What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-24 compared with 2021-02-25 · 166 added, 220 removed, 1124 unchanged (26% of the section changed)

24 unchanged sentences

Diluted earnings per share $ 6.58 $ 4.80 $ 7.15

$ 4.80 $ 7.15 $ 6.22

Dividends per share $ 0.71 $ 0.68 $ 0.66

15 unchanged sentences

(1) The tax benefit (expense) included in other comprehensive income for foreign currency translation adjustments for 2021, 2020, and 2019 was immaterial.

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

(2) The tax benefit (expense) included in other comprehensive income for pension and postretirement adjustments for 2021, 2020, and 2019 was ($ 42.3 ) million, $ 8.3 million, and $ 8.5 million, respectively.

See notes to consolidated financial statements

53 unchanged sentences

Depreciation and amortization 114,384 115,903 102,412

(Gain) loss on sale of businesses — — ( 1,735 )

(Gain) loss on sale/disposal of long-lived assets — ( 11,054 ) ( 1,120 )

(Gain) on sale/disposal of long-lived assets ( 568 ) — ( 11,054 )

Deferred income taxes ( 10,200 ) ( 7,048 ) 40,787

17 unchanged sentences

Acquisition of businesses, net of cash acquired — ( 487,944 ) ( 185,209 )

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

Other — ( 17 ) ( 172 )

21 unchanged sentences

January 1, 2019 $ 49,187 $ 118,234 $ 2,191,471 $ ( 288,447 ) $ ( 539,664 )

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

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

Net earnings — — 307,583 — —

2 unchanged sentences

Restricted stock — ( 10,483 ) — — 10,483

Stock options exercised — ( 2,355 ) — — 14,294

Other — ( 752 ) — — 752

Employee stock purchase plan and stock options exercised — ( 4,226 ) — — 15,996

Share-based compensation — 13,264 — — 405

1 unchanged sentence

— — — — ( 50,661 )

Other — ( 719 ) — — 719

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

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

Net earnings — — 201,392 — —

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

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

Dividends paid — — ( 28,175 ) — —

Restricted stock — ( 4,115 ) — — 4,115

Stock options exercised — ( 4,226 ) — — 15,996

Other — ( 719 ) — — 719

Employee stock purchase plan and stock options exercised — ( 3,286 ) — — 14,434

Share-based compensation — 14,383 — — 54

1 unchanged sentence

— — — — ( 200,018 )

Other — ( 517 ) — — 517

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

3 unchanged sentences

Restricted stock — ( 9,007 ) — — 9,007

Stock options exercised — ( 3,286 ) — — 14,434

Other — ( 517 ) — — 517

Employee stock purchase plan — 877 — — 8,828

Share-based compensation — 13,296 — — 154

1 unchanged sentence

— — — — ( 343,129 )

Other — ( 597 ) — — 597

December 31, 2021 $ 49,187 $ 127,104 $ 2,908,827 $ ( 190,465 ) $ ( 1,068,163 )

4 unchanged sentences

Nature of Operations

Curtiss-Wright Corporation and its subsidiaries (the Corporation or the Company) is a global, diversified manufacturing and service company that designs, manufactures, and overhauls precision components and provides highly engineered products and services to the aerospace, defense, general industrial, and power generation markets.

Curtiss-Wright Corporation and its subsidiaries (the Corporation or the Company) is a global integrated business that provides highly engineered products, solutions, and services mainly to aerospace & defense markets, as well as critical technologies in demanding commercial power, process, and industrial markets.

Principles of Consolidation

55 unchanged sentences

Share-based employee compensation is a non-cash expense since the Corporation settles these obligations by issuing the shares of Curtiss-Wright Corporation instead of settling such obligations with cash payments.

Compensation expense for non-qualified share options, performance shares, and time-based restricted stock is recognized over the requisite service period for the entire award based on the grant date fair value.

Compensation expense for performance shares and time-based restricted stock is recognized over the requisite service period for the entire award based on the grant date fair value.

The Corporation accounts for income taxes using the asset and liability method.

10 unchanged sentences

This balance is primarily affected by foreign currency exchange rate fluctuations.

(Gains) and losses from foreign currency transactions are included in General and administrative expenses in the Consolidated Statement of Earnings, which amounted to $ 3.9 million, $ 7.2 million, and ($ 4.5 ) million for the years ended December 31, 2020, 2019, and 2018, respectively.

Losses from foreign currency transactions are included in general and administrative expenses in the Consolidated Statement of Earnings, which amounted to $ 1.8 million, $ 3.9 million, and $ 7.2 million for the years ended December 31, 2021, 2020, and 2019, respectively.

Forward Foreign Exchange and Currency Option Contracts

2 unchanged sentences

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

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

The Corporation does not use derivative financial instruments for trading or speculative purposes.

15 unchanged sentences

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

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

The Corporation accounts for revenues in accordance with ASC 606, Revenue from Contracts with Customers .

Under ASC 606, revenue is recognized when control of a promised good and/or service is transferred to a customer at a transaction price that reflects the consideration that the Corporation expects to be entitled to in exchange for that good and/or service.

27 unchanged sentences

(In thousands) 2021 2020 2019

Aerospace $ 463,835 $ 416,841 $ 376,951

Ground 107,287 93,432 97,131

Naval 692,168 568,776 486,476

Total Defense Customers $ 1,263,290 $ 1,079,049 $ 960,558

Aerospace $ 325,518 $ 433,038 $ 414,422

Power Generation 331,983 392,173 431,793

Aerospace & Defense

Aerospace Defense $ 452,661 $ 463,690 $ 416,841

Ground Defense 220,290 107,448 93,432

Naval Defense 710,688 692,152 568,776

Commercial Aerospace 267,722 325,518 433,038

Total Aerospace & Defense Customers $ 1,651,361 $ 1,588,808 $ 1,512,087

Power & Process $ 473,489 $ 474,842 $ 572,950

General Industrial 381,081 327,686 402,924

18 unchanged sentences

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

For the year ended December 31, 2021, the Corporation did not complete any acquisitions.

However, the Corporation paid $ 5 million during the twelve months ended December 31, 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.

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

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

These acquisitions are described in more detail below.

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

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

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for all acquisitions consummated during 2020 and 2019:

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

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for all acquisitions consummated in 2020:

(In thousands) 2020

9 unchanged sentences

Total Purchase price $ 495,547

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

Due to seller 7,603 —

Total purchase price $ 495,547 $ 185,209

Goodwill deductible for tax purposes $ 37,234

2020 Acquisitions

Pacific Star Communications, Inc.

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

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.

The acquired business operates within the Defense segment.

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

Integrated Air Defense System (IADS)

The acquired business operates within the Defense Electronics segment.

Interactive Analysis and Display System (IADS)

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

1 unchanged sentence

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

The acquired product line operates within the Defense segment.

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

Dyna-Flo Control Valve Services Ltd.

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 approximately $ 60 million, net of cash acquired.

1 unchanged sentence

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

The acquired business operates within the Commercial/Industrial segment.

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

2019 Acquisitions

901D Holdings, LLC (901D)

On December 31, 2019 , the Corporation acquired 100% of the membership interests of 901D for $ 135 million, net of cash acquired.

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

Navy shipbuilding program, operates within the Defense segment.

Tactical Communications Group (TCG)

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

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

The acquired business operates within the Naval & Power segment.

ASSETS HELD FOR SAL E

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

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.

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

Accordingly, the assets and liabilities of the business are presented as held for sale in the Corporation's Consolidated Balance Sheet as of December 31, 2021.

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

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

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

(In thousands) As of December 31, 2020

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 impairment losses of $ 19 million and $ 33 million for the years ended December 31, 2021 and 2020, respectively.

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

The aggregate components of assets and liabilities classified as held for sale as of December 31 are as follows:

(In thousands) 2021 2020

Assets held for sale:

13 unchanged sentences

Substantially all amounts of unbilled receivables are expected to be billed and collected in the subsequent year.

An immaterial amount of unbilled receivables are subject to retainage provisions.

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

An immaterial amount of billed receivables are subject to retainage provisions.

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

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

42 unchanged sentences

Depreciation expense for the years ended December 31, 2021, 2020, and 2019 was $ 54.8 million, $ 55.3 million, and $ 57.4 million, respectively.

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 and December 31, 2019 on a relative fair value basis.

Refer to Note 18 to the Consolidated Financial Statements for additional information on the Corporation’s reportable segments.

The changes in the carrying amount of goodwill for 2021 and 2020 are as follows:

(In thousands) Commercial/Industrial Defense Power Consolidated

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

December 31, 2019 $ 314,667 $ 441,291 $ 410,722 $ 1,166,680

Acquisitions — 256,733 28,467 285,200

Impairment on assets held for sale (1)

— — ( 9,598 ) ( 9,598 )

Adjustments — ( 1,385 ) — ( 1,385 )

1 unchanged sentence

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

Acquisitions 28,467 256,733 — 285,200

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

Adjustments (2)

— 12,943 — 12,943

Foreign currency translation adjustment ( 774 ) ( 2,844 ) ( 1,436 ) ( 5,054 )

December 31, 2021 $ 316,147 $ 714,014 $ 432,865 $ 1,463,026

(1) Amount relates to the Corporation's industrial valves business in Germany, which was classified as held for sale as of December 31, 2020.

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

The purchase price allocations relating to the businesses acquired are initially based on estimates.

3 unchanged sentences

The Corporation completed its annual goodwill impairment testing as of October 31, 2021, 2020, and 2019 and concluded that there was no impairment of goodwill.

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

OTHER INTANGIBLE ASSETS, NET

13 unchanged sentences

(2) During the year ended December 31, 2020, the Corporation recognized an impairment loss of $ 18 million pertaining to technology and customer-related intangibles of its industrial valve business in Germany, which was classified as held for sale during the fourth quarter of 2020.

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

During the year ended December 31, 2020, the Corporation acquired intangible assets of $ 204.4 million as a result of the Corporation's PacStar, IADS, and Dyna-Flo acquisitions, which included Customer-related intangibles of $ 159.9 million, Technology of $ 34.6 million, and Other intangible assets of $ 9.9 million.

The weighted average amortization periods for these aforementioned intangible assets are 16.4 years, 8.9 years, and 7.1 years, respectively.

During the year ended December 31, 2021, the Corporation did not acquire any intangible assets.

However, as a result of finalizing the purchase price allocation related to the Corporation's acquisition of PacStar, approximately $ 12 million of intangible assets were reclassified to goodwill during 2021.

Amortization expense for the years ended December 31, 2021, 2020, and 2019 was $ 60 million, $ 61 million, and $ 45 million, respectively.

97 unchanged sentences

Warranty reserves 15,268 14,491

Restructuring liability 6,944 —

WEC legal reserve (1)

15,000 11,600

Pension and other postretirement liabilities 8,054 7,715

Restructuring liability 279 6,944

Other 38,724 30,742

Total other current liabilities $ 102,714 $ 98,755

(1) As of December 31, 2021, the Corporation reclassified prior year amounts associated with its ongoing legal matter with Westinghouse Electric Company (WEC) regarding the AP1000 program.

As a result, amounts previously captured within the "warranty reserves" and "other" captions were reclassified into the "WEC legal reserve" caption.

See Note 19 to the Consolidated Financial Statements for more information regarding the Corporation's WEC legal reserve.

2017 Tax Cuts and Jobs Act

On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the Tax Act) was enacted into law.

The new legislation contained several key tax provisions, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the U.S.

corporate income tax rate to 21 %.

The Corporation will also generally be eligible for a 100% dividends received exemption on its foreign earnings.

The Tax Act subjects a U.S.

shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries.

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

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

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

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

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

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

In conjunction with the enactment of the 2017 Tax Cuts and Jobs Act (the Tax Act), the Corporation recorded provisional income tax expense of $ 18.2 million for the year ended December 31, 2017 related to the one-time transition tax on certain foreign earnings.

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

The transition tax liability, which is expected to be paid in 2024 and 2025, was $ 7.4 million and $ 9.0 million as of December 31, 2021 and December 31, 2020, respectively.

As of December 31, 2021, the Corporation reassessed its assertion around whether foreign undistributed earnings should continue to no longer be considered permanently reinvested.

Based on such assessment, Corporation revised its assertion with respect to prior and current earnings of a foreign subsidiary, which resulted in the reversal of $ 2.8 million of tax liabilities previously recorded.

The Corporation maintains its previous assertion for all other foreign subsidiaries, and has recorded a liability for withholding taxes that would arise upon distribution of the Corporation’s foreign undistributed earnings.

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

1 unchanged sentence

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

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

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

With respect to the sale of the German industrial valves business in January 2022, the Corporation has determined that the global intangible low-taxed income (GILTI)-related impact associated with the sale is immaterial.

Except as noted above, the Corporation remains permanently reinvested to the extent of any outside basis differences in its foreign subsidiaries in excess of the amount of undistributed earnings as it is not practicable to determine the provision impact, if any, due to the complexities associated with this calculation.

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

3 unchanged sentences

$ 354,510 $ 263,051 $ 396,462

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

(1) The Corporation recognized pre-tax impairment losses of $ 19 million in 2021 and $ 33 million in 2020 pertaining to its industrial valve business in Germany, which was classified as held for sale during the fourth quarter of 2020.

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

15 unchanged sentences

State and local taxes, net of federal benefit 3.6 3.7 2.4

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

Foreign asset impairment (held for sale) 1.6 1.2 —

Valuation allowance for foreign assets held for sale 0.2 1.3 —

2 unchanged sentences

0.2 ( 0.9 ) 1.4

Impacts related to the Tax Act — — 1.8

Foreign-derived intangible income ( 1.4 ) ( 2.8 ) ( 1.3 )

12 unchanged sentences

Pension and other postretirement liabilities — 13,533

Capital loss carryover — 955

Legal reserves 6,991 —

Other 32,665 33,401

6 unchanged sentences

Withholding taxes 12,776 12,549

Pension and other postretirement assets 29,385 —

Other 7,149 8,757

9 unchanged sentences

The Corporation has federal and state income tax net loss carryforwards of $ 61.8 million, all of which are net operating losses that expire through 2040.

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

The Corporation has recorded a deferred tax asset of $ 5.4 million, reflecting the benefit of the loss carryforwards related to international and domestic operations.

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

1 unchanged sentence

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

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

As of December 31, 2021, the Corporation increased its valuation allowance by $ 1.4 million to $ 2.6 million, in order to measure only the portion of the deferred tax asset that more likely than not will be realized.

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

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

As of December 31, 2021, the Corporation recorded a deferred tax asset of $ 4.4 million on net operating losses of $ 14.7 million related to the held for sale industrial valve business in Germany.

A provision of $ 0.7 million was recorded during the year ended December 31, 2021, resulting in a full valuation allowance against the deferred tax asset, as it is more likely than not that the losses will be forfeited.

20 unchanged sentences

Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

Revolving credit agreement, due 2023 $ 93,900 $ 93,900 $ — $ —

3.84 % Senior notes due 2021

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The weighted-average interest rate of the Corporation's Revolving Credit Agreement in 2021 and 2020 was 1.0 % and 1.4 %, respectively.

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

The Corporation's total debt outstanding had a weighted-average interest rate of 3.4 % in both 2021 and 2020.

Aggregate maturities of debt are as follows:

(In thousands)

2021 $ 100,000

Thereafter 457,500

5 unchanged sentences

The proceeds available under the Credit Agreement are to be used for working capital, internal growth initiatives, funding of future acquisitions, and general corporate purposes.

As of December 31, 2020, the Corporation had $ 21 million in letters of credit supported by the credit facility and no borrowings outstanding under the credit facility.

As of December 31, 2021, the Corporation had $ 21 million in letters of credit supported by the credit facility and $ 94 million borrowings outstanding under the credit facility.

The unused credit available under the credit facility as of December 31, 2021 was $ 385 million, which the Corporation had the ability to borrow in full without violating its debt to capitalization covenant.

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The 2013 Notes are senior unsecured obligations, equal in right of payment to the Corporation’s existing senior indebtedness.

The Corporation, at its option, can prepay at any time all or any part of the 2013 Notes, subject to a make-whole payment in accordance with the terms of the Note Purchase Agreement.

The Corporation, at its option, can prepay at any time all or any part of the 2013 Notes, subject to a make-whole payment in

accordance with the terms of the Note Purchase Agreement.

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

1 unchanged sentence

On December 8, 2011 , the Corporation issued $ 300 million of Senior Notes (the “2011 Notes”).

The 2011 Notes consist of $ 100 million of 3.84 % Senior Notes that mature on December 1, 2021 and $ 200 million of 4.24 % Senior Series Notes that mature on December 1, 2026 .

The 2011 Notes consist of $ 100 million of 3.84 % Senior Notes that matured on December 1, 2021 and $ 200 million of 4.24 % Senior Series Notes that mature on December 1, 2026 .

The 2011 Notes are senior unsecured obligations, equal in right of payment to our existing senior indebtedness.

6 unchanged sentences

The Corporation is required to report both basic earnings per share (EPS), based on the weighted-average number of common shares outstanding, and diluted earnings per share, based on the basic EPS adjusted for all potentially dilutive shares issuable.

As of December 31, 2020, 2019, and 2018, there were no options outstanding that were considered anti-dilutive.

As of December 31, 2021, 2020 and 2019, there were no anti-dilutive equity-based awards excluded from the calculation of diluted earnings per share.

Earnings per share calculations for the years ended December 31, 2021, 2020, and 2019, were as follows:

3 unchanged sentences

Basic earnings per share $ 267,159 40,417 $ 6.61

Dilutive effect of stock options and deferred stock compensation 261

Dilutive effect of deferred stock compensation 185

Diluted earnings per share $ 267,159 40,602 $ 6.58

11 unchanged sentences

In addition, any awards that were previously granted under any prior plan that terminate without issuance of shares shall be eligible for issuance under the 2014 Omnibus Plan.

Awards under the 2014 Omnibus Plan may be in the form of stock options, stock appreciation rights, restricted stock, restricted stock units (RSU), other stock-based awards, performance share units (PSU), or cash-based performance units (PU).

During 2020, the Corporation granted share-based awards in the form of RSUs, PSUs, and restricted stock.

Awards under the 2014 Omnibus Plan may be in the form of stock options, stock appreciation rights, restricted stock units (RSU), other stock-based awards, performance share units (PSU), or cash-based performance units (PU).

During 2021, the Corporation granted share-based awards in the form of RSUs and PSUs.

Previous grants under the 2005 Stock Plans included non-qualified stock options.

Under our employee benefit program, the Corporation also provides an Employee Stock Purchase Plan (ESPP) to most active employees.

Under our employee benefit program, the Corporation also provides an Employee

Stock Purchase Plan (ESPP) to most active employees.

Certain awards provide for accelerated vesting if there is a change in control.

14 unchanged sentences

As of December 31, 2021, the Corporation's did not have any stock options outstanding.

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

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

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

Performance Share Units

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

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

Performance is measured by determining the percentile rank of the total shareholder return of the Corporation's common stock in relation to the total shareholder return of the S&P Midcap 400 Index (for awards granted in 2020 through 2021) or compared to a self-constructed peer group (for awards granted in 2019).

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

46 unchanged sentences

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

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

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

As of December 31, 2021, and 2020, the Corporation had a noncurrent pension asset of $ 233.8 million and $ 80.8 million, respectively.

The change in balance was primarily due to a higher return on plan assets during 2021.

Nonqualified Pension Plan

15 unchanged sentences

As of December 31, 2021 and 2020, the total projected benefit obligation related to all foreign plans was $ 107.2 million and $ 115.5 million, respectively.

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

As of December 31, 2021 the Corporation had a net pension asset of $ 12.9 million.

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

The Corporation's contributions to the foreign plans are expected to be $ 2.4 million in 2022.

8 unchanged sentences

Recognized net actuarial loss/(gain) 28,905 23,062 9,310 — ( 5 ) ( 198 )

Special termination benefits 52 — — 367 — —

Cost of settlements/curtailments 3,310 2,395 — — — —

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

In 2021, special termination benefits were recognized as a result of early retirement benefits offered to employees in the US and Switzerland.

In addition, the Company recognized settlement charges in 2021 related to the retirement of former executives.

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

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

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

In addition, a curtailment was recognized in Mexico in 2020 as a result of the Corporation's restructuring initiatives.

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

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Plan participants’ contributions 1,304 1,366 294 331

Amendments ( 477 ) — 309 —

Actuarial (gain) loss ( 37,825 ) 92,596 ( 41 ) 3,048

Benefits paid ( 68,965 ) ( 46,607 ) ( 2,303 ) ( 2,390 )

Special Termination Benefits 52 — 367 —

Actual expenses ( 1,491 ) ( 1,526 ) — —

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Noncurrent liabilities (1)

( 72,619 ) ( 79,636 ) ( 23,118 ) ( 24,074 )

Total $ 177,546 $ 6,474 $ ( 25,194 ) $ ( 25,670 )

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Total $ 120,132 $ 294,224 $ 449 $ ( 123 )

Information for pension plans with an accumulated benefit obligation in excess of plan assets:

Projected benefit obligation $ 114,297 $ 881,731 N/A N/A

Accumulated benefit obligation 111,807 848,309 N/A N/A

Fair value of plan assets 28,217 759,972 N/A N/A

Information for plans with an accumulated benefit obligation in excess of plan assets:

Projected benefit obligation $ 101,667 $ 114,297 $ 25,193 N/A

Accumulated benefit obligation 95,755 111,807 25,193 N/A

Fair value of plan assets 22,792 28,217 — N/A

(1) As of December 31, 2021 and 2020, this caption includes accrued pension and other postretirement benefit costs of $ 4.4 million and $ 5.4 million, respectively, reflected in the "Liabilities held for sale" caption within the Consolidated Balance Sheet.

Plan Assumptions

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(In thousands) Insurance

Contracts Other Total

Contracts Real

Estate Other Total

December 31, 2019 $ — $ 4,224 $ — $ 4,224

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

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

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

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

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

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

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Cumulative contributions of approximately $ 100 million are expected to be made from 2022 through 2026.

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

In addition, the Corporation had foreign pension costs under various defined contribution plans of $ 5.4 million in 2021, and $ 5.3 million in both 2020 and 2019.

SEGMENT INFORMATION

The Corporation’s segments are composed of similar product groupings that serve the same or similar end markets.

Based on this approach, the Corporation has three reportable segments:

Commercial/Industrial, Defense, and Power, as described below in further detail.

The Commercial/Industrial reportable segment is comprised of businesses that provide a diversified offering of highly engineered products and services supporting critical applications primarily across the commercial aerospace and general industrial markets.

The products offered include electronic throttle control devices and transmission shifters, electro-mechanical actuation control components, valves, and surface technology services such as shot peening, laser peening, coatings, and advanced testing.

The Defense reportable segment is comprised of businesses that primarily provide products to the defense markets and to a lesser extent the commercial aerospace market.

Prior to the first quarter of 2021, the Corporation reported its results of operations through three reportable segments:

Commercial/Industrial, Defense, and Power.

On January 1, 2021, the Corporation implemented an organizational change to simplify its reportable segments and align its product sales with its end market structure.

As a result, the Corporation now reports its results of operations through the following reportable segments:

Aerospace & Industrial, Defense Electronics, and Naval & Power.

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.

The Aerospace & Industrial reportable segment is comprised of businesses that provide a diversified offering of highly engineered products and services supporting critical applications primarily across the commercial aerospace and general industrial markets.

The products offered include electronic throttle control devices and transmission shifters, electro-mechanical actuation control components, and surface technology services such as shot peening, laser peening and engineered coatings.

The Defense Electronics reportable segment is comprised of businesses that primarily provide products to the defense markets and to a lesser extent the commercial aerospace market.

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

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

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

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

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

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

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

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

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

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

Operating results by reportable segment are as follows:

Year Ended December 31,

(In thousands) 2021 2020 2019

Commercial/Industrial $ 951,292 $ 1,138,740 $ 1,113,138

Defense 734,041 626,282 603,794

Power 708,865 726,237 697,491

Aerospace & Industrial $ 789,054 $ 807,144 $ 963,649

Defense Electronics 727,828 610,413 525,393

Naval & Power 995,509 977,109 1,001,662

Intersegment Revenues ( 6,460 ) ( 3,330 ) ( 2,743 )

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Operating income (expense)

Commercial/Industrial $ 81,581 $ 179,637 $ 167,647

Defense 140,406 137,286 140,680

Power 104,626 122,139 101,646

Aerospace & Industrial $ 121,817 $ 99,714 $ 149,135

Defense Electronics 159,089 118,748 119,044

Naval & Power 141,660 108,151 170,883

Corporate and Eliminations (1)

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Depreciation and amortization expense

Commercial/Industrial $ 44,921 $ 45,895 $ 48,174

Defense 38,507 22,204 21,537

Power 28,344 30,213 29,294

Aerospace & Industrial $ 36,999 $ 37,690 $ 39,526

Defense Electronics 38,136 36,188 19,872

Naval & Power 35,937 37,894 38,914

Corporate 3,312 4,131 4,100

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Segment assets

Commercial/Industrial $ 1,315,361 $ 1,363,592 $ 1,312,823

Defense 1,655,564 1,209,706 975,047

Power 847,380 885,727 792,102

Aerospace & Industrial $ 991,508 $ 1,019,203 $ 1,078,324

Defense Electronics 1,536,369 1,542,686 1,102,821

Naval & Power 1,270,099 1,256,416 1,277,880

Corporate 294,581 175,445 305,236

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Capital expenditures

Commercial/Industrial $ 21,643 $ 28,983 $ 26,510

Defense 4,326 8,479 9,100

Power 18,656 28,700 11,944

Aerospace & Industrial $ 16,799 $ 20,025 $ 26,679

Defense Electronics 3,922 3,317 3,385

Naval & Power 18,106 21,283 36,098

Corporate 2,281 2,874 3,590

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Earnings before taxes:

Total segment operating income $ 326,613 $ 439,062 $ 409,973

Total reportable segment operating income $ 422,566 $ 326,613 $ 439,062

Corporate and Eliminations ( 39,883 ) ( 37,765 ) ( 35,109 )

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Consolidated total $ 360,031 $ 378,200 $ 385,593

Net sales by product line

Year Ended December 31,

(In thousands) 2020 2019 2018

Flow Control $ 1,037,155 $ 1,051,821 $ 1,008,262

Motion Control 1,098,184 1,130,593 1,090,703

Surface Technologies 255,997 305,547 312,870

Consolidated total $ 2,391,336 $ 2,487,961 $ 2,411,835

The Flow Control products include valves, pumps, motors, generators, and instrumentation that manage the flow of liquids and gases, generate power, and monitor or provide critical functions.

Motion Control's products include turret aiming and stabilization products, embedded computing board level modules, electronic throttle control devices, transmission shifters, and electro-mechanical actuation control components.

Surface Technologies include shot peening, laser peening, and coatings services that enhance the durability, extend the life, and prevent premature fatigue and failure on customer-supplied metal components.

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 believe that the disposition of any of these matters, individually or in the aggregate, will have a material adverse effect on its consolidated financial condition, results of operations, and cash flows.

Legal Proceedings

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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 December 31, 2020 and 2019, there were $ 21.1 million and $ 32.6 million of stand-by letters of credit outstanding, respectively, and $ 5.6 million and $ 10.8 million of bank guarantees outstanding, respectively.

There were $ 21.1 million of stand-by letters of credit outstanding for both December 31, 2021 and 2020.

As of December 31, 2021 and 2020 there were $ 4.5 million and $ 5.6 million of bank guarantees outstanding, respectively.

The Corporation, through its Electro-Mechanical Division (EMD) business unit, has three Pennsylvania Department of Environmental Protection (PADEP) radioactive materials licenses that are utilized in the continued operation of the EMD business.

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AP1000 Program

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

The terms of the AP1000 China and U.S.

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

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

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

As of December 31, 2020, the Corporation has not met 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 February 2022, the Corporation and WEC reached an agreement to settle all open claims and counterclaims under the AP1000 U.S.

and China contracts.

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

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

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

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

The settlement agreement requires the Corporation to pay WEC $ 15 million during the first quarter of 2022 and $ 10 million during the first quarter of 2023 in exchange for the Corporation's full release from all open claims under such contracts, whether known or unknown, as well as negotiating and executing a right of first refusal for all future AP1000 projects.

As a result of the settlement, the Corporation recorded charges of $ 13 million related to this matter for the year ended December 31, 2021.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

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

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

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

Amount reclassified from Accumulated other comprehensive income (loss) Affected line item in the statement where net earnings is presented

Amount reclassified from Accumulated other comprehensive income (loss) Affected line item in the Consolidated Statement of Earnings

(In thousands) 2021 2020

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Amortization of prior service costs $ 555 $ 926 Other income, net

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

Recognized net actuarial losses ( 28,905 ) ( 23,057 ) Other income, net

Settlements ( 3,310 ) ( 1,086 ) Other income, net

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During the year ended December 31, 2020, the Corporation executed restructuring activities across all of its segments to support its ongoing effort of improving capacity utilization and operating efficiency.

These restructuring activities, which include workforce reductions and consolidation of facilities, resulted in $ 43 million of pre-tax charges for the year ended December 31, 2020.

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

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

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

Commercial/Industrial

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

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

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

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

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

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

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

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

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

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

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

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

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

Affected line item in the Consolidated Statement of Earnings

(In thousands) December 31, 2020

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

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

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

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

Total restructuring charges Earnings before income taxes $ 42,725

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

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following tables set forth selected unaudited quarterly Consolidated Statements of Earnings information for the fiscal years ended December 31, 2020 and 2019.

(In thousands, except per share data) First Second Third Fourth

Net sales $ 601,231 $ 550,047 $ 571,614 $ 668,444

Gross profit 200,579 186,026 212,821 241,801

Net earnings 51,761 31,018 64,620 53,993

Net earnings per share

Basic earnings per share $ 1.22 $ 0.75 $ 1.56 $ 1.31

Diluted earnings per share $ 1.21 $ 0.74 $ 1.55 $ 1.30

Net sales $ 578,314 $ 638,996 $ 614,880 $ 655,771

Gross profit 196,873 230,044 226,076 245,752

Net earnings 55,593 80,072 82,510 89,408

Net earnings per share

Basic earnings per share $ 1.30 $ 1.87 $ 1.93 $ 2.09

Diluted earnings per share $ 1.29 $ 1.86 $ 1.92 $ 2.08

Certain amounts may not add due to rounding.

These restructuring activities, which included workforce reductions and consolidation of facilities, were substantially completed as of December 31, 2021.

As of December 31, 2021 and 2020, the restructuring liability associated with these restructuring activities was $ 0.3 million and $ 6.9 million, respectively.

This balance is reported within Other Current Liabilities on the Consolidated Balance Sheet.

SUBSEQUENT EVENTS

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

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

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

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

On January 21, 2022, the Corporation announced that it has entered into an agreement to acquire the assets that comprise the Safran Aerosystems Arresting Company ("SAA") for $ 240 million in cash.

SAA is a designer and manufacturer of aircraft emergency arresting systems with more than 5,000 systems worldwide.

For the year ended December 31, 2021, SAA generated sales of approximately $ 70 million.

The acquisition is expected to close in the third quarter of 2022, subject to regulatory approval and other closing conditions.

Upon close, the acquired business will operate within the Corporation's Naval & Power segment.

On January 28, 2022, the Corporation completed the sale of its industrial valve business in Germany, which was classified as held for sale as of December 31, 2021, for approximately $ 3 million of gross cash proceeds.

Report of the Corporation

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The accounting systems and internal accounting controls are augmented by written policies and procedures, organizational structure providing for a division of responsibilities, selection and training of qualified personnel, and an internal audit program.

The design, monitoring, and revision of internal accounting control systems involve, among other things, management’s judgment with respect to the relative cost and expected benefits of specific control measures.

Management of the Corporation has completed an assessment of the Corporation’s internal controls over financial reporting and has included “Management’s Annual Report on Internal Control Over Financial Reporting” in Item 9A of this Annual Report on Form 10-K.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of Curtiss-Wright Corporation

To the shareholders and the Board of Directors of Curtiss-Wright Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Curtiss-Wright Corporation and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of earnings, comprehensive income, cash flows, and stockholders' equity, for each of the three years in the period ended December 31, 2020, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

We have audited the accompanying consolidated balance sheets of Curtiss-Wright Corporation and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of earnings, comprehensive income, cash flows and shareholders' equity, for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

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Critical Audit Matter

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

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

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

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

Revenue – Over-Time Basis – Refer to Note 2 to the financial statements

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Certain of the Company’s contracts have limited amount of historical data available requiring the Company to make judgments to estimate future costs that will be incurred for these contracts.

Related to these contracts, auditing these estimates required

both extensive audit effort due to a high degree of auditor judgment, especially given the limited historical data for certain contracts, when performing audit procedures and evaluating the results of those procedures.

Related to these contracts, auditing these estimates required both extensive audit effort due to a high degree of auditor judgment, especially given the limited historical data for certain contracts, when performing audit procedures and evaluating the results of those procedures.

How the Critical Audit Matter Was Addressed in the Audit

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of Curtiss-Wright Corporation

To the shareholders and the Board of Directors of Curtiss-Wright Corporation

Opinion on Internal Control over Financial Reporting

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We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated February 24, 2022, expressed an unqualified opinion on those financial statements.

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

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

Basis for Opinion

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data