SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

ý☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, ~~2017~~2021

o☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _________ to _______

Commission File Number 1-134

CURTISS-WRIGHT CORPORATION

(Exact name of Registrant as specified in its charter)



Delaware						13-0612970
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	CW	New York Stock Exchange

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

~~Large accelerated filer~~ ý

~~Accelerated filer~~ o

~~Non-accelerated filer~~ o

~~(Do not check if a smaller reporting company)~~

~~Smaller reporting company~~ o

Emerging growth companyo

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

~~Yes~~ o No ý

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, par value $1.00 per share: ~~44,129,363~~39,239,706 shares ~~(as~~as of ~~September 30, 2017).~~October 31, 2021.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

TABLE of CONTENTS


PART I – FINANCIAL INFORMATION				PAGE

~~PART I – FINANCIAL INFORMATION~~		~~PAGE~~


Item 1.	Financial Statements (Unaudited):

			Condensed Consolidated Statements of Earnings	4

			Condensed Consolidated Statements of Comprehensive Income	5

			Condensed Consolidated Balance Sheets	6

			Condensed Consolidated Statements of Cash Flows	7

			Condensed Consolidated Statements of Stockholders’ Equity	8

			Notes to Condensed Consolidated Financial Statements	910

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		1921

Item 3.		Quantitative and Qualitative Disclosures about Market Risk		2932

Item 4.		Controls and Procedures		2932


PART II – OTHER INFORMATION


Item 1.		Legal Proceedings		3033

Item 1A.		Risk Factors		3033

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		3033

Item 3.		Defaults upon Senior Securities		3134

Item 4.		Mine Safety Disclosures		3134

Item 5.		Other Information		3234

Item 6.		Exhibits		3335

Signatures				3436

Page 3

PART 1- FINANCIAL INFORMATION

Item 1. Financial Statements

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(UNAUDITED)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands, except per share data)	2021		2020		2021		2020
Net sales
Product sales	$	528,339	$	493,398	$	1,552,706	$	1,457,772
Service sales	92,280		78,216		286,467		265,120
Total net sales	620,619		571,614		1,839,173		1,722,892
Cost of sales
Cost of product sales	328,424		305,921		989,759		945,886
Cost of service sales	55,187		52,872		177,930		177,580
Total cost of sales	383,611		358,793		1,167,689		1,123,466
Gross profit	237,008		212,821		671,484		599,426
Research and development expenses	21,618		17,587		66,675		54,163
Selling expenses	30,067		24,869		89,227		81,650
General and administrative expenses	78,998		77,251		229,608		230,515
Impairment of assets held for sale	8,656		—		8,656		—
Restructuring expenses	—		8,541		—		20,730
Operating income	97,669		84,573		277,318		212,368
Interest expense	9,955		9,055		30,094		25,059
Other income, net	3,627		5,417		8,910		6,844
Earnings before income taxes	91,341		80,935		256,134		194,153
Provision for income taxes	(21,638)		(16,315)		(65,554)		(46,754)
Net earnings	$	69,703	$	64,620	$	190,580	$	147,399

Net earnings per share:
Basic earnings per share	$	1.71	$	1.56	$	4.66	$	3.52
Diluted earnings per share	$	1.70	$	1.55	$	4.64	$	3.49

Dividends per share	0.18		0.17		0.53		0.51

Weighted-average shares outstanding:
Basic	40,769		41,545		40,865		41,926
Diluted	40,950		41,797		41,040		42,190
See notes to condensed consolidated financial statements

Page 4

Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands, except per share data) 2017 2016 2017 2016
Net sales
Product sales $ 468,073
$ 413,905
$ 1,351,076
$ 1,244,148
Service sales 99,828
93,187
308,069
299,218
Total net sales 567,901
507,092
1,659,145
1,543,366
Cost of sales
Cost of product sales 292,215
261,488
878,446
806,092
Cost of service sales 64,903
61,128
200,371
195,515
Total cost of sales 357,118
322,616
1,078,817
1,001,607
Gross profit 210,783
184,476
580,328
541,759
Research and development expenses 14,575
14,071
45,374
44,467
Selling expenses 28,818
26,273
86,331
85,025
General and administrative expenses 70,840
67,559
217,575
210,342
Operating income 96,550
76,573
231,048
201,925
Interest expense 10,457
10,488
31,584
30,694
Other income, net 321
483
823
818
Earnings before income taxes 86,414
66,568
200,287
172,049
Provision for income taxes (22,470 ) (20,636 ) (53,146 ) (53,335 )
Net earnings $ 63,944
$ 45,932
$ 147,141
$ 118,714

Net earnings per share:
Basic earnings per share $ 1.45
$ 1.04
$ 3.33
$ 2.67
Diluted earnings per share $ 1.43
$ 1.02
$ 3.29
$ 2.63

Dividends per share 0.15
0.13
0.41
0.39
Weighted-average shares outstanding:
Basic 44,137
44,323
44,196
44,457
Diluted 44,686
44,997
44,782
45,128

See notes to condensed consolidated financial statements

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(In thousands)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Net earnings	$	69,703	$	64,620	$	190,580	$	147,399
Other comprehensive income (loss)
Foreign currency translation adjustments, net of tax (1)	$	(16,273)	$	28,229	$	(12,990)	$	2,139
Pension and postretirement adjustments, net of tax (2)	4,994		3,561		15,036		12,244
Other comprehensive income (loss), net of tax	(11,279)		31,790		2,046		14,383
Comprehensive income	$	58,424	$	96,410	$	192,626	$	161,782

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net earnings $ 63,944
$ 45,932
$ 147,141
$ 118,714
Other comprehensive income (loss)
Foreign currency translation, net of tax ⁽¹⁾
$ 25,393
$ (12,366 ) $ 69,294
$ (26,907 )
Pension and postretirement adjustments, net of tax ⁽²⁾
1,280
1,634
4,974
4,766
Other comprehensive income (loss), net of tax 26,673
(10,732 ) 74,268
(22,141 )
Comprehensive income $ 90,617
$ 35,200
$ 221,409
$ 96,573

(1) The tax ~~expense~~benefit included in ~~other comprehensive income for~~ foreign currency translation adjustments for the three and nine months ended September 30, ~~2017 were $0.4 million~~2021 and ~~$1.6 million, respectively. The tax benefit included in other comprehensive loss for foreign currency translation adjustments for the three and nine months ended~~ September 30, ~~2016 were $0.7 million and $1.0 million, respectively.~~2020 was immaterial.

(2) The tax expense included in ~~other comprehensive income for~~ pension and postretirement adjustments for the three and nine months ended September 30, ~~2017 were $0.8~~2021 was $2.0 million and ~~$3.3~~$5.1 million, respectively. The tax expense included in ~~other comprehensive income for~~ pension and postretirement adjustments for the three and nine months ended September 30, ~~2016 were $0.9~~2020 was $1.3 million and ~~$3.0~~$4.0 million, respectively.

See notes to condensed consolidated financial statements

Page 5

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except per share data)


	September 30, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	234,416	$	198,248
Receivables, net	670,867		588,718
Inventories, net	433,140		428,879
Assets held for sale	20,215		27,584
Other current assets	65,171		57,395
Total current assets	1,423,809		1,300,824
Property, plant, and equipment, net	360,314		378,200
Goodwill	1,461,313		1,455,137
Other intangible assets, net	552,514		609,630
Operating lease right-of-use assets, net	140,524		150,898
Prepaid pension asset	111,906		92,531
Other assets	32,921		34,114
Total assets	$	4,083,301	$	4,021,334
Liabilities
Current liabilities:
Current portion of long-term debt	100,000		100,000
Accounts payable	158,196		201,237
Accrued expenses	142,169		146,833
Deferred revenue	249,671		253,411
Liabilities held for sale	13,215		10,141
Other current liabilities	101,892		98,755
Total current liabilities	765,143		810,377
Long-term debt	957,101		958,292
Deferred tax liabilities, net	121,491		115,007
Accrued pension and other postretirement benefit costs	98,122		98,345
Long-term operating lease liability	124,362		133,069
Long-term portion of environmental reserves	15,096		15,422
Other liabilities	101,926		103,248
Total liabilities	2,183,241		2,233,760
Contingencies and commitments (Note 14)
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	49,187		49,187
Additional paid in capital	124,532		122,535
Retained earnings	2,839,294		2,670,328
Accumulated other comprehensive loss	(308,810)		(310,856)
Common treasury stock, at cost (8,713,862 shares as of September 30, 2021 and 8,270,949 shares as of December 31, 2020)	(804,143)		(743,620)
Total stockholders’ equity	1,900,060		1,787,574
Total liabilities and stockholders’ equity	$	4,083,301	$	4,021,334

See notes to condensed consolidated financial statements

Page 6

September 30,
2017 December 31,
2016
Assets
Current assets:
Cash and cash equivalents $ 432,191
$ 553,848
Receivables, net 515,966
463,062
Inventories, net 397,270
366,974
Other current assets 43,852
30,927
Total current assets 1,389,279
1,414,811
Property, plant, and equipment, net 387,699
388,903
Goodwill 1,089,781
951,057
Other intangible assets, net 338,957
271,461
Other assets 15,508
11,549
Total assets $ 3,221,224
$ 3,037,781
Liabilities

Current liabilities:
Current portion of long-term and short-term debt $ 150,408
$ 150,668
Accounts payable 150,751
177,911
Accrued expenses 131,357
130,239
Income taxes payable 9,988
18,274
Deferred revenue 189,788
170,143
Other current liabilities 36,946
28,027
Total current liabilities 669,238
675,262
Long-term debt 814,400
815,630
Deferred tax liabilities, net 57,918
49,722
Accrued pension and other postretirement benefit costs 101,827
107,151
Long-term portion of environmental reserves 14,956
14,024
Other liabilities 88,409
84,801
Total liabilities 1,746,748
1,746,590
Contingencies and commitments (Note 12)

Stockholders’ equity
Common stock, $1 par value,100,000,000 shares authorized at September 30, 2017 and December 31, 2016; 49,187,378 shares issued at September 30, 2017 and December 31, 2016; outstanding shares were 44,129,363 at September 30, 2017 and 44,181,050 at December 31, 2016 49,187
49,187
Additional paid in capital 123,573
129,483
Retained earnings 1,883,185
1,754,907
Accumulated other comprehensive loss (217,488 ) (291,756 )
Common treasury stock, at cost (5,058,015 shares at September 30, 2017 and 5,006,328 shares at December 31, 2016) (363,981 ) (350,630 )
Total stockholders’ equity 1,474,476
1,291,191
Total liabilities and stockholders’ equity $ 3,221,224
$ 3,037,781

See notes to condensed consolidated financial statements

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended
	September 30,
(In thousands)	2021		2020
Cash flows from operating activities:
Net earnings	$	190,580	$	147,399
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization	86,240		84,769
Gain on sale/disposal of long-lived assets	(604)		(370)
Deferred income taxes	4,480		4,258
Share-based compensation	10,861		11,777
Impairment of assets held for sale	8,656		—
Foreign exchange loss on substantial liquidation of subsidiary	—		9,498
Non-cash restructuring charges	—		10,254
Change in operating assets and liabilities, net of businesses acquired:
Receivables, net	(81,498)		1,987
Inventories, net	(5,045)		(33,322)
Progress payments	(3,960)		(3,036)
Accounts payable and accrued expenses	(51,702)		(81,535)
Deferred revenue	115		(8,841)
Pension and postretirement liabilities, net	2,406		(150,674)
Other current and long-term assets and liabilities	(4,768)		11,620
Net cash provided by operating activities	155,761		3,784
Cash flows from investing activities:
Proceeds from sale/disposal of long-lived assets	3,389		2,476
Additions to property, plant, and equipment	(27,858)		(36,341)
Acquisition of businesses, net of cash acquired	—		(82,053)
Additional consideration paid on prior year acquisitions	(5,340)		—
Net cash used for investing activities	(29,809)		(115,918)
Cash flows from financing activities:
Borrowings under revolving credit facility	166,771		389,398
Payment of revolving credit facility	(166,771)		(389,398)
Borrowings on debt	—		300,000
Repurchases of common stock	(79,092)		(137,155)
Proceeds from share-based compensation	9,705		9,908
Dividends paid	(14,320)		(14,160)
Other	(699)		(648)
Net cash (used for)/provided by financing activities	(84,406)		157,945
Effect of exchange-rate changes on cash	(5,378)		(10,023)
Net increase in cash and cash equivalents	36,168		35,788
Cash and cash equivalents at beginning of period	198,248		391,033
Cash and cash equivalents at end of period	$	234,416	$	426,821
See notes to condensed consolidated financial statements

Page 7

Nine Months Ended
September 30,
(In thousands) 2017 2016
Cash flows from operating activities:
Net earnings $ 147,141
$ 118,714
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization 74,815
72,419
Gain on sale of businesses (1,011 ) (845 )
Gain on fixed asset disposals (225 ) (194 )
Deferred income taxes (1,321 ) (6,388 )
Share-based compensation 9,173
7,813
Change in operating assets and liabilities, net of businesses acquired and divested:
Receivables, net (38,204 ) 95,200
Inventories, net (892 ) (18,613 )
Progress payments 325
4,094
Accounts payable and accrued expenses (42,662 ) (58,162 )
Deferred revenue 16,772
14,937
Income taxes payable (11,358 ) 8,936
Net pension and postretirement liabilities 4,115
2,723
Termination of interest rate swap —
20,405
Other current and long-term assets and liabilities 5,639
6,173
Net cash provided by operating activities 162,307
267,212
Cash flows from investing activities:
Proceeds from sales and disposals of long lived assets 1,790
1,204
Proceeds from divestitures 6,162
1,027
Additions to property, plant, and equipment (34,874 ) (26,127 )
Acquisition of businesses, net of cash acquired (232,630 ) (295 )
Net cash used for investing activities (259,552 ) (24,191 )
Cash flows from financing activities:
Borrowings under revolving credit facility 4,884
7,504
Payments of revolving credit facility (5,144 ) (7,961 )
Repurchases of common stock (38,939 ) (80,296 )
Proceeds from share-based compensation 11,854
18,359
Dividends paid (11,497 ) (11,576 )
Excess tax benefits from share-based compensation plans —
6,771
Other (512 ) (469 )
Net cash used for financing activities (39,354 ) (67,668 )
Effect of exchange-rate changes on cash 14,942
(11,997 )
Net increase (decrease) in cash and cash equivalents (121,657 ) 163,356
Cash and cash equivalents at beginning of period 553,848
288,697
Cash and cash equivalents at end of period $ 432,191
$ 452,053
Supplemental disclosure of non-cash activities:

Capital expenditures incurred but not yet paid $ 756
$ 688
See notes to condensed consolidated financial statements

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(In thousands)


	For the nine months ended September 30, 2021
	Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock
December 31, 2020	$	49,187	$	122,535	$	2,670,328	$	(310,856)	$	(743,620)
Net earnings	—		—		190,580		—		—
Other comprehensive income, net of tax	—		—		—		2,046		—
Dividends declared	—		—		(21,614)		—		—
Restricted stock	—		(9,007)		—		—		9,007
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)

Common Stock Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock
December 31, 2015 $ 49,190
$ 144,923
$ 1,590,645
$ (225,928 ) $ (303,407 )
Net earnings —
—
187,329
—
—
Other comprehensive loss, net of tax —
—
—
(65,828 ) —
Dividends paid —
—
(23,067 ) —
—
Restricted stock, net of tax —
(12,086 ) —
—
17,275
Stock options exercised, net of tax —
(11,271 ) —
—
39,483
Other (3 ) (1,104 ) —
—
811
Share-based compensation —
9,021
—
—
457
Repurchase of common stock —
—
—
—
(105,249 )
December 31, 2016 $ 49,187
$ 129,483
$ 1,754,907
$ (291,756 ) $ (350,630 )
Net earnings —
—
147,141
—
—
Other comprehensive income, net of tax —
—
—
74,268
—
Dividends declared —
—
(18,124 ) —
—
Restricted stock —
(9,624 ) —
—
9,618
Stock options exercised —
(2,995 ) —
—
14,855
Other —
(2,099 ) (739 ) —
750
Share-based compensation —
8,808
—
—
365
Repurchase of common stock —
—
—
—
(38,939 )
September 30, 2017 $ 49,187
$ 123,573
$ 1,883,185
$ (217,488 ) $ (363,981 )

See notes to condensed consolidated financial statements


	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	—		466		—		—		4,320
Share-based compensation	—		4,120		—		—		16
Repurchase of common stock (1)	—		—		—		—		(54,697)
September 30, 2021	$	49,187	$	124,532	$	2,839,294	$	(308,810)	$	(804,143)

Page 8

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(In thousands)


	For the nine months ended September 30, 2020
	Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock
December 31, 2019	$	49,187	$	116,070	$	2,497,111	$	(325,274)	$	(562,722)
Net earnings	—		—		147,399		—		—
Other comprehensive income, net of tax	—		—		—		14,383		—
Dividends declared	—		—		(21,221)		—		—
Restricted stock	—		(4,115)		—		—		4,115
Employee stock purchase plan and stock options exercised	—		(1,364)		—		—		11,272
Share-based compensation	—		11,723		—		—		54
Repurchase of common stock (1)	—		—		—		—		(137,155)
Other	—		(517)		—		—		517
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)

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.

Page 9

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BASIS OF PRESENTATION

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

The unaudited condensed consolidated financial statements include the accounts of Curtiss-Wright and its majority-owned subsidiaries. All intercompany transactions and accounts have been eliminated.

The unaudited condensed consolidated financial statements of the Corporation have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted as permitted by such rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of these financial statements.

Management is required to make estimates and judgments that affect the reported amount of assets, liabilities, revenue, and expenses and disclosure of contingent assets and liabilities in the accompanying financial statements. Actual results may differ from these estimates. The most significant of these estimates includes the estimate of costs to complete ~~long-term contracts under~~using the ~~percentage-of-completion~~over-time revenue recognition accounting ~~methods, the estimate of useful lives for property, plant, and equipment, cash flow estimates used for testing the recoverability of assets,~~method, pension plan and postretirement obligation assumptions, estimates for inventory obsolescence, fair value estimates around assets and assumed liabilities from acquisitions, estimates for the valuation and useful lives of intangible assets, legal reserves, and the estimate of future environmental costs. Changes in estimates of contract sales, costs, and profits are recognized using the cumulative catch-up method of accounting. This method recognizes in the current period the cumulative effect of the changes on current and prior periods. 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, ~~2017~~2021 and ~~2016,~~2020, there were no ~~individual~~ 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.

The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Corporation’s ~~2016~~2020 Annual Report on Form 10-K. The results of operations for interim periods are not necessarily indicative of trends or of the operating results for a full year.

~~Recent accounting pronouncements adopted~~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.

2. REVENUE

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.

Performance Obligations

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

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

Page 910

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

~~Standard~~

~~Description~~

~~Effect on the condensed consolidated financial statements~~

~~ASU 2017-04 Simplifying the Test for Goodwill Impairment~~

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the measurement of goodwill impairment testing by removing step two. This guidance was early adopted effective January 1, 2017 and will be applied prospectively.relative to total estimated costs. If a performance obligation does not qualify for over-time revenue recognition, revenue is then recognized at the point-in-time in which control of the distinct good or service is transferred to the customer, typically based upon the terms of delivery.

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Over-time	48	%	50	%	51	%	52	%
Point-in-time	52	%	50	%	49	%	48	%

Contract backlog represents the remaining performance obligations that have not yet been recognized as revenue. 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. The remainder will be recognized thereafter.

Disaggregation of Revenue

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,
(In thousands)	2021		2020		2021		2020
Aerospace & Defense
Aerospace Defense	$	116,853	$	121,987	$	327,846	$	333,120
Ground Defense	55,124		20,519		159,091		63,205
Naval Defense	175,800		165,524		531,429		496,157
Commercial Aerospace	67,461		70,943		196,285		242,708
Total Aerospace & Defense	$	415,238	$	378,973	$	1,214,651	$	1,135,190

Commercial
Power & Process	$	112,736	$	113,919	$	343,573	$	350,632
General Industrial	92,645		78,722		280,949		237,070
Total Commercial	$	205,381	$	192,641	$	624,522	$	587,702

Total	$	620,619	$	571,614	$	1,839,173	$	1,722,892

Contract Balances

Timing of revenue recognition and cash collection may result in billed receivables, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on the Condensed Consolidated Balance Sheet. The Corporation’s contract assets primarily relate to its rights to consideration for work completed but not billed as of the reporting date. Contract assets are transferred to billed receivables when the rights to consideration become unconditional. This is typical in situations where amounts are billed as work progresses in accordance with agreed-upon contractual terms or upon achievement of contractual milestones. 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. Contract assets and contract liabilities are reported in the "Receivables, net" and "Deferred revenue" lines, respectively, within the Condensed Consolidated Balance Sheet.

~~The adoption of this standard does not have a financial impact on the Condensed Consolidated Financial Statements.~~

~~Date of adoption: January 1, 2017~~

~~ASU 2016-09 Improvements to Employee Share-Based Payment Accounting~~

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes and forfeitures. Excess tax benefits previously reported as cash flows from financing activities in the Condensed Consolidated Financial Statements are now required to be reported as operating activities. The Company adopted this guidance effective January 1, 2017.

The Corporation recorded an income tax benefit of approximately $5 million within the provision for income taxes for the nine months ended September 30, 2017 related to the excess tax benefit on stock options and performance share units. Prior to adoption, this amount would have been recorded as an increase to additional paid-in capital.

~~The Corporation elected to account for forfeitures as they occur, which did not have a material impact on its Condensed Consolidated Financial Statements.~~

~~Date of adoption: January 1, 2017~~

~~Recent accounting pronouncements to be adopted~~



~~Standard~~	~~Description~~	~~Effect on the condensed consolidated financial statements~~
~~ASU 2014-09 Revenue from Contracts with Customers~~	In May 2014, the FASB issued a comprehensive new revenue recognition standard which will supersede previous existing revenue recognition guidance. The standard creates a five-step model for revenue recognition that requires companies to exercise judgment when considering contract terms and relevant facts and circumstances. The five-step model includes (1) identifying the contract, (2) identifying the separate performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations and (5) recognizing revenue when each performance obligation has been satisfied. The standard also requires expanded disclosures surrounding revenue recognition. The standard is effective for fiscal periods beginning after December 15, 2017 and allows for either full retrospective or modified retrospective adoption.	The Corporation plans to apply the modified retrospective approach upon adoption and is currently evaluating the impact of adoption on its Condensed Consolidated Financial Statements as of January 1, 2018. While its assessment is ongoing and not yet complete, the Corporation anticipates certain contracts currently accounted for on a “point in time” basis will be required to transition to an “over-time” model as they meet one or more of the mandatory criteria established under the new standard. The Corporation expects the transition adjustment to primarily include the following: a) U.S. Government and commercial contracts where such promised goods do not have alternative use and the Corporation has an enforceable right to payment for performance completed to date; b) repair and overhaul services performed on customer-owned goods; and c) Defense-related contracts where the Corporation uses customer-furnished materials in production. We are in the process of implementing appropriate changes to our business processes, systems, and controls to support recognition and disclosure under the new standard. The Corporation will continue to monitor interpretative guidance issued by the FASB which may cause its evaluation to change.
~~Date of adoption: January 1, 2018~~

Page 1011

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)



~~ASU 2016-02 Leases~~	In February 2016, the FASB issued final guidance that will require lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to today’s accounting. The guidance requires the use of a modified retrospective approach.	~~The Corporation is currently evaluating the impact of the adoption of this standard on its Condensed Consolidated Financial Statements.~~
~~Date of adoption: January 1, 2019~~
~~ASU 2017-01~~ ~~Clarifying the Definition of a Business~~	In January 2017, the FASB issued ASU 2017-01, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard introduces a screen for determining when assets acquired are not a business and clarifies that a business must include, at a minimum, an input and a substantive process that contribute to an output. The standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.	~~The Corporation does not expect the adoption of this standard to have a material impact on its Condensed Consolidated Financial Statements.~~
~~Date of adoption: January 1, 2018~~
~~ASU 2017-07~~ ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~	In March 2017, the FASB issued final guidance that requires the service cost component of net periodic benefit costs from defined benefit and other postretirement benefit plans be included in the same Consolidated Statement of Earnings captions as other compensation costs arising from services rendered by the covered employees during the period. The other components of net benefit cost will be presented in the Statement of Earnings separately from service costs. This standard is effective for fiscal years beginning after December 15, 2017. Following adoption, only service costs will be eligible for capitalization into manufactured inventories. The amendments of this standard should be applied retrospectively for the presentation of the service cost component and the other components of net periodic benefit costs.	~~The Corporation is currently evaluating the impact of the adoption of this standard on its Condensed Consolidated Financial Statements.~~
~~Date of adoption: January 1, 2018~~

2.3. ACQUISITIONS

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 ~~a number of~~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 ~~prices for these businesses reflect~~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, ~~2017,~~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~~2 businesses for an aggregate purchase price of ~~$233~~$90 million, which are described in more detail below. ~~No acquisitions were made during~~The Condensed Consolidated Statement of Earnings for the nine months ended September 30, ~~2016.~~

~~Page 11~~

~~CURTISS-WRIGHT CORPORATION and SUBSIDIARIES~~

~~NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~The Condensed Consolidated Statement of Earnings includes $45~~2020 included $12 million of total net sales and $1 million of net losses from the Corporation's ~~2017~~2020 acquisitions.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for ~~all~~the acquisitions consummated during the nine months ended September 30, ~~2017.~~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

(In thousands) 2017
Accounts receivable $ 5,006
Inventory 22,702
Property, plant, and equipment 4,598
Other current and non-current assets 2,815
Intangible assets 88,900
Current and non-current liabilities (6,672 )
Due to seller (596 )
Net tangible and intangible assets 116,753
Purchase price, net of cash acquired 232,630
Goodwill $ 115,877

Goodwill deductible for tax purposes $ 115,877

~~2017~~2020 Acquisitions

~~Teletronics Technology Corporation (TTC)~~PacStar

On ~~January 3, 2017,~~October 30, 2020, the Corporation acquired 100% of the issued and outstanding ~~capital~~ stock of ~~TTC~~PacStar for ~~$226.0 million, net of cash acquired.~~$406 million. The ~~Share~~ 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. ~~TTC~~PacStar is a ~~designer~~provider of tactical communications solutions for battlefield network management. The

Page 12

CURTISS-WRIGHT CORPORATION and manufacturer of high-technology data acquisition and comprehensive flight test instrumentation systems for critical aerospace and defense applications. For the year ended December 31, 2016, TTC generated sales of $64 million.~~The~~ SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

acquired business operates within the Defense Electronics segment. The acquisition is subject to post-closing adjustments with the purchase price allocation not yet complete.

~~Para Tech Coating, Inc. (Para Tech)~~IADS

On ~~February 8, 2017,~~April 20, 2020, the ~~Corporation~~Corporation acquired ~~certain assets and assumed certain liabilities of Para Tech~~the IADS product line for ~~$6.6 million in cash.~~approximately $29 million. The Asset Purchase Agreement contains representations and warranties customary for a ~~purchase price adjustment mechanism~~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.

Dyna-Flo

On February 28, 2020, the Corporation 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. ~~Para Tech is a provider of parylene conformal coating services~~Dyna-Flo specializes in control valves, actuators, and control systems for ~~aerospace & defense electronic components as well as critical medical devices.~~the chemical, petrochemical, and oil and gas markets. The acquired business operates within the ~~Commercial/Industrial~~Naval & Power segment.

3.4. 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)

5. RECEIVABLES

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. Substantially all amounts of unbilled receivables are expected to be billed and collected within one year. An immaterial amount of unbilled receivables are subject to retainage provisions. The amount of claims and unapproved change orders within our receivables balances are immaterial.

The composition of receivables is as follows:

Page 1213

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Inventoried costs contain amounts relating to long-term contracts and programs with long production cycles, a portion of which will not be realized within one year. Long-term contract inventory includes an immaterial amount of claims or other similar items subject to uncertainty concerning their determination or realization. Inventories are valued at the lower of cost or ~~market.~~net realizable value.

The composition of inventories is as follows:

Inventoried costs related to U.S. Government and other long-term contracts (1)

~~Inventoried costs related to long-term contracts include~~(1) As of September 30, 2021 and December 31, 2020, this caption also includes capitalized ~~contract~~ development costs of $26.3 million and $29.7 million, respectively, related to certain aerospace and defense ~~programs of $30.4 million and $28.8 million, as of September 30, 2017 and December 31, 2016, respectively.~~programs. These capitalized costs will be liquidated as ~~production~~ units are ~~delivered to the customers.~~produced under contract. As of September 30, ~~2017~~2021 and December 31, ~~2016, $4.1~~2020, capitalized development costs of $12.1 million and ~~$3.9~~$13.0 million, respectively, are ~~scheduled to be liquidated under~~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 endedSeptember 30, ~~2017~~2021 are as follows:


(In thousands)	Aerospace & Industrial		Defense Electronics		Naval & Power		Consolidated
December 31, 2020	$	316,921	$	703,915	$	434,301	$	1,455,137
Adjustments (1)	—		11,608		—		11,608
Foreign currency translation adjustment	(967)		(3,293)		(1,172)		(5,432)
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.

(In thousands) Commercial/Industrial Defense Power Consolidated
December 31, 2016 $ 436,141
$ 327,655
$ 187,261
$ 951,057
Acquisitions 2,608
113,269
—
115,877
Divestitures (1,168 ) (648 ) —
(1,816 )
Foreign currency translation adjustment 9,963
14,469
231
24,663
September 30, 2017 $ 447,544
$ 454,745
$ 187,492
$ 1,089,781

68. OTHER INTANGIBLE ASSETS, NET

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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


	September 30, 2017							December 31, 2016								September 30, 2021						December 31, 2020
(In thousands)	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net		(In thousands)	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Technology	$	243,216	$	(110,441	)	$	132,775	$	166,859	$	(98,266	)	$	68,593	Technology	$	274,522	$	(160,020)	$	114,502	$	280,595	$	(148,064)	$	132,531
Customer related intangibles	366,910		(175,251		)	191,659		349,742		(157,154		)	192,588		Customer related intangibles	568,566		(263,098)		305,468		573,722		(239,798)		333,924
Programs (1)															Programs (1)	144,000		(25,200)		118,800		144,000		(19,800)		124,200
Other intangible assets	40,613		(26,090		)	14,523		36,709		(26,429		)	10,280		Other intangible assets	49,543		(35,799)		13,744		51,493		(32,518)		18,975
Total	$	650,739	$	(311,782	)	$	338,957	$	553,310	$	(281,849	)	$	271,461	Total	$	1,036,631	$	(484,117)	$	552,514	$	1,049,810	$	(440,180)	$	609,630

~~During~~(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.

7.9. FAIR VALUE OF FINANCIAL INSTRUMENTS

Forward Foreign Exchange and Currency Option Contracts

The Corporation has foreign currency exposure primarily in the United Kingdom, Europe, and Canada. 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 Condensed Consolidated Balance Sheets based upon quoted market prices for comparable instruments.

Interest Rate Risks and Related Strategies

The Corporation’s primary interest rate exposure results from changes in U.S. dollar interest rates. 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 Condensed Consolidated Balance Sheets

As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, the fair values of the asset and liability derivative instruments ~~are~~were immaterial.

Effects on Condensed Consolidated Statements of Earnings

The ~~location~~gains and ~~amount of~~ losses ~~or (gains) recognized in income~~ 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 ~~as follows:~~($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.

Three Months Ended Nine Months Ended
(In thousands) September 30, September 30,
Derivatives not designated as hedging instrument 2017 2016 2017 2016
Forward exchange contracts:
General and administrative expenses $ (2,282 ) $ 3,596
$ (1,668 ) $ 8,632

~~CURTISS-WRIGHT CORPORATION and SUBSIDIARIES~~

~~NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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 ~~issues~~issuances as of September 30, ~~2017~~.2021. Accordingly, all of the Corporation’s debt is valued atas a Level 2.2 financial instrument. The fair values described below may not be indicative of net realizable value or reflective of future fair values. 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.

September 30, 2017 December 31, 2016
(In thousands) Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value
5.51% Senior notes due 2017 150,000
150,888
150,000
154,509
3.84% Senior notes due 2021 100,000
103,949
100,000
102,463
3.70% Senior notes due 2023 225,000
232,186
225,000
226,946
3.85% Senior notes due 2025 100,000
103,517
100,000
100,338
4.24% Senior notes due 2026 200,000
211,242
200,000
203,592
4.05% Senior notes due 2028 75,000
77,751
75,000
74,630
4.11% Senior notes due 2028 100,000
104,235
100,000
99,876
Other debt 408
408
668
668
Total debt 950,408
984,176
950,668
963,022
Debt issuance costs, net (869 ) (869 ) (984 ) (984 )
Unamortized interest rate swap proceeds 15,269
15,269
16,614
16,614
Total debt, net $ 964,808
$ 998,576
$ 966,298
$ 978,652

Three Months Ended Nine Months Ended
(In thousands) September 30, September 30,
2017 2016 2017 2016
Service cost $ 5,874
$ 6,347
$ 18,819
$ 18,832
Interest cost 6,951
7,503
19,406
22,915
Expected return on plan assets (13,549 ) (13,462 ) (40,144 ) (40,633 )
Amortization of prior service cost (24 ) (11 ) (75 ) (34 )
Amortization of unrecognized actuarial loss 2,525
2,837
9,691
9,023
Net periodic benefit cost $ 1,777

$ 3,214

$ 7,697

$ 10,103

~~Defined Contribution Retirement Plan~~

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


	September 30, 2021				December 31, 2020
(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
3.70% Senior notes due 2023	202,500		209,499		202,500		211,790
3.85% Senior notes due 2025	90,000		96,193		90,000		97,429
4.24% Senior notes due 2026	200,000		219,908		200,000		224,390
4.05% Senior notes due 2028	67,500		73,903		67,500		75,440
4.11% Senior notes due 2028	90,000		98,723		90,000		101,047
3.10% Senior notes due 2030	150,000		153,306		150,000		155,805
3.20% Senior notes due 2032	150,000		152,240		150,000		155,048
Total debt	1,050,000		1,104,245		1,050,000		1,123,122
Debt issuance costs, net	(993)		(993)		(1,147)		(1,147)
Unamortized interest rate swap proceeds	8,094		8,094		9,439		9,439
Total debt, net	$	1,057,101	$	1,111,346	$	1,058,292	$	1,131,414

~~Effective January 1, 2014,~~

Defined Benefit Pension Plans

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

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

The Corporation does not expect to make any contributions to the Curtiss-Wright Pension Plan in 2021. Contributions to the foreign benefit plans are not expected to be material in 2021. During the nine months ended September 30, 2020, the Corporation made a $150 million voluntary contribution to the Curtiss-Wright Pension Plan.

During the three and nine months ended September 30, 2021, the Company recognized settlement charges related to the retirement of former executives. The settlement charges represent events that are accounted for under guidance on employers’ accounting for settlements and curtailments of defined benefit pension plans.

Defined Contribution Retirement Plan

The Company also maintains a defined contribution plan for all non-union employees who are not currently receiving final or career average pay benefits ~~became eligible to receive employer contributions in the Corporation’s sponsored 401(k) plan.~~for its U.S. subsidiaries. The employer contributions include both employer match and non-elective contribution components up to a maximum employer contribution of 6%7% of eligible compensation. During the three and nine months ended September 30, ~~2017 and 2016,~~2021, the expense relating to the plan was ~~$10.0~~$4.6 million and ~~$8.9~~$14.2 million, respectively. During the three and nine months ended September 30, 2020, the expense relating to the plan was $4.5 million and $14.8 million,

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

respectively. The Corporation made ~~$10.9~~$16.4 million in contributions to the plan during the nine months ended September 30, ~~2017,~~2021, and expects to make total contributions of ~~$11.8~~approximately $19.0 million in ~~2017.~~2021.

9.11. EARNINGS PER SHARE

Diluted earnings per share ~~were~~was computed based on the weighted-average number of shares outstanding plus all potentially dilutive common shares. A reconciliation of basic to diluted shares used in the earnings per share calculation is as follows:

Three Months Ended Nine Months Ended
(In thousands) September 30, September 30,
2017 2016 2017 2016
Basic weighted-average shares outstanding 44,137
44,323
44,196
44,457
Dilutive effect of stock options and deferred stock compensation 549
674
586
671
Diluted weighted-average shares outstanding 44,686
44,997
44,782
45,128

~~For~~There were no anti-dilutive equity-based awards for the three months ~~and~~ended September 30, 2021. For the nine months ended September 30, ~~2017,~~2021, approximately ~~38,000~~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. ~~For the~~There were no anti-dilutive equity-based awards for three and nine months ended September 30, ~~2016, there were no anti-dilutive equity-based awards.~~2020.

~~10.~~12. SEGMENT INFORMATION

~~The Corporation manages and evaluates its operations based on end markets~~Prior to ~~strengthen its ability to service customers and recognize certain organizational efficiencies. Based on this approach,~~the first quarter of 2021, the Corporation ~~has~~reported its results of operations through three reportable segments: Commercial/Industrial, Defense, and Power. On January 1, 2021, the Corporation implemented an organizational change to simplify its reportable segments and align its product sales with its end market structure. As a result, the Corporation now reports its results of operations through the following reportable segments: Aerospace & Industrial, Defense Electronics, and Naval & Power. While this organizational change resulted in the recasting of previously reported amounts across all reportable segments, it did not impact the Corporation’s previously reported consolidated financial statements.

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

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2021		2020		2021		2020
Net sales
Aerospace & Industrial	$	197,060	$	189,021	$	578,452	$	593,654
Defense Electronics	182,314		148,674		528,080		428,912
Naval & Power	242,891		234,613		737,967		702,662
Less: Intersegment revenues	(1,646)		(694)		(5,326)		(2,336)
Total consolidated	$	620,619	$	571,614	$	1,839,173	$	1,722,892

Operating income (expense)
Aerospace & Industrial	$	30,872	$	23,880	$	81,874	$	65,635
Defense Electronics	40,762		35,103		106,656		83,902
Naval & Power	35,483		33,367		116,635		90,623
Corporate and other (1)	(9,448)		(7,777)		(27,847)		(27,792)
Total consolidated	$	97,669	$	84,573	$	277,318	$	212,368

Three Months Ended Nine Months Ended
(In thousands) September 30, September 30,
2017 2016 2017 2016
Net sales
Commercial/Industrial $ 294,158
$ 276,179
$ 865,070
$ 841,812
Defense 142,681
114,946
384,917
335,553
Power 132,102
117,929
412,667
370,798
Less: Intersegment revenues (1,040 ) (1,962 ) (3,509 ) (4,797 )
Total consolidated $ 567,901
$ 507,092
$ 1,659,145
$ 1,543,366

Operating income (expense)
Commercial/Industrial $ 46,774
$ 39,067
$ 121,088
$ 108,076
Defense 33,636
28,822
65,978
64,276
Power 19,486
14,130
60,896
44,872
Corporate and eliminations ⁽¹⁾
(3,346 ) (5,446 ) (16,914 ) (15,299 )
Total consolidated $ 96,550
$ 76,573
$ 231,048
$ 201,925

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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


(In thousands)	September 30, 2021		December 31, 2020
Identifiable assets
Aerospace & Industrial	$	1,013,184	$	1,020,294
Defense Electronics	1,560,252		1,542,686
Naval & Power	1,281,365		1,255,325
Corporate and Other	208,285		175,445
Assets held for sale	20,215		27,584
Total consolidated	$	4,083,301	$	4,021,334

Three Months Ended Nine Months Ended
(In thousands) September 30, September 30,
2017 2016 2017 2016
Total operating income $ 96,550
$ 76,573
$ 231,048
$ 201,925
Interest expense 10,457
10,488
31,584
30,694
Other income, net 321
483
823
818
Earnings before income taxes $ 86,414
$ 66,568
$ 200,287
$ 172,049

(In thousands) September 30, 2017 December 31, 2016
Identifiable assets
Commercial/Industrial $ 1,443,206
$ 1,391,040
Defense 1,051,580
751,859
Power 502,553
516,321
Corporate and Other 223,885
378,561
Total consolidated $ 3,221,224
$ 3,037,781

~~11.~~13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The cumulative balance of each component of accumulated other comprehensive income (AOCI), net of tax, is as follows:

Other comprehensive income (loss) before reclassifications (1)

Amounts reclassified from accumulated other comprehensive loss (1)

Other comprehensive loss before reclassifications (1)

Amounts reclassified from accumulated other comprehensive loss (1)

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

14. CONTINGENCIES AND COMMITMENTS

From time to time, the Corporation and its subsidiaries are involved in legal proceedings that are incidental to the operation of our business. Some of these proceedings allege damages relating to asbestos and environmental exposures, intellectual property matters, copyright infringement, personal injury claims, employment and employee benefit matters, government contract issues, commercial or contractual disputes, and acquisitions or divestitures. The Corporation continues to defend vigorously against all claims. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including assessment of the merits of the particular claim, as well as current accruals and insurance coverage, the Corporation does not expect that such legal proceedings will have a material adverse impact on its condensed consolidated financial statements.

The Corporation has been named in a number of lawsuits that allege injury from exposure to asbestos. 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 as well as its acquired businesses’ operations and the relatively non-friable condition of asbestos in its historical products makes it unlikely that it will face material liability in any asbestos litigation, whether individually or in the aggregate. The Corporation maintains insurance coverage and indemnification agreements for these potential liabilities and believes adequate coverage exists to cover any unanticipated asbestos liability.

In December 2013, the Corporation, along with other unaffiliated parties, received a claim from Canadian Natural Resources Limited (CNRL) filed in the Court of Queen’s Bench of Alberta, Judicial District of Calgary. The claim pertains to a January 2011 fire and explosion at a delayed coker unit at its Fort McMurray refinery that resulted in the injury of five CNRL employees, damage to property and equipment, and various forms of consequential loss, such as loss of profit, lost opportunities, and business interruption. The fire and explosion occurred when a CNRL employee bypassed certain safety controls and opened an operating coker unit. The total quantum of alleged damages arising from the incident has not been finalized, but is estimated to meet or exceed $1 billion. The Corporation maintains various forms of commercial, property and casualty, product liability, and other forms of insurance; however, such insurance may not be adequate to cover the costs associated with a judgment against us. In October 2017, all parties agreed in principle to participate in a formal mediation in late 2018 with the intention of settling this claim.The Corporation is currently unable to estimate an amount, or range of potential losses, if any, from this matter. The Corporation believes it has adequate legal defenses and intends to defend this matter vigorously. The Corporation’s financial condition, results of operations, and cash flows, could be materially affected during a future fiscal quarter or fiscal year by unfavorable developments or outcome regarding this claim.

~~Westinghouse Bankruptcy~~

~~CURTISS-WRIGHT CORPORATION and SUBSIDIARIES~~

~~NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

Letters of Credit and Other Financial Arrangements

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, ~~2017~~2021 and December 31, ~~2016,~~2020, there were ~~$23.4~~$22.3 million and ~~$47.2~~$21.1 million of stand-by letters of credit outstanding, respectively, and ~~$13.9~~$4.8 million and ~~$12.8~~$5.6 million of bank guarantees outstanding, respectively. In addition, the Corporation is required to provide the Nuclear Regulatory Commission financial assurance demonstrating its ability to cover the cost of decommissioning its Cheswick, Pennsylvania facility upon closure, though the Corporation does not intend to close this facility. The Corporation has provided this financial assurance in the form of a ~~$56.0~~$45.6 million surety bond.

~~The~~Within the Corporation’s Naval & Power segment, Electro-Mechanical Division ~~which is within the Corporation’s Power segment,~~(EMD) is the reactor coolant pump (RCP) supplier for the Westinghouse Electric Company (WEC) AP1000 nuclear power plants ~~under construction~~ in China and the United States. The terms of the AP1000 ~~China~~U.S. and ~~United States~~China contracts include liquidated damage ~~penalty~~ provisions for failure to meet contractual delivery dates if the Corporation caused the delay and the delay was not excusable. ~~On October 10, 2013,~~While the Corporation received a letter from Westinghouse stating entitlements to the maximum amount of liquidated damages allowable under the AP1000 China contract from Westinghouse of approximately $25 million. The Corporation would be liable for liquidated damages under the contract if certain contractual delivery dates weredid not ~~met and if the Corporation was deemed responsible for the delay. As of September 30, 2017, the Corporation has not met~~meet certain contractual delivery dates under its ~~AP 1000~~AP1000 U.S. and China ~~and US contracts; however~~contracts, there are significant counterclaims and uncertainties as to which parties are responsible for the ~~delays.~~delay.

In June 2021, the Corporation and WEC participated in non-binding mediation in an effort to settle all open disputes under the U.S. and China contracts. 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. contract. The Corporation believes that it has adequate legal defenses and intends to vigorously defend ~~this matter. Given~~these matters. The Corporation is also aggressively pursuing a counterclaim against WEC.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

As it relates to the ~~uncertainties surrounding the responsibility for the delays, no accrual has been made for this matter as of September 30, 2017. As of September 30, 2017,~~U.S. contract, the range of possible loss is $0 to $31 ~~million for~~million. The Corporation believes that the ~~AP1000 US~~likelihood of any potential liability stemming from liquidated damages on the U.S. contract ~~for a total~~is remote. As it relates to the China contract, the range of possible loss ofis $0 to ~~$55.5~~$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.

15. 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.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I- ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date they were made, and we assume no obligation to update forward-looking statements to reflect actual results or changes in or additions to the factors affecting such forward-looking statements.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

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 ~~that~~which are reported through our ~~Commercial/~~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 ~~39%~~55% of our ~~2017 total sales~~2021 revenues are expected to be generated from defense-related markets.

In March 2020, the World Health Organization characterized the outbreak of COVID-19 as a pandemic. The pandemic has adversely affected certain elements of our business, including our supply chain, transportation networks, and production levels. The extent to which COVID-19 continues to adversely impact our operations depends on future developments, including the impact of the global rollout of COVID-19 vaccines, the emergence and impact of any new COVID-19 variants, as well as the issuance of vaccine mandates by the Biden administration. However, given the diversified breadth of our company, we believe that we are well-positioned to mitigate any material risks arising as a result of COVID-19 or any of its variants. From an operational perspective, our current cash balance, coupled with expected cash flows from operating activities for the remainder of the year as well as our current borrowing capacity under the Revolving Credit Agreement, are expected to be more than sufficient to meet operating cash requirements, planned capital expenditures, interest payments on long-term debt obligations, payments on lease obligations, pension and postretirement funding requirements, and dividend payments through the current year and beyond.

RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand the results of operations and financial condition of the Corporation for the three and nine month periods ended September 30, ~~2017.~~2021. The financial information as of September 30, ~~2017~~2021 should be read in conjunction with the financial statements for the year ended December 31, ~~2016~~2020 contained in our Form 10-K.

The MD&A is organized into the following sections: Condensed Consolidated Statements of Earnings, Results by Business Segment, and Liquidity and Capital Resources. Our discussion will be focused on the overall results of ~~continuing~~ operations followed by a more detailed discussion of those results within each of our reportable segments.

Our three reportable segments are generally concentrated in a few end markets; however, each may have sales across several end markets. An end market is defined as an area of demand for products and services. 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. 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.

Analytical Definitions

Throughout management’s discussion and analysis of financial condition and results of operations, the terms “incremental” and “organic” are used to explain changes from period to period. The term “incremental” is used to highlight the impact acquisitions and divestitures had on the current year results. The results of operations for acquisitions are incremental for the first twelve months from the date of acquisition. Additionally, the results of operations of divested businesses are removed from the comparable prior year period for purposes of calculating “organic” orand “incremental” results. The definition of “organic” excludes the ~~effect~~effects of restructuring-related expenses, impairment of assets held for sale, and foreign currency translation.

Consolidated Statements of Earnings
Three Months Ended Nine Months Ended
(In thousands) September 30, September 30,
2017 2016 % change 2017 2016 % change
Sales
Commercial/Industrial $ 293,939
$ 275,649
7 % $ 864,360
$ 840,422
3 %
Defense 141,945
113,949
25 % 382,968
333,301
15 %
Power 132,017
117,494
12 % 411,817
369,643
11 %
Total sales $ 567,901
$ 507,092
12 % $ 1,659,145
$ 1,543,366
8 %

Operating income

Commercial/Industrial $ 46,774
$ 39,067
20 % $ 121,088
$ 108,076
12 %
Defense 33,636
28,822
17 % 65,978
64,276
3 %
Power 19,486
14,130
38 % 60,896
44,872
36 %
Corporate and eliminations (3,346 ) (5,446 ) 39 % (16,914 ) (15,299 ) (11 )%
Total operating income $ 96,550
$ 76,573
26 % $ 231,048
$ 201,925
14 %

Interest expense 10,457
10,488
— % 31,584
30,694
3 %
Other income, net 321
483
NM
823
818
NM

Earnings before taxes 86,414
66,568
30 % 200,287
172,049
16 %
Provision for income taxes (22,470 ) (20,636 ) 9 % (53,146 ) (53,335 ) — %
Net earnings $ 63,944
$ 45,932

$ 147,141
$ 118,714

New orders $ 517,268
$ 500,127
3 % $ 1,709,745
$ 1,652,396
3 %

NM- not a meaningful percentage

~~Components of sales and operating income increase (decrease):~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 vs. 2016 2017 vs. 2016
Sales Operating Income Sales Operating Income
Organic 8 % 20 % 5 % 15 %
Acquisitions 4 % 7 % 4 % (1 %)
Foreign currency — % (1 %) (1 %) — %
Total 12 % 26 % 8 % 14 %

~~Sales~~ for the third quarter of 2017 increased $61 million, or 12%, to $568 million, compared with the prior year period. On a segment basis, sales from the Commercial/Industrial segment, Defense segment, and Power segment increased $18 million, $28 million, and $15 million, respectively.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

~~acquisition. Operating income~~


Condensed Consolidated Statements of Earnings
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(In thousands)	2021		2020		% change		2021		2020		% change
Sales
Aerospace & Industrial	$	196,296	$	188,768	4	%	$	576,340	$	592,907	(3	%)
Defense Electronics	181,504		148,324		22	%	525,067		427,518		23	%
Naval & Power	242,819		234,522		4	%	737,766		702,467		5	%
Total sales	$	620,619	$	571,614	9	%	$	1,839,173	$	1,722,892	7	%

Operating income
Aerospace & Industrial	$	30,872	$	23,880	29	%	$	81,874	$	65,635	25	%
Defense Electronics	40,762		35,103		16	%	106,656		83,902		27	%
Naval & Power	35,483		33,367		6	%	116,635		90,623		29	%
Corporate and other	(9,448)		(7,777)		(21	%)	(27,847)		(27,792)		—	%
Total operating income	$	97,669	$	84,573	15	%	$	277,318	$	212,368	31	%

Interest expense	9,955		9,055		(10	%)	30,094		25,059		(20	%)
Other income, net	3,627		5,417		(33	%)	8,910		6,844		30	%

Earnings before income taxes	91,341		80,935		13	%	256,134		194,153		32	%
Provision for income taxes	(21,638)		(16,315)		(33	%)	(65,554)		(46,754)		(40	%)
Net earnings	$	69,703	$	64,620			$	190,580	$	147,399

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

New orders	$	627,015	$	558,899	12	%	$	1,896,190	$	1,748,949	8	%

Components of sales and operating ~~margin also benefited from improved volume on industrial vehicle products in the Commercial/Industrial segment, and our ongoing margin improvement initiatives.~~income increase (decrease):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021 vs. 2020				2021 vs. 2020
	Sales		Operating Income		Sales		Operating Income
Organic	1	%	7	%	—	%	19	%
Acquisitions	7	%	9	%	6	%	6	%
Impairment of assets held for sale	—	%	(10	%)	—	%	(4	%)
Restructuring	—	%	13	%	—	%	13	%
Foreign currency	1	%	(4	%)	1	%	(3	%)
Total	9	%	15	%	7	%	31	%

Operating income during the nine months ended September 30, 2017 increased $29 million, or 14%, to $231 million and operating margin increased 80 basis points to 13.9%, compared with the same period in 2016. Increases in operating income and operating margin were primarily attributable to higher production levels in our Power segment on the AP1000 China Direct program, higher volume on industrial vehicle products in the Commercial/Industrial segment, and the benefits of our ongoing margin improvement initiatives. These increases in operating income and operating margin were partially offset by an unfavorable shift in mix for our defense electronic products in the Defense segment.

~~RESULTS BY BUSINESS SEGMENT~~

~~Commercial/Industrial~~

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Three Months Ended Nine Months Ended
(In thousands) September 30, September 30,
2017 2016 % change 2017 2016 % change
Sales $ 293,939
$ 275,649
7 % $ 864,360
$ 840,422
3 %
Operating income 46,774
39,067
20 % 121,088
108,076
12 %
Operating margin 15.9 % 14.2 % 170 bps 14.0 % 12.9 % 110 bps
New orders $ 287,118
$ 283,185
1 % $ 930,039
$ 920,904
1 %

~~Components of sales and operating income increase (decrease):~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 vs. 2016 2017 vs. 2016
Sales Operating Income Sales Operating Income
Organic 6 % 20 % 4 % 12 %
Acquisitions — % — % — % — %
Foreign currency 1 % — % (1 %) — %
Total 7 % 20 % 3 % 12 %

Sales during the nine months ended September 30, ~~2017~~2021 increased ~~$24~~$116 million, or 3%7%, to ~~$864~~$1,839 million, ~~from~~compared with the prior year period. InOn a segment basis, sales from the ~~general industrial market, we experienced higher~~Defense Electronics and Naval & Power segments increased $98 million and $35 million, respectively, with sales ~~of $37 million primarily due to increased demand for our industrial vehicle products. This increase was partially offset~~from the Aerospace & Industrial segment decreasing $17 million. Changes in sales by ~~lower sales of $13 million~~segment are discussed in further detail in the ~~naval defense market primarily due to the timing of production on the Virginia-class submarine program. Unfavorable foreign currency translation reduced sales~~results by ~~$7 million.~~business segment section below.

Operating income ~~during~~in the third quarter increased $8$13 million, or ~~20%~~15%, to ~~$47~~$98 million, ~~from the prior year period,~~ and operating margin increased ~~170~~90 basis points to ~~15.9%. The~~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 ~~margin improvement initiatives~~operational excellence and ~~improved profitability on industrial vehicle and sensors and controls products.~~

Operating income during the nine months ended September 30, ~~2017~~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 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 favorable overhead absorption and current year savings recognized as a ~~government order for the F-35 Joint Strike Fighter (JSF) and increased demand for~~result of our ~~industrial vehicle products.~~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 ~~timing~~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 ~~orders received from Boeing~~$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 ~~timing~~issuance of ~~funding from government customers.~~$300 million Senior Notes in August 2020.

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

Other income, net during the nine months ended September 30, 2021 increased $2 million, or 30%, to $9 million primarily due to the prior year recognition of accumulated foreign currency translation losses of $10 million related to the substantial liquidation of our Norwegian subsidiary. This increase was partially offset by higher pension costs, including one-time pension settlement charges recognized in the current year period related to the retirement of former executives.

The effective tax rate of 23.7% in the third quarter increased compared to an effective tax rate of 20.2% in the prior year period. The effective tax rate of 25.6% for the nine months ended September 30, 2021 increased as compared to an effective tax rate of 24.1%. Increases in both of the comparable periods were primarily due to a provisional charge related to an impairment loss recognized on assets held for sale during the current year period, which is not deductible for tax purposes.

Comprehensive income in the third quarter was $58 million, compared to comprehensive income of $96 million in the prior year period. The change was primarily due to the following:

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

•Foreign currency translation adjustments in the third quarter resulted in a $16 million comprehensive loss, compared to a $28 million comprehensive gain in the prior year period. The comprehensive loss during the current period was primarily attributed to decreases in the British Pound and Canadian dollar.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

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. The change was primarily due to the following:

~~Defense~~•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 due to an increase in new orders for industrial vehicles and sensors and actuation equipment in the Aerospace & Industrial segment, as well as the incremental impact of our PacStar acquisition in the Defense Electronics segment. These increases were partially offset by the timing of naval defense orders in the Naval & Power segment.

RESULTS BY BUSINESS SEGMENT

Aerospace & Industrial

Components of sales and operating income increase (decrease):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021 vs. 2020				2021 vs. 2020
	Sales		Operating Income		Sales		Operating Income
Organic	3	%	19	%	(5	%)	12	%
Restructuring	—	%	13	%	—	%	14	%
Foreign currency	1	%	(3	%)	2	%	(1	%)
Total	4	%	29	%	(3	%)	25	%

Three Months Ended Nine Months Ended
September 30, September 30,
2017 vs. 2016 2017 vs. 2016
Sales Operating Income Sales Operating Income
Organic 8 % — % 3 % 5 %
Acquisitions 16 % 20 % 12 % (2 %)
Foreign currency 1 % (3 %) — % — %
Total 25 % 17 % 15 % 3 %

Sales in the third quarter increased ~~$28~~$8 million, or ~~25%~~4%, to ~~$142~~$196 million from the ~~comparable~~ prior year ~~period,~~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 ~~incremental impact~~exit of our ~~TTC acquisition which contributed $18 million in sales. Sales~~build-to-print product line in the ground defense market increased primarily due to higher demand for our missile defense systems and turret drive stabilization systems (TDSS) on international ground defense platforms. Excluding the impactfourth quarter of TTC, sales to the aerospace defense market were relatively flat as increased unmanned aerial vehicle (UAV) production was more than offset by declines in helicopter sales and lower production for certain military aircraft programs.2020.

Sales during the nine months ended September 30, ~~2017 increased $50~~2021 decreased $17 million, or ~~15%~~3%, to ~~$383~~$576 million from the ~~comparable~~ prior year period, primarily due to the ~~incremental~~ impact of ~~our TTC acquisition~~the COVID-19 pandemic on the commercial aerospace market. In the commercial aerospace market, sales decreased $56 million, the majority of which ~~contributed $40 million~~occurred in ~~sales.~~the first quarter of 2021 due to lower demand for actuation and sensors equipment as well as surface treatment services. Sales in the ground defense market increased primarily due to higher TDSS demand on international ground defense platforms, partially offset by lower sales of embedded computing products on the G/ATOR program. Excluding the impact of TTC, sales to thecommercial aerospace ~~defense~~ market were ~~relatively flat as increased UAV production was more than offset by declines in helicopter sales and lower production for certain military aircraft programs.~~also

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Operating income in the ~~acquisition of TTC, partially offset by~~third quarter increased $7 million, or 29%, to $31 million from the ~~timing of naval orders~~prior year period, and ~~government orders for defense electronics products. New orders~~operating margin increased ~~$56 million~~300 basis points to 15.7%. Operating income during the nine months ended September 30, ~~2017~~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 ~~period,~~periods, primarily due to ~~the acquisition of TTC~~an increase in new orders for industrial vehicles as well as higher demand for sensors and ~~a government order for aircraft handling systems. These increases were partially offset by the timing of naval orders.~~actuation equipment.

~~Power~~Defense Electronics

Components of sales and operating income increase (decrease):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021 vs. 2020				2021 vs. 2020
	Sales		Operating Income		Sales		Operating Income
Organic	(3	%)	(2	%)	(2	%)	14	%
Acquisitions	25	%	21	%	25	%	16	%
Restructuring	—	%	1	%	—	%	4	%
Foreign currency	—	%	(4	%)	—	%	(7	%)
Total	22	%	16	%	23	%	27	%

Three Months Ended Nine Months Ended
September 30, September 30,
2017 vs. 2016 2017 vs. 2016
Sales Operating Income Sales Operating Income
Organic 12 % 38 % 11 % 36 %
Acquisitions — % — % — % — %
Foreign currency — % — % — % — %
Total 12 % 38 % 11 % 36 %

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

Sales in the third quarter increased ~~$15~~$33 million, or ~~12%~~22%, to $132 million, primarily due to higher production revenues of $11 million on the AP1000 China Direct program and improved aftermarket sales supporting international nuclear operating reactors. These increases were partially offset by lower aftermarket sales supporting domestic nuclear operating reactors. The naval defense market benefited from increased production on CVN-79 and CVN-80 pumps and the timing of production on the Virginia-class submarine program.

~~Operating income~~Sales during the nine months ended September 30, ~~2017~~2021 increased ~~$16~~$98 million, or ~~36%~~23%, to ~~$61~~$525 million ~~and operating margin increased 270 basis points~~ from the prior year period, ~~to 14.8%. The increases in operating income and operating margin were~~ primarily due to ~~higher production levels~~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 ~~AP1000 China Direct program and improved~~aerospace defense market.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

~~New orders~~ ~~increased $10 million~~Operating income during the ~~three~~nine months ended September 30, ~~2017~~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 inthe 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.

Components of sales and operating income increase (decrease):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021 vs. 2020				2021 vs. 2020
	Sales		Operating Income		Sales		Operating Income
Organic	3	%	11	%	4	%	22	%
Impairment of assets held for sale	—	%	(26	%)	—	%	(10	%)
Restructuring	—	%	22	%	—	%	18	%
Foreign currency	1	%	(1	%)	1	%	(1	%)
Total	4	%	6	%	5	%	29	%

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 the CVN-81 aircraft carrier and Virginia-class submarine programs. This increase was partially offset by the timing of production on the China Direct AP1000 program in the power & process market.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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 $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 quarterincreased $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, 2021decreased $54 million from the comparable prior year period, primarily due to the timing of funding for pumps and generators with government customers. New orders decreased $8 million during the nine months ended September 30, 2017 from the comparable prior year period primarily due to a commercial order for pumps in the prior year period that did not reoccur, partially offset by the timing of funding with government customers.naval defense orders.

SUPPLEMENTARY INFORMATION

The table below depicts sales by end ~~market. End~~ market ~~sales help~~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
Aerospace & Defense markets:
Aerospace Defense	$	116,853	$	121,987	(4	%)	$	327,846	$	333,120	(2	%)
Ground Defense	55,124		20,519		169	%	159,091		63,205		152	%
Naval Defense	175,800		165,524		6	%	531,429		496,157		7	%
Commercial Aerospace	67,461		70,943		(5	%)	196,285		242,708		(19	%)
Total Aerospace & Defense	$	415,238	$	378,973	10	%	$	1,214,651	$	1,135,190	7	%

Commercial markets:
Power & Process	$	112,736	$	113,919	(1	%)	$	343,573	$	350,632	(2	%)
General Industrial	92,645		78,722		18	%	280,949		237,070		19	%
Total Commercial	$	205,381	$	192,641	7	%	$	624,522	$	587,702	6	%

Total Curtiss-Wright	$	620,619	$	571,614	9	%	$	1,839,173	$	1,722,892	7	%

Net Sales by End Market
Three Months Ended Nine Months Ended
(In thousands) September 30, September 30,
2017 2016 % change 2017 2016 % change
Defense markets:
Aerospace $ 92,728
$ 78,324
18 % $ 247,656
$ 216,585
14 %
Ground 27,804
19,601
42 % 65,056
58,661
11 %
Naval 102,616
99,719
3 % 293,634
296,670
(1 %)
Other 5,072
4,389
16 % 18,077
8,023
125 %
Total Defense $ 228,220
$ 202,033
13 % $ 624,423
$ 579,939
8 %

Commercial markets:
Aerospace $ 105,284
$ 94,248
12 % $ 304,691
$ 298,939
2 %
Power Generation 93,873
89,643
5 % 314,197
285,144
10 %
General Industrial 140,524
121,168
16 % 415,834
379,344
10 %
Total Commercial $ 339,681
$ 305,059
11 % $ 1,034,722
$ 963,427
7 %

Total Curtiss-Wright $ 567,901
$ 507,092
12 % $ 1,659,145
$ 1,543,366
8 %

~~Note: Certain amounts~~Aerospace & Defense markets

Sales in the ~~prior year have been reclassed to conform to the current year presentation.~~

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 $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 ~~various projects across government entities.~~Virginia-class submarine programs. These increases were partially offset by lower sales in the ~~naval defense~~commercial aerospace market ~~primarily~~during the first quarter of 2021 due to a pandemic-driven decline in demand for sensors products and surface treatment services. Sales in the ~~timing~~commercial aerospace market were also negatively impacted by the exit of ~~production on~~our build-to-print product line in the ~~Virginia-class submarine program.~~fourth quarter of 2020.

Sales ~~during~~in the ~~three months ended September 30, 2017~~third quarter increased ~~$35~~$13 million, or ~~11%~~7%, to ~~$340~~$205 million ~~against the comparable prior year period,~~ primarily due to higher ~~sales in the commercial aerospace and general~~demand for our industrial ~~markets. In the commercial aerospace market, we experienced higher sales of actuation and sensors and controls products. Sales increases~~vehicle products in the general industrial market were primarily due to higher sales of $16 million for our industrial vehicle products. Sales also benefited favorably from increases in the power generation market due to higher production revenues of $11 million on the AP1000 China Direct program and improved aftermarket sales supporting international nuclear operating reactors. These increases were partially offset by lower aftermarket sales supporting domestic nuclear operating reactors.market.

Sales during the nine months ended September 30, ~~2017~~2021 increased ~~$71~~$37 million, or 7%6%, to ~~$1,035~~$625 million ~~against the comparable prior year period,~~ primarily due to higher sales in the power generation and general industrial markets. Within the power generation market, we generated higher production revenues of $45 million on the AP1000 China Direct program, partially offset by lower aftermarket sales of $16 million supporting domestic nuclear and non-nuclear operating reactors. In the general industrial market, we experienced higher demand for our industrial vehicle products ~~which resulted in a sales increase of $30 million. Sales also benefited favorably from increases~~ in the ~~commercial aerospace market primarily due to increased demand for sensors~~general industrial market. This increase was partially offset by the timing of production on the China Direct AP1000 program and ~~controls products.~~lower nuclear aftermarket sales in the power & process market.

LIQUIDITY AND CAPITAL RESOURCES

Sources and Use of Cash

We derive the majority of our operating cash inflow from receipts on the sale of goods and services and cash outflow for the procurement of materials and labor; cash flow is therefore subject to market fluctuations and conditions. Most of our long-term contracts allow for several billing points (progress or milestone) that provide us with cash receipts as costs are incurred throughout the project rather than upon contract completion, thereby reducing working capital requirements. 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. 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):
Operating activities	$	155,761	$	3,784
Investing activities	(29,809)		(115,918)
Financing activities	(84,406)		157,945
Effect of exchange-rate changes on cash	(5,378)		(10,023)
Net increase in cash and cash equivalents	36,168		35,788

Condensed Consolidated Statements of Cash Flows

(In thousands) September 30, 2017 September 30, 2016
Cash provided by (used):
Operating activities $ 162,307
$ 267,212
Investing activities (259,552 ) (24,191 )
Financing activities (39,354 ) (67,668 )
Effect of exchange-rate changes on cash 14,942
(11,997 )
Net increase (decrease) in cash and cash equivalents (121,657 ) 163,356

Net cash used for investing activities ~~increased~~decreased$~~235~~86 million from the comparable prior year period, primarily due to ~~current year~~prior period acquisitions and lower current period capital expenditures. The Corporation acquired two businesses during the nine months ended September 30, ~~2017~~2020 for ~~approximately $233~~$82 million ~~net of~~in cash ~~acquired.~~paid. The Corporation did not ~~acquire~~make any ~~businesses~~acquisitions during the nine months ended September 30, ~~2016. The capital~~2021. Capital expenditures for the nine months ended September 30, ~~2017~~2021 and September 30, ~~2016~~2020 were ~~$35~~$28 million and ~~$26~~$36 million, ~~respectively.~~respectively, with the decrease primarily due to lower capital spending during the current period as well as lower current period investment related to the new DRG facility.

Financing Activities

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

~~Financing Activities~~

The Corporation’s debt outstanding had an average interest rate of ~~4.0%~~3.6% for both the three and nine months ended September 30, ~~2017 as compared to an average interest rates of 4.0%~~2021, and ~~3.9%~~3.3% and 3.4% for ~~the comparable periods ended September 30, 2016. The Corporation’s average debt outstanding was $950 million for both~~ the three and nine months ended September 30, ~~2017~~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, ~~2016,~~2021, respectively, and $939 million and $875 million for the three and nine months ended September 30, 2020, respectively.

~~Revolving~~ Credit Agreement

As of September 30, ~~2017,~~2021, the Corporation had no outstanding borrowings under the ~~2012~~2018 Senior Unsecured Revolving Credit Agreement (the “Credit Agreement” or “credit facility”) and ~~$23~~$22 million in letters of credit supported by the credit facility. The unused credit available under the Credit Agreement as of September 30, ~~2017~~2021 was ~~$477~~$478 million, which could be borrowed without violating any of our debt covenants.

Repurchase of common stock

During the nine months ended September 30, ~~2017,~~2021, the Corporation used ~~$39~~$79 million of cash to repurchase approximately ~~414,000~~0.6 million outstanding shares under its share repurchase program. During the nine months ended September 30, ~~2016,~~2020, the Corporation used ~~$80~~$137 million of cash to repurchase approximately ~~1,035,000~~1.4 million outstanding ~~shares.~~shares under its share repurchase program.

Management continually evaluates cash utilization alternatives, including share repurchases, acquisitions, and increased dividends 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.

The Corporation made dividend payments of ~~$11~~$14 million ~~and $12 million for~~during both the nine months ended September 30, ~~2017~~2021 and September 30, ~~2016, respectively.~~2020.

As of the date of this report, we were in compliance with all debt agreements and credit facility covenants, including our most restrictive covenant, which is our debt to capitalization limit of 60%. 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, ~~2017,~~2021, we had the ability to borrow additional debt of ~~$1,132 million~~$1.7 billion without violating our debt to capitalization covenant.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

CRITICAL ACCOUNTING POLICIES

Our condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. Preparation of these statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates and assumptions are affected by the application of our accounting policies. Critical accounting policies are those that require application of management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain and may change in subsequent periods. A summary of significant accounting policies and a description of accounting policies that are considered critical may be found in our ~~2016~~2020 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission on February ~~21, 2017,~~25, 2021, in the Notes to the

~~CURTISS WRIGHT CORPORATION and SUBSIDIARIES~~

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our market risk during the nine months ended September 30, ~~2017~~.2021. Information regarding market risk and market risk management policies is more fully described in ~~item “7A.Quantitative~~"Item 7A. Quantitative and Qualitative Disclosures about Market ~~Risk”~~Risk" of our ~~2016~~2020 Annual Report on Form 10-K.

Item 4. CONTROLS AND PROCEDURES

As of September 30, ~~2017~~,2021, our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of September 30, ~~2017~~2021 insofar as they are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and they include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

During the quarter ended ~~June~~September 30, 2017, we implemented new controls as part of our efforts to adopt the new revenue recognition standard. Those efforts resulted in changes to our accounting processes and procedures related to monitoring the adoption process. There2021, there have ~~not~~ been ~~any~~no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) ~~during the quarter ended~~ ~~September 30, 2017~~that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

We ~~or our subsidiaries~~ have been named in ~~a number of~~pending lawsuits that allege injury from exposure to asbestos. To date, ~~neither~~ we ~~nor our subsidiaries~~ have not been found liable or paid any material sum of money in settlement in any asbestos-related case. We believe that the minimal use of asbestos in our past operations as well as our acquired businesses and the relatively non-friable condition of asbestos in our historical products ~~makes~~make it unlikely that we will face material liability in any asbestos litigation, whether individually or in the aggregate. We maintain insurance coverage and indemnification agreements for these potential liabilities and we believe adequate coverage exists to cover any unanticipated asbestos liability.



~~13925 Ballantyne Corporate~~ 130 Harbour Place Drive, Suite 300
~~Suite 400, Charlotte,~~ Davidson,	North Carolina	~~28277~~28036
(Address of principal executive offices)		(Zip Code)


(In thousands)	September 30, 2017			December 31, 2016			(In thousands)	September 30, 2021		December 31, 2020
Billed receivables:							Billed receivables:
Trade and other receivables	$	367,631		$	340,091		Trade and other receivables	$	381,628	$	361,460
Less: Allowance for doubtful accounts	(7,306		)	(4,832		)
Net billed receivables	360,325			335,259
Unbilled receivables:
Unbilled receivables (contract assets):							Unbilled receivables (contract assets):
Recoverable costs and estimated earnings not billed	178,479			149,847			Recoverable costs and estimated earnings not billed	296,500		238,309
Less: Progress payments applied	(22,838		)	(22,044		)	Less: Progress payments applied	(734)		(3,291)
Net unbilled receivables	155,641			127,803			Net unbilled receivables	295,766		235,018
Less: Allowance for doubtful accounts							Less: Allowance for doubtful accounts	(6,527)		(7,760)
Receivables, net	$	515,966		$	463,062		Receivables, net	$	670,867	$	588,718


(In thousands)	September 30, 2017			December 31, 2016			(In thousands)	September 30, 2021		December 31, 2020
Raw materials	$	189,326		$	189,228		Raw materials	$	194,887	$	177,828
Work-in-process	85,636			73,843			Work-in-process	81,781		80,729
Finished goods	127,647			112,478			Finished goods	111,914		120,767
Inventoried costs related to U.S. Government and other long-term contracts	61,587			57,516
Gross inventories	464,196			433,065
Less: Inventory reserves	(55,240		)	(54,988		)
Progress payments applied, principally related to long-term contracts	(11,686		)	(11,103		)
Inventoried costs related to U.S. Government and other long-term contracts (1)							Inventoried costs related to U.S. Government and other long-term contracts (1)	50,086		56,599
Inventories, net of reserves							Inventories, net of reserves	438,668		435,923
Less: Progress payments applied							Less: Progress payments applied	(5,528)		(7,044)
Inventories, net	$	397,270		$	366,974		Inventories, net	$	433,140	$	428,879


(In thousands)	Foreign currency translation adjustments, net		Total pension and postretirement adjustments, net		Accumulated other comprehensive income (loss)
December 31, 2019	$	(130,019)	$	(195,255)	$	(325,274)
Other comprehensive income (loss) before reclassifications (1)	41,282		(44,513)		(3,231)
Amounts reclassified from accumulated other comprehensive loss (1)	—		17,649		17,649
Net current period other comprehensive loss	41,282		(26,864)		14,418
December 31, 2020	$	(88,737)	$	(222,119)	$	(310,856)
Other comprehensive loss before reclassifications (1)	(12,990)		(3,442)		(16,432)
Amounts reclassified from accumulated other comprehensive loss (1)	—		18,478		18,478
Net current period other comprehensive income (loss)	(12,990)		15,036		2,046
September 30, 2021	$	(101,727)	$	(207,083)	$	(308,810)



(In thousands)	Foreign currency translation adjustments, net			Total pension and postretirement adjustments, net			Accumulated other comprehensive income (loss)
December 31, 2015	$	(107,810	)	$	(118,118	)	$	(225,928	)
Other comprehensive income (loss) before reclassifications	(64,840		)	(7,892		)	(72,732		)
Amounts reclassified from accumulated other comprehensive loss	—			6,904			6,904
Net current period other comprehensive loss	(64,840		)	(988		)	(65,828		)
December 31, 2016	$	(172,650	)	$	(119,106	)	$	(291,756	)
Other comprehensive income (loss) before reclassifications	69,294			(669		)	68,625
Amounts reclassified from accumulated other comprehensive income (loss)	—			5,643			5,643
Net current period other comprehensive income	69,294			4,974			74,268
September 30, 2017	$	(103,356	)	$	(114,132	)	$	(217,488	)



	September 30, 2017			December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	432,191		$	553,848
Receivables, net	515,966			463,062
Inventories, net	397,270			366,974
Other current assets	43,852			30,927
Total current assets	1,389,279			1,414,811
Property, plant, and equipment, net	387,699			388,903
Goodwill	1,089,781			951,057
Other intangible assets, net	338,957			271,461
Other assets	15,508			11,549
Total assets	$	3,221,224		$	3,037,781
Liabilities
Current liabilities:
Current portion of long-term and short-term debt	$	150,408		$	150,668
Accounts payable	150,751			177,911
Accrued expenses	131,357			130,239
Income taxes payable	9,988			18,274
Deferred revenue	189,788			170,143
Other current liabilities	36,946			28,027
Total current liabilities	669,238			675,262
Long-term debt	814,400			815,630
Deferred tax liabilities, net	57,918			49,722
Accrued pension and other postretirement benefit costs	101,827			107,151
Long-term portion of environmental reserves	14,956			14,024
Other liabilities	88,409			84,801
Total liabilities	1,746,748			1,746,590
Contingencies and commitments (Note 12)
Stockholders’ equity
Common stock, $1 par value,100,000,000 shares authorized at September 30, 2017 and December 31, 2016; 49,187,378 shares issued at September 30, 2017 and December 31, 2016; outstanding shares were 44,129,363 at September 30, 2017 and 44,181,050 at December 31, 2016	49,187			49,187
Additional paid in capital	123,573			129,483
Retained earnings	1,883,185			1,754,907
Accumulated other comprehensive loss	(217,488		)	(291,756		)
Common treasury stock, at cost (5,058,015 shares at September 30, 2017 and 5,006,328 shares at December 31, 2016)	(363,981		)	(350,630		)
Total stockholders’ equity	1,474,476			1,291,191
Total liabilities and stockholders’ equity	$	3,221,224		$	3,037,781

See notes to condensed consolidated financial statements



(In thousands)	2017
Accounts receivable	$	5,006
Inventory	22,702
Property, plant, and equipment	4,598
Other current and non-current assets	2,815
Intangible assets	88,900
Current and non-current liabilities	(6,672		)
Due to seller	(596		)
Net tangible and intangible assets	116,753
Purchase price, net of cash acquired	232,630
Goodwill	$	115,877

Goodwill deductible for tax purposes	$	115,877



(In thousands)	Commercial/Industrial			Defense			Power		Consolidated
December 31, 2016	$	436,141		$	327,655		$	187,261	$	951,057
Acquisitions	2,608			113,269			—		115,877
Divestitures	(1,168		)	(648		)	—		(1,816		)
Foreign currency translation adjustment	9,963			14,469			231		24,663
September 30, 2017	$	447,544		$	454,745		$	187,492	$	1,089,781



(In thousands)	Amount reclassified from AOCI			Affected line item in the statement where net earnings is presented
Defined benefit pension and other postretirement benefit plans
Amortization of prior service costs	568			(1)
Amortization of actuarial losses	(9,525		)	(1)
	(8,957		)	Total before tax
	3,314			Income tax
Total reclassifications	$	(5,643	)	Net of tax


~~(1)~~(In thousands)	~~These items are included~~Amount reclassified from AOCI		Affected line item in the ~~computation~~statement where net earnings is presented
Defined benefit pension and other postretirement benefit plans
Amortization of ~~net periodic benefit cost. See Note 8, Pension and~~ prior service costs	$	648	Other ~~Postretirement Benefit Plans.~~income, net
Amortization of actuarial losses	(21,705)		Other income, net
Settlements	(3,310)		Other income, net
	(24,367)		Earnings before income taxes
	5,889		Provision for income taxes
Total reclassifications	$	(18,478)	Net earnings



Consolidated Statements of Earnings
	Three Months Ended								Nine Months Ended
(In thousands)	September 30,								September 30,
	2017			2016			% change		2017			2016			% change
Sales
Commercial/Industrial	$	293,939		$	275,649		7	%	$	864,360		$	840,422		3	%
Defense	141,945			113,949			25	%	382,968			333,301			15	%
Power	132,017			117,494			12	%	411,817			369,643			11	%
Total sales	$	567,901		$	507,092		12	%	$	1,659,145		$	1,543,366		8	%

Operating income
Commercial/Industrial	$	46,774		$	39,067		20	%	$	121,088		$	108,076		12	%
Defense	33,636			28,822			17	%	65,978			64,276			3	%
Power	19,486			14,130			38	%	60,896			44,872			36	%
Corporate and eliminations	(3,346		)	(5,446		)	39	%	(16,914		)	(15,299		)	(11	)%
Total operating income	$	96,550		$	76,573		26	%	$	231,048		$	201,925		14	%

Interest expense	10,457			10,488			—	%	31,584			30,694			3	%
Other income, net	321			483			NM		823			818			NM

Earnings before taxes	86,414			66,568			30	%	200,287			172,049			16	%
Provision for income taxes	(22,470		)	(20,636		)	9	%	(53,146		)	(53,335		)	—	%
Net earnings	$	63,944		$	45,932				$	147,141		$	118,714

New orders	$	517,268		$	500,127		3	%	$	1,709,745		$	1,652,396		3	%

NM- not a meaningful percentage



Net Sales by End Market
	Three Months Ended						Nine Months Ended
(In thousands)	September 30,						September 30,
	2017		2016		% change		2017		2016		% change
Defense markets:
Aerospace	$	92,728	$	78,324	18	%	$	247,656	$	216,585	14	%
Ground	27,804		19,601		42	%	65,056		58,661		11	%
Naval	102,616		99,719		3	%	293,634		296,670		(1	%)
Other	5,072		4,389		16	%	18,077		8,023		125	%
Total Defense	$	228,220	$	202,033	13	%	$	624,423	$	579,939	8	%

Commercial markets:
Aerospace	$	105,284	$	94,248	12	%	$	304,691	$	298,939	2	%
Power Generation	93,873		89,643		5	%	314,197		285,144		10	%
General Industrial	140,524		121,168		16	%	415,834		379,344		10	%
Total Commercial	$	339,681	$	305,059	11	%	$	1,034,722	$	963,427	7	%

Total Curtiss-Wright	$	567,901	$	507,092	12	%	$	1,659,145	$	1,543,366	8	%


	Total Number of shares purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program	Maximum Dollar amount of shares that may yet be Purchased Under the Program			Total Number of shares purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of a Publicly Announced Program	Maximum Dollar amount of shares that may yet be Purchased Under the Program
July 1 - July 31	41,800	$	93.49	326,074	$	19,638,576	July 1 - July 31	35,522	118.23	238,368	$	171,542,074
August 1 - August 31	46,600	96.10		372,674	15,160,510		August 1 - August 31	36,793	119.58	275,161	167,142,412
September 1 - September 30	41,089	99.78		413,763	11,060,541		September 1 - September 30	373,690	123.36	648,851	521,045,368
For the quarter ended	129,489	$	96.42	413,763	$	11,060,541
For the quarter ended September 30, 2021							For the quarter ended September 30, 2021	446,005	122.64	648,851	$	521,045,368