What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-11-04 · 192 added, 421 removed, 521 unchanged (54% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(In thousands, except per share data) 2022 2021

10 unchanged sentences

General and administrative expenses 87,600 73,232

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

Restructuring expenses — 8,541 — 20,730

Loss on divestiture 4,651 —

Operating income 60,510 85,066

15 unchanged sentences

(In thousands)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Three Months Ended

Net earnings $ 40,685 $ 59,469

3 unchanged sentences

Pension and postretirement adjustments, net of tax (2)

4,994 3,561 15,036 12,244

Other comprehensive income (loss), net of tax ( 1,059 ) 1,640

Comprehensive income $ 39,626 $ 61,109

(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.

(1) The tax benefit included in foreign currency translation adjustments for the three months ended March 31, 2022 and 2021 was immaterial.

(2) The tax expense included in pension and postretirement adjustments for the three months ended March 31, 2022 and 2021 was $ 1.4 million and $ 1.7 million, respectively.

See notes to condensed consolidated financial statements

2 unchanged sentences

(In thousands, except per share data)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Current assets:

16 unchanged sentences

Accrued expenses 109,077 144,466

Income taxes payable 1,478 3,235

Deferred revenue 224,679 260,157

11 unchanged sentences

Stockholders’ equity

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

Common stock, $ 1 par value, 100,000,000 shares authorized as of March 31, 2022 and December 31, 2021;

49,187,378 shares issued as of March 31, 2022 and December 31, 2021;

outstanding shares were 38,471,738 as of March 31, 2022 and 38,469,778 as of December 31, 2021

49,187 49,187

2 unchanged sentences

Accumulated other comprehensive loss ( 191,524 ) ( 190,465 )

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

Common treasury stock, at cost ( 10,715,640 shares as of March 31, 2022 and 10,717,600 shares as of December 31, 2021)

( 1,073,426 ) ( 1,068,163 )

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(In thousands) 2022 2021

1 unchanged sentence

Net earnings $ 40,685 $ 59,469

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

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

Depreciation and amortization 27,363 28,595

Loss on divestiture 4,651 —

Gain on sale/disposal of long-lived assets ( 3,070 ) ( 349 )

1 unchanged sentence

Share-based compensation 3,809 3,327

Impairment of assets held for sale 8,656 —

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

Non-cash restructuring charges — 10,254

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

4 unchanged sentences

Deferred revenue ( 35,154 ) ( 14,836 )

Income taxes payable 6,927 16,247

Pension and postretirement liabilities, net ( 6,034 ) 1,182

Other current and long-term assets and liabilities ( 32,845 ) ( 5,573 )

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

Net cash used for operating activities ( 124,315 ) ( 26,603 )

Cash flows from investing activities:

1 unchanged sentence

Additions to property, plant, and equipment ( 10,896 ) ( 8,537 )

Acquisition of businesses, net of cash acquired — ( 82,053 )

Additional consideration paid on prior year acquisitions ( 5,062 ) ( 5,340 )

3 unchanged sentences

Payment of revolving credit facility ( 121,198 ) ( 65,301 )

Borrowings on debt — 300,000

Repurchases of common stock ( 18,857 ) ( 11,797 )

Proceeds from share-based compensation 5,284 4,919

Dividends paid ( 14,320 ) ( 14,160 )

Other ( 248 ) ( 229 )

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

Net cash provided by (used for) financing activities 106,179 ( 7,107 )

Effect of exchange-rate changes on cash ( 5,795 ) ( 4,614 )

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

Net decrease in cash and cash equivalents ( 34,322 ) ( 51,179 )

Cash and cash equivalents at beginning of period 171,004 198,248

4 unchanged sentences

(In thousands)

For the nine months ended September 30, 2021

For the three months ended March 31, 2021

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

4 unchanged sentences

Restricted stock — ( 6,407 ) — — 6,407

Employee stock purchase plan and stock options exercised — 877 — — 8,828

Share-based compensation — 10,724 — — 137

Repurchase of common stock (1)

— — — — ( 79,092 )

Other — ( 597 ) — — 597

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

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

Net earnings — — 69,703 — —

Other comprehensive income, net of tax — — — ( 11,279 ) —

Dividends declared — — ( 7,293 ) — —

Employee stock purchase plan — 411 — — 4,508

2 unchanged sentences

— — — — ( 11,797 )

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

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

For the nine months ended September 30, 2020

Other — ( 597 ) — — 597

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

For the three months ended March 31, 2022

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

1 unchanged sentence

Net earnings — — 40,685 — —

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

Other comprehensive loss, net of tax — — — ( 1,059 ) —

Dividends declared — — ( 6,932 ) — —

Restricted stock — ( 8,523 ) — — 8,523

Employee stock purchase plan and stock options exercised — ( 1,364 ) — — 11,272

Employee stock purchase plan — 814 — — 4,470

Share-based compensation — 3,714 — — 95

2 unchanged sentences

Other — ( 506 ) — — 506

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

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

Net earnings — — 64,620 — —

Other comprehensive income, net of tax — — — 31,790 —

Dividends declared — — ( 7,058 ) — —

Employee stock purchase plan and stock options exercised — ( 1,470 ) — — 6,191

Share-based compensation — 4,800 — — ( 163 )

Repurchase of common stock (1)

— — — — ( 12,542 )

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

March 31, 2022 $ 49,187 $ 122,603 $ 2,942,580 $ ( 191,524 ) $ ( 1,073,426 )

(1) For both the three months ended March 31, 2022 and 2021, the Corporation repurchased approximately 0.1 million shares of its common stock.

See notes to condensed consolidated financial statements

(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

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BASIS OF PRESENTATION

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, power & process, and general industrial 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 (A&D) markets, as well as critical technologies in demanding commercial power, process, and industrial markets.

The unaudited condensed consolidated financial statements include the accounts of Curtiss-Wright and its majority-owned subsidiaries.

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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 nine months ended September 30, 2021 and 2020, there were no significant changes in estimated contract costs.

During the three months ended March 31, 2022 and 2021, 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.

1 unchanged sentence

The results of operations for interim periods are not necessarily indicative of trends or of the operating results for a full year.

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 operates under the following three reportable segments:

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

This change resulted in the transfer of the Corporation's valve-related operations into the new Naval & Power segment.

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

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

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

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

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

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

The following table illustrates the approximate percentage of revenue recognized for performance obligations satisfied over-time versus at a point-in-time for the three months ended March 31, 2022 and 2021:

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

relative to total estimated costs.

The following table illustrates the approximate percentage of revenue recognized for performance obligations satisfied over-time versus at a point-in-time for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Three Months Ended

Over-time 53 % 52 %

2 unchanged sentences

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

Total backlog was approximately $ 2.2 billion as of September 30, 2021, of which the Corporation expects to recognize approximately 84 % as net sales over the next 36 months .

Total backlog was approximately $ 2.3 billion as of March 31, 2022, of which the Corporation expects to recognize approximately 89 % 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 Nine Months Ended

September 30, September 30,

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

(In thousands) 2022 2021

4 unchanged sentences

Commercial Aerospace 60,892 57,269

Total Aerospace & Defense $ 415,238 $ 378,973 $ 1,214,651 $ 1,135,190

Total Aerospace & Defense customers $ 360,971 $ 401,936

Power & Process $ 104,788 $ 105,504

General Industrial 93,702 89,619

Total Commercial $ 205,381 $ 192,641 $ 624,522 $ 587,702

Total Commercial customers $ 198,490 $ 195,123

Total $ 559,461 $ 597,059

5 unchanged sentences

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

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.

Revenue recognized during the three months ended March 31, 2022 and 2021 included in contract liabilities at the beginning of the respective years was approximately $ 79 million and $ 77 million, respectively.

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

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

This goodwill arises because the acquisition purchase price reflects the future earnings and cash flow potential in excess of the earnings and cash flows attributable to the current product and customer set at the time of acquisition.

Thus, goodwill inherently includes the know-how of the assembled workforce, the ability of the workforce to further improve the technology and product offerings, and the expected cash flows resulting from these efforts.

Goodwill may also include expected synergies resulting from the complementary strategic fit these businesses bring to existing operations.

The Corporation allocates the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities.

In the months after closing, as the Corporation obtains additional information about these assets and liabilities, including through tangible and intangible asset appraisals, and as the Corporation learns more about the newly acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price.

Only items identified as of the acquisition date are considered for subsequent adjustment.

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

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 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

Accounts receivable $ 3,204

Inventory 10,233

Property, plant, and equipment 1,332

Other current and non-current assets 188

Intangible assets 39,384

Operating lease right-of-use assets, net 1,992

Current and non-current liabilities ( 10,590 )

Net tangible and intangible assets 45,743

Goodwill 43,912

Total purchase price $ 89,655

Goodwill deductible for tax purposes $ 38,519

2020 Acquisitions

On October 30, 2020 , the Corporation acquired 100% of the issued and outstanding stock of PacStar for $ 406 million.

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

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

ASSETS HELD FOR SALE

In January 2022, the Corporation completed the sale of its industrial valve business in Germany, which was presented as held for sale in the Corporation's Consolidated Balance Sheet as of December 31, 2021, for gross cash proceeds of $ 3 million.

The Corporation recorded a loss of $ 5 million upon sale closing during the first quarter of 2022.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

acquired business operates within the Defense Electronics segment.

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

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

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

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

The acquired product line operates within the Defense Electronics segment.

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

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

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

The acquired business operates within the Naval & Power segment.

ASSETS HELD FOR SALE

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 Condensed Consolidated Balance Sheet.

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.

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) September 30, 2021 December 31, 2020

Assets held for sale:

Receivables, net $ 9,632 $ 9,902

Inventories, net 18,141 16,401

Other current assets 1,663 1,798

Property, plant, and equipment, net 4,357 4,821

Reserve for assets held for sale ( 13,578 ) ( 5,338 )

Total assets held for sale, current $ 20,215 $ 27,584

Liabilities held for sale:

Accounts payable $ ( 3,046 ) $ ( 2,654 )

Accrued expenses ( 1,208 ) ( 1,375 )

Other current liabilities ( 3,975 ) ( 748 )

Accrued pension and other postretirement benefit costs ( 4,986 ) ( 5,364 )

Total liabilities held for sale, current $ ( 13,215 ) $ ( 10,141 )

Receivables primarily include amounts billed to customers, unbilled charges on long-term contracts consisting of amounts recognized as sales but not billed, and other receivables.

3 unchanged sentences

The composition of receivables is as follows:

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(In thousands) March 31, 2022 December 31, 2021

Billed receivables:

Trade and other receivables $ 352,905 $ 362,007

Unbilled receivables (contract assets):

Unbilled receivables:

Recoverable costs and estimated earnings not billed 314,240 291,758

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The composition of inventories is as follows:

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

(In thousands) March 31, 2022 December 31, 2021

Raw materials $ 217,900 $ 191,066

7 unchanged sentences

Inventories, net $ 448,122 $ 411,567

(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.

(1) This caption includes capitalized development costs of $ 24.9 million as of March 31, 2022 related to certain aerospace and defense programs.

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

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.

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

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

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

As of March 31, 2022, capitalized development costs of $ 17.1 million are not currently supported by existing firm orders.

The changes in the carrying amount of goodwill for the three months ended March 31, 2022 are as follows:

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

1 unchanged sentence

Adjustments — ( 469 ) — ( 469 )

— 11,608 — 11,608

Foreign currency translation adjustment ( 1,629 ) ( 1,861 ) ( 168 ) ( 3,658 )

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.

March 31, 2022 $ 314,518 $ 711,684 $ 432,697 $ 1,458,899

OTHER INTANGIBLE ASSETS, NET

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

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

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(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 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.

Total intangible amortization expense for the three months ended March 31, 2022 was $ 14 million, as compared to $ 15 million in the comparable prior year period.

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

(In millions)

FAIR VALUE OF FINANCIAL INSTRUMENTS

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Effects on Condensed Consolidated Balance Sheets

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

As of March 31, 2022 and December 31, 2021, the fair values of the asset and liability derivative instruments were immaterial.

Effects on Condensed Consolidated Statements of Earnings

Undesignated hedges

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 (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.

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 September 30, 2021.

The (losses) and gains and 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 respective (losses) and gains for the three months ended March 31, 2022 and 2021 were immaterial.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

1 unchanged sentence

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

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

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

3.84 % Senior notes due 2021

$ 100,000 $ 100,473 $ 100,000 $ 102,173

Revolving credit agreement, due 2023 $ 213,900 $ 213,900 $ 93,900 $ 93,900

3.70 % Senior notes due 2023

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The following table is a consolidated disclosure of all domestic and foreign defined pension plans as described in the Corporation’s 2021 Annual Report on Form 10-K.

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,

The components of net periodic pension cost were as follows:

Three Months Ended

(In thousands) 2022 2021

6 unchanged sentences

Net periodic pension cost $ 3,256 $ 3,076

The Corporation does not expect to make any contributions to the Curtiss-Wright Pension Plan in 2021.

The Corporation did not make any contributions to the Curtiss-Wright Pension Plan during 2021, and does not expect to do so in 2022.

Contributions to the foreign benefit plans are not expected to be material in 2022.

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.

During the three months ended March 31, 2022, the Company recognized a settlement charge related to the retirement of a former executive.

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

Defined Contribution Retirement Plan

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subsidiaries.

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 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,

The employer contributions include both employer match and non-elective

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

contribution components up to a maximum employer contribution o f 7 % of eligible compensation.

During the three months ended March 31, 2022 and 2021, the expense relating to the plan was $ 5.7 million and $ 5.3 million, respectively.

EARNINGS PER SHARE

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

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(In thousands) 2022 2021

Basic weighted-average shares outstanding 38,456 40,933

Dilutive effect of stock options and deferred stock compensation 181 252 175 264

Dilutive effect of deferred stock compensation 212 170

Diluted weighted-average shares outstanding 38,668 41,103

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.

For the three months ended March 31, 2022 and 2021, approximately 26,000 and 88,000 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.

SEGMENT INFORMATION

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.

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

1 unchanged sentence

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

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(In thousands) 2022 2021

11 unchanged sentences

Total consolidated $ 60,510 $ 85,066

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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.

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

Three Months Ended Nine Months Ended

September 30, September 30,

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended

(In thousands) 2022 2021

3 unchanged sentences

Earnings before income taxes $ 53,977 $ 79,950

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

(In thousands) March 31, 2022 December 31, 2021

Identifiable assets

13 unchanged sentences

— 24,009 24,009

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

Net current period other comprehensive income (loss) ( 10,829 ) 131,220 120,391

December 31, 2021 $ ( 99,566 ) $ ( 90,899 ) $ ( 190,465 )

Other comprehensive loss before reclassifications (1)

Other comprehensive income (loss) before reclassifications (1)

( 6,825 ) 1,393 ( 5,432 )

Amounts reclassified from accumulated other comprehensive loss (1)

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

— 4,373 4,373

Net current period other comprehensive income (loss) ( 6,825 ) 5,766 ( 1,059 )

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

March 31, 2022 $ ( 106,391 ) $ ( 85,133 ) $ ( 191,524 )

(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 $ ( 4,373 ) Net earnings

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONTINGENCIES AND COMMITMENTS

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The Corporation continues to defend vigorously against all claims.

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

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 condensed 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 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.

As of March 31, 2022 and December 31, 2021, there were $ 19.5 million and $ 21.1 million of stand-by letters of credit outstanding, respectively.

As of March 31, 2022 and December 31, 2021, there were $ 2.7 million and $ 4.5 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.

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AP1000 Program

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

The terms of the AP1000 U.S.

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

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

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

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

In February 2022, the Corporation and Westinghouse Electric Company (WEC) executed a settlement agreement to resolve all open claims and counterclaims under the AP1000 U.S.

and China contracts.

The mediation efforts were ultimately unsuccessful.

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

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

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

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.

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

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

contract is remote.

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

As of 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

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

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.

Under the terms of the settlement agreement, the Corporation paid WEC $ 15 million in March 2022 and is required to pay WEC a final amount of $ 10 million in 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 of December 31, 2021, the Corporation was adequately accrued regarding this matter.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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Examples of forward-looking statements include, but are not limited to:

(a) projections of or statements regarding return on investment, future earnings, interest income, sales, volume, other income, earnings or loss per share, growth prospects, capital structure, and other financial terms, (b) statements of plans and objectives of management, (c) statements of future economic performance and potential impacts from COVID-19, including the impacts to supply and demand, and measures taken by governments and private industry in response, and (d) statements of assumptions, such as economic conditions underlying other statements.

(a) projections of or statements regarding return on investment, future earnings, interest income, sales, volume, other income, earnings or loss per share, growth prospects, capital structure, and other financial terms, (b) statements of plans and objectives of management, (c) statements of future economic performance and potential impacts from COVID-19, including the impacts to supply and demand, and measures taken by governments and private industry in response, (d) statements of future economic performance and potential impacts due to the conflict between Russia and Ukraine, and (e) statements of assumptions, such as economic conditions underlying other statements.

Such forward-looking statements can be identified by the use of forward-looking terminology such as “anticipates,” “believes,” “continue,” “could,” “estimate,” “expects,” “intend,” “may,” “might,” “outlook,” “potential,” “predict,” “should,” “will,” as well as the negative of any of the foregoing or variations of such terms or comparable terminology, or by discussion of strategy.

13 unchanged sentences

COMPANY ORGANIZATION

Curtiss-Wright Corporation is a diversified, multinational provider of highly engineered, technologically advanced, value-added products and services to a broad range of industries which are reported through our Aerospace & Industrial, Defense Electronics, and Naval & Power segments.

We are positioned as a market leader across a diversified array of niche markets through engineering and technological leadership, precision manufacturing, and strong relationships with our customers.

We provide products and services to a number of global markets and have achieved balanced growth through the successful application of our core competencies in engineering and precision manufacturing.

Our overall strategy is to be a balanced and diversified company, less vulnerable to cycles or downturns in any one market, and to establish strong positions in profitable niche markets.

Approximately 55% of our 2021 revenues are expected to be generated from defense-related markets.

Curtiss-Wright Corporation 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.

We report our operations through our Aerospace & Industrial, Defense Electronics, and Naval & Power segments.

We operate across a diversified array of niche markets through engineering and technological leadership, precision manufacturing, and strong relationships with our customers.

Approximately 66% of our 2022 revenues are expected to be generated from A&D-related markets.

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

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RESULTS OF OPERATIONS

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

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 financial information as of March 31, 2022 should be read in conjunction with the financial statements for the year ended December 31, 2021 contained in our Form 10-K.

The MD&A is organized into the following sections:

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The sales for the relevant markets will be discussed throughout the MD&A.

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 operates under the following three reportable segments:

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

This change resulted in the transfer of the Corporation's valve-related operations into the Naval & Power segment.

Analytical Definitions

3 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, impairment of assets held for sale, and foreign currency translation.

The definition of “organic” excludes the loss from sale of our industrial valves business in Germany as well as the effects of foreign currency translation.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

3 unchanged sentences

Condensed Consolidated Statements of Earnings

Three Months Ended Nine Months Ended

September 30, September 30,

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

Three Months Ended

(In thousands) 2022 2021 % change

Aerospace & Industrial $ 191,112 $ 180,331 6 %

13 unchanged sentences

Net earnings $ 40,685 $ 59,469 (32 %)

Restructuring-related expenses $ — $ 11,166 NM $ — 28,545 NM

New orders $ 634,265 $ 579,447 9 %

Components of sales and operating income increase (decrease):

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2021 vs.

Sales Operating Income Sales Operating Income

Three Months Ended

Sales Operating Income

Organic (6 %) (22 %)

Acquisitions — % — %

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

Restructuring — % 13 % — % 13 %

Loss on divestiture — % (6 %)

Foreign currency — % (1 %)

Total (6 %) (29 %)

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.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

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.

Sales during the three months ended March 31, 2022 decreased $38 million, or 6%, to $559 million, compared with the prior year period.

On a segment basis, sales from the Defense Electronics and Naval & Power segments decreased $38 million and $11 million, respectively, with sales from the Aerospace & Industrial segment increasing $11 million.

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

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 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.

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, as well as favorable overhead absorption on higher general industrial sales.

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.

Operating income during the three months ended March 31, 2022 decreased $25 million, or 29%, to $61 million, compared with the prior year period, while operating margin decreased 340 basis points to 10.8%, compared with the same period in 2021.

In the Defense Electronics segment, decreases in operating income and operating margin were primarily due to unfavorable overhead absorption on lower sales as well as unfavorable mix, which more than offset the benefits of our ongoing

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

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.

operational excellence initiatives.

Operating income and operating margin in the Naval & Power segment decreased primarily due to a loss on sale of our industrial valves business in Germany, unfavorable overhead absorption on lower sales in the naval defense market, and unfavorable mix in the power & process market.

These decreases were partially offset by increases in operating income and operating margin in the Aerospace & Industrial segment, primarily due to favorable absorption on higher sales, as well as the benefits of our ongoing operational excellence initiatives.

Non-segment operating expense during the three months ended March 31, 2022 increased $6 million , or 73%, to $15 million , primarily due to costs associated with shareholder activism in the current period.

Interest expense of $10 million was essentially flat compared to the prior year period.

Other income, net during the three months ended March 31, 2022 decreased $2 million, or 38%, to $3 million, primarily due to pension settlement charges recognized in the current period related to the retirement of a former executive.

The effective tax rate for the three months ended March 31, 2022 of 24.6% decreased as compared to an effective tax rate of 25.6% in the prior year period, primarily due to higher stock compensation benefits in the current period.

Comprehensive income for the three months ended March 31, 2022 was $40 million, compared to comprehensive income of $61 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.

• Net earnings decreased $19 million, primarily due to lower operating income.

• Foreign currency translation adjustments for the three months ended March 31, 2022 resulted in a $7 million comprehensive loss, compared to a $4 million comprehensive loss in the prior period.

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

New orders increased $55 million during the three months ended March 31, 2022 from the comparable prior year period, primarily due to the timing of naval defense orders in the Naval & Power segment, as well as an increase in new orders for industrial vehicles and commercial aerospace products in the Aerospace & Industrial segment.

These increases were partially offset by the timing of orders across all defense-related markets in the Defense Electronics segment due to ongoing supply chain disruption.

Changes in new orders by segment are discussed in further detail in the "Results by Business Segment" section below.

RESULTS BY BUSINESS SEGMENT

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

Three Months Ended Nine Months Ended

September 30, September 30,

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

Three Months Ended

(In thousands) 2022 2021 % change

Sales $ 191,112 $ 180,331 6 %

Operating income 24,853 19,025 31 %

Operating margin 15.7 % 12.7 % 300 bps 14.2 % 11.1 % 310 bps

Restructuring-related expenses $ — $ 3,183 NM $ — $ 9,052 NM

Operating margin 13.0 % 10.6 % 240 bps

New orders $ 228,314 $ 199,115 15 %

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Components of sales and operating income increase (decrease):

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2021 vs.

Sales Operating Income Sales Operating Income

Three Months Ended

Sales Operating Income

Organic 7 % 33 %

Restructuring — % 13 % — % 14 %

Acquisitions — % — %

Foreign currency (1 %) (2 %)

1 unchanged sentence

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

Sales 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 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

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

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.

Sales during the three months ended March 31, 2022 increased $11 million, or 6%, to $191 million from the prior year period, primarily due to higher demand for actuation and sensors products as well as surface treatment services on narrow-body platforms in the commercial aerospace market.

Sales also benefited from higher demand for industrial vehicle products in the general industrial market.

Operating income increased $6 million, or 31%, to $25 million during the three months ended March 31, 2022 compared to the prior year period, while operating margin increased 240 basis points to 13.0%.

The increases in operating income and operating margin were primarily due to favorable overhead absorption on higher sales, as well as the benefits of our ongoing operational excellence initiatives.

New orders during the three months ended March 31, 2022 increased $29 million from the comparable prior year period, primarily due to an increase in new orders for industrial vehicles and commercial aerospace equipment.

Defense Electronics

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

Three Months Ended Nine Months Ended

September 30, September 30,

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

Three Months Ended

(In thousands) 2022 2021 % change

Sales $ 143,069 $ 181,212 (21 %)

Operating income 23,290 36,623 (36 %)

Operating margin 22.5 % 23.7 % (120 bps) 20.3 % 19.6 % 70 bps

Restructuring-related expenses $ — $ 586 NM $ — $ 3,056 NM

Operating margin 16.3 % 20.2 % (390 bps)

New orders $ 159,688 $ 182,300 (12 %)

Components of sales and operating income increase (decrease):

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2021 vs.

Sales Operating Income Sales Operating Income

Three Months Ended

Sales Operating Income

Organic (21 %) (37 %)

Acquisitions — % — %

Restructuring — % 1 % — % 4 %

Foreign currency — % 1 %

Total (21 %) (36 %)

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

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

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.

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

Sales during the three months ended March 31, 2022 decreased $38 million, or 21%, to $143 million from the prior year period, primarily due to timing across all defense markets.

In the ground defense market, sales decreased $17 million primarily due to ongoing supply chain headwinds, which contributed to lower sales of embedded computing and tactical communications equipment on various programs.

Sales in the aerospace defense market decreased $14 million primarily due to the delayed signing of the FY22 defense budget, which resulted in lower sales of embedded computing equipment on various programs.

Sales in the naval defense market were negatively impacted by the timing of orders on various submarine and surface combat ship programs.

Operating income during the three months ended March 31, 2022 decreased $13 million, or 36%, to $23 million, and operating margin decreased 390 basis points from the prior year period to 16.3%.

The decreases in operating income and operating margin were primarily due to unfavorable overhead absorption on lower sales and unfavorable mix.

New orders during the three months ended March 31, 2022 decreased $23 million from the comparable prior year period, primarily due to the timing of orders across all defense-related markets due to ongoing supply chain disruption.

Naval & Power

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

Three Months Ended Nine Months Ended

September 30, September 30,

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

Three Months Ended

(In thousands) 2022 2021 % change

Sales $ 225,280 $ 235,516 (4 %)

Operating income 27,288 38,057 (28 %)

Operating margin 14.6 % 14.2 % 40 bps 15.8 % 12.9 % 290 bps

Restructuring-related expenses $ — $ 7,397 NM $ — $ 16,437 NM

Operating margin 12.1 % 16.2 % (410 bps)

New orders $ 246,263 $ 198,032 24 %

Components of sales and operating income increase (decrease):

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2021 vs.

Sales Operating Income Sales Operating Income

Three Months Ended

Sales Operating Income

Organic (4 %) (14 %)

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

Restructuring — % 22 % — % 18 %

Acquisitions — % — %

Loss on divestiture — % (14 %)

Foreign currency — % — %

1 unchanged sentence

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

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.

Sales during the three months ended March 31, 2022 decreased $11 million, or 4%, to $225 million from the prior year period.

In the naval defense market, sales decreased $6 million primarily due to lower sales on the CVN-80 aircraft carrier and Virginia-class submarine programs, partially offset by higher demand on the Columbia-class submarine program.

In the power & process market, higher nuclear aftermarket sales were more than offset by the wind down on the China Direct AP1000 program.

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 $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.

Operating income during the three months ended March 31, 2022 decreased $11 million, or 28%, to $27 million, and operating margin decreased 410 basis points from the prior year period to 12.1%.

The decreases in operating income and operating margin were primarily due to a loss on sale of our industrial valves business in Germany, unfavorable overhead absorption on lower sales in the naval defense market, and unfavorable mix in the power & process market.

New orders increased $48 million during the three months ended March 31, 2022 from the comparable prior year period, primarily due to the timing of naval defense orders.

SUPPLEMENTARY INFORMATION

The table below depicts sales by end market and customer type, as it helps provide an enhanced understanding of our businesses and the markets in which we operate.

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 Nine Months Ended

September 30, September 30,

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

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

Net Sales by End Market and Customer Type Three Months Ended

(In thousands) 2022 2021 % change

Aerospace & Defense markets:

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Aerospace & 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.

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.

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 during the three months ended March 31, 2022 decreased $41 million, or 10%, to $361 million, primarily due to lower sales in the aerospace defense, ground defense, and naval defense markets.

Sales in the aerospace defense and ground defense markets decreased primarily due to timing of sales of embedded computing and tactical communications equipment on various programs .

Sales decreases in the naval defense market were primarily due to lower sales on the CVN-80 aircraft carrier and Virginia-class submarine programs, partially offset by higher demand on the Columbia-class submarine program.

Commercial markets

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.

Sales during the three months ended March 31, 2022 increased $3 million, or 2%, to $198 million, primarily due to higher demand for industrial vehicle products in the general industrial market.

LIQUIDITY AND CAPITAL RESOURCES

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

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

Management continually evaluates cash utilization alternatives,

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

including share repurchases, acquisitions, increased dividends, and paying down debt, to determine the most beneficial use of available capital resources.

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

Condensed Consolidated Statements of Cash Flows Nine Months Ended

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

Cash provided by (used for):

Condensed Consolidated Statements of Cash Flows Three Months Ended

(In thousands) March 31, 2022 March 31, 2021

Cash provided by (used in):

Operating activities

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Effect of exchange-rate changes on cash (5,795) (4,614)

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 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.

Net decrease in cash and cash equivalents (34,322) (51,179)

Net cash used in operating activities increased $98 million from the prior year period, primarily due to lower net earnings, higher inventory receipts, the timing of advanced cash receipts, and a legal settlement payment made to WEC during the current period.

Net cash used in investing activities decreased $2 million from the prior year period, primarily due to higher current period proceeds from disposal of long-lived assets.

Net cash provided by financing activities increased $113 million from the prior year period, primarily due to higher current period net borrowings of $120 million under our revolving credit facility.

Refer to the "Financing Activities" section below for further details.

Financing Activities

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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.

The Corporation’s debt outstanding had an average interest rate of 3.2% and 3.5% for the three months ended March 31, 2022 and 2021, respectively.

The Corporation’s average debt outstanding was $1,112 million and $1,057 million for the three months ended March 31, 2022 and 2021, respectively.

Credit Agreement

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.

As of March 31, 2022, the Corporation had $214 million of outstanding borrowings under the 2012 Senior Unsecured Revolving Credit Agreement (the “Credit Agreement” or “credit facility”) and approximately $19 million in letters of credit supported by the credit facility.

The unused credit available under the Credit Agreement as of March 31, 2022 was $267 million which could be borrowed without violating any of our debt covenants.

Repurchase of common stock

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.

During the three months ended March 31, 2022, the Corporation used $19 million of cash to repurchase approximately 0.1 million outstanding shares under its share repurchase program.

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

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 $14 million during both the nine months ended September 30, 2021 and September 30, 2020.

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

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

As of March 31, 2022, we had the ability to borrow additional debt of $1.5 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 nine months ended September 30, 2021.

There have been no material changes in our market risk during the three months ended March 31, 2022.

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