What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-20 compared with 2023-02-22 · 156 added, 186 removed, 1046 unchanged (25% of the section changed)

16 unchanged sentences

Impairment of assets held for sale — — 19,088

Restructuring expenses — — 31,695

Operating income 484,602 423,443 377,129

32 unchanged sentences

Inventories, net 510,033 483,113

Assets held for sale — 10,988

Other current assets 67,502 52,623

12 unchanged sentences

Deferred revenue 303,872 254,801

Liabilities held for sale — 12,655

Other current liabilities 70,800 82,779

33 unchanged sentences

Share-based compensation 16,803 15,384 13,450

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

Non-cash restructuring charges — — 15,628

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

1 unchanged sentence

Inventories, net ( 21,568 ) ( 62,562 ) 13,554

Progress payments ( 3,099 ) ( 3,672 ) ( 7,689 )

Accounts payable and accrued expenses 11,571 42,493 17,713

10 unchanged sentences

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

Other — — ( 17 )

Net cash used for investing activities ( 35,519 ) ( 325,867 ) ( 42,403 )

19 unchanged sentences

Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock

January 1, 2020 $ 49,187 $ 116,070 $ 2,497,111 $ ( 325,274 ) $ ( 562,722 )

January 1, 2021 (as previously reported) $ 49,187 $ 122,535 $ 2,670,328 $ ( 310,856 ) $ ( 743,620 )

Correction of prior period error (Note 2) — — ( 6,575 ) — —

January 1, 2021 (as revised) 49,187 122,535 2,663,753 ( 310,856 ) ( 743,620 )

Net earnings — — 262,829 — —

2 unchanged sentences

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

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

Employee stock purchase plan — 877 — — 8,828

Share-based compensation — 13,296 — — 154

4 unchanged sentences

Net earnings — — 294,348 — —

Other comprehensive income, net of tax — — — 120,391 —

Other comprehensive loss, net of tax — — — ( 68,451 ) —

Dividends paid — — ( 28,779 ) — —

7 unchanged sentences

Net earnings — — 354,509 — —

Other comprehensive loss, net of tax — — — ( 68,451 ) —

Other comprehensive income, net of tax — — — 45,693 —

Dividends paid — — ( 30,249 ) — —

37 unchanged sentences

Average useful lives for property, plant, and equipment are as follows:

Buildings and improvements 5 to 40 years

Machinery, equipment, and other 3 to 15 years

Buildings and improvements 5 to 40

Machinery, equipment, and other 3 to 15

See Note 7 to the Consolidated Financial Statements for further information on property, plant, and equipment.

36 unchanged sentences

See Note 13 to the Consolidated Financial Statements for further information.

Foreign Currency

For operations outside the United States of America that prepare financial statements in currencies other than the U.S.

dollar, the Corporation translates assets and liabilities at period-end exchange rates and income statement amounts using weighted-average exchange rates for the period.

The cumulative effect of translation adjustments is presented as a component of accumulated other comprehensive income (loss) within stockholders’ equity.

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 ($ 2.6 ) million, $ 1.8 million, and $ 3.9 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Forward Foreign Exchange and Currency Option Contracts

The Corporation uses financial instruments, such as forward exchange and currency option contracts, to hedge a portion of existing and anticipated foreign currency denominated transactions.

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

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.

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

Interest Rate Risks and Related Strategies

5 unchanged sentences

For interest rate swaps designated as fair value hedges (i.e., hedges against the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), changes in the fair value of the interest rate swaps offset changes in the fair value of the fixed rate debt due to changes in market interest rates.

Recently Issued Accounting Standards

Recently issued accounting standards to be adopted

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740), Improvement to Income Tax Disclosures , which requires enhanced income tax disclosures, including disaggregation of information in the rate reconciliation table and disaggregated information related to income taxes paid.

The ASU is effective for annual reporting periods beginning with the year ending December 31, 2025.

Early adoption is permitted.

The Company is currently evaluating the impact of adopting this standard on its Consolidated Financial Statements.

In November 2023, the FASB issued A SU 2023-07, Segment Reporting (Topic 280), Improvement to Reportable Segment Disclosures .

This ASU enhances disclosures required for reportable segments in both annual and interim consolidated financial statements.

The ASU, which requires retrospective application, is effective for annual reporting periods beginning with the year ending December 31, 2024, and interim periods beginning with the three months ending March 31, 2025.

Early adoption is permitted.

The Company is currently evaluating the impact of adopting this standard on its Consolidated Financial Statements.

CORRECTION OF PRIOR PERIOD ERROR

During the third quarter of 2023, the Corporation identified an error related to a single long-term contract within a subsidiary of its Naval & Power segment.

The error primarily impacts 2020 and 2021, whereby certain events occurring during the pandemic, including constructive changes to the contract as well as labor inefficiencies and hiring delays due to a facility relocation, were not reflected in the contract’s estimated costs of completion.

In accordance with Staff Accounting Bulletin (SAB) Nos.

99 and 108, the Corporation evaluated this error and, based on an analysis of quantitative and qualitative factors, determined that it was not material to any one of the prior reporting periods affected and, therefore, amendment of previously filed reports with the Securities and Exchange Commission is not required.

However, the Corporation concluded that the cumulative misstatement could not be corrected in the three and nine months ended September 30, 2023, without materially misstating those respective periods.

Therefore, the Corporation revised the accompanying prior period financial statements and related notes hereto included within this filing, as summarized below.

The net impact of the error resulted in an overstatement of previously reported total net sales and net earnings of approximately $ 5 million and $ 4 million, respectively, for the year ended December 31, 2021 and an overstatement of previously reported total net sales and net earnings of approximately $ 8 million and $ 7 million , respectively, for the year ended December 31, 2020.

The net impact of the error for the year ended December 31, 2020 of approximately $ 7 million has been corrected as an adjustment to the beginning balance as of January 1, 2021 in the accompanying consolidated statement of stockholders’ equity for the year ended December 31, 2021.

The error did not impact previously reported total net sales or net earnings for the year ended December 31, 2022.

The following tables summarize the net impact of the error in the accompanying consolidated financial statements:

Consolidated Balance Sheet as of December 31, 2022:

(In thousands) As previously reported Corrections As revised

Receivables, net $ 724,603 $ ( 1,299 ) $ 723,304

Total current assets 1,517,313 ( 1,299 ) 1,516,014

Total assets 4,449,602 ( 1,299 ) 4,448,303

Accrued expenses 177,536 ( 3,096 ) 174,440

Deferred revenue 242,483 12,318 254,801

Other current liabilities 82,395 384 82,779

Total current liabilities 971,439 9,606 981,045

Total liabilities 2,457,483 9,606 2,467,089

Retained earnings 3,174,396 ( 10,905 ) 3,163,491

Total stockholders' equity 1,992,119 ( 10,905 ) 1,981,214

Total liabilities and stockholders' equity 4,449,602 ( 1,299 ) 4,448,303

Consolidated Statement of Earnings for the year ended December 31, 2021:

(In thousands) As previously reported Corrections As revised

Product sales $ 2,109,617 $ ( 5,170 ) $ 2,104,447

Total net sales 2,505,931 ( 5,170 ) 2,500,761

Cost of product sales 1,330,191 384 1,330,575

Total cost of sales 1,572,575 384 1,572,959

Gross profit 933,356 ( 5,554 ) 927,802

Operating income 382,683 ( 5,554 ) 377,129

Earnings before income taxes 354,510 ( 5,554 ) 348,956

Provision for income taxes ( 87,351 ) 1,224 ( 86,127 )

Net earnings 267,159 ( 4,330 ) 262,829

Basic earnings per share $ 6.61 $ ( 0.11 ) $ 6.50

Diluted earnings per share $ 6.58 $ ( 0.11 ) $ 6.47

Consolidated Statement of Comprehensive Income for the year ended December 31, 2021:

(In thousands) As previously reported Corrections As revised

Net earnings $ 267,159 $ ( 4,330 ) $ 262,829

Comprehensive income 387,550 ( 4,330 ) 383,220

Consolidated Statement of Cash Flows for the year ended December 31, 2021:

(In thousands) As previously reported Corrections As revised

Net earnings $ 267,159 $ ( 4,330 ) $ 262,829

Receivables, net ( 61,277 ) 105 ( 61,172 )

Deferred revenue 9,584 5,065 14,649

Income taxes ( 12,988 ) ( 1,224 ) ( 14,212 )

Other 19,005 384 19,389

Net cash provided by operating activities 387,668 — 387,668

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

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As part of its assessment, the Corporation considers all goods and/or services promised in the contract, regardless of whether they are explicitly stated or implied by customary business practices.

The Corporation’s contracts may contain either a single performance obligation, including the promise to transfer individual goods or services that are not separately distinct

within the context of the respective contracts, or multiple performance obligations.

The Corporation’s contracts may contain either a single performance obligation, including the promise to transfer individual goods or services that are not separately distinct within the context of the respective contracts, or multiple performance obligations.

For contracts with multiple performance obligations, the Corporation allocates the overall transaction price to each performance obligation using standalone selling prices, where available, or utilizes estimates for each distinct good or service in the contract where standalone prices are not available.

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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, 2023, the Corporation did not complete any acquisitions.

For the year ended December 31, 2022, the Corporation acquired two businesses for an aggregate purchase price of $ 282 million, net of cash acquired.

The Corporation's current period acquisitions contributed $ 45 million of total net sales and $ 1 million of net losses for the year ended December 31, 2022 which are included in the Consolidated Statement of Earnings.

Also, the Corporation paid $ 5 million during the year ended December 31, 2022 for the final portion of the purchase price on the acquisition of Dyna-Flo Control Valve Services Ltd.

Such acquisitions contributed $ 45 million of total net sales and $ 1 million of net losses for the year ended December 31, 2022 which are included in the Consolidated Statement of Earnings.

Also, the Corporation paid $ 5

million during the year ended December 31, 2022 for the final 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, 2021, the Corporation did not complete any acquisitions.

However, the Corporation paid $ 5 million during the year 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 Dyna-Flo acquisition.

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

11 unchanged sentences

Goodwill deductible for tax purposes $ 106,593

2022 Acquisitions

Keronite Group Limited ("Keronite")

On November 15, 2022 , the Corporation completed the acquisition of Keronite for $ 34 million.

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

The acquired business is a provider of Plasma Electrolytic Oxidation surface treatment applications and will operate within the Aerospace & Industrial segment .

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

Safran Aerosystems Arresting Company ("arresting systems acquisition")

On June 30, 2022 , the Corporation completed its arresting systems acquisition for $ 249 million.

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

The acquired business is a designer and manufacturer of mission-critical, fixed-wing aircraft emergency arresting system, and operates within the Naval & Power segment .

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

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 met the criteria to be classified as held for sale at that time.

Accordingly, the assets and liabilities of the business were presented as held for sale in the Corporation's Consolidated Balance Sheet, which resulted in impairment losses of $ 19 million and $ 33 million for the years ended December 31, 2021 and 2020, respectively.

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.

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

49 unchanged sentences

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

Acquisitions 12,445 — 94,148 106,593

Adjustments — 967 — 967

— 12,943 — 12,943

Foreign currency translation adjustment ( 7,042 ) ( 12,195 ) ( 6,714 ) ( 25,951 )

December 31, 2022 $ 321,550 $ 702,786 $ 520,299 $ 1,544,635

Acquisitions 12,445 — 94,148 106,593

Adjustments — 967 — 967

Foreign currency translation adjustment 3,581 7,592 3,018 14,191

December 31, 2023 $ 325,131 $ 710,378 $ 523,317 $ 1,558,826

(1) 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.

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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.

During the year ended December 31, 2022, the Corporation acquired intangible assets of $ 147 million as a result of the Corporation's Keronite and arresting systems acquisitions, which included Customer-related intangibles of $ 106 million, Technology of $ 36 million, and Other intangible assets of $ 5 million.

The weighted average amortization periods for these aforementioned intangible assets are 16.1 years, 14.9 years, and 10.0 years, respectively.

During the year ended December 31, 2023, 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.

The weighted average amortization periods for these aforementioned intangible assets upon acquisition were 16.1 , 14.9 , and 10.0 years, respectively.

Amortization expense for the years ended December 31, 2023, 2022, and 2021 was $ 65 million, $ 61 million, and $ 60 million, respectively.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

Forward Foreign Exchange and Currency Option Contracts

The Corporation has foreign currency exposure, primarily in the United Kingdom, Canada, and Europe.

The Corporation uses financial instruments, such as forward and option contracts, to hedge a portion of existing and anticipated foreign currency denominated transactions.

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

Guidance on accounting for derivative instruments and hedging activities requires companies to recognize all of the derivative financial instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets.

Interest Rate Risks and Related Strategies

2 unchanged sentences

The Corporation’s policy is to manage interest cost using a mix of fixed and variable rate debt.

The Corporation periodically uses interest rate swaps to manage such exposures.

Under these interest rate swaps, the Corporation exchanges, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount.

The Corporation’s foreign exchange contracts and interest rate swaps are considered Level 2 instruments which are based on market based inputs or unobservable inputs and corroborated by market data such as quoted prices, interest rates, or yield curves.

Effects on Consolidated Balance Sheet

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

Effects on Consolidated Statement of Earnings

Undesignated hedges

The location and amount of losses recognized in income on forward exchange derivative contracts not designated for hedge accounting for the years ended December 31, were as follows:

(In thousands) 2022 2021 2020

Forward exchange contracts:

General and administrative expenses $ 8,378 $ 1,499 $ 2,312

The estimated fair value amounts were determined by the Corporation using available market information, which is primarily based on quoted market prices for the same or similar issues as of December 31, 2023.

22 unchanged sentences

Total other current liabilities $ 70,800 $ 82,779

2017 Tax Cuts and Jobs Act

2017 Tax Cuts and Jobs A ct

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 as of December 31, 2022 and December 31, 2021, respectively.

The transition tax liability, which is expected to be paid in 2024 and 2025, was $ 7.8 million and $ 7.4 million as of December 31, 2023 and December 31, 2022, respectively.

As of December 31, 2023, the Corporation reassessed its assertion around whether foreign undistributed earnings should continue to no longer be considered permanently reinvested.

Consistent with the prior year findings, the Corporation continues to not record a liability for withholding taxes of a foreign subsidiary, which resulted in the reversal in 2021 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.

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

However, the Corporation did not record any provision, as it expected under tax law to recover the outside basis difference in a tax-free manner as occurred upon sale of the business in the first quarter of 2022.

The global intangible low-taxed income (GILTI)-related impact associated with the sale is immaterial.

Consistent with the prior year findings, the Corporation remained no longer permanently reinvested with the exception of one foreign subsidiary.

The Corporation has recorded a liability for withholding taxes that would arise upon distribution of the Corporation’s foreign undistributed earnings.

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.

4 unchanged sentences

$ 463,070 $ 389,195 $ 348,956

(1) The Corporation recognized a pre-tax loss of $ 5 million during the first quarter of 2022 pertaining to the sale of its industrial valve business in Germany, as well as pre-tax impairment losses of $ 19 million and $ 33 million in 2021 and 2020, respectively.

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

16 unchanged sentences

Foreign earnings (1)

0.7 0.2 ( 0.9 )

Foreign loss on sale — 0.2 —

6 unchanged sentences

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

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

Federal statutory rate, the cost of repatriating foreign earnings, and the impact of changes to foreign valuation allowances, excluding items related to foreign assets that were classified as held for sale in 2021 .

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

1 unchanged sentence

Deferred tax assets:

Operating lease liabilities $ 34,977 $ 32,868

Capitalized R&D expenses $ 39,463 $ 23,785

Operating lease liabilities 32,041 34,977

Inventories, net 24,282 21,992

Net operating loss 9,096 5,384

Environmental reserves 8,677 9,262

Incentive compensation 9,314 8,531

Environmental reserves 8,949 8,677

Net operating loss 8,348 9,096

Legal reserves 287 2,864

3 unchanged sentences

Goodwill amortization 110,543 103,174

Operating lease right-of-use assets, net 32,651 30,911

Other intangible amortization 53,551 59,966

Depreciation 15,433 13,694

Withholding taxes 13,200 12,776

Pension and other postretirement assets 37,870 29,053

Operating lease right-of-use assets, net 30,327 32,651

Withholding taxes 16,120 13,200

Depreciation 15,339 15,433

Other 8,160 7,256

2 unchanged sentences

Net deferred tax liabilities $ 123,988 $ 115,510

Deferred tax assets and liabilities are reflected on the Corporation’s consolidated balance sheet as of December 31 as follows:

Deferred tax assets and liabilities are reflected on the Corporation’s Consolidated Balance Sheets as of December 31 as follows:

(In thousands) 2023 2022

Net noncurrent deferred tax assets (1)

$ 8,331 $ 7,491

Net noncurrent deferred tax liabilities 132,319 123,001

Net deferred tax liabilities $ 123,988 $ 115,510

(1) Amount is classified within the "Other Assets" caption in the Corporation's Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022, respectively.

The Corporation has income tax net operating loss carryforwards related to international operations of $ 20.1 million, of which $ 18.4 million have an indefinite life and $ 1.7 million which expire through 2029.

2 unchanged sentences

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.

As of December 31, 2022 the Corporation increased its valuation allowance by $ 2.9 million to $ 5.7 million, in order to measure only the portion of deferred tax assets that more likely than not will be realized.

As of December 31, 2023 the Corporation decreased its valuation allowance by $ 0.8 million to $ 4.9 million, in order to measure only the portion of deferred tax assets that more likely than not will be realized.

As of December 31, 2023, $ 2.0 million of the total valuation allowance relates to foreign tax credits arising from branch operations that the Corporation believes it will be unable to utilize.

The Corporation recorded a tax provision of $ 2.7 million in the current year and $ 0.7 million in prior year related to the valuation allowance on branch foreign tax credits.

The Corporation recorded a tax benefit of $ 1.4 million in the current year as compared to a provision of $ 2.7 million in prior year related to the valuation allowance on branch foreign tax credits.

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, 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.

This resulted in a full valuation allowance against the deferred tax asset, as it is more likely than not that the losses will be forfeited as a result of the divestiture.

Upon the closure of the sale of the industrial valve business in the first quarter of 2022, the Corporation removed both the deferred tax asset and associated valuation allowance, with no resulting tax impact.

Income tax payments, net of refunds, of $ 136.4 million, $ 61.1 million, and $ 107.1 million were made in 2023, 2022, and 2021, respectively.

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Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

Revolving credit agreement, due 2027 $ — $ — $ 93,900 $ 93,900

3.70 % Senior notes due 2023

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(1) Represents the gain from termination of the Corporation's interest rate swap agreements on its 3.85 % and 4.24 % Senior Notes in February 2016, which will be amortized into interest expense over the remaining terms of the respective notes.

The weighted-average interest rate of the Corporation's Revolving Credit Agreement in 2022 and 2021 was 2.9 % and 1.0 %, respectively.

The Corporation's total debt outstanding had a weighted-average interest rate of 3.4 % in both 2022 and 2021, respectively.

The Corporation's total debt outstanding had a weighted-average interest rate of 3.9 % in 2023 and 3.4 % in 2022.

Aggregate maturities of debt are as follows:

(In thousands)

2023 $ 202,500

Thereafter 600,000

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In May 2022, the Corporation terminated its existing credit agreement, which was set to expire in October 2023, and entered into a new credit agreement (Credit Agreement) with a syndicate of financial institutions.

The Credit Agreement, which is set to expire in May 2027, increases the size of the Corporation’s revolving credit facility to $ 750 million, and expands the accordion feature to $ 250 million.

The Credit Agreement, which is set to expire in May 2027, increased the size of the Corporation’s revolving credit facility to $ 750 million, and expanded the accordion feature to $ 250 million.

The Corporation plans to use the Credit Agreement for general corporate purposes, which may include the funding of possible future acquisitions or supporting internal growth initiatives.

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The 2020 Notes are senior unsecured obligations, equal in right of payment to the Corporation’s existing senior indebtedness.

The Corporation, at its option, can prepay at any time all or any part of the 2020 Notes, subject to a make-whole payment in

accordance with the terms of the Note Purchase Agreement.

The Corporation, at its option, can prepay at any time all or any part of the 2020 Notes, subject to a make-whole payment in accordance with the terms of the Note Purchase Agreement.

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

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

The 2013 Notes consisted of $ 225 million of 3.70 % Senior Notes that mature on February 26, 2023 , $ 100 million of 3.85 % Senior Notes that mature on February 26, 2025 , and $ 75 million of 4.05 % Senior Notes that mature on February 26, 2028 .

The 2013 Notes consisted of $ 225 million of 3.70 % Senior Notes that matured on February 26, 2023 , $ 100 million of 3.85 % Senior Notes that mature on February 26, 2025 , and $ 75 million of 4.05 % Senior Notes that mature on February 26, 2028 .

$ 100 million of additional 4.11 % Senior Notes were deferred and subsequently issued on September 26, 2013 that mature on September 26, 2028 .

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

Under the terms of the Note Purchase Agreement, as amended, the Corporation is required to maintain certain financial ratios, the most restrictive of which is a debt to capitalization limit of 60 % ( 65 % for four consecutive quarters following an acquisition greater than $100 million) and an interest coverage ratio of less than 3 to 1.

million) and an interest coverage ratio of less than 3 to 1.

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

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Basic earnings per share $ 262,829 40,417 $ 6.50

Dilutive effect of stock options and deferred stock compensation 261

Dilutive effect of deferred stock compensation 185

Diluted earnings per share $ 262,829 40,602 $ 6.47

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Cash received from share-based awards $ 10,584 $ 9,997 $ 9,705

Stock Options

As of December 31, 2022 and 2021, the Corporation did not have any stock options outstanding.

The total intrinsic value of stock options exercised during 2020 was $ 5.2 million.

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 a self-constructed peer group (for awards granted in 2022) or compared to the S&P Midcap 400 Index (for awards granted in 2020 through 2021).

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 a self-constructed peer group (for awards granted in 2022 and 2023) or compared to the S&P Midcap 400 Index (for awards granted in 2021).

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.

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PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

The Corporation maintains nine separate and distinct pension and other post-retirement defined benefit plans, consisting of three domestic plans and six separate foreign pension plans.

The Corporation maintains separate and distinct pension and other post-retirement defined benefit plans, consisting of three domestic plans and six separate foreign pension plans.

The domestic plans include a qualified pension plan, a non-qualified pension plan, and a postretirement health-benefits plan.

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On December 31, 2012, the Corporation amended the CW Pension Plan to close the benefit to EMD employees hired after January 1, 2014.

Participants of the former Williams Controls Retirement Income Plan for salaried employees are either deferred vested participants or currently receiving benefits, as benefit accruals under the plan were frozen to future accruals effective January 1, 2003.

Benefits in the salaried plan are based on average compensation and years of service.

Participants of the former Williams Controls UAW Local 492 Plan for union employees are entitled to a benefit based on years of service multiplied by a monthly pension rate, and may be eligible for supplemental benefits based upon attainment of certain age and service requirements.

4 unchanged sentences

As of December 31, 2023, and 2022, the Corporation had a noncurrent pension asset of $ 244.1 million and $ 209.9 million, respectively.

The change in balance was primarily due to a lower return on plan assets during 2022.

The change in balance was primarily due to a higher return on plan assets during 2023.

Nonqualified Pension Plan

11 unchanged sentences

Effective August 31, 2013, the Corporation modified the benefit design for post-65 retirees by introducing RRAs to align with the EMD delivery model.

The Corporation had an accrued postretirement benefit liability as of December 31, 2022 and 2021 of $ 20.0 million and $ 25.2 million, respectively.

The Corporation had an accrued postretirement benefit liability $ 20.0 million as of both December 31, 2023 and 2022, respectively.

The Corporation expects to contribute $ 1.7 million to the plan during 2024.

2 unchanged sentences

As of December 31, 2023 and 2022, the total projected benefit obligation related to all foreign plans was $ 80.8 million and $ 69.6 million, respectively.

As of December 31, 2022 the Corporation had a net pension asset of $ 9.8 million.

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

As of December 31, 2023 and December 31, 2022, the Corporation had a net pension asset of $ 10.7 million and $ 9.8 million, respectively.

The Corporation's contributions to the foreign plans are expected to be $ 1.2 million in 2024.

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In 2022 and 2021, the Company recognized settlement charges 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 in 2020 as a result of the Corporation's restructuring initiatives.

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

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Divestitures — ( 4,341 )

Amendments — ( 477 )

Special termination benefits — 52

Currency translation adjustments 5,340 ( 8,117 )

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Noncurrent liabilities ( 48,595 ) ( 40,087 )

( 40,087 ) ( 72,619 )

Total $ 209,994 $ 179,268

Amounts recognized in accumulated other comprehensive income (AOCI)

Net actuarial loss (gain) $ 133,813 $ 120,676

Net actuarial loss $ 121,557 $ 133,813

Prior service cost ( 163 ) ( 239 )

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Fair value of plan assets 25,314 21,311

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

Plan Assumptions

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In the first quarter of 2022, the Corporation implemented an asset de-risking strategy in recognition of the strong funded status of the plan and a desire to reduce volatility as the plan approaches the cessation of accruals in 2028.

As a part of its strategy shift, the Corporation transitioned to an Outsourced Chief Investment Officer (“OCIO”) model that introduces asset allocation constraints that increase the fixed income allocation over time and with changes in the funded status.

As a part of its strategy shift, the Corporation transitioned to an Outsourced Chief Investment Officer model that introduces asset allocation constraints that increase the fixed income allocation over time and with changes in the funded status.

Accordingly, our established target allocations for each of the following asset classes:

domestic equity securities, international equity securities, and debt securities have changed.

the Corporation’s actual and current target allocations for the CW Pension Plan, representing 91 % of consolidated assets:

Below are the Corporation’s actual and current target allocations for the CW Pension Plan, representing 90 % of consolidated assets:

As of December 31, Target Expected

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Cash and cash equivalents $ 33,272 $ 730 $ 32,542 $ —

Equity securities- Mutual funds (1)

Equity securities (1)

388,343 370,028 18,315 —

Bond funds (2)

Fixed Income (2)

481,169 373,963 107,206 —

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Cash and cash equivalents $ 16,105 $ 16,105 $ — $ —

Equity securities - Mutual funds (1)

Equity securities (1)

358,082 341,575 16,507 —

Bond funds (2)

Fixed Income (2)

578,797 9,316 569,481 —

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(1) This category consists of domestic and international equity securities.

It is comprised of U.S.

securities benchmarked against the S&P 500 index and Russell Mid Cap and Russell 2000 indices, international mutual funds benchmarked against the MSCI EAFE and EM indices, global equity index mutual funds associated with our U.K.

based pension plans, and balanced funds associated with the U.K.

and Canadian based pension plans.

(2) This category consists of This category consists of domestic and international bonds.

It is comprised of individual U.S.

securities and exchange-traded funds benchmarked against the S&P 500 index and Russell Mid Cap and Russell 2000 indices, international securities and exchange-traded funds benchmarked against the MSCI EAFE and EM indices, global equity index mutual funds associated with our U.K.

based pension plans, and a balanced fund associated with the Canadian based pension plan.

(2) This category consists of domestic and international bonds.

The domestic fixed income securities consist of a portfolio of investment grade corporate debt, below investment-grade issues, fixed income exchange traded funds, and U.S.

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based pension plans.

(3) This category consists of a domestic real estate fund and real estate investment trusts in Switzerland.

(3) This category consists of a domestic real estate exchange-traded fund and real estate investment trusts in Switzerland.

Equity securities and exchange-traded equity and bond mutual funds are valued using a market approach based on the quoted market prices of identical instruments.

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Real estate investment trusts are priced at net asset value based on valuations of the underlying real estate holdings using inputs such as discounted cash flows, independent appraisals, and market-based comparable data.

Cash balances in the United States are held in a pooled fund and classified as a Level 2 asset.

Cash balances in the United States are held in money market funds and classified as a Level 1 asset.

cash is valued using a market approach based on quoted market prices of identical instruments.

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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 products offered include electronic throttle control devices, joysticks, power management electronics, traction inverters 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 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 products offered include commercial off-the-shelf (COTS) embedded computing board level modules, integrated subsystems, turret aiming and stabilization products, tactical communications solutions for battlefield network management, weapons handling systems, avionics and electronics, flight test equipment, and aircraft data management solutions.

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 and aerospace defense markets.

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

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Total Consolidated $ 2,845,373 $ 2,557,025 $ 2,500,761

(In thousands) 2022 2021 2020

Operating income (expense)

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Total Consolidated $ 116,172 $ 112,027 $ 114,384

Segment assets

Capital expenditures

Aerospace & Industrial $ 17,067 $ 18,554 $ 16,799

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Corporate 3,914 2,507 2,281

Assets held for sale — 10,988 27,584

Total Consolidated $ 44,666 $ 38,217 $ 41,108

Capital expenditures

(1) Corporate and Eliminations includes pension expense, environmental remediation and administrative expenses, legal, and other expenses.

As of December 31,

(In thousands) 2023 2022

Segment assets

Aerospace & Industrial $ 1,077,808 $ 1,041,562

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Total Consolidated $ 4,620,969 $ 4,448,303

(1) Corporate and Eliminations includes pension expense, environmental remediation and administrative expenses, legal, foreign currency transactional gains and losses, and other expenses.

Reconciliations

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Other income, net 29,861 12,732 12,067

Total consolidated earnings before tax $ 389,195 $ 354,510 $ 263,051

Earnings before income taxes $ 463,070 $ 389,195 $ 348,956

As of December 31,

1 unchanged sentence

Total assets for reportable segments $ 4,091,748 $ 4,075,461

Assets held for sale — 10,988 27,584

Non-segment cash 228,930 122,198

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To date, the Corporation has not been found liable for or paid any material sum of money in settlement in any asbestos-related case.

The Corporation

believes its minimal use of asbestos in its past operations and the relatively non-friable condition of asbestos in its products make it unlikely that it will face material liability in any asbestos litigation, whether individually or in the aggregate.

The Corporation believes its minimal use of asbestos in its past operations and the relatively non-friable condition of asbestos in its products

make it unlikely that it will face material liability in any asbestos litigation, whether individually or in the aggregate.

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

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In connection with these licenses, the Corporation has known conditional asset retirement obligations related to asset decommissioning activities to be performed in the future, when the Corporation terminates these licenses.

For two of the three licenses, the Corporation has recorded an asset retirement obligation of approximately $ 8 million.

As of December 31, 2023, the Corporation has recorded an asset retirement obligation of approximately $ 8 million for two of the three licenses.

For its third license, the Corporation has not recorded an asset retirement obligation as it is not reasonably estimable due to insufficient information about the timing and method of settlement of the obligation.

3 unchanged sentences

The Corporation has provided this financial assurance in the form of a $ 35 million surety bond.

AP1000 Program

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 executed a settlement agreement to resolve all open claims and counterclaims under the AP1000 U.S.

and China contracts.

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.

Under the settlement, the parties also negotiated and executed a right of first refusal for all future AP1000 projects.

As of December 31, 2021, the Corporation was adequately accrued regarding this matter.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 unchanged sentences

— 16,237 16,237

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

Net current period other comprehensive loss ( 61,241 ) ( 7,210 ) ( 68,451 )

December 31, 2022 $ ( 160,807 ) $ ( 98,109 ) $ ( 258,916 )

3 unchanged sentences

— ( 44 ) ( 44 )

Net current period other comprehensive loss ( 61,241 ) ( 7,210 ) ( 68,451 )

Net current period other comprehensive income 37,519 8,174 45,693

December 31, 2023 $ ( 123,288 ) $ ( 89,935 ) $ ( 213,223 )

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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, 2022 and 2021, 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, 2022, 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, 2023 and 2022, the related consolidated statements of earnings, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

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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.

Goodwill – Certain Reporting Units – Refer to Notes 1 and 8 to the financial statements

Revenue– Over-Time Basis – Refer to Note 3 to the financial statements

Critical Audit Matter Description

The Company tests for goodwill impairment annually, at the reporting unit level, in the fourth quarter.

Additionally, goodwill is tested for impairment when an event occurs or if circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

The goodwill balance was $1.5 billion as of December 31, 2022, of which amounts were assigned to two reporting units which were subject to a quantitative assessment to assess if the fair value of the respective reporting unit exceeded its carrying value.

When performing the quantitative assessment, the Company considered both comparative market multiples as well as estimated discounted cash flows for the reporting units.

The significant estimates and assumptions include, but are not limited to, revenue growth rates, operating margins, and future economic and market conditions.

The discount rates are based upon the reporting unit’s weighted average cost of capital.

The estimated fair values of these reporting units exceeded their carrying amounts and there was no impairment of goodwill.

We identified goodwill for these two reporting units as a critical audit matter because of the significant judgments made by management to estimate their fair value.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management's estimates and assumptions related to forecasts of future revenue growth rates, operating margins, and future economic and market conditions, and the selection of market multiples and discount rates.

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

The Company identifies a performance obligation for each promise in a contract to transfer a distinct good or service to the customer.

Revenue recognized on an over-time basis for the year ended December 31, 2023, accounted for approximately 47% of total net sales.

Contracts that qualify for over-time revenue recognition are generally associated with the design, development, and manufacture of highly engineered industrial products used in commercial and defense applications and generally span between 2-5 years in duration.

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.

Included within revenue recognized on an over-time basis are certain contracts that require the use of reasonable and dependable estimates of future costs that will be incurred to complete production of goods or provision of services as well as a

disciplined cost estimating system in which all functions of the business are integrally involved.

These estimates are determined based on industry knowledge and experience of engineers, project managers, and financial staff.

Specific to these contracts, auditing over-time revenue required extensive audit effort due to a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future revenue growth rates, operating margins, and future economic and market conditions (the “forecasts”), and the selection of market multiples and discount rates for these two reporting units included the following:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value, such as controls related to forecasts and management’s selection of market multiples and discount rates.

• We evaluated management’s ability to accurately forecast future revenue growth rates, operating margins, and future economic and market conditions by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s forecasts by comparing the forecasts to:

– Historical operating results of the reporting unit.

– Internal communications to senior management.

– Third-party industry reports for similar products.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the selected (1) market multiples and (2) discount rates by:

– Researching and analyzing valuation market multiples for guideline public companies.

– Testing the source information underlying the determination of the discount rates and the mathematical accuracy of the calculations.

– Developing a range of independent estimates and comparing those to the discount rates selected by management.

Our audit procedures related to auditing over-time revenue specific to these contracts (as described above) included the following, among others:

◦ At select business units, we tested the effectiveness of controls over the recognition of over-time basis revenue, including those over costs incurred to date and estimates of future costs related to the performance obligation.

◦ Obtained the population of active contracts during 2023 and assessed (1) contract year-to-date revenue in relation to inception-to-date margin and (2) contract value in relation to inception-to-date margin to identify potential outliers in the portfolio of active contracts that may contain characteristics of audit interest.

◦ For those contracts identified that contained characteristics of audit interest, performed further audit procedures tailored to address the specific characteristics of audit interest identified.

Procedures performed, among others, included:

▪ Read the relevant portions of contracts including any recent contract modifications to understand contract terms, including incentives, fee arrangement, scope of work, and any unusual contract terms.

▪ Evaluated the estimates of total costs and profits for these selected contracts by:

• Evaluating management’s ability to achieve the estimated cost and profit by 1) performing inquiries with the business managers and corroborating the information gained from these inquiries with other parties who have detailed knowledge of the contract’s progress, issues being encountered, and overall production status, 2) considering management’s historical performance against estimates, and 3) considering any contradictory information.

• Comparing management’s estimates for selected contracts to costs and profits of similar related contracts, when applicable.

◦ We developed independent estimates of revenue based on historical profit margins and current year costs incurred to date.

We compared those estimates to revenue recognized by the Company.

◦ Tested the accuracy and completeness of the costs incurred to date.

/s/ Deloitte & Touche LLP

8 unchanged sentences

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 20, 2024, 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 Safran Aerosystems Arresting Company, and Keronite Group Limited, which were acquired on June 30, 2022 and November 15, 2022, respectively, and whose financial statements constitute 2% of total net sales and 3% of total assets of the consolidated financial statement amounts (excluding acquired intangible assets and goodwill) as of and for year ended December 31, 2022.

Accordingly, our audit did not include the internal control over financial reporting at Safran Aerosystems Arresting Company, and Keronite Group Limited.

Basis for Opinion

19 unchanged sentences

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data