Sales for the Corporation’s Metal Treatment segment totaled $44.6 million for the third quarter of 2004, up 26% when compared with $35.3 million in the third quarter of 2003. Organic sales growth of $7.5 million represented the majority of the sales increase, a 21% improvement over the third quarter of 2003. The 2004 acquisitions contributed $1.8 million in incremental sales for the third quarter of 2004. The organic growth was due to strong sales growth in our global shot peening services primarily to the aerospace and automotive markets, which contributed $4.4 million, higher sales of heat treating services of $1.2 million, and sales growth from our laser peening technology, which contributed $0.8 million in additional sales. In addition, foreign currency translation favorably impacted sales for the third quarter of 2004 by $1.6 million as compared to the prior year period.
Operating income for the third quarter of 2004 increased 58% to $6.8 million from $4.3 million for the same period last year. Overall margin improvement was due to higher sales volume, favorable sales mix in our shot peening, laser peening, and heat treating businesses, and implemented cost reduction initiatives. Offsetting the improvements were increased medical costs and higher energy costs as compared to the prior year period. This segment also benefited from favorable foreign currency translation in the third quarter of 2004 as compared to the third quarter of 2003.
Sales for the Metal Treatment segment totaled $131.5 million for the first nine months of 2004, up 30% as compared to $101.1 million for the comparable period of 2003. Organic sales growth was 21% in the first nine months of 2004, contributing $18.4 million to the increase. The organic growth was due to strong sales growth from our new laser peening technology, which contributed $4.6 million in additional sales, as well as solid growth in our global shot peening services, which contributed $8.3 million mainly in the German automotive, European commercial aerospace, and North American commercial and military aerospace markets. Sales from the heat treating division were up $2.1 million over the prior year period mainly due to overflow from a competitor and new aluminum treatment capabilities for the aerospace industry. The remaining sales increase was due to contributions from 2003 and 2004 acquisitions, which contributed $10.9 million of incremental sales in the first nine months of 2004. The main contributor to this increase was the E/M Coatings businesses, which were acquired in April 2003. In addition, foreign currency translation favorably impacted the sales for the first nine months of 2004 by $4.4 million as compared to the prior year period.
Operating income for the first nine months of 2004 increased 60% to $21.0 million from $13.1 million for the same period last year. Margin improvement was due to higher sales volume, favorable sales mix due to higher laser peening sales, and implemented cost reduction initiatives. Offsetting the improvements were increased medical costs and higher energy costs as compared to the prior year period. The business segment also benefited from favorable foreign currency translation in the first nine months of 2004 as compared to the prior year period.
New orders received for the Metal Treatment segment totaled $44.8 million in the third quarter of 2004 and $132.3 million for the first nine months of 2004, representing an increase of 26% and 30% from the same periods in 2003, respectively. Acquisitions made in 2003 and 2004 contributed $1.8 million and $10.9 million in incremental new orders received in the third quarter and first nine months of 2004, respectively. Backlog increased 28% to $1.8 million at September 30, 2004 from $1.4 million at December 31, 2003.
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
MANAGEMENT’S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS of OPERATIONS, continued
Interest Expense
Interest expense increased $2.0 million and $5.5 million for the third quarter and first nine months of 2004, respectively, versus the comparable prior year periods, due to higher debt levels associated with the funding of acquisitions and increased borrowing rates.
Corporate Administrative Expenses
Corporate administrative expenses increased $1.2 million and $1.7 million for the third quarter and first nine months of 2004, respectively, versus the comparable prior year periods, mainly due to expenses associated with Sarbanes-Oxley Section 404 compliance.
CHANGES IN FINANCIAL CONDITION
Liquidity and Capital Resources
The Corporation derives the majority of its operating cash inflow from receipts on the sale of goods and services and cash outflow for the procurement of materials and labor, and is therefore subject to market fluctuations and conditions. Approximately 50% of the Corporation’s business is in the defense sector, which is characterized by long-term contracts. Most of our long-term contracts allow for several billing points (progress or milestones) that provide the Corporation 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.
Operating Activities
The Corporation’s working capital was $223.7 million at September 30, 2004, a decrease of $14.9 million from the working capital at December 31, 2003 of $238.6 million. The ratio of current assets to current liabilities was 2.5 to 1 at September 30, 2004 versus 2.8 to 1 at December 31, 2003.
Cash and cash equivalents totaled $38.5 million in the aggregate at September 30, 2004, down from $98.7 million at December 31, 2003. The decrease is due to the use of available cash to fund the acquisition of Dy 4 Systems, Inc. on January 31, 2004. Days sales outstanding was 54 days at September 30, 2004 as compared to 56 days at December 31, 2003. Inventory turns were 5.5 at September 30, 2004 and December 31, 2003.
The remaining working capital increased $45.2 million from December 31, 2003, 50% of which is due to the acquisitions made in the first nine months of 2004. In addition to the impact of these acquisitions, working capital changes were highlighted by an increase in accounts receivable of approximately $16.1 million due primarily to the timing of billed sales, an increase in inventories of $3.1 million in anticipation of increased sales activity during the fourth quarter of 2004, and a decline in progress payments of $2.9 million due mainly to the liquidation of several large projects, offset by an increase in deferred revenue of $4.5 million due to an increase in customer funding on long-term projects.
Page 31 of 40
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
MANAGEMENT’S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS of OPERATIONS, continued
Investing Activities
The Corporation acquired ten businesses in the first nine months of 2004. A combination of stock, cash resources, and funds available under the Corporation’s credit agreements were utilized for the funding of these acquisitions, which totaled $232.0 million. As indicated in Note 2 to the Consolidated Financial Statements, certain acquisition agreements contain contingent purchase price adjustments, such as potential earn-out payments. In the first nine months of 2004, the Corporation made approximately $3.0 million in such payments relative to prior period acquisitions.
During the nine months ended September 30, 2004, internally available funds were adequate to meet capital expenditures of $20.6 million. Principal capital expenditures included new and replacement machinery and equipment within the business segments and for the expansion of new product lines. The Corporation is expected to make additional capital expenditures of approximately $15 million during the remainder of 2004 on machinery and equipment for ongoing operations at the business segments, expansion of existing facilities, and investments in new product lines and facilities.
Financing Activities
At September 30, 2004, the Corporation had a $400 million credit agreement with a group of ten banks. Borrowings under the agreement bear interest at a floating rate based on market conditions. In addition, the Corporation’s interest rate and level of facility fees are dependent on maintenance of certain financial ratios, as defined in the agreement. The Corporation is subject to annual facility fees on the commitments under the Revolving Credit Agreement. In connection with the Revolving Credit Agreement, the Corporation paid customary transaction fees that have been deferred and are being amortized over the term of the agreement. The Corporation is required under the agreement to maintain certain financial ratios and meet certain other financial tests, of which the Corporation is in compliance at September 30, 2004. Cash borrowings (excluding letters of credit) under the credit agreement at September 30, 2004 were $132.0 million as compared to $8.9 million at December 31, 2003. The unused credit available under the agreement at September 30, 2004 was $249.6 million.
On July 23, 2004, the Corporation amended its existing credit facility, increasing the available line of credit from $225 million to $400 million. The Corporation plans to use the credit line for working capital purposes, internal growth initiatives, funding of future acquisitions, and other general corporate purposes. The agreement expires in 2009.
On September 25, 2003 the Corporation issued $200.0 million of Senior Notes (the “Notes”). The Notes consist of $75.0 million of 5.13% Senior Notes that mature on September 25, 2010 and $125.0 million of 5.74% Senior Notes that mature on September 25, 2013. The Notes are senior unsecured obligations and are equal in right of payment to the Corporation’s existing senior indebtedness. The Corporation, at its option, can prepay at any time all or, from time to time, any part of the Notes, subject to a make-whole amount in accordance with the terms of the Note Purchase Agreement. In connection with the Notes, the Corporation paid customary transaction fees that have been deferred and are being amortized over the term of the Notes. The Corporation is required under the Note Purchase Agreement to maintain certain financial ratios, of which the Corporation is in compliance at September 30, 2004.
On November 6, 2003 the Corporation entered into two interest rate swap agreements with notional amounts of $20 million and $60 million to effectively convert the fixed interest rates on
Page 32 of 40
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
MANAGEMENT’S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS of OPERATIONS, continued
the $75 million 5.13% Senior Notes and $125 million 5.74% Senior Notes, respectively, to variable rates based on specified spreads over six-month LIBOR. In the short-term, the swaps have, and are expected to continue to provide the Corporation with a lower level of interest expense related to the Notes.
Industrial revenue bonds, which are collateralized by real estate, machinery, and equipment, were $14.3 million at September 30, 2004 and December 31, 2003. The loans outstanding under the Senior Notes, Interest Rate Swaps, Revolving Credit Agreements, and Industrial Revenue Bonds had variable interest rates averaging 3.4% during the third quarter of 2004; 2003 loans outstanding under the Revolving Credit Agreements and Industrial Revenue Bonds had variable interest rates averaging 2.1% for the third quarter of 2003.
Cash generated from operations is considered adequate to meet the Corporation’s cash requirements for the fourth quarter of 2004 and the upcoming year, including anticipated debt repayments, planned capital expenditures, dividends, environmental obligations, and working capital requirements. Undistributed earnings from certain of the Corporation’s foreign subsidiaries are considered permanently reinvested.
CRITICAL ACCOUNTING POLICIES
Our consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States of America. Preparing consolidated financial 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. We believe that the following are some of the more critical judgment areas in the application of our accounting policies that affect our financial condition and results of operations:
Revenue recognition: The realization of revenue refers to the timing of its recognition in the accounts of the Corporation and is generally considered realized or realizable and earned when the earnings process is substantially complete and all of the following criteria are met: 1) persuasive evidence of an arrangement exists; 2) delivery has occurred or services have been rendered; 3) the Corporation’s price to its customer is fixed or determinable; and 4) collectibility is reasonably assured.
The Corporation records sales and related profits on production and service type contracts as units are shipped and title and risk of loss have transferred or as services are rendered. This method is used in our Metal Treatment segment and in some of the business units within the Motion Control and Flow Control segments that serve commercial markets.
For certain contracts in our Flow Control and Motion Control segments that require performance over an extended period before deliveries begin, sales and estimated profits are recorded by applying the percentage-of-completion method of accounting. The percentage-of-completion method of accounting is used primarily for the Corporation’s defense contracts and certain long-term commercial contracts. This method recognizes revenue and profit as the contracts progress towards completion. For certain contracts that contain a significant number of performance milestones, as defined by the customer, sales are recorded based upon achievement of these performance milestones. The performance milestone method is an output
Page 33 of 40
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
MANAGEMENT’S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS of OPERATIONS, continued
measure of progress towards completion made in terms of results achieved. For certain fixed price contracts, where none or a limited number of milestones exist, the cost-to-cost method is used, which is an input measure of progress towards completion. Under the cost-to-cost input method, sales and profits are recorded based on the ratio of costs incurred to an estimate of total costs at completion.
Application of percentage-of-completion methods of revenue recognition requires the use of reasonable and dependable estimates of the future material, labor, and overhead costs that will be incurred. The percentage-of-completion method of accounting for long-term contracts requires a disciplined cost estimating system in which all functions of the business are integrally involved. These estimates are determined based upon the industry knowledge and experience of the Corporation’s engineers, project managers, and financial staff. These estimates are significant and reflect changes in cost and operating performance throughout the contract and could have a significant impact on operating performance. Adjustments to original estimates for contract revenue, estimated costs at completion, and the estimated total profit are often required as work progresses throughout the contract and as experience and more information is obtained, even though the scope of work under the contract may not change. These changes are recorded on a cumulative retroactive basis in the period they are determined to be necessary.
Under the percentage-of-completion and completed contract methods, provisions for estimated losses on uncompleted contracts are recognized in the period in which the likelihood of such losses is determined. Certain contracts contain provisions for the redetermination of price and, as such, management defers a portion of the revenue from those contracts until such time as the price has been finalized.
Some of the Corporation’s customers withhold certain amounts from the billings they receive. These retainages are generally not due until the project has been completed and accepted by the customer.
Inventory: Inventory costs include materials, direct labor, and manufacturing overhead costs, which are stated at the lower of cost or market, where market is limited to the net realizable value. The Corporation estimates the net realizable value of its inventories and establishes reserves to reduce the carrying amount of these inventories to net realizable value, as necessary. We continually evaluate the adequacy of the inventory reserves by reviewing historical scrap rates, on-hand quantities, as compared with historical and projected usage levels and other anticipated contractual requirements. The stated inventory costs are also reflective of the estimates used in applying the percentage-of-completion revenue recognition method.
The Corporation purchases materials for the manufacture of components for sale. The decision to purchase a set quantity of a particular item is influenced by several factors including: current and projected price, future estimated availability, existing and projected contracts to produce certain items, and the estimated needs for its businesses.
For certain of its long-term contracts, the Corporation utilizes progress billings, which represent amounts billed to customers prior to the delivery of goods and services and are recorded as a reduction to inventory and receivables. Progress billings are generally based on costs incurred, including direct costs, overhead, and general and administrative costs.
Page 34 of 40
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
MANAGEMENT’S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS of OPERATIONS, continued
Pension and other postretirement benefits: The Corporation, in consultation with its actuaries, determines the appropriate assumptions for use in determining the liability for future pension and other postretirement benefits. The most significant of these assumptions include the number of employees who will receive benefits along with the tenure and salary level of those employees, the expected return on plan assets, the discount rates used on plan obligations, and the trends in health care costs. Changes in these assumptions in future years will have an effect on the Corporation’s pension and postretirement costs and associated pension and postretirement assets and liabilities.
The discount rates and compensation rates increases used to determine the benefit obligations of the plans as of December 31, 2003 and the annual periodic costs for 2004 were lowered in 2003 to better reflect current economic conditions. The reduction in the discount rates increased the benefit obligation on the plans. A corresponding decrease in future compensation costs, which occurred due to the impact of lower inflationary effects, had an offsetting decrease to the benefit obligation. The changes in these two assumptions were based upon current and future economic indicators.
The overall expected return on assets assumption is based on a combination of historical performance of the pension fund and expectations of future performance. The historical returns are determined using the market–related value of assets, which is the same value used in the calculation of annual net periodic benefit cost. The market-related value of assets includes the recognition of realized and unrealized gains and losses over a five year period, which effectively averages the volatility associated with the actual performance of the plan’s assets from year to year. Although over the last ten years the market related value of assets had an average annual yield of 11.6%, the actual returns averaged 8.5% during the same period. The Corporation has consistently used the 8.5% rate as a long-term overall average return. Given the uncertainties of the current economic and geopolitical landscapes, we consider the 8.5% to be a reasonable assumption of the future long-term investment returns.
The long-term medical trend assumptions starts with a current rate that is in line with expectations for the near future, and then grade the rates down over time until it reaches an ultimate rate that is close to expectations for growth in GDP. The reasoning is that medical trends cannot continue to be higher than the rate of GDP growth in the long term. Any change in the expectation of these rates to return to a normal level will have an impact on the Corporation.
See Note 9 to the Corporation’s Consolidated Financial Statements in Item 1 of this quarterly report for further information on the Corporation’s pension and postretirement plans, including an estimate of future cash contributions.
Environmental reserves: The Corporation provides for environmental reserves when, in conjunction with internal and external legal counsel, it is determined that a liability is both probable and estimable. In many cases, the liability is not fixed or capped when the Corporation first records a liability for a particular site. In estimating the future liability and continually evaluating the sufficiency of such liabilities, the Corporation weighs certain factors including the Corporation’s participation percentage due to a settlement by or bankruptcy of other potentially responsible parties, a change in the environmental laws requiring more stringent requirements, a change in the estimate of future costs that will be incurred to remediate the site, and changes in technology related to environmental remediation.
Page 35 of 40
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
MANAGEMENT’S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS of OPERATIONS, continued
Purchase accounting: The Corporation applies the purchase method of accounting to its acquisitions. Under this method, the purchase price, including any capitalized acquisition costs, is allocated to the underlying tangible and intangible assets acquired and liabilities assumed based on their respective fair market values, with any excess recorded as goodwill. The Corporation, usually in consultation with third-party valuation advisors, determines the fair values of such assets and liabilities.
Goodwill: The recoverability of goodwill is subject to an annual impairment test based on the estimated fair value of the underlying businesses. Additionally, goodwill is tested for impairment when an event occurs or if circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. These estimated fair values are based on estimates of future cash flows of the businesses. Factors affecting these future cash flows include the continued market acceptance of the products and services offered by the businesses, the development of new products and services by the businesses and the underlying cost of development, the future cost structure of the businesses, and future technological changes. Estimates are also used for the Corporation’s cost of capital in discounting the projected future cash flows. The Corporation utilizes an independent third party cost of capital analysis in determination of its estimates. If it has been determined that an impairment has occurred, the Corporation may be required to recognize an impairment of its asset, which would be limited to the difference between the book value of the asset and its fair value. Any such impairment would be recognized in full in the reporting period in which it has been identified.
Other intangible assets: Other intangible assets are generally the result of acquisitions and consist primarily of purchased technology, customer related intangibles, trademarks and service marks, and technology licenses. Intangible assets are recorded at their fair values as determined through purchase accounting and are amortized on a straight-line basis over their estimated useful lives, which range from 1 to 20 years. The Corporation reviews the recoverability of intangible assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount might not be recoverable. Any impairment would be recorded in the reporting period in which it has been identified.
Recently issued accounting standards: In May 2004, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) 106-2 “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003.” This guidance supersedes FSP 106-1 issued in January 2004 and clarifies the accounting and disclosure requirments for employers with postretirement benefit plans that have been or will be affected by the passage of the Medicare Prescription Drug improvement and Modernization Act of 2003 (“the Act”). The Act introduces two new features to Medicare that an employer needs to consider in measuring its obligation and net periodic postretirement benefit costs. The effective date for the new requirements is the first interim or annual period beginning after June 15, 2004. Additional information regarding the impact of the Act is presented in Note 9.
Page 36 of 40
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
| Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
The Corporation’s profitability may also be adversely affected during any period of unexpected or rapid increase in interest rates. The Corporation’s market risk for a change in interest rates relates primarily to its debt obligations. The Corporation shifted its interest rate exposure from 46% variable at December 31, 2003 to 65% variable at September 30, 2004. The increase in variable interest rate exposure is due to the Corporation funding its 2004 acquisition activity through its revolving credit facility. A change in interest rates of 1% would have an impact on consolidated interest expense of approximately $2.3 million.
The Corporation is exposed to fluctuations in foreign currency exchange rates, particularly to the Canadian dollar, British pound, and the Euro. Any significant change in the value of the currencies of those countries in which the Corporation does business against the U.S. dollar could have an adverse effect on the Corporation’s business, financial condition, and results of operations. Management seeks to minimize the risk from these foreign currency fluctuations principally through invoicing the Corporation’s customers in the same currency as the source of the products. However, the Corporation’s efforts to minimize these risks may not be successful.
The acquisitions of Dy 4 and Primagraphics have increased the Corporation’s exposure to foreign currency exchange rate fluctuations related to the Canadian dollar and the British pound. The Corporation currently has a hedging program in place to mitigate the Canadian dollar foreign currency risk.
Further information regarding market risk and market risk management policies is more fully described in item “7A. Quantitative and Qualitative Disclosures about Market Risk” of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2003.
| Item 4. | CONTROLS AND PROCEDURES |
As of September 30, 2004, the Corporation’s management, including the Corporation’s Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the Corporation’s 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, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures are effective, in all material respects, to ensure that information required to be disclosed in the reports the Corporation files and submits under the Exchange Act is recorded, processed, summarized, and reported as and when required.
There have not been any changes in the Corporation’s 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 fiscal quarter ended September 30, 2004 that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.
FORWARD-LOOKING INFORMATION
The statements in this Quarterly Report on Form 10-Q and in oral statements that may be made by representatives of the Corporation relating to plans, strategies, economic performance and trends and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27(a) of the Securities Act of 1933 and Section 21(e) of the Securities Exchange Act of 1934. Forward looking statements are inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors. Examples
Page 37 of 40
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
of forward-looking information include, but are not limited to, (a) projections of or statements regarding return on investment, future earnings, interest income, other income, earnings or loss per share, investment mix and quality, growth prospects, capital structure, and other financial terms, (b) statements of plans and objectives of management, (c) statements of future economic performance, and (d) statements of assumptions, such as economic conditions underlying other statements. Such forward- looking information can be identified by the use of forward looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “anticipates,” or the negative of any of the foregoing or other variations thereon or comparable terminology, or by discussion of strategy.
No assurance can be given that the future results described by the forward-looking information will be achieved. Such statements are subject to risks, uncertainties, and other factors, which are outside our control that could cause actual results to differ materially from future results expressed or implied by such forward-looking information. Readers are cautioned not to put undue reliance on such forward-looking information. Such statements include, without limitation, those contained in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Notes to the Consolidated Financial Statements including, without limitation, the Environmental Matters Note. Important factors that could cause the actual results to differ materially from those in these forward-looking statements include, among other items, (i) a reduction in anticipated orders, (ii) change in governmental spending resulting from U.S. and international military budget constraints and determinations, U.S. congressional and international legislative body discretion; U.S. and international government administration policies and priorities; changing world military threats, strategies and missions; competition from foreign manufacturers of platforms and equipment; NATO country determinations regarding participation in common programs; changes in U.S. and international government procurement timing, strategies and practices, the general state of world military readiness and deployment; and the ability to obtain export licenses (iii) an economic downturn, (iv) unanticipated environmental remediation expenses or claims, (v) changes in the need for additional machinery and equipment and/or in the cost for the expansion of the Corporation’s operations, (vi) changes in the competitive marketplace and/or customer requirements, (vii) an inability to perform customer contracts at anticipated cost levels, (viii) changes in the Corporation’s future tax rates resulting from a variety of factors, including statutory changes in Federal and state tax rates, non deductibility of goodwill amortization and IPR&D acquired in a stock purchase business combination and the non deductibility of our ESPP compensation expense and (ix) other factors that generally affect the business of companies operating in the Corporation’s Segments.
The Corporation has no obligation to update any forward-looking statements
Page 38 of 40
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
PART II - OTHER INFORMATION
In the ordinary course of business, the Corporation and its subsidiaries are subject to various pending claims, lawsuits and contingent liabilities. The Corporation does not believe that disposition of any of these matters will have a material adverse effect on the Corporation’s consolidated financial position or results of operations.
Curtiss-Wright Corporation or its subsidiaries have been named in approximately 100 lawsuits that allege injury from exposure to asbestos. To date, Curtiss-Wright has secured its dismissal without prejudice in approximately 15 lawsuits, and is currently in discussions for similar dismissal in several others, and has not been found liable or paid any material sum of money in settlement in any case. Curtiss-Wright believes that the minimal use of asbestos in its operations and the relatively non-friable condition of asbestos in its products makes it unlikely that it will face material liability in any asbestos litigation, whether individually or in the aggregate. Curtiss-Wright does maintain insurance coverage for these lawsuits and it believes adequate coverage exists to cover any unanticipated asbestos liability.
Item 6. EXHIBITS and REPORTS on FORM 8-K
Exhibit 4 | Amended and Restated Credit Agreement dated July 23, 2004 between Registrant, the Issuing Banks referred to therein, the Lenders parties thereto from time to time, and Bank of America, N.A., as Administrative Agent, incorporated by reference to Exhibit 4 to Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2004. |
Exhibit 10 | Amendment No. 2, dated September 30, 2004, to the Amended and Restated Curtiss-Wright Corporation Retirement Plan, filed herewith. |
Exhibit 31.1 | Certification of Martin R. Benante, Chairman and CEO, Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith |
Exhibit 31.2 | Certification of Glenn E. Tynan, Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith |
Exhibit 32 | Certification of Martin R. Benante, Chairman and CEO, and Glenn E. Tynan, Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith |
Page 39 of 40
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
| | CURTISS-WRIGHT CORPORATION |
| | By: | (Registrant)
/s/ Glenn E. Tynan
|
| | | Glenn E. Tynan
Vice President Finance / C.F.O.
Dated: November 9, 2004 |
Page 40 of 40
