & Power segments increased $98 million and $35 million, respectively, with sales from the Aerospace & Industrial segment decreasing $17 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.

Operating income in the third quarter increased $13 million, or 15%, to $98 million, and operating margin increased 90 basis points to 15.7% 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 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.

Operating income in the Defense Electronics segment increased primarily due to the incremental impact of our PacStar acquisition, as well as the benefits from our ongoing operational excellence and prior year restructuring initiatives , partially offset by higher research and development costs and unfavorable foreign currency translation.

Operating margin in the Defense Electronics segment was negatively impacted by first year purchase accounting costs from our PacStar acquisition.

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

These increases were partially offset by an impairment loss of $9 million on assets held for sale in our industrial valves business in Germany, as well as unfavorable mix in the power & process market.

Operating income during the nine months ended September 30, 2021 increased $65 million, or 31%, to $277 million and operating margin increased 280 basis points to 15.1%, compared with the same period in 2020.

Operating income in the Defense Electronics segment increased 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 b y higher research and development costs and unfavorable foreign currency translation.

Operating margin in the Defense Electronics segment was negatively impacted by first year purchase accounting costs from our PacStar acquisition.

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

These increases were partially offset by an impairment loss of $9 million on assets held for sale in our industrial valves business in Germany.

Non-segment operating expense in the third quarter increased $2 million, or 21%, to $9 million, primarily due to higher corporate costs in the current period.

Non-segment operating expense during the nine months ended September 30, 2021 of $28 million was essentially flat compared to the prior year period.

Interest expense in the third quarter and nine months ended September 30, 2021 increased $1 million, or 10%, to $10 million, and $5 million , or 20%, to $30 million, respectively, primarily due to the issuance of $300 million Senior Notes in August 2020.

Other income, net in the third quarter decreased $2 million, or 33%, to $4 million, primarily due to higher pension costs in the current period.

Other income, net during the nine months ended September 30, 2021 increased $2 million, or 30%, to $9 million 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.

This increase was partially offset by higher pension costs, including one-time pension settlement charges recognized in the current year period related to the retirement of former executives.

The effective tax rate of 23.7% in the third quarter increased compared to an effective tax rate of 20.2% in the prior year period.

The effective tax rate of 25.6% for the nine months ended September 30, 2021 increased as compared to an effective tax rate of 24.1%.

Increases in both of the comparable periods were primarily due to a provisional charge related to an impairment loss recognized on assets held for sale during the current year period, which is not deductible for tax purposes.

Comprehensive income in the third quarter was $58 million, compared to comprehensive income of $96 million in the prior year period.

The change was primarily due to the following:

• Net earnings increased $5 million, primarily due to higher operating income.

• Foreign currency translation adjustments in the third quarter resulted in a $16 million comprehensive loss, compared to a $28 million comprehensive gain in the prior year period.

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

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

• 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 .

Comprehensive income during the nine months ended September 30, 2021 was $193 million, compared to comprehensive income of $162 million in the prior year period.

The change was primarily due to the following:

• Net earnings increased $43 million, primarily due to higher operating income.

• Foreign currency translation adjustments for the nine months ended September 30, 2021 resulted in a $13 million comprehensive loss, compared to a $2 million comprehensive gain in the prior period.

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

New orders in the third quarter and nine months ended September 30, 2021 increased $68 million and $147 million, respectively, from the comparable prior year periods, primarily du e to 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.

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

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

5 unchanged sentences

Components of sales and operating income increase (decrease):

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2021 vs.

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Organic 3 % 19 % (5 %) 12 %

Acquisitions — % — % — % — %

Restructuring — % 13 % — % 14 %

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

Sales in the third quarter increased $8 million, or 4%, to $196 million from the prior year period.

Sales in the general industrial market increased $14 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.

Sales during the nine months ended September 30, 2021 decreased $17 million, or 3%, to $576 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 $56 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

Sales in the commercial aerospace market were also

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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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.

negatively impacted by the exit of our build-to-print product line in the fourth quarter of 2020.

These decreases were partially offset by sales increases of $42 million in the general industrial market, primarily due to higher demand for industrial vehicle products and surface treatment services.

Operating income in the third quarter increased $7 million, or 29%, to $31 million from the prior year period, and operating margin increased 300 basis points to 15.7%.

Operating income during the nine months ended September 30, 2021 increased $16 million, or 25%, to $82 million from the prior year period, and operating margin increased 310 basis points to 14.2%.

The increases in operating income and operating margin for each of the respective periods 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.

New orders in the third quarter and nine months ended September 30, 2021 increased $36 million and $133 million, respectively, from the comparable prior year periods, primarily due to an increase in new orders for industrial vehicles as well as higher demand for 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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

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

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Components of sales and operating income increase (decrease):

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2021 vs.

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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.

Sales in the third quarter increased $33 million, or 22%, to $182 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 $37 million.

This increase was partially offset by lower sales on fighter jets in the aerospace defense market.

Sales during the nine months ended September 30, 2021 increased $98 million, or 23%, to $525 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 $102 million.

Higher sales of avionics and test equipment in the commercial aerospace market were essentially offset by the timing of sales on embedded computing equipment on various programs in the aerospace defense market.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

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.

Operating income in the third quarter increased $6 million, or 16%, to $41 million compared to the prior year period, while operating margin decreased 120 basis points from the prior year period to 22.5%.

The increase in operating income was primarily due to the incremental impact of our PacStar acquisition as well as the benefits from our ongoing operational excellence and prior year restructuring initiatives, partially offset by higher research and development costs and unfavorable foreign currency translation .

Operating margin was negatively impacted by first year purchase accounting costs from our PacStar acquisition.

Operating income during the nine months ended September 30, 2021 increased $23 million, or 27%, to $107 million, and operating margin increased 70 basis points from the prior year period to 20.3%.

The increase in operating income was 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 higher research and development costs and unfavorable foreign currency translation.

Operating margin was negatively impacted by first year purchase accounting costs from our PacStar acquisition.

New orders in the third quarter and nine months ended September 30, 2021 increased $26 million and $69 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.

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

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

5 unchanged sentences

Components of sales and operating income increase (decrease):

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2021 vs.

1 unchanged sentence

Organic 3 % 11 % 4 % 22 %

Acquisitions — % — % — % — %

Impairment of assets held for sale — % (26 %) — % (10 %)

Restructuring — % 22 % — % 18 %

2 unchanged sentences

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

Sales in the third quarter increased $8 million, or 4%, to $243 million from the prior year period.

In the naval defense market, sales increased $11 million primarily due to higher production on th e CVN-81 aircraft carrier and Virginia-class submarine program s.

This increase was partially offset by the timing of production on the China Direct AP1000 program in the power & process market.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

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.

Sales during the nine months ended September 30, 2021 increased $35 million, or 5%, to $738 million from the prior year period.

In the naval defense market, sales increased $42 million primarily due to increased production on the CVN-81 aircraft carrier and Virginia-class submarine programs, as well as higher service center and foreign military sales.

This increase was partially offset by the timing of production on the China Direct AP1000 program and lower nuclear aftermarket sales in the power & process market.

Operating income in the third quarter increased $2 million, or 6%, to $35 million, and operating margin increased 40 basis points from the prior year period to 14.6%, primarily due to current year savings recognized as a result of prior year restructuring actions.

These increases were partially offset by an impairment loss of $9 million on assets held for sale in our industrial valves business in Germany as well as unfavorable mix in the power & process market.

Operating income during the nine months ended September 30, 2021 increased $26 million, or 29%, to $117 million, and operating margin increased 290 basis points from the prior year period to 15.8%.

The increases in operating income and operating margin were primarily due to favorable overhead absorption on higher sales, current year savings recognized as a result of our prior year restructuring initiatives, and the absence of prior period transition costs associated with our DRG facility.

These increases were partially offset by an impairment loss of $9 million on assets held for sale in our industrial valves business in Germany.

New orders in the third quarter increased $6 million from the comparable prior year period, as higher demand for industrial valve products was partially offset by the timing of naval defense orders.

New orders during the nine months ended September 30, 2021 decreased $54 million from the comparable prior year period, 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.

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

June 30, June 30,

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

September 30, September 30,

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

11 unchanged sentences

Aerospace & Defense markets

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.

Sales in the third quarter increased $36 million, or 10%, to $415 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 $38 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.

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

These increases were partially offset by lower sales on fighter jets in the aerospace defense market.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Sales during the nine months ended September 30, 2021 increased $79 million, or 7%, to $1,215 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 $102 million.

In the naval defense market, sales benefited from higher production on the CVN-81 aircraft carrier and Virginia-class submarine programs.

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.

Commercial markets

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.

Sales in the third quarter increased $13 million, or 7%, to $205 million primarily due to higher demand for our industrial vehicle products in the general industrial market.

Sales during the nine months ended September 30, 2021 increased $37 million, or 6%, to $625 million primarily due to higher demand for our industrial vehicle products in the general industrial market.

This increase was partially offset by the timing of production on the China Direct AP1000 program and lower nuclear aftermarket sales in the power & process market.

LIQUIDITY AND CAPITAL RESOURCES

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

Condensed Consolidated Statements of Cash Flows Six Months Ended

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

Cash provided by (used in):

Condensed Consolidated Statements of Cash Flows Nine Months Ended

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

Cash provided by (used for):

Operating activities

5 unchanged sentences

Effect of exchange-rate changes on cash (5,378) (10,023)

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

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.

Net increase in cash and cash equivalents 36,168 35,788

Net cash provided by operating activities increased $152 million from the prior year period, primarily due to a prior year voluntary pensi on contribution of $150 million, lower inventory receipts and disbursements, as well as 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.

Net cash used for investing activities decreased $86 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 nine months ended September 30, 2020 for $82 million in cash paid.

The Corporation did not make any acquisitions during the nine months ended September 30, 2021.

Capital expenditures for the nine months ended September 30, 2021 and September 30, 2020 were $28 million and $36 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% 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

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

The Corporation’s debt outstanding had an average interest rate of 3.6% for both the three and nine months ended September 30, 2021, and 3.3% and 3.4% for the three and nine months ended September 30, 2020, respectively.

The Corporation’s average debt outstanding was $1,050 million and $1,056 million for the three and nine months ended September 30, 2021, respectively, and $939 million and $875 million for the three and nine months ended September 30, 2020, respectively.

Credit Agreement

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.

As of September 30, 2021, the Corporation had no outstanding borrowings under the 2018 Senior Unsecured Revolving Credit Agreement (the “Credit Agreement” or “credit facility”) and $22 million in letters of credit supported by the credit facility.

The unused credit available under the Credit Agreement as of September 30, 2021 was $478 million, which could be borrowed without violating any of our debt covenants.

Repurchase of common stock

During the six months ended June 30, 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.

During the nine months ended September 30, 2021, the Corporation used $79 million of cash to repurchase approximately 0.6 million outstanding shares under its share repurchase program.

During the nine months ended September 30, 2020, the Corporation used $137 million of cash to repurchase approximately 1.4 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.

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

The Corporation made dividend payments of $14 million during both the nine months ended September 30, 2021 and September 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 June 30, 2021, we had the ability to borrow additional debt of $1.7 billion without violating our debt to capitalization covenant.

As of September 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 six months ended June 30, 2021.

There have been no material changes in our market risk during the nine months ended September 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