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~~June 30, ~~2017~~2022

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~~38,394,586 shares ~~(as~~as of ~~September 30, 2017).~~July 31, 2022.

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		1920

Item 3.		Quantitative and Qualitative Disclosures about Market Risk		2931

Item 4.		Controls and Procedures		2931


PART II – OTHER INFORMATION


Item 1.		Legal Proceedings		3032

Item 1A.		Risk Factors		3032

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		3032

Item 3.		Defaults upon Senior Securities		3132

Item 4.		Mine Safety Disclosures		3132

Item 5.		Other Information		32

Item 6.		Exhibits		3334

Signatures				3435

Page 3

PART 1- FINANCIAL INFORMATION

Item 1. Financial Statements

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(UNAUDITED)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands, except per share data)	2022		2021		2022		2021
Net sales
Product sales	$	505,416	$	515,392	$	958,837	$	1,024,367
Service sales	103,941		106,103		209,981		194,187
Total net sales	609,357		621,495		1,168,818		1,218,554
Cost of sales
Cost of product sales	316,389		331,881		610,916		661,335
Cost of service sales	64,454		64,895		127,986		122,743
Total cost of sales	380,843		396,776		738,902		784,078
Gross profit	228,514		224,719		429,916		434,476
Research and development expenses	23,868		23,194		44,417		45,057
Selling expenses	30,407		29,564		58,499		59,160
General and administrative expenses	76,134		77,378		163,734		150,610
Loss on divestiture	—		—		4,651		—
Operating income	98,105		94,583		158,615		179,649
Interest expense	9,788		10,180		19,318		20,139
Other income, net	4,555		440		7,552		5,283
Earnings before income taxes	92,872		84,843		146,849		164,793
Provision for income taxes	(22,000)		(23,435)		(35,292)		(43,916)
Net earnings	$	70,872	$	61,408	$	111,557	$	120,877

Net earnings per share:
Basic earnings per share	$	1.84	$	1.50	$	2.90	$	2.95
Diluted earnings per share	$	1.83	$	1.49	$	2.89	$	2.94

Dividends per share	0.19		0.18		0.37		0.35

Weighted-average shares outstanding:
Basic	38,429		40,915		38,438		40,921
Diluted	38,654		41,088		38,657		41,092
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				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net earnings	$	70,872	$	61,408	$	111,557	$	120,877
Other comprehensive income (loss)
Foreign currency translation adjustments, net of tax (1)	$	(40,336)	$	7,243	$	(47,161)	$	3,283
Pension and postretirement adjustments, net of tax (2)	3,988		4,442		9,754		10,042
Other comprehensive income (loss), net of tax	(36,348)		11,685		(37,407)		13,325
Comprehensive income	$	34,524	$	73,093	$	74,150	$	134,202

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 included in ~~other comprehensive income for~~ foreign currency translation adjustments for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017 were $0.4~~2022 was $0.9 million and ~~$1.6~~$1.1 million, respectively. The tax benefit included in ~~other comprehensive loss for~~ foreign currency translation adjustments for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016 were $0.7 million and $1.0 million, respectively.~~2021 was immaterial.

(2) The tax expense included in ~~other comprehensive income for~~ pension and postretirement adjustments for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017 were $0.8~~2022 was $0.5 million and ~~$3.3~~$1.9 million, respectively. The tax expense included in ~~other comprehensive income for~~ pension and postretirement adjustments for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016 were $0.9~~2021 was $1.5 million and ~~$3.0~~$3.1 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)


	June 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	171,414	$	171,004
Receivables, net	699,632		647,148
Inventories, net	482,790		411,567
Assets held for sale	—		10,988
Other current assets	84,584		67,101
Total current assets	1,438,420		1,307,808
Property, plant, and equipment, net	348,062		360,031
Goodwill	1,531,999		1,463,026
Other intangible assets, net	638,873		538,077
Operating lease right-of-use assets, net	145,325		143,613
Prepaid pension asset	263,719		256,422
Other assets	36,130		34,568
Total assets	$	4,402,528	$	4,103,545
Liabilities
Current liabilities:
Current portion of long-term debt	202,500		—
Accounts payable	171,589		211,640
Accrued expenses	133,706		147,701
Deferred revenue	215,188		260,157
Liabilities held for sale	—		12,655
Due to seller	247,215		—
Other current liabilities	89,009		102,714
Total current liabilities	1,059,207		734,867
Long-term debt	1,006,577		1,050,610
Deferred tax liabilities, net	149,213		147,349
Accrued pension and other postretirement benefit costs	84,404		91,329
Long-term operating lease liability	126,006		127,152
Long-term portion of environmental reserves	13,100		13,656
Other liabilities	96,382		112,092
Total liabilities	2,534,889		2,277,055
Contingencies and commitments (Note 14)
Stockholders’ equity
Common stock, $1 par value, 100,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 49,187,378 shares issued as of June 30, 2022 and December 31, 2021; outstanding shares were 38,381,875 as of June 30, 2022 and 38,469,778 as of December 31, 2021	49,187		49,187
Additional paid in capital	126,316		127,104
Retained earnings	3,006,164		2,908,827
Accumulated other comprehensive loss	(227,872)		(190,465)
Common treasury stock, at cost (10,805,503 shares as of June 30, 2022 and 10,717,600 shares as of December 31, 2021)	(1,086,156)		(1,068,163)
Total stockholders’ equity	1,867,639		1,826,490
Total liabilities and stockholders’ equity	$	4,402,528	$	4,103,545

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)


	Six Months Ended
	June 30,
(In thousands)	2022		2021
Cash flows from operating activities:
Net earnings	$	111,557	$	120,877
Adjustments to reconcile net earnings to net cash provided by (used for) operating activities
Depreciation and amortization	53,645		57,616
Loss on divestiture	4,651		—
Gain on sale/disposal of long-lived assets	(3,004)		(590)
Deferred income taxes	(4,516)		6,293
Share-based compensation	7,580		6,725
Change in operating assets and liabilities, net of businesses acquired:
Receivables, net	(47,826)		(53,787)
Inventories, net	(58,620)		(15,214)
Progress payments	(954)		(2,680)
Accounts payable and accrued expenses	(55,406)		(58,217)
Deferred revenue	(45,397)		6,663
Pension and postretirement liabilities, net	(4,376)		(4,017)
Other current and long-term assets and liabilities	(50,605)		(15,193)
Net cash provided by (used for) operating activities	(93,271)		48,476
Cash flows from investing activities:
Proceeds from sale/disposal of long-lived assets	6,319		2,982
Additions to property, plant, and equipment	(19,492)		(17,771)
Additional consideration paid on prior year acquisitions	(5,062)		(5,340)
Net cash used for investing activities	(18,235)		(20,129)
Cash flows from financing activities:
Borrowings under revolving credit facilities	653,547		163,507
Payments of revolving credit facilities	(494,347)		(163,507)
Repurchases of common stock	(31,645)		(24,395)
Proceeds from share-based compensation	5,284		4,919
Dividends paid	(14,220)		(6,961)
Other	(499)		(462)
Net cash (used for)/provided by financing activities	118,120		(26,899)
Effect of exchange-rate changes on cash	(6,204)		(2,188)
Net increase (decrease) in cash and cash equivalents	410		(740)
Cash and cash equivalents at beginning of period	171,004		198,248
Cash and cash equivalents at end of period	$	171,414	$	197,508
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 six months ended June 30, 2022
	Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock
December 31, 2021	$	49,187	$	127,104	$	2,908,827	$	(190,465)	$	(1,068,163)
Net earnings	—		—		111,557		—		—
Other comprehensive loss, net of tax	—		—		—		(37,407)		—
Dividends declared	—		—		(14,220)		—		—
Restricted stock	—		(8,523)		—		—		8,523
Employee stock purchase plan	—		814		—		—		4,470
Share-based compensation	—		7,427		—		—		153
Repurchase of common stock (1)	—		—		—		—		(31,645)
Other	—		(506)		—		—		506
June 30, 2022	$	49,187	$	126,316	$	3,006,164	$	(227,872)	$	(1,086,156)

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 June 30, 2022
	Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock
March 31, 2022	$	49,187	$	122,603	$	2,942,580	$	(191,524)	$	(1,073,426)
Net earnings	—		—		70,872		—		—
Other comprehensive loss, net of tax	—		—		—		(36,348)		—
Dividends declared	—		—		(7,288)		—		—
Share-based compensation	—		3,713		—		—		58
Repurchase of common stock (1)	—		—		—		—		(12,788)
June 30, 2022	$	49,187	$	126,316	$	3,006,164	$	(227,872)	$	(1,086,156)

Page 8

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(In thousands)


	For the six months ended June 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	—		—		120,877		—		—
Other comprehensive income, net of tax	—		—		—		13,325		—
Dividends declared	—		—		(14,321)		—		—
Restricted stock	—		(9,007)		—		—		9,007
Employee stock purchase plan	—		411		—		—		4,508
Share-based compensation	—		6,604		—		—		121
Repurchase of common stock (1)	—		—		—		—		(24,395)
Other	—		(597)		—		—		597
June 30, 2021	$	49,187	$	119,946	$	2,776,884	$	(297,531)	$	(753,782)


	For the three months ended June 30, 2021
	Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock
March 31, 2021	$	49,187	$	119,172	$	2,722,829	$	(309,216)	$	(743,808)
Net earnings	—		—		61,408		—		—
Other comprehensive income, net of tax	—		—		—		11,685		—
Dividends declared	—		—		(7,353)		—		—
Restricted stock	—		(2,600)		—		—		2,600
Share-based compensation	—		3,374		—		—		24
Repurchase of common stock (1)	—		—		—		—		(12,598)
June 30, 2021	$	49,187	$	119,946	$	2,776,884	$	(297,531)	$	(753,782)

See notes to condensed consolidated financial statements

(1) For the three and six months ended June 30, 2022, the Corporation repurchased approximately 0.1 million and 0.2 million shares of its common stock, respectively. For the three and six months ended June 30, 2021, the Corporation repurchased approximately 0.1 million and 0.2 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 ~~diversified multinational manufacturing and service company~~global integrated business that ~~designs, manufactures, and overhauls precision components and~~ provides highly engineered products, solutions, and services mainly to ~~the~~ aerospace & defense (A&D) markets, as well as critical technologies in demanding commercial 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~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, 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~~2021 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~~

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 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 six months ended June 30, 2022 and 2021:

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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.	~~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~~


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Over-time	53	%	52	%	53	%	52	%
Point-in-time	47	%	48	%	47	%	48	%

~~Recent accounting pronouncements~~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 $2.4 billion as of June 30, 2022, of which the Corporation expects to recognize approximately 88% as net sales over the next 36 months. The remainder will be ~~adopted~~

recognized thereafter.



~~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~~

Disaggregation of Revenue

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~~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. ACQUISITIONS~~

The following table presents the Corporation’s total net sales disaggregated by end market and customer type:


Total Net Sales by End Market and Customer Type	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2022		2021		2022		2021
Aerospace & Defense
Aerospace Defense	$	94,545	$	99,977	$	192,549	$	210,993
Ground Defense	44,393		48,221		83,501		103,967
Naval Defense	172,786		177,724		335,753		355,629
Commercial Aerospace	68,192		71,555		129,084		128,824
Total Aerospace & Defense	$	379,916	$	397,477	$	740,887	$	799,413

Commercial
Power & Process	$	125,355	$	125,333	$	230,143	$	230,837
General Industrial	104,086		98,685		197,788		188,304
Total Commercial	$	229,441	$	224,018	$	427,931	$	419,141

Total	$	609,357	$	621,495	$	1,168,818	$	1,218,554

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 six months ended June 30, 2022 included in the contract liabilities balance as of January 1, 2022 was approximately $56 million and $135 million, respectively. Revenue recognized during the three and six months ended June 30, 2021 included in the contract liabilities balance as of January 1, 2021 was approximately $65 million and $142 million, respectively. Contract assets and contract liabilities are reported in the "Receivables, net" and "Deferred revenue" lines, respectively, within the Condensed Consolidated Balance Sheet.

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

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CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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~~six months ended ~~September~~June 30, ~~2017,~~2022, the Corporation acquired ~~two businesses~~1 business for an aggregate purchase price of ~~$233~~$247 million, which ~~are~~is described in more detail ~~below. No acquisitions were made during~~below, and represents a non-cash investing activity in 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 million of total net sales and $1 million of net losses from~~Cash Flows. During the ~~Corporation's 2017~~six months ended June 30, 2021, the Corporation did not complete any acquisitions.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for ~~all acquisitions~~the acquisition consummated during the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2022.


(In thousands)	2022
Accounts receivable	$	9,970
Inventory	22,790
Property, plant, and equipment	1,683
Other current and non-current assets	1,872
Intangible assets	130,500
Operating lease right-of-use assets, net	1,197
Current and non-current liabilities	(9,607)
Net tangible and intangible assets	158,405
Goodwill	88,810
Total purchase price	$	247,215

Due to seller	$	247,215
Cash paid to date	$	—

Goodwill deductible for tax purposes	$	88,810

(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

2022 Acquisition

~~2017 Acquisitions~~

Safran Aerosystems Arresting Company (SAA)

~~Teletronics Technology Corporation (TTC)~~

On ~~January 3, 2017,~~June 30, 2022, the Corporation ~~acquired 100%~~completed the acquisition of ~~the issued and outstanding capital stock of TTC~~SAA for ~~$226.0 million, net of cash acquired.~~$247 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~~type. SAA is a designer 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.mission-critical, fixed-wing aircraft emergency arresting systems. The acquired business ~~operates~~will operate within the ~~Defense~~Naval & Power segment.

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

~~On February 8, 2017, the Corporation acquired certain assets and assumed certain liabilities of Para Tech for $6.6 million in cash.~~ The ~~Asset Purchase Agreement contains a purchase price adjustment mechanism and representations and warranties customary for a transaction of this type, including a portion of~~acquisition is subject to post-closing adjustments with the purchase price allocation not yet complete.

4. ASSETS HELD FOR SALE

In January 2022, the Corporation completed the sale of its industrial valve business in Germany, which was presented as held ~~back~~for sale in the Corporation's Consolidated Balance Sheet as ~~security~~of December 31, 2021, for ~~potential indemnification claims against~~gross cash proceeds of $3 million. The Corporation recorded a loss of $5 million upon sale closing during the ~~seller. Para Tech is a provider~~first quarter of ~~parylene conformal coating services for aerospace & defense electronic components as well as critical medical devices. The acquired business operates within the Commercial/Industrial segment.~~2022.

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CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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:


(In thousands)	June 30, 2022		December 31, 2021
Billed receivables:
Trade and other receivables	$	414,195	$	362,007
Unbilled receivables (contract assets):
Recoverable costs and estimated earnings not billed	291,485		291,758
Less: Progress payments applied	(688)		(1,297)
Net unbilled receivables	290,797		290,461
Less: Allowance for doubtful accounts	(5,360)		(5,320)
Receivables, net	$	699,632	$	647,148

~~Page 12~~

~~CURTISS-WRIGHT CORPORATION and SUBSIDIARIES~~

~~NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

(In thousands) September 30, 2017 December 31, 2016
Billed receivables:
Trade and other receivables $ 367,631
$ 340,091
Less: Allowance for doubtful accounts (7,306 ) (4,832 )
Net billed receivables 360,325
335,259
Unbilled receivables:
Recoverable costs and estimated earnings not billed 178,479
149,847
Less: Progress payments applied (22,838 ) (22,044 )
Net unbilled receivables 155,641
127,803
Receivables, net $ 515,966
$ 463,062

4.6. INVENTORIES

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:


(In thousands)	September 30, 2017			December 31, 2016			(In thousands)	June 30, 2022		December 31, 2021
Raw materials	$	189,326		$	189,228		Raw materials	$	239,575	$	191,066
Work-in-process	85,636			73,843			Work-in-process	87,193		78,221
Finished goods	127,647			112,478			Finished goods	118,655		98,944
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)	42,110		48,619
Inventories, net of reserves							Inventories, net of reserves	487,533		416,850
Less: Progress payments applied							Less: Progress payments applied	(4,743)		(5,283)
Inventories, net	$	397,270		$	366,974		Inventories, net	$	482,790	$	411,567

~~Inventoried costs related to long-term contracts include~~(1) This caption includes capitalized ~~contract~~ development costs of $19.8 million as of June 30, 2022 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~~June 30, ~~2017 and December 31, 2016, $4.1~~2022, capitalized development costs of $12.3 million ~~and $3.9 million, respectively,~~ are ~~scheduled to be liquidated under~~not currently supported by existing firm orders.

5.7. GOODWILL

The changes in the carrying amount of goodwill for the ~~nine~~six months ended~~September~~ June 30, ~~2017~~2022 are as follows:


(In thousands)	Aerospace & Industrial		Defense Electronics		Naval & Power		Consolidated
December 31, 2021	$	316,147	$	714,014	$	432,865	$	1,463,026
Acquisitions	—		—		88,810		88,810
Adjustments	—		967		—		967
Foreign currency translation adjustment	(6,335)		(10,445)		(4,024)		(20,804)
June 30, 2022	$	309,812	$	704,536	$	517,651	$	1,531,999

(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								June 30, 2022						December 31, 2021
(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	$	302,999	$	(168,995)	$	134,004	$	274,615	$	(164,077)	$	110,538
Customer related intangibles	366,910		(175,251		)	191,659		349,742		(157,154		)	192,588		Customer related intangibles	657,605		(280,993)		376,612		568,720		(270,816)		297,904
Programs (1)															Programs (1)	144,000		(30,600)		113,400		144,000		(27,000)		117,000
Other intangible assets	40,613		(26,090		)	14,523		36,709		(26,429		)	10,280		Other intangible assets	53,484		(38,627)		14,857		49,559		(36,924)		12,635
Total	$	650,739	$	(311,782	)	$	338,957	$	553,310	$	(281,849	)	$	271,461	Total	$	1,158,088	$	(519,215)	$	638,873	$	1,036,894	$	(498,817)	$	538,077

(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.

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~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, the fair values of the asset and liability derivative instruments ~~are~~were immaterial.

Effects on Condensed Consolidated Statements of Earnings

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 gains and losses on forward exchange derivative contracts not designated for hedge accounting are recognized to general and administrative expenses within the Condensed Consolidated Statements of Earnings. The losses for the three and six months ended June 30, 2022 were $5 million and $6 million, respectively. The gains for the three and six months ended June 30, 2021 were immaterial.

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~~June 30, ~~2017~~.2022. 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.


	June 30, 2022				December 31, 2021
(In thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Revolving credit agreement, due 2027	$	253,100	$	253,100	$	93,900	$	93,900
3.70% Senior notes due 2023	202,500		202,266		202,500		208,086
3.85% Senior notes due 2025	90,000		88,790		90,000		95,246
4.24% Senior notes due 2026	200,000		198,087		200,000		218,421
4.05% Senior notes due 2028	67,500		65,836		67,500		73,783
4.11% Senior notes due 2028	90,000		87,593		90,000		98,854
3.10% Senior notes due 2030	150,000		133,963		150,000		154,832
3.20% Senior notes due 2032	150,000		131,206		150,000		154,875
Total debt	1,203,100		1,160,841		1,043,900		1,097,997
Debt issuance costs, net	(868)		(868)		(949)		(949)
Unamortized interest rate swap proceeds	6,845		6,845		7,659		7,659
Total debt, net	$	1,209,077	$	1,166,818	$	1,050,610	$	1,104,707

Revolving Credit Agreement

In May 2022, the Corporation terminated its existing credit agreement, which was set to expire in October 2023, and entered into a new credit agreement (“Credit Agreement”) with a syndicate of financial institutions. The Credit Agreement, which is set to expire in May 2027, increases the size of the Corporation’s revolving credit facility to $750 million, and expands the accordion feature to $250 million. The proceeds available under the Credit Agreement are to be used for general corporate purposes, which may include the funding of possible future acquisitions or supporting internal growth initiatives.

Defined Benefit Pension Plans

The following ~~tables are~~table is a consolidated ~~disclosures~~disclosure of all domestic and foreign defined benefit pension plans as described in the Corporation’s ~~2016~~2021 Annual Report on Form 10-K.

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)

~~Effective January 1, 2014,~~

The Corporation did not make any contributions to the Curtiss-Wright Pension Plan during 2021, and does not expect to do so in 2022. Contributions to the foreign benefit plans are not expected to be material in 2022.

During the six months ended June 30, 2022, as well as during the three and six months ended June 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 ~~nine~~three and six months ended ~~September~~June 30, ~~2017 and 2016,~~2022, the expense relating to the plan was ~~$10.0~~$4.6 million and ~~$8.9~~$10.3 million, respectively. ~~The Corporation made $10.9 million in contributions~~During the three and six months ended June 30, 2021, the expense relating to the plan ~~during the nine months ended September 30, 2017,~~was $4.3 million and ~~expects to make total contributions of $11.8~~$9.6 million, ~~in 2017.~~respectively.

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 the three ~~months~~ and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, approximately ~~38,000~~37,000 and 31,000 shares, respectively, issuable under equity-based awards were excluded from the calculation of diluted earnings per share as they were anti-dilutive based on the average stock price during the period. ~~For~~There were approximately 34,000 and 61,000 anti-dilutive equity-based awards for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016, there were no anti-dilutive equity-based awards.~~2021, respectively.

~~10.~~12. SEGMENT INFORMATION

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
(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)

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2022		2021		2022		2021
Net sales
Aerospace & Industrial	$	209,311	$	200,254	$	401,161	$	381,392
Defense Electronics	150,404		163,468		294,342		345,766
Naval & Power	251,313		259,496		476,628		495,076
Less: Intersegment revenues	(1,671)		(1,723)		(3,313)		(3,680)
Total consolidated	$	609,357	$	621,495	$	1,168,818	$	1,218,554

Operating income (expense)
Aerospace & Industrial	$	32,464	$	31,977	$	57,317	$	51,002
Defense Electronics	24,460		29,271		47,750		65,894
Naval & Power	50,001		43,095		77,289		81,152
Corporate and other (1)	(8,820)		(9,760)		(23,741)		(18,399)
Total consolidated	$	98,105	$	94,583	$	158,615	$	179,649

⁽¹⁾ ~~Corporate and eliminations includes~~ Includes pension and other postretirement benefit expense, certain environmental costs related to remediation at legacy sites, foreign currency transactional gains and losses, and certain other expenses.

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


(In thousands)	June 30, 2022		December 31, 2021
Identifiable assets
Aerospace & Industrial	$	1,006,902	$	991,508
Defense Electronics	1,541,806		1,536,369
Naval & Power	1,551,343		1,270,099
Corporate and Other	302,477		294,581
Assets held for sale	—		10,988
Total consolidated	$	4,402,528	$	4,103,545

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:

(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 )

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Other comprehensive income (loss) before reclassifications (1)

Amounts reclassified from accumulated other comprehensive income (1)

Other comprehensive income (loss) before reclassifications (1)

Amounts reclassified from accumulated other comprehensive income (1)

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

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

secure advance payments from certain international customers. As of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, there were ~~$23.4~~$17.2 million and ~~$47.2~~$21.1 million of stand-by letters of credit outstanding, respectively, and ~~$13.9~~$2.4 million and ~~$12.8~~$4.5 million of bank guarantees outstanding, respectively. In addition, the Corporation is required to provide the Nuclear Regulatory Commission financial assurance demonstrating its ability to cover the cost of decommissioning its Cheswick, Pennsylvania facility upon closure, though the Corporation does not intend to close this facility. The Corporation has provided this financial assurance in the form of a ~~$56.0~~$35.2 million surety bond.

~~The Electro-Mechanical Division, which is within~~In February 2022, the ~~Corporation’s Power segment, is~~Corporation and Westinghouse Electric Company (WEC) executed a settlement agreement to resolve all open claims and counterclaims under the ~~reactor coolant pump (RCP) supplier for~~AP1000 U.S. and China contracts. Under the ~~Westinghouse AP1000 nuclear power plants under construction in China and the United States. The~~ terms of the ~~AP1000 China and United States contracts include liquidated damage penalty provisions for failure to meet contractual delivery dates if~~settlement agreement, the Corporation ~~caused the delay~~paid WEC $15 million in March 2022 and ~~the delay was not excusable. On October 10, 2013, the Corporation received~~is required to pay WEC a ~~letter from Westinghouse stating entitlements to the maximum~~final amount of ~~liquidated damages allowable~~$10 million in the first quarter of 2023 in exchange for the Corporation’s full release from all open claims under ~~the~~such contracts, whether known or unknown, as well as negotiating and executing a right of first refusal for all future AP1000 ~~China contract from Westinghouse~~projects. As of ~~approximately $25 million. The Corporation would be liable for liquidated damages under the contract if certain contractual delivery dates were not met and if~~December 31, 2021, the Corporation was ~~deemed responsible for the delay. As of September 30, 2017,~~adequately accrued regarding this matter.

15. SUBSEQUENT EVENTS

On August 1, 2022, the Corporation has not met certain contractual delivery dates under its AP 1000 China and US contracts; however there are significant uncertainties as to which parties are responsible for the delays. The Corporation believesannounced that it ~~has adequate legal defenses and intends to vigorously defend this matter. Given the uncertainties surrounding the responsibility for the delays, no accrual has been made for this matter as~~priced a private placement debt offering of ~~September 30, 2017. As of September 30, 2017, the range of possible loss is $0 to $31~~$300 million for senior notes. The offering is expected to close in the ~~AP1000 US contract, for a total range of possible loss of $0~~fourth quarter, subject to ~~$55.5 million.~~customary closing conditions.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I- ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

Except for historical information, this Quarterly Report on Form 10-Q may be deemed to contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not limited to: (a) projections of or statements regarding return on investment, future earnings, interest income, sales, volume, other income, earnings or loss per share, growth prospects, capital structure, and other financial terms, (b) statements of plans and objectives of management, (c) statements of future economic performance and potential impacts from COVID-19, including the impacts to supply and demand, the impact of significant inflation, higher interest rates or deflation, and measures taken by governments and private industry in response, (d) statements of future economic performance and potential impacts due to the conflict between Russia and Ukraine, and (e) statements of assumptions, such as economic conditions underlying other statements. Such forward-looking statements can be identified by the use of forward-looking terminology such as “anticipates,” “believes,” “continue,” “could,” “estimate,” “expects,” “intend,” “may,” “might,” “outlook,” “potential,” “predict,” “should,” “will,” as well as the negative of any of the foregoing or variations of such terms or comparable terminology, or by discussion of strategy. No assurance may be given that the future results described by the forward-looking statements will be achieved. While we believe these forward-looking statements are reasonable, they are only predictions and are subject to known and unknown risks, uncertainties, and other factors, many of which are beyond our control, which could cause actual results, performance, or achievement to differ materially from anticipated future results, performance, or achievement expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, those described in “Item 1A. Risk Factors” of our ~~2016~~2021 Annual Report on Form 10-K, and elsewhere in that report, those described in this Quarterly Report on Form 10-Q, and those described from time to time in our future reports filed with the Securities and Exchange Commission. Such forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, those contained in Item 1. Financial Statements and Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

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~~global integrated business that provides highly engineered ~~technologically advanced, value-added~~ products, solutions, and services mainly to ~~a broad range of industries that are reported~~aerospace & defense markets, as well as critical technologies in demanding commercial power, process, and industrial markets. We report our operations through our ~~Commercial/~~Aerospace & Industrial, Defense Electronics, and Naval & Power segments. We ~~are positioned as a market leader~~operate 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~~Approximately 67% 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% of our 2017 total sales2022 revenues are expected to be generated from ~~defense-related~~A&D-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 Credit Agreement, are expected to be more than sufficient to meet operating cash requirements, planned capital expenditures, principal payments on the current portion of long-term debt obligations, 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~~six month periods ended ~~September~~June 30, ~~2017.~~2022. The financial information as of ~~September~~June 30, ~~2017~~2022 should be read in conjunction with the financial statements for the year ended December 31, ~~2016~~2021 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.

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~~loss from sale of our industrial valves business in Germany as well as the effects of 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


Condensed Consolidated Statements of Earnings
	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2022		2021		% change		2022		2021		% change
Sales
Aerospace & Industrial	$	208,572	$	199,713	4	%	$	399,684	$	380,044	5	%
Defense Electronics	149,549		162,351		(8	%)	292,618		343,563		(15	%)
Naval & Power	251,236		259,431		(3	%)	476,516		494,947		(4	%)
Total sales	$	609,357	$	621,495	(2	%)	$	1,168,818	$	1,218,554	(4	%)

Operating income
Aerospace & Industrial	$	32,464	$	31,977	2	%	$	57,317	$	51,002	12	%
Defense Electronics	24,460		29,271		(16	%)	47,750		65,894		(28	%)
Naval & Power	50,001		43,095		16	%	77,289		81,152		(5	%)
Corporate and other	(8,820)		(9,760)		10	%	(23,741)		(18,399)		(29	%)
Total operating income	$	98,105	$	94,583	4	%	$	158,615	$	179,649	(12	%)

Interest expense	9,788		10,180		4	%	19,318		20,139		4	%
Other income, net	4,555		440		NM		7,552		5,283		43	%

Earnings before income taxes	92,872		84,843		9	%	146,849		164,793		(11	%)
Provision for income taxes	(22,000)		(23,435)		6	%	(35,292)		(43,916)		20	%
Net earnings	$	70,872	$	61,408	15	%	$	111,557	$	120,877	(8	%)

New orders	$	776,162	$	698,970	11	%	$	1,410,428	$	1,271,857	11	%

~~acquisition. Operating income~~

Components of sales and operating ~~margin also benefited from improved volume on industrial vehicle products~~income increase (decrease):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022 vs. 2021				2022 vs. 2021
	Sales		Operating Income		Sales		Operating Income
Organic	(1	%)	2	%	(3	%)	(9	%)
Acquisitions	—	%	—	%	—	%	—	%
Loss on divestiture	—	%	—	%	—	%	(4	%)
Foreign currency	(1	%)	2	%	(1	%)	1	%
Total	(2	%)	4	%	(4	%)	(12	%)

Sales in the ~~Commercial/Industrial segment, and our ongoing margin improvement initiatives.~~

Sales during the six months ended June 30, 2022 decreased $50 million, or 4%, to ~~the following:~~

~~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

million, respectively, with sales from the Aerospace & Industrial segment increasing $19 million. Changes in sales by segment are discussed in further detail in the results by business segment section below.

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~~Operating income in the second quarter increased $4 million, or 4%, to $98 million, and operating margin increased 90 basis points to 16.1% compared with the same period in 2021. 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~~Operating income during the ~~nine~~six months ended ~~September~~June 30, ~~2017 increased $24~~2022 decreased $21 million, or 3%12%, to ~~$864~~$159 million from the prior year period. In the general industrial market, we experienced higher sales of $37 million primarily due to increased demand for our industrial vehicle products. This increase was partially offset by lower sales of $13 million in the naval defense market primarily due to the timing of production on the Virginia-class submarine program. Unfavorable foreign currency translation reduced sales by $7 million.

Non-segment operating expense in the second quarter decreased $1 million, or 10%, to $9 million, primarily due to lower pension costs in the current period. Non-segment operating expense during the six months ended June 30, 2022 increased $5 million, or 29%, to $24 million, primarily due to costs associated with shareholder activism in the current period.

Interest expense in the second quarter and six months ended June 30, 2022 of $10 million and $19 million, respectively, was essentially flat against the comparable prior year periods.

Other income, net in the second quarter increased $4 million to $5 million. Other income, net during the six months ended June 30, 2022 increased $2 million, or 43%, to $8 million. Increases in both periods were primarily due to ~~ongoing margin improvement initiatives and higher volume~~lower overall pension costs against the comparable prior year periods.

The effective tax rate of 23.7% in the second quarter decreased compared to an effective tax rate of 27.6% in the prior year period. The effective tax rate of 24.0% for the six months ended June 30, 2022 decreased as compared to an effective tax rate of 26.6%. Decreases in both of the comparable periods were primarily due to an unfavorable foreign rate change on ~~industrial vehicle products.~~deferred tax liabilities in the prior year that did not recur, as well as lower provisional tax expense associated with the Tax Act for foreign withholding taxes in the current year period.

~~New orders~~ ~~increased $4~~Comprehensive income in the second quarter was $35 million, compared to comprehensive income of $73 million in the prior year period. The change was primarily due to the following:

•Foreign currency translation adjustments in the second quarter resulted in a $40 million comprehensive loss, compared to a $7 million comprehensive gain in the prior year period. The comprehensive loss during the ~~three~~current period was primarily attributed to decreases in the British Pound.

•Net earnings increased $9 million, primarily due to higher operating income and other income, net.

Comprehensive income during the six months ended ~~September~~June 30, ~~2017~~2022 was $74 million, compared to comprehensive income of $134 million in the prior year period. The change was primarily due to the following:

•Foreign currency translation adjustments for the six months ended June 30, 2022 resulted in a $47 million comprehensive loss, compared to a $3 million comprehensive gain in the prior period. The comprehensive loss during the current period was primarily attributed to decreases in the British Pound.

•Net earnings decreased $9 million, primarily due to lower operating income.

New orders in the second quarter increased $77 million from the comparable prior year period, primarily due to the ~~increased demand for our industrial vehicle products and a new order for the CVN-79 aircraft carrier. These increases were offset by the~~ timing of naval defense orders ~~received from Boeing. New~~in the Naval & Power segment, as well as an increase in new orders ~~increased $9 million during~~for commercial aerospace equipment in the ~~nine months ended September 30, 2017 primarily due to a government order for the F-35 Joint Strike Fighter (JSF)~~Defense Electronics and ~~increased demand for our industrial vehicle products.~~Aerospace & Industrial segments. These increases were partially offset by the timing of new orders ~~received from Boeing and~~for industrial vehicles in the ~~timing of funding from government customers.~~Aerospace & Industrial segment.

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

New orders during thesix months ended June 30, 2022 increased $139 million from the comparable prior year period primarily due to the timing of naval defense orders in the Naval & Power segment, as well as an increase in new orders for commercial aerospace equipment in the Defense Electronics and Aerospace & Industrial segments.

~~Defense~~RESULTS BY BUSINESS SEGMENT

Aerospace & Industrial

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

Components of sales and operating income increase (decrease):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022 vs. 2021				2022 vs. 2021
	Sales		Operating Income		Sales		Operating Income
Organic	7	%	2	%	7	%	14	%
Acquisitions	—	%	—	%	—	%	—	%
Foreign currency	(3	%)	—	%	(2	%)	(2	%)
Total	4	%	2	%	5	%	12	%

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~~second quarter increased ~~$28~~$9 million, or ~~25%~~4%, to ~~$142~~$209 million from the ~~comparable~~ prior year period, primarily due to higher sales in the ~~incremental impact of our TTC acquisition which contributed $18 million in sales.~~commercial aerospace and general industrial markets. Sales in the ~~ground defense~~commercial aerospace market benefited $5 million from higher demand for actuation and sensors products as well as surface treatment services on various narrow-body and wide-body platforms. Sales in the general industrial market increased $5 million primarily due to higher demand for ~~our missile defense systems and turret drive stabilization systems (TDSS) on international ground defense platforms. Excluding the impact of TTC,~~industrial vehicle products. These increases were partially offset by sales todecreases in the aerospace defense market ~~were relatively flat as increased unmanned aerial vehicle (UAV) production was more than offset by declines in helicopter~~primarily due to lower sales of actuation and ~~lower production for certain military aircraft~~sensors products on various fighter jet programs.

Sales during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 increased ~~$50~~$19 million, or ~~15%~~5%, to ~~$383~~$400 million from the ~~comparable~~ prior year period, primarily due to ~~the incremental impact of our TTC acquisition which contributed $40 million in sales. Sales~~higher sales in the ~~ground defense~~commercial aerospace and general industrial markets. In the commercial aerospace market, sales increased $10 million primarily due to higher ~~TDSS~~ demand ~~on international ground defense platforms, partially offset by lower~~for actuation and sensors products as well as surface treatment services. The general industrial market benefited from sales increases of ~~embedded computing products on the G/ATOR program. Excluding the impact of TTC, sales~~$9 million primarily due to ~~the aerospace defense market were relatively flat as increased UAV production was more than offset by declines in helicopter sales and lower production~~higher demand for ~~certain military aircraft programs.~~industrial vehicle products.

Operating income ~~during~~ in the ~~third~~second quarter increased $5approximately $1 million, or ~~17%~~2%, to ~~$34~~$32 million ~~while operating margin decreased 160 basis points~~ from the prior year ~~quarter~~period, and operating margin decreased 40 basis points to ~~23.7%. Excluding a~~15.6%, as favorable absorption on higher sales and the benefits of our ongoing operational excellence initiatives were essentially offset by higher research and development investments.

Operating income during the six months ended June 30, 2022 increased $6 million, ~~benefit~~or 12%, to $57 million from ~~our TTC acquisition,~~the prior year period, and operating margin increased 90 basis points to 14.3%. The increases in operating income and operating margin ~~declined as ongoing margin improvement initiatives were more than offset by an unfavorable shift~~ in ~~mix for our defense electronics products.~~

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

New orders in the second quarter decreased $8 million, as an increase in new orders for commercial aerospace equipment was more than offset by the timing of new orders for industrial vehicles.

New orders during the six months ended June 30, 2022 increased $22 million primarily due to an increase in new orders for commercial aerospace equipment. This increase was partially offset by the timing of ~~naval orders and government~~new orders for defense electronics products. New orders increased $56 million during the nine months ended September 30, 2017 from the comparable prior year period, primarily due to the acquisition of TTC and a government order for aircraft handling systems. These increases were partially offset by the timing of naval orders.industrial vehicles.

~~Power~~Defense Electronics

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

Components of sales and operating income increase (decrease):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022 vs. 2021				2022 vs. 2021
	Sales		Operating Income		Sales		Operating Income
Organic	(7	%)	(21	%)	(14	%)	(29	%)
Acquisitions	—	%	—	%	—	%	—	%
Foreign currency	(1	%)	5	%	(1	%)	1	%
Total	(8	%)	(16	%)	(15	%)	(28	%)

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~~second quarter ~~increased $15~~decreased $13 million, or ~~12%~~8%, 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.

Sales during the six months ended June 30, 2022 decreased $51 million, or 15%, to $293 million from the prior year period. In the ground defense market, sales ~~increased~~decreased $23 million primarily due to ~~higher production levels~~ongoing supply chain headwinds as well as the delayed signing of the FY22 defense budget, which contributed to lower sales of embedded computing and tactical communications equipment on ~~CVN-80 pumps.~~various programs. The aerospace defense market was also negatively impacted by ongoing supply chain headwinds, which resulted in lower sales of $16 million, primarily on embedded computing equipment on various programs. In the commercial aerospace market, sales decreased $10 million primarily due to lower sales of avionics and flight test equipment on various domestic and international platforms.

Operating income in the ~~third~~second quarter ~~of 2017 increased~~decreased $5 million, or ~~38%~~16%, to ~~$19~~$24 million compared to the prior year period, and operating margin ~~increased 280~~decreased 160 basis points from the prior year period to ~~14.8%~~16.4%. The increases in operating income and operating margin were primarily due to higher production levels on the AP1000 China Direct program and improved profitability in the nuclear aftermarket business primarily driven by higher volume and the benefits of our ongoing margin improvement initiatives.

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MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

prior year period to 16.3%. The decreases in operating income and operating margin for each of the respective periods were primarily due to unfavorable overhead absorption on lower sales.

New orders in the second quarter increased $11 million, primarily due to an increase in new orders for commercial aerospace equipment.

New orders during the six months ended June 30, 2022 decreased $5 million, as an increase in new orders for commercial aerospace equipment was more than offset by the timing of orders across all defense-related markets due to the delayed signing of the FY22 defense budget.

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

Components of sales and operating income increase (decrease):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022 vs. 2021				2022 vs. 2021
	Sales		Operating Income		Sales		Operating Income
Organic	(3	%)	15	%	(4	%)	2	%
Acquisitions	—	%	—	%	—	%	—	%
Loss on divestiture	—	%	—	%	—	%	(7	%)
Foreign currency	—	%	1	%	—	%	—	%
Total	(3	%)	16	%	(4	%)	(5	%)

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

Sales in the second quarter decreased $8 million, or 3%, to $251 million from the prior year period. In the naval defense market, sales decreased $7 million, as higher demand on the Columbia-class submarine and CVN-81 aircraft carrier programs was more than offset by lower sales on the CVN-80 aircraft carrier and Virginia-class submarine programs. In the power & process market, higher nuclear aftermarket ~~business~~ sales as well as higher demand for industrial valve products were essentially offset by the wind-down on the China Direct AP1000 program.

Sales during the six months ended June 30, 2022 decreased $18 million, or 4%, to $477 million from the prior year period. Sales decreased $14 million in the naval defense market, as higher demand on the Columbia-class submarine and CVN-81 aircraft carrier programs was more than offset by lower sales on the CVN-80 aircraft carrier and Virginia-class submarine programs. In the power & process market, higher nuclear aftermarket sales were more than offset by the wind-down on the China Direct AP1000 program.

Operating income in the second quarter increased $7 million, or 16%, to $50 million, and operating margin increased 330 basis points from the prior year period to 19.9%, primarily ~~driven by higher volume~~due to favorable mix in the naval defense and process markets, as well as the benefits of our ongoing operational excellence initiatives.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Operating income during the six months ended June 30, 2022 decreased $4 million, or 5%, to $77 million, and operating margin ~~improvement~~decreased 20 basis points from the prior year period to 16.2%. Both operating income and operating margin were negatively impacted by a loss on sale of our industrial valves business in Germany in the current period, as well as unfavorable overhead absorption on lower sales in the naval defense market. These decreases were partially offset by favorable mix in the naval defense and process markets, as well as the benefits of our ongoing operational excellence initiatives.

New orders ~~increased $10 million during~~in the ~~three~~second quarter and six months ended ~~September~~June 30, ~~2017~~2022 increased $73 million and $122 million, respectively, from the comparable prior year ~~period~~periods, 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						Six Months Ended
	June 30,						June 30,
(In thousands)	2022		2021		% change		2022		2021		% change
Aerospace & Defense markets:
Aerospace Defense	$	94,545	$	99,977	(5	%)	$	192,549	$	210,993	(9	%)
Ground Defense	44,393		48,221		(8	%)	83,501		103,967		(20	%)
Naval Defense	172,786		177,724		(3	%)	335,753		355,629		(6	%)
Commercial Aerospace	68,192		71,555		(5	%)	129,084		128,824		—	%
Total Aerospace & Defense	$	379,916	$	397,477	(4	%)	$	740,887	$	799,413	(7	%)

Commercial markets:
Power & Process	$	125,355	$	125,333	—	%	$	230,143	$	230,837	—	%
General Industrial	104,086		98,685		5	%	197,788		188,304		5	%
Total Commercial	$	229,441	$	224,018	2	%	$	427,931	$	419,141	2	%

Total Curtiss-Wright	$	609,357	$	621,495	(2	%)	$	1,168,818	$	1,218,554	(4	%)

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.~~

Sales induring the ~~ground defense market increased~~ six months ended June 30, 2022 decreased $59 million, or 7%, to $741 million, primarily due to ~~higher demand for our missile defense systems and TDSS products on international ground defense platforms.~~

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

~~acquisition and various projects across government entities. These increases were partially offset by lower sales~~Sales in the ~~naval defense market,~~second quarter increased $5 million, or 2%, to $229 million primarily due to ~~the timing of production on the Virginia-class submarine program.~~

Sales during the six months ended June 30, 2022 increased $9 million, or 2%, to $428 million primarily due to ~~increased~~higher demand for ~~sensors and controls products.~~our industrial vehicle products in the general industrial market. In the power & process market, higher nuclear aftermarket sales were offset by the wind-down on the China Direct AP1000 program.

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	Six Months Ended
(In thousands)	June 30, 2022		June 30, 2021
Cash provided by (used for):
Operating activities	$	(93,271)	$	48,476
Investing activities	(18,235)		(20,129)
Financing activities	118,120		(26,899)
Effect of exchange-rate changes on cash	(6,204)		(2,188)
Net increase (decrease) in cash and cash equivalents	410		(740)

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~~2 million from the ~~comparable~~ prior year period, primarily due to higher current period proceeds from disposal of long-lived assets.

Net cash provided by financing activities increased $145 million from the prior year ~~acquisitions~~period, primarily due to higher current period net borrowings under our Credit Agreement. Refer to the "Financing Activities" section below for further details.

Financing Activities

The Corporation’s debt outstanding had an average interest rate of 3.2% for both the three and ~~capital expenditures. The Corporation acquired two businesses during the nine~~six months ended ~~September~~June 30, ~~2017~~2022, and 3.5% for ~~approximately $233 million, net of cash acquired. The Corporation did not acquire any businesses during~~both the ~~nine~~three and six months ended ~~September~~June 30, ~~2016.~~2021, respectively. The ~~capital expenditures~~Corporation’s average debt outstanding was $1.2 billion for both the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2022, and ~~September~~$1.1 billion for both the three and six months ended June 30, ~~2016 were $35 million~~2021, respectively.

Revolving Credit Agreement

In May 2022, the Corporation terminated its existing credit agreement, which was set to expire in October 2023, and ~~$26 million, respectively.~~entered into a new Credit Agreement with a syndicate of financial institutions. The Credit Agreement, which is set to expire in May

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

2027, increases the size of the Corporation’s revolving credit facility to $750 million, and expands the accordion feature to $250 million.

~~Financing Activities~~

~~Revolving Credit Agreement~~

As of ~~September~~June 30, ~~2017,~~2022, the Corporation had no$253 million of outstanding borrowings under the ~~2012 Senior Unsecured Revolving~~ Credit Agreement, ~~(the “Credit Agreement” or “credit facility”)~~ and ~~$23~~$17 million in letters of credit supported by the ~~credit facility.~~Credit Agreement. The unused credit available under the Credit Agreement as of ~~September~~June 30, ~~2017~~2022 was ~~$477~~$480 million, which could be borrowed without violating any of our debt covenants.

Repurchase of common stock

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, the Corporation used ~~$39~~$32 million of cash to repurchase approximately ~~414,000~~0.2 million outstanding shares under its share repurchase program. During the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2021, the Corporation used ~~$80~~$24 million of cash to repurchase approximately ~~1,035,000~~0.2 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~~$7 million ~~for~~during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~September~~June 30, ~~2016, respectively.~~2021, respectively, with the increase primarily due to timing of the quarterly dividend payment during the current period. Additionally, beginning in the second quarter, the Corporation increased its quarterly dividend 6% to $0.19 per share.

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~~June 30, ~~2017,~~2022, we had the ability to borrow additional debt of ~~$1,132 million~~$1.5 billion without violating our debt to capitalization covenant.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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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~~2021 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission on February ~~21, 2017,~~24, 2022, 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~~six months ended ~~September~~June 30, ~~2017~~.2022. 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~~2021 Annual Report on Form 10-K.

Item 4. CONTROLS AND PROCEDURES

As of ~~September~~June 30, ~~2017~~,2022, 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~~June 30, ~~2017~~2022 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 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. There2022, 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



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



	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				Six Months Ended
	June 30,				June 30,
(In thousands)	2022		2021		2022		2021
Service cost	$	5,970	$	7,120	$	12,033	$	13,990
Interest cost	5,418		4,511		10,706		8,817
Expected return on plan assets	(13,858)		(15,191)		(27,715)		(30,371)
Amortization of prior service cost	(87)		(369)		(173)		(432)
Amortization of unrecognized actuarial loss	3,845		7,574		7,851		14,717
Cost of settlements	—		3,075		1,842		3,075
Net periodic pension cost	$	1,288	$	6,720	$	4,544	$	9,796



(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	$	173	Other ~~Postretirement Benefit Plans.~~income, net
Amortization of actuarial losses	(7,851)		Other income, net
Settlements	(1,842)		Other income, net
	(9,520)		Earnings before income taxes
	1,857		Provision for income taxes
Total reclassifications	$	(7,663)	Net earnings



	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



	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)	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)	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	)



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
April 1 - April 30	29,197	$150.57	163,349	$	233,753,889
May 1 - May 31	29,793	$140.85	193,142	$	229,557,422
June 1 - June 30	31,040	$135.16	224,182	$	225,362,016
For the quarter ended June 30, 2022	90,030	$142.04	224,182	$	225,362,016