[LOGO]
ANNUAL =
REPORT
1999
=
----
=
1995
=
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=
1996
=
- ------------
1997
=
- ---------------
1998
=
- --------------------
1999
=
- -------------------------
FIVE YEARS OF =
GROWTH
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CURTISS-WRIGHT CORPORATION
- --------------------------
is a diversified global provider of highly engineered products and =
services to
the Motion Control, Flow Control and Metal Treatment industries. The =
firm
employs approximately 2,270 people. More information on Curtiss-Wright =
can be
found on the Internet at www.curtisswright.com
CONTENTS
1 | Financial Highlights
2 | Letter to Stockholders
5 | Note from the Chairman
6 | At a Glance
8 | Motion Control
10 | Metal Treatment
12 | Flow Control
14 | Quarterly Results of Operations
14 | Consolidated Selected Financial Data
14 | Forward-Looking Statements
15 | Management's Discussion and Analysis of
Financial Condition and Results of Operations
18 | Report of the Corporation
18 | Report of Independent Accountants
19 | Consolidated Financial Statements
23 | Notes to Consolidated Financial Statements
36 | Corporate Directory and Information
[GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
=
- -------------------------------------------------=20
(Dollars in thousands, except per share data; unaudited) 1999 =
1998 1997
- ------------------------------------------------------------------------=
- ------------------------------------
=
=20
Performance:
Sales $ 293,263 =
$ 249,413 $ 219,395=20
Earnings before interest, taxes,
depreciation and amortization $ 77,462 =
$ 57,726 $ 51,383
Net earnings $ 39,045 =
$ 29,053 $ 27,885
Normalized net earnings $ =
34,042(1) $ 27,817(1) $ 27,885
Diluted earnings per common share $ 3.82 =
$ 2.82 $ 2.71
Normalized diluted earnings per share $ 3.33 =
$ 2.70 $ 2.71
Return on sales 13.3% =
11.6% 12.7%
Return on assets 10.6% =
9.1% 10.1%
Return on average stockholders' equity 16.0% =
13.4% 14.4%
New orders $ 295,709 =
$ 232,217 $ 259,260
Backlog at year-end $ 212,820 =
$ 198,297 $ 149,201
- ------------------------------------------------------------------------=
- ------------------------------------
Year-End Financial Position: =20
Working capital $ 124,438 =
$ 130,763 $ 132,751
Current ratio 3.2 to 1 =
2.9 to 1 4.4 to 1
Total assets $ 387,126 =
$ 352,740 $ 284,708
Stockholders' equity $ 258,355 =
$ 229,593 $ 204,853
Stockholders' equity per common share $ 25.73 =
$ 22.53 $ 20.13
Other Year-End Data: =20
Depreciation and amortization $ 12,864 =
$ 9,661 $ 9,097
Capital expenditures $ 19,883 =
$ 10,642 $ 11,231
Shares of common stock outstanding 10,040,250 =
10,190,790 10,175,140
Number of stockholders 3,854 =
3,926 4,142
Number of employees 2,267 =
2,052 1,884
- ------------------------------------------------------------------------=
- ------------------------------------
Dividends per Common Share $ .52 =
$ .52 $ .505
- ------------------------------------------------------------------------=
- ------------------------------------
(1) Earnings are adjusted to exclude the effects of the environmental
insurance settlements and consolidation costs associated with its =
Motion
Control business segment.
FINANCIAL HIGHLIGHTS
1995-1999
[GRAPHIC OMITTED]
[The following table was depicted as a line graph in the printed =
material.]
Sales/Backlog
(in thousands)
95 96 97 98 99
Sales $393,783
Backlog $313,879
[GRAPHIC OMITTED]
[The following table was depicted as a line graph in the printed =
material.]
Operating Income/Net Earnings
(in thousands)
95 96 97 98 99
Operating Income $51,137
Net Earnings $35,046
[GRAPHIC OMITTED]
[The following table was depicted as a line graph in the printed =
material.]
Return on Equity
(percentage)
95 96 97 98 99
16.8%
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 1
- -------------------
TO OUR SHAREHOLDERS
- -------------------
In 1999, Curtiss-Wright enjoyed its most profitable year since 1981. =
Net
earnings increased 34% from 1998 (22% in normalized net earnings) on a =
sales
increase of 18%.
Since 1995, Curtiss-Wright has achieved a compound annual growth rate =
of 17% in
sales and 25% in normalized operating income. The fact that our profits =
grew
even faster than our sales is particularly significant in our view. =
This
performance helped place us on Forbes magazine's list of America's 200 =
Best
Small Companies for 1999. Of course, the Forbes ranking was based on =
more than
growth and profitability over the past five years. There were also =
subjective
considerations, such as "forthrightness and clarity in the presentation =
of
investor information." We are honored by Forbes' evaluation and will =
strive to
continue to increase sales while producing superior profits and to =
maintain that
level of quality in our communications to you.
Balanced Growth
The accompanying pie chart reflects our current sales mix, fully =
recognizing
acquisitions made during 1999. It illustrates the balance among our =
three
business segments: Motion Control, Metal Treatment and Flow Control. =
Five years
ago, our aerospace businesses were vulnerable to the cyclicality of new
commercial aircraft production rates, and our valve products were =
serving
markets with low growth prospects. We were not pleased with our =
vulnerability in
these areas, and initiated diversification activities.
Today, Curtiss-Wright is diversified in a way that benefits our =
financial
performance and improves our growth prospects. With three business =
segments that
all have profitable growth opportunities, we are now better positioned =
to create
more value for our shareholders. Our strong balance sheet allows us to =
invest in
internal growth initiatives, make selective acquisitions and maintain a =
steady
course through weak economic cycles.
Flow Control
In 1999, we positioned our Flow Control business for future growth by =
acquiring
the Farris Engineering pressure-relief valve product line. Farris is =
one of the
world's leading manufacturers of spring-loaded and pilot-operated
pressure-relief valves for use in processing facilities including =
refineries,
petrochemical/chemical
2 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
Today, Curtiss-Wright is diversified in a way that benefits our =
financial
performance and improves our growth prospects.
plants and pharmaceutical manufacturing operations. One purpose of =
acquiring
such a well-established provider to the processing industry was to =
introduce our
existing valve product lines to that market. The strengths of Farris in =
the
industrial markets complement Curtiss-Wright Flow Control's established =
position
in the nuclear area, and the combined business can better serve both =
markets on
a global basis with a broader product line, an improved distribution =
system and
superior engineering capabilities.
Aircraft Production Rates
With the growth of our aerospace overhaul and repair business and the
acquisition of Curtiss-Wright Drive Technologies, aircraft production =
rates are
no longer the determining factor for our financial performance. Well =
over
one-third of our aerospace sales are now to the aftermarket. While =
Boeing, our
largest customer, is forecasting a significant reduction in aircraft =
shipments
in 2000, we expect our Boeing-related sales to be down only about 10%, =
or $5
million. One factor directly insulating us from the general turndown in =
Boeing's
production rates is a new contract to be performed over the next =
several years
to supply torque limiter kits for trailing-edge wing-flap actuation =
systems on
Boeing 757 aircraft. More importantly, the decline in Boeing volume =
represents
less than 2% of Curtiss-Wright's total sales and will be more than =
offset by
additional sales in other areas of the Company.
This reduction of dependency on the commercial aircraft build rates is =
exactly
what we were determined to accomplish through the diversifica tion =
activities
initiated five years ago. It has been accomplished through both =
acquisitions and
internal development programs. Our anticipated growth and profitability =
during
the upcoming cyclical downturn of this portion of the aerospace sector =
will
validate our strategy.
Cost Reductions
As a result of actions taken during 1999, we have significantly reduced =
our cost
of manufacturing actuation and control products. Anticipating the =
downturn in
Boeing production, in late 1998 we decided to consolidate our =
Fairfield, New
Sales by Business Segment
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- --------
[The following table was depicted as a pie chart in the printed =
material.]
[GRAPHIC OMITTED]
Flow Control
Metal Treatment
Motion Control
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- --------
Sales by Industry
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[The following table was depicted as a pie chart in the printed =
material.]
[GRAPHIC OMITTED]
Marine
Military Aerospace
Agriculture
Automotive
Commercial Aerospace
Construction & Mining
Oil & Petroleum
Other
Power Generation
Transportation
Non-Aviation Military
Rescue
- ------------------------------------------------------------------------=
- --------
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 3
[PHOTO OMITTED]
David Lasky
Chairman and Chief Executive Officer
[PHOTO OMITTED]
Martin R. Benante
President and Chief Operating Officer
...aircraft production rates are no longer the determining factor for =
our
financial performance.
Jersey, manufacturing operations into our Shelby, North Carolina, =
facility. In
1999, $3.8 million in pretax expenses associated with this =
consolidation were
incurred. The consolidation is now complete; the Fairfield facility is =
up for
sale, and the profitability of our aerospace actuation product line =
will
improve.
Metal Treatment
New facilities are an important part of our plan to expand shot-peening
operations globally to tap markets we find attractive. We intend to =
continue to
grow our heat-treating services through acquisition. Through these =
efforts we
will be expanding the 37-facility metal treatment network we now have =
around the
world.
The impressive trend in sales and profit growth our Metal Treatment =
business
segment had been establishing over the past several years was =
interrupted in
1999 by a slowdown in several markets, most notably aerospace, oil =
tool,
agriculture and construction machinery. Profitability also was limited
temporarily by start-up costs associated with several new shot-peening
facilities.
Outlook
In the past year, we have made great progress in establishing =
Curtiss-Wright as
a growth company. Having achieved a significant measure of global =
diversity in
our revenue and customer base, and a balance among our business =
segments, we
face the future with confidence. We recognize and appreciate the =
dedication and
hard work of all the Curtiss-Wright employees who have worked =
tirelessly to set
new standards of excellence and increase the value of their Company.
Sincerely,
/s/ David Lasky /s/ Martin R. Benante
David Lasky Martin R. Benante
Chairman and Chief Executive Officer President and Chief =
Operating Officer
February 3, 2000
4 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
Note from the Chairman
It is now 38 years since I joined Curtiss-Wright. I have seen the =
Company
transformed from a shrinking entity, overly dependent on one business, =
to a
vibrant, growing, multi-sector enterprise with an enviable record of
profitability. That transformation has been the result of the efforts =
of a
unique group of very talented people who have given of themselves to =
the utmost.
I will retire as Chairman and Chief Executive Officer of Curtiss-Wright
following the Annual Meeting of Stockholders. I do so with the =
knowledge that
the Company will be in the very capable hands of Marty Benante, your =
President
and Chief Operating Officer, and the other key executives of the =
Company. I am
confident that they will lead Curtiss-Wright to new heights of =
performance.
Marty was appointed to his current position in April of last year. He =
is a
career employee of Curtiss-Wright and has held positions of increasing
responsibility since joining the Company in 1978.
As for myself, I expect to continue to serve on the Company's Board of =
Directors
and, along with the other members, to support the management team at
Curtiss-Wright.
I deeply appreciate the opportunity I have been given to serve the =
Company.
Thank you for your support.
/s/ =
David Lasky
David =
Lasky
Curtiss-Wright Corporation and =
Subsidiaries | 5
Curtiss-Wright's three business segments serve many markets.
AT A GLANCE
[PHOTO OMITTED]
Motion Control
Keeping the world in motion.
[GRAPHIC OMITTED]
[PHOTO OMITTED]
Flow Control
The leader in valve =
technology.
Curtiss-Wright is diversified across three business segments with a =
fairly equal
sales distribution. While about half of our sales are related to the =
aerospace
industry, the balance of our activity is spread over a number of =
markets. Even
within aerospace, however, our operations have expanded. In addition to =
being a
supplier of products and services for OEM applications tied to the =
production of
new aircraft, we now provide overhaul and repair services to a global =
customer
base.
Sales generated from services are about equal to those generated from
manufactured products. Our activities in the aftermarket have grown, =
and we have
expanded globally as measured by both our customer base and our =
facility
locations.
Curtiss-Wright is now diversified in many aspects and is no longer =
dependent on
any one customer or exposed to the cyclicality of any single market =
segment.
6 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
[GRAPHIC OMITTED]
AT A GLANCE
Metal Treatment
We offer a wide variety of quality services.
=
- ------------------------------------------------------------------------=
- -----------------
PRODUCTS & SERVICES =
MAJOR MARKETS =20
- ------------------------------------------------------------------------=
- ----------------------------------------------
=
METAL TREATMENT Among the approximately 50 services we =
provide are: Aerospace Manufacturing =20
=
Automotive Manufacturing =20
Aluminum/Nonferrous Treating =
Metalworking Industries =20
Annealing/Stress Relieving =
Oil and Gas Drilling/Exploration=20
Austempering/Brazing =
Power Generation =20
Blast Cleaning =
Jet Engine Manufacturing =20
Carbonitriding/Nitriding =
Agricultural Equipment =20
Carbon Restoration/Carburizing =
Transportation =20
Cryogenic Treatments =
Construction and Mining =20
Deburring =
=20
Edge, Vibratory and Superfinishing
Engineering and Field Services
Fabrication of Machinery, Tooling,
Parts and Supplies
Fatigue and Physical Testing
Flame, Induction and
Precipitation Hardening
Marquenching/Normalizing
Nondestructive Testing
Painting/Plating
Shot-Peening
Shot-Peen Forming
Straightening
Texturizing
Vacuum Treatments
Valve Reed Manufacturing
- ------------------------------------------------------------------------=
- ----------------------------------------------
MOTION CONTROL Control and Actuation =
Aerospace Manufacturing =20
Components and Systems =
Commercial Airlines =20
Aerospace Overhaul Services =
Airfreight Haulers =20
Hydropneumatic Suspension Systems =
Military Air Forces =20
Electromechanical Drives and Systems =
Military Vehicle Manufacturing =20
Electrohydraulic Drives and Systems =
Railway Car Manufacturing =20
Rescue Tools =
Diesel Engine Manufacturing =20
=
Rescue Tool Industry =20
- ------------------------------------------------------------------------=
- ----------------------------------------------
FLOW CONTROL Military and Commercial =
U.S. Navy Propulsion Systems =20
Nuclear/Nonnuclear Valves (globe, =
U.S. Navy Shipbuilding =20
gate, control, safety, solenoid and =
relief) Nuclear Power Plants =20
Fluid Power Products and Systems =
Petrochemical/Chemical Industry
Valve Overhaul and Repair =
Entertainment Industry =20
Engineering, Inspection and Testing =
Services Petroleum Production/Refining =20
Air-Driven Hydraulic Pumps and =
Pharmaceutical Industry =20
Gas Boosters =
Industrial Gases Industry =20
=
Automotive/Truck Industry =20
=
- ------------------------------------------------------------------------=
- -----------------
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 7
CAPABILITIES
[GRAPHIC =
OMITTED]
New =
Capabilities
Providing stabilizing =
and aiming
systems for military =
vehicles is a
new market we now =
service.
[GRAPHIC OMITTED]
[GRAPHIC =
OMITTED]
The =
Aftermarket
We have built a business =
providing
aerospace maintenance, =
repair and
overhaul =
services.
MOTION CONTROL
Curtiss-Wright's formidable capabilities in motion control have evolved =
from its
base business as a supplier of actuation and control components for the =
movement
of aircraft surfaces, such as wing flaps and cargo and weapons bay =
doors. Our
largest commercial programs include numerous Boeing commercial aircraft =
such as
the next-generation 737, 747, 767 and 777 platforms. Two of our largest =
military
programs are the Lockheed Martin F-16 Fighting Falcon as well as the =
F-22
Raptor, both of which contain Curtiss-Wright proprietary designs for =
the
secondary flight control and utility actuation systems.
Maintenance, repair and overhaul (MRO) of aerospace components has =
become a more
important part of this business segment. We repair and overhaul not =
only parts
we manufacture but also parts produced by others, and we have grown =
these MRO
operations into a $50 million business. MRO services are provided at =
four
locations, serving more than 550 airlines and airfreight haulers. =
Having a vital
MRO operation significantly broadens our scope beyond the initial =
production of
an aircraft to encompass the entire life cycle. It also takes advantage =
of the
aging of aircraft fleets and the growing trend of outsourcing MRO =
services.
Our recent acquisition of Curtiss-Wright Drive Technologies (CWDT), =
based in
Switzerland, expanded our motion control markets beyond aerospace. We =
now have
sophisticated
[GRAPHIC OMITTED]
8 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
[GRAPHIC OMITTED]
New Programs
We will be providing three actuation systems for the F-22.
Our Motion Control business has expanded from being only a supplier of =
aerospace
OEM components.
applications for armored-vehicle turret aiming stabilization and =
suspension
systems. We also provide technology and products for railway tilting =
systems as
well as fuel-injection controls for diesel engine applications. CWDT is =
a Swiss
company with customers throughout Europe.
Growth Opportunities
In addition to expanding MRO opportunities, we participate in two =
military
programs that are in their initial production stages: the V-22 Osprey =
vertical
takeoff and landing craft, and the F-22 Raptor advanced tactical =
fighter. If
these programs continue forward in the numbers currently under =
consideration,
they will be significant to Curtiss-Wright in the future.
We continue to work on development programs for new aircraft. In 1999, =
we signed
a teaming agreement with Moog Inc. to pursue actuation system =
opportunities on
the Joint Strike Fighter (JSF) program. This strategic alliance allows =
both
companies to offer their core competencies and capabilities for the =
advanced
technology JSF program at the best overall value and lowest risk. The =
JSF is the
next-generation, multirole jet fighter for the United States and Great =
Britain.
It will be based on a common aircraft platform that can be used by more =
than one
branch of the armed services. Boeing and Lockheed Martin are currently =
competing
to be the prime contractor for the 3,000 aircraft projected to be =
produced.
We are currently introducing CWDT's technologies and product lines to =
the U.S.
land-based military and aerospace markets, where they have had only =
limited
exposure so far. Curtiss-Wright's long-standing reputation as a =
military
supplier will facilitate this process.
[GRAPHIC OMITTED]
THE LAST FIVE YEARS
(1995-1999)
The sales for the period benefited from increased production of =
commercial
aircraft, the growth of our maintenance, repair and overhaul =
operations, and our
movement into new markets.
[The following table was depicted as a line chart in the printed =
material.]
95 $ 50,677
96 $ 64,623
97 $ 97,369
98 $105,400
99 ................................ $124,155
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 9
EXPANDING
[GRAPHIC OMITTED]
Wing Skins
Shot-peen forming is =
used to put
the curvature in wing =
skins.
[GRAPHIC OMITTED]
METAL TREATMENT
Curtiss-Wright is considered the technological leader in shot-peening =
and
shot-peen forming metal treatment services. Our global network of 37 =
regional
facilities, covering most of North America and many of the major =
markets in
Europe, is unmatched by any other supplier of these services. Short =
turnaround
time is an important customer requirement, and our well-placed regional
facilities enable us to meet that need.
While half of our metal treatment business relates to the aerospace =
industry
(both original production and aftermarket), the balance is diversified =
across a
number of markets, including automotive, in which we have
[GRAPHIC OMITTED]
10 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
[GRAPHIC OMITTED]
Applications
Shot-peening is diverse in its product applications.
[GRAPHIC OMITTED]
Diverse Markets
Agricultural equipment is only one of the many markets we serve.
Curtiss-Wright is the largest independent provider of shot-peening =
services.
an active base of over 5,000 customers. While the level of metal =
treatment
services we provide directly to Boeing is not significant, many of =
Boeing's
suppliers are our customers, and they have been feeling the effects of =
curtailed
production schedules. To some extent, these will be offset by an =
increase in
production scheduled for the Airbus programs in 2000. We provide metal =
treatment
services for engine, landing gear, actuation systems, wheel and brake =
components
and wing skins for commercial, military and business aircraft. Overall, =
the
outlook for the aerospace segment of our Metal Treatment business in =
2000 is
good.
Growth Opportunities
We have identified attractive markets into which we should expand our =
network of
shot-peening facilities, and we plan to step up our rate of =
establishing new
locations in the years ahead. In addition, 6 of our 37 facilities also =
offer
heat-treating services, and we want to expand our heat-treating =
operation into a
broad network. We will continue our plan to accomplish this through a =
program of
selective acquisitions.
Internally, we are advancing our technological capabilities. We have =
developed a
robotic shot-peening machine that we are introducing to several of our
facilities. The machine offers significantly shorter setup times and =
will
improve customer turnaround times. In conjunction with Lawrence =
Livermore
National Laboratory, we are developing applications for the new =
technology of
laser peening.
THE LAST FIVE YEARS
(1995-1999)
We have realized the benefits of diversification in our Metal Treatment =
business
segment. Sales growth leveled off in 1999 as slowdowns in some of our =
served
markets were offset by growth in other areas.
[The following table was depicted as a line chart in the printed =
material.]
95 $ 74,458
96 $ 82,615
97 $ 95,362
98 $105,999
99 $104,143
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 11
OPPORTUNITIES
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
Nuclear Marine Market
We will continue our commitment to support the U.S. Navy's nuclear =
fleet.
[GRAPHIC OMITTED]
Systems Management
An industry focus today is on systems that manage the entire flow =
control
process.
FLOW CONTROL
Our flow control business is well-known for its highly engineered, =
leakless
valves for nuclear power generation applications. We improved our =
distribution
capabilities to the nuclear industry and the breadth of our product =
line with
the acquisition of Enertech in 1998. We now not only manufacture our =
own
products but also distribute complementary products of others to the =
commercial
nuclear industry. In 1999, we acquired Farris Engineering, a supplier =
of
pressure-relief valves to the process industry. We significantly =
expanded our
market reach to include the chemical, oil and gas, and pharmaceutical
industries. This expanded our product line and opened a new =
distribution channel
to these additional
[GRAPHIC OMITTED]
12 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
[GRAPHIC OMITTED]
Capabilities
Our welding capability is one of the key components of our leakless =
valve
technology.
Our actions have significantly expanded our product lines and served =
markets.
markets for our traditional valves. Our leakless valve technology has
performance advantages in nonnuclear applications as well, and the =
Farris
addition improves our access to those opportunities.
As we have expanded our Flow Control business, we have maintained our =
strong
support relationship with the U.S. Navy. During the recent decline in =
the
construction rate of nuclear submarines, we have kept in place the =
manufacturing
and testing capabilities required to support Navy programs while other =
suppliers
have chosen to curtail their participation or exit this area entirely. =
We have
taken advantage of this situation to expand our sales to this market. =
We have
made a long-term commitment to what has been and will continue to be an
important market for us.
Growth Opportunities
The market for our type of high-end technology in the flow control =
arena is
growing, and we are developing products that apply our valve technology =
to areas
beyond our traditional applications. We also see more demand for =
management
systems for flow control processes, which make use of smart-valve =
technology
that not only regulates flow but also gathers information, transmits it =
to a
data collection center for evaluation, and receives and executes =
instructions
for adjusting control settings. Our valve designs are uniquely suited =
to serve
this demand.
Opportunities for growth exist within our naval markets. Growing =
concern over
maintaining minimum force requirements is driving consideration of =
accelerating
construction of new nuclear submarines to replace retiring vessels. In =
addition,
we now are providing an unprecedented degree of technical support to =
the U.S.
Navy. We also are developing valves with materials of construction that =
offer
superior resistance to corrosion from sea water, and are developing =
shipboard
flow control systems that reduce manning requirements.
THE LAST FIVE YEARS
(1995-1999)
Our acquisition program generated sales growth in our Flow Control =
segment as we
broadened both our product line and the markets we participate in.
[The following table was depicted as a line chart in the printed =
material.]
95 $23,792
96 $23,298
97 $26,664
98 $38,014
99 .................... $64,965
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 13
QUARTERLY RESULTS OF OPERATIONS (Unaudited)
=
- -------------------------------------------------------
(In thousands, except per share amounts) First Second =
Third Fourth
- ------------------------------------------------------------------------=
- --------------------------
=
=20
1999 Quarters:
Sales $ 70,350 $ 70,195 =
$ 69,009 $ 83,709
Gross profit 25,018 24,680 =
23,881 28,832
Net earnings 7,982 8,279 =
13,985 8,799
Earnings per share:
Basic earnings per common share $ .79 $ .82 =
$ 1.38 $ .87
Diluted earnings per common share $ .78 $ .79 =
$ 1.38 $ .87
Dividends per common share $ .13 $ .13 =
$ .13 $ .13
- ------------------------------------------------------------------------=
- --------------------------
1998 Quarters:
Sales $ 60,846 $ 59,405 =
$ 62,603 $ 66,559
Gross profit 18,122 21,749 =
20,851 21,292
Net earnings 6,605 7,701 =
6,758 7,989
Earnings per share:
Basic earnings per common share $ .65 $ .76 =
$ .66 $ .78
Diluted earnings per common share $ .64 $ .75 =
$ .66 $ .77
Dividends per common share $ .13 $ .13 =
$ .13 $ .13
- ------------------------------------------------------------------------=
- --------------------------
Net earnings for the third quarter of 1999 includes a net insurance =
settlement
of $7,354,000 or $0.72 per diluted share.
CONSOLIDATED SELECTED FINANCIAL DATA (Unaudited)
=
- ------------------------------------------------------------
(In thousands, except per share data) 1999 1998 =
1997 1996 1995
- ------------------------------------------------------------------------=
- -------------------------------
=
=20
Sales $293,263 $249,413 =
$219,395 $170,536 $154,446
Net earnings 39,045 29,053 =
27,885 16,109 18,169
Total assets 387,126 352,740 =
284,708 267,164 246,201
Long-term debt 34,171 20,162 =
10,347 10,347 10,347
Basic earnings per common share: $ 3.86 $ 2.85 $ =
2.74 $ 1.59 $ 1.79
Diluted earnings per common share $ 3.82 $ 2.82 $ =
2.71 $ 1.58 $ 1.79
Cash dividends $ .52 $ .52 $ =
.505 $ .50 $ .50
- ------------------------------------------------------------------------=
- -------------------------------
See notes to consolidated financial statements for additional financial
information.
FORWARD-LOOKING STATEMENTS
This Annual Report contains not only historical information but also
forward-looking statements regarding expectations for future company
performance. Forward-looking statements involve risk and uncertainty. =
Please
refer to the Company's 1999 Annual Report on Form 10-K for a discussion =
relating
to forward-looking statements contained in this Annual Report and =
factors that
could cause future results to differ from current expectations.
14 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Curtiss-Wright Corporation continued to build on improving sales and =
operating
performance in 1999. Sales for the year totaled $293.3 million, =
reflecting an
18% increase over 1998 sales of $249.4 million and 34% above 1997 sales =
of
$219.4 million. Operating income, in the aggregate, increased 41% from =
$36.3
million in 1998 to $51.2 million in 1999. Net earnings for the =
Corporation
increased to $39.0 million, or $3.82 per diluted share for 1999, 34% =
above 1998
net earnings of $29.1 million, or $2.82 per diluted share and 40% above =
1997 net
earnings. New orders received in 1999 totaled $295.7 million, =
increasing 27% and
14% compared with orders received in 1998 and 1997, respectively. =
Backlog at
December 31, 1999 stands at $212.8 million compared with $198.3 at =
December 31,
1998 and $149.2 million at December 31, 1997.
Included in the 1999 performance was the benefit of a major settlement =
of
litigation against an insurance carrier for the recovery of =
environmental
remediation costs. The settlement, net of taxes, associated litigation =
expenses
and amounts recognized for additional related environmental costs, =
added $7.4
million or $.72 per diluted share to net earnings for the year. The =
Corporation
recognized other insurance claim proceeds in late 1998, which added =
$1.7 million
or $.17 per diluted share to net earnings of that year. Also =
significantly
impacting 1999 earnings were costs associated with the consolidation of
operations within the Motion Control business segment, which reduced =
net
earnings by $2.3 million or $.23 per diluted share. Absent the =
settlement and
consolidation costs, net earnings for 1999 were $34.0 million or $3.33 =
per
diluted share, 17% above those of 1998.
Increases in operating income and net earnings, sales, new orders and =
backlog
for 1999 largely reflect the recent acquisitions made by the =
Corporation. Since
April 1998, the Corporation has acquired six new businesses; Alpha Heat
Treaters, Enertech, Drive Technology, Metallurgical Processing, Farris
Engineering and Sprague. In the aggregate, these businesses had sales =
in 1999 of
$59.9 million. Acquisitions are discussed further in Note 2 to the =
Consolidated
Financial Statements, and in the Segment Performance section below.
Sales increases for 1998, as compared with 1997, occurred in all of the
Corporation's business operating segments. Sales from acquisitions =
(Enertech,
acquired on July 31, 1998 and Alpha Heat Treaters acquired on April 30, =
1998)
augmented this increase. Net earnings for 1998, as compared with 1997, =
were
impaired by the high level of additional charges for anticipated losses =
on
military development programs, inventory adjustments and costs related =
to the
consolidation of manufacturing operations within the Motion Control =
business
segment, as detailed in the Segment Performance section below. In the =
aggregate,
1998 net earnings were reduced by $3.9 million or $.38 per share as a =
result of
these charges. Offsetting those charges was the aforementioned =
recognition in
1998 of insurance claims proceeds. The 1997 earnings results included a =
one-time
gain from the sale of excess real estate which, after the benefit of a
capital-loss carryforward, added $2.0 million or $.20 per share. Net =
earnings
for 1997 had also been impacted by losses caused by significant =
overruns on
military actuation development contracts.
SEGMENT PERFORMANCE
Motion Control
The Corporation's Motion Control segment posted sales of $124.2 million =
for
1999, 18% above sales reported for the prior year. Higher sales largely =
reflect
the acquisition of Drive Technology on December 31, 1998. Sales of =
commercial
aircraft actuation products also improved for 1999 over those of the =
prior year,
reflecting Boeing's increased production levels for commercial =
aircraft. Net
earnings, which totaled $5.2 million in 1999, also benefited from cost =
and
performance improvements for these programs. Sales for aircraft =
component
overhaul and repair services improved slightly for 1999 in comparison =
with the
prior year, but sales of military aircraft actuation products declined.
Net earnings for the Motion Control segment were impacted in 1999 by =
substantial
one-time costs associated with the consolidation of its manufacturing =
operations
into its expanded Shelby, NC facility and with the move of certain =
overhaul and
repair services to a new location in Gastonia, NC. Expenses related to =
the
consolidation activities, including costs related to the previously =
announced
shutdown of our Fairfield, NJ facility, totaled approximately $3.8 =
million in
1999, as compared to $.9 million in 1998. Discussions are currently =
underway for
the sale of this property.
Public information indicates that Boeing's scheduled delivery rate of =
commercial
aircraft will be down significantly in the year 2000. Estimates are for
deliveries of 480 aircraft, which would represent a decline in excess =
of 22%
from the 1999 level of 620 planes.
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 15
While Boeing is an important and valued customer, the acquisitions and =
internal
development activities of the Corporation over the past several years =
in other
business areas have reduced the potential impact of the production =
cycles of the
commercial aircraft market on overall sales. Additionally, in 1999 the
Corporation was awarded a new Boeing contract for the retrofit of =
Boeing 757
aircraft torque limiters. The potential for generating additional =
revenue also
exists to the extent the Corporation provides the associated =
installation
service through its maintenance, repair and overhaul operations. Taking =
only
these additional retrofit production sales into consideration, it is =
estimated
that the reduction in sales to Boeing of original equipment will =
represent less
than 2% of the Corporation's total sales in 2000.
Motion Control posted a sales increase of 8% for 1998 when compared =
with 1997.
This primarily reflected the increasing level of original equipment =
manufactured
(OEM) products for Boeing. However, during 1998 the segment experienced =
a number
of cost and efficiency issues. In addition, inventory write-offs,
book-to-physical and valuation adjustments severely impacted profits =
for this
segment. In the aggregate, accounting adjustments, cost overruns on =
military
development contracts and costs related to the consolidation of =
manufacturing
operations resulted in a charge to net earnings of $3.9 million or $.38 =
per
share in 1998. Sales of military actuation products for 1998 were =
slightly below
those of 1997 as sales resulting from the completion of "safety of =
flight"
testing on F-22 components early in 1998 were offset by the end of an =
F-16 shaft
retrofit contract and lower foreign military sales. Sales of component =
overhaul
services to foreign regions, while slightly below expectations, were =
steady in
1998 and above 1997 levels. During 1998, the Corporation's sales of =
component
overhaul and repair services in the aggregate improved 7% compared with =
the
prior year.
Metal Treatment
The Corporation's Metal Treatment segment reported sales of $104.1 =
million in
1999, slightly lower than the record sales for metal treatment services =
in 1998
of $106.0 million. This segment has felt several of its primary markets =
soften
in 1999. Services for industrial, agricultural and certain aerospace =
customers
have declined in comparison with the prior year. Sales of heat treating =
services
benefited from the acquisition of Metallurgical Processing in June 1999 =
and
improved slightly despite a significant decline in oil tool market =
activity.
Net earnings in 1999 of $14.4 million for Metal Treatment were =
significantly
below those of 1998, reflecting lower sales and margins and increased =
operating
expenses. Operating expenses for 1999 included costs for facility =
expansions,
taking place in both North America and Europe. Three of this segment's
operations relocated into larger facilities and incurred higher =
operating costs
and temporary start-up costs as a result.
The Metal Treatment business had shown an 11% sales improvement in 1998 =
over
1997, reflecting increases in aerospace, oil tool, petrochemical and =
other
industrial markets, worldwide. In addition, 1998 sales benefited from
contributions of an additional heat-treating facility in York, =
Pennsylvania that
was acquired in April 1998. Sales improvements also reflected newly =
opened
facilities in Belgium, Germany, England and Kansas. 1998 net earnings =
for the
segment increased from 1997 by $3.3 million or 22% to $18.2 million. =
This
increase reflected improved sales in traditional markets, growth in =
producing
flapper valve components, lower overhead costs and a reduction in =
start-up costs
of new facilities. Sales and net earnings for 1997 were also =
particularly strong
as the result of a worldwide improvement in aerospace applications, =
including
peen-forming of wingskins for commercial, regional and business =
aircraft and
other metal treatment services for engine components and other aircraft =
parts.
Flow Control
The Corporation's Flow Control segment produced substantially higher =
sales and
improved earnings in 1999, as compared with 1998. Sales of $65.0 =
million were
71% above those of 1998, reflecting the acquisitions of Enertech in =
July 1998
and the Farris and Sprague business units in August 1999. Sales =
improvements for
the year also reflect additional U.S. Navy valve business resulting =
from
contracts received in 1998. Net earnings of $3.6 million in 1999 =
benefited from
the recent acquisitions, which offset higher administrative expenses =
during the
year.
The Flow Control segment posted increases in sales and net earnings of =
43% and
39% in 1998. These increases largely reflected the acquisition of =
Enertech. In
1998, sales of commer- cial valve products increased as a result of =
shipments to
a new foreign nuclear power plant. Net income for 1998 also benefited =
from
improved cost performance on valve remakes and upgrade programs, while =
net
earnings for 1997 were slightly impaired by higher administrative costs =
and
expenses relating to a commercial royalty agreement.
16 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
CORPORATE AND OTHER EXPENSES
Operating income for the Corporation includes the recognition of =
environmental
remediation costs, related administrative expenses, costs for legal =
services to
pursue claims against related parties and related recoveries of such =
claims.
Details of expenses and related recoveries are discussed further in =
Note 11 to
the Consolidated Financial Statements.
OTHER REVENUES
The Corporation recorded nonoperating net revenues for 1999 aggregating =
$13.4
million compared with $11.7 million in 1998 and $12.3 million in 1997. =
Noncash
pension income recognized as a result of the Corporation's overfunded =
pension
plan increased 28% to $6.6 million for 1999. The amounts recorded as =
pension
income reflect the extent to which the return on plan assets exceeds =
the cost of
providing benefits in the same year, as detailed further in Note 12 to =
the
Consolidated Financial Statements. Rental income also improved when =
comparing
1999 to the prior year, primarily due to a settlement of a real estate =
tax
appeal. The Corporation recognized $.7 million of additional rental =
income from
the settlement. Investment income declines reflect lower cash balances =
available
for investments due to expenditures for acquisitions in each of the =
last two
years. In 1997, the Corporation sold two parcels of undeveloped land =
generating
net earnings of $2.0 million or $.20 per share.
CHANGES IN FINANCIAL POSITION:
Liquidity and Capital Resources
The Corporation's working capital decreased 5% at December 31, 1999, =
totaling
$124.4 million as compared with $130.8 million at December 31, 1998. =
The ratio
of current assets to current liabilities improved to 3.2 to 1 at =
December 31,
1999 compared with 2.9 to 1 at the end of 1998. The Corporation's =
balance of
cash and short-term investments totaled $35.1 million at December 31, =
1999
declining $37.1 million from balances at December 31, 1998. Declines in =
cash and
short-term investments reflect the acquisition of three businesses in =
1999,
which involved the aggregate cash outflows of $49.3 million.
Working capital changes were highlighted by an increase in accounts =
receivable
of $9.8 million and inventories of $6.5 million during the year. These =
increases
are largely due to the acquisitions of Metallurgical, Farris and =
Sprague during
1999. Current liabilities declined $11.9 million at December 31, 1999, =
compared
with the prior year end because of reclassification from current to =
long-term
status of borrowings used to fund the Drive Technology acquisition.
Acquisitions in 1999 also added $19.7 million of goodwill to the =
balance sheet
for the excess of the total purchase prices over the combined fair =
value of the
net assets acquired. In 1998, the Corporation completed an industrial =
revenue
bond (IRB) financing adding $8.4 million of debt to provide for the =
plant
expansion of the Shelby, North Carolina facility and related equipment =
purchases
necessary to meet the demands of the new Boeing contracts and the =
growth of the
overhaul service business.
At December 31, 1999, the Corporation has two credit agreements in =
effect
aggregating $100.0 million with a group of five banks. The Revolving =
Credit
Agreement commits a maximum of $60.0 million to the Corporation for =
cash
borrowings and letters of credit. The Corporation also has in effect a
Short-Term Credit Agreement, which allows for cash borrowings of $40.0 =
million.
The maximum unused credit available under these agreements at December =
31, 1999
was $58.2 million. Cash Borrowings under the Revolving Credit =
Agreements at
December 31, 1999 were $19.5 million. During 1998, the Corporation =
maintained a
$22.5 million Revolving Credit lending facility and a $22.5 million =
Short-term
Credit Agreement. As discussed above and in Note 9 to the Consolidated =
Financial
Statements, these credit agreements were used to finance the Drive =
Technology
acquisition at December 31, 1998. Borrowings under these credit =
agreements
totaled $20.5 million at December 31, 1998, all of which was =
transferred to the
new agreement in 1999.
Capital expenditures were $19.9 million in 1999, increasing from $10.6 =
million
spent in 1998 and $11.2 million in 1997. Principal expenditures were =
for
additional equipment to service the facility expansions of Metal =
Treatment. In
2000, capital expenditures are expected to decline modestly with =
continued
expansion of the Metal Treatment segment and expenditures for equipment =
in both
the Motion Control and Flow Control segments. At December 31, 1999, the
Corporation had commitments of $1.7 million primarily for the purchase =
of
capital equipment in 2000.
Cash generated from operations and current short-term investment =
holdings are
considered adequate to meet the Corporation's overall cash requirements =
for the
upcoming year. This includes planned capital expenditures, anticipated =
debt
repayments, normal dividends, satisfying environmental obligations and =
other
working capital requirements.
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 17
REPORT OF THE CORPORATION
The consolidated financial statements appearing on pages 19 through 35 =
of this
Annual Report have been prepared by the Corporation in conformity with =
generally
accepted accounting principles. The financial statements necessarily =
include
some amounts that are based on the best estimates and judgments of the
Corporation. Other financial information in the Annual Report is =
consistent with
that in the financial statements.
The Corporation maintains accounting systems, procedures and internal =
accounting
controls designed to provide reasonable assurance that assets are =
safeguarded
and that transactions are executed in accordance with the appropriate =
corporate
authorization and are properly recorded. The accounting systems and =
internal
accounting controls are augmented by written policies and procedures;
organizational structure providing for a division of responsibilities; =
selection
and training of qualified personnel and an internal audit program. The =
design,
monitoring, and revision of internal accounting control systems =
involve, among
other things, management's judgment with respect to the relative cost =
and
expected benefits of specific control measures.
PricewaterhouseCoopers LLP, independent certified public accountants, =
have
examined the Corporation's consolidated financial statements as stated =
in their
report. Their examination included a study and evaluation of the =
Corporation's
accounting systems, procedures and internal controls, and tests and =
other
auditing procedures, all of a scope deemed necessary by them to support =
their
opinion as to the fairness of the financial statements.
The Audit Committee of the Board of Directors, composed entirely of =
Directors
from outside the Corporation, among other things, makes recommendations =
to the
Board as to the nomination of independent auditors for appointment by
stockholders and considers the scope of the independent auditors' =
examination,
the audit results and the adequacy of internal accounting controls of =
the
Corporation. The independent auditors have direct access to the Audit =
Committee,
and they meet with the Committee from time to time with and without =
management
present, to discuss accounting, auditing, internal control and =
financial
reporting matters.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Curtiss-Wright Corporation
In our opinion, the accompanying consolidated balance sheets and the =
related
consolidated statements of earnings and stockholders' equity and of =
cash flows
present fairly, in all material respects, the financial position of
Curtiss-Wright Corporation and its subsidiaries at December 31, 1999 =
and 1998,
and the results of their operations and their cash flows for each of =
the three
years in the period ended December 31, 1999, in conformity with =
accounting
principles generally accepted in the United States. These financial =
statements
are the responsibility of the Company's management; our responsibility =
is to
express an opinion on these financial statements based on our audits. =
We
conducted our audits of these statements in accordance with auditing =
standards
generally accepted in the United States, which require that we plan and =
perform
the audit to obtain reasonable assurance about whether the financial =
statements
are free of material misstatement. An audit includes examining, on a =
test basis,
evidence supporting the amounts and disclosures in the financial =
statements,
assessing the accounting principles used and significant estimates made =
by
management, and evaluating the overall financial statement =
presentation. We
believe that our audits provide a reasonable basis for the opinion =
expressed
above.
Florham Park, New Jersey
January 31, 2000
18 | Curtiss-Wright Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
=
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
For the years ended December 31, (In thousands except per share data) =
1999 1998 1997
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
=
=20
Net sales =
$ 293,263 $ 249,413 $ 219,395
Cost of sales =
190,852 167,399 143,706
- ------------------------------------------------------------------------=
- ------------------------------------------
Gross profit =
102,411 82,014 75,689
Research and development costs =
2,801 1,346 1,877
Selling expenses =
17,015 11,606 7,979
General and administrative expenses =
43,121 34,277 32,694
Environmental remediation and administrative expenses, =
=20
net of recovery =
(11,683) (1,562) 3,132
- ------------------------------------------------------------------------=
- ------------------------------------------
=
=20
Operating income =
51,157 36,347 30,007
Investment income, net =
2,295 3,206 3,432
Rental income, net =
4,580 3,299 3,342
Pension income, net =
6,574 5,126 3,312
Other income (expense), net =
(8) 87 2,193
Interest expense =
1,289 485 387
- ------------------------------------------------------------------------=
- ------------------------------------------
=
=20
Earnings before income taxes =
63,309 47,580 41,899
Provision for income taxes =
24,264 18,527 14,014
- ------------------------------------------------------------------------=
- ------------------------------------------
Net earnings =
$ 39,045 $ 29,053 $ 27,885
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
Net Earnings per Common Share: =
=20
Basic earnings per share =
$ 3.86 $ 2.85 $ 2.74
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
Diluted earnings per share =
$ 3.82 $ 2.82 $ 2.71
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
See notes to consolidated financial statements.
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 19
CONSOLIDATED BALANCE SHEETS
=
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
December 31, (In thousands) =
1999 1998
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
=
=20
Assets:
Current assets:
Cash and cash equivalents =
$ 9,547 $ 5,809
Short-term investments =
25,560 66,444
Receivables, net =
70,729 60,912
Deferred tax assets =
8,688 7,841
Inventories =
60,584 54,048
Other current assets =
5,262 3,519
- ------------------------------------------------------------------------=
- -------------------------------------------
Total current assets =
180,370 198,573
- ------------------------------------------------------------------------=
- -------------------------------------------
Property, plant and equipment, at cost:
Land =
5,267 4,645
Buildings and improvements =
95,631 91,325
Machinery, equipment and other =
141,102 141,245
- ------------------------------------------------------------------------=
- -------------------------------------------
=
242,000 237,215
Less, accumulated depreciation =
147,422 162,704
- ------------------------------------------------------------------------=
- -------------------------------------------
Property, plant and equipment, net =
94,578 74,511
Prepaid pension costs =
50,447 43,822
Goodwill, net =
50,357 30,724
Property held for sale =
2,653 322
Other assets =
8,721 4,788
- ------------------------------------------------------------------------=
- -------------------------------------------
Total assets =
$ 387,126 $ 352,740
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
Liabilities:
Current liabilities:
Current portion of long-term debt =
$ 4,047 $ 20,523
Accounts payable =
13,304 13,433
Accrued expenses =
19,463 17,254
Income taxes payable =
5,203 5,052
Other current liabilities =
13,915 11,548
- ------------------------------------------------------------------------=
- -------------------------------------------
Total current liabilities =
55,932 67,810
- ------------------------------------------------------------------------=
- -------------------------------------------
Long-term debt =
34,171 20,162
Deferred income taxes =
14,113 9,714
Accrued postretirement benefit costs =
8,515 9,575
Other liabilities =
16,040 15,886
- ------------------------------------------------------------------------=
- -------------------------------------------
Total liabilities =
128,771 123,147
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
Contingencies and Commitments (Notes 9 & 14)
Stockholders' Equity:
Preferred stock, $1 par value, 650,000 authorized, none issued =
-- --=20
Common stock, $1 par value, 22,500,000 authorized, 15,000,000 shares =
issued
(outstanding shares 10,040,250 for 1999 and 10,190,790 for 1998) =
15,000 15,000
Additional paid in capital =
51,599 51,669
Retained earnings =
376,006 342,218
Unearned portion of restricted stock =
(24) (40)
Accumulated other comprehensive income =
(2,622) (2,800)
- ------------------------------------------------------------------------=
- -------------------------------------------
=
439,959 406,047
Less, treasury stock at cost (4,959,750 shares for 1999 and 4,809,210 =
shares for 1998) 181,604 176,454
- ------------------------------------------------------------------------=
- -------------------------------------------
Total stockholders' equity =
258,355 229,593
- ------------------------------------------------------------------------=
- -------------------------------------------
Total liabilities and stockholders' equity =
$ 387,126 $ 352,740
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
See notes to consolidated financial statements.
20 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
=
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
For the years ended December 31, (In thousands) =
1999 1998 1997
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
=
=20
Cash flows from operating activities:
Net earnings =
$ 39,045 $ 29,053 $ 27,885
- ------------------------------------------------------------------------=
- -----------------------------------------
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization =
12,864 9,661 9,097
Noncash pension income =
(6,574) (5,126) (3,312)
Net (gains) losses on sales and disposals of real estate
and equipment =
-- 94 (1,968)
Net (gains) losses on short-term investments =
390 (266) (1,717)
Deferred taxes =
2,300 1,494 76
Changes in operating assets and liabilities, net of businesses
acquired:
Proceeds from sales of trading securities =
394,355 374,802 342,416
Purchases of trading securities =
(353,861) (379,097) (349,500)
(Increase) decrease in receivables =
6,878 (7,181) (4,929)
(Increase) decrease in inventories =
2,830 734 (3,624)
Increase (decrease) in progress payments =
(13,057) (1,248) 1,934
Increase (decrease) in accounts payable and
accrued expenses =
(1,734) 2,470 (666)
Increase in income taxes payable =
151 207 1,656
Increase in other assets =
(1,016) (320) (548)
Increase (decrease) in other liabilities =
241 (236) (2,458)
Other, net =
(1,758) 881 (879)
- ------------------------------------------------------------------------=
- -----------------------------------------
Total adjustments =
42,009 (3,131) (14,422)
- ------------------------------------------------------------------------=
- -----------------------------------------
Net cash provided by operating activities =
81,054 25,922 13,463
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
Cash flows from investing activities:
Proceeds from sales and disposals of real estate and equipment =
2,586 950 3,460
Additions to property, plant and equipment =
(19,883) (10,642) (11,231)
Acquisition of new businesses, net of cash =
(49,322) (41,711) --
- ------------------------------------------------------------------------=
- -----------------------------------------
Net cash used for investing activities =
(66,619) (51,403) (7,771)
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
Cash flows from financing activities:
Proceeds from short-term borrowing =
-- 20,523 --
Proceeds from long-term borrowing =
-- 9,815 --
Common stock repurchase =
(5,440) (611) --
Dividends paid =
(5,257) (5,309) (5,137)
- ------------------------------------------------------------------------=
- -----------------------------------------
Net cash (used for) provided by financing activities =
(10,697) 24,418 (5,137)
- ------------------------------------------------------------------------=
- -----------------------------------------
Net increase (decrease) in cash and cash equivalents =
3,738 (1,063) 555
Cash and cash equivalents at beginning of year =
5,809 6,872 6,317
- ------------------------------------------------------------------------=
- -----------------------------------------
Cash and cash equivalents at end of year =
$ 9,547 $ 5,809 $ 6,872
- ------------------------------------------------------------------------=
- -----------------------------------------
Supplemental disclosure of non-cash investing activities:
Acquisitions:
Fair value of assets acquired: =
$ 54,868 $ 54,635 $ --
Liabilities assumed =
(5,034) (10,857) --
Cash acquired =
(512) (2,067) --
- ------------------------------------------------------------------------=
- -----------------------------------------
Net cash paid =
$ 49,322 $ 41,711 $ --
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
See notes to consolidated financial statements.
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 21
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
=
Unearned Accumulated
Additional =
Portion of Other
Common Paid in =
Retained Restricted Comprehensive Comprehensive Treasury
(In thousands) Stock Capital =
Earnings Stock Awards Income Income Stock
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
=
=20
December 31, 1996 $10,000 $57,127 =
$299,740 $ (608) $(1,506) $181,390
- ------------------------------------------------------------------------=
- ----------------------------------------------------------
Comprehensive income:
Net earnings =
27,885 $27,885
Translation adjustments, net =
(1,783) (1,783)
- ------------------------------------------------------------------------=
- ----------------------------------------------------------
Total comprehensive income =
$26,102
- ------------------------------------------------------------------------=
- ----------------------------------------------------------
Common dividends =
(5,137)
Stock options exercised, net (117) =
(376)
Amortization of earned
portion of restricted stock awards =
266
Two-for-one stock split 5,000 (5,000) =
(4,014) (4,014)
- ------------------------------------------------------------------------=
- ----------------------------------------------------------
December 31, 1997 15,000 52,010 =
318,474 (342) (3,289) 177,000
- ------------------------------------------------------------------------=
- ----------------------------------------------------------
Comprehensive income:
Net earnings =
29,053 $29,053
Translation adjustments, net =
489 489
- ------------------------------------------------------------------------=
- ----------------------------------------------------------
Total comprehensive income =
$29,542
- ------------------------------------------------------------------------=
- ----------------------------------------------------------
Common dividends =
(5,309)
Common stock repurchase =
612
Stock options exercised, net (449)
Amortization of earned
portion of restricted stock awards 108 =
302 (1,158)
- ------------------------------------------------------------------------=
- ----------------------------------------------------------
December 31, 1998 15,000 51,669 =
342,218 (40) (2,800) 176,454
- ------------------------------------------------------------------------=
- ----------------------------------------------------------
Comprehensive income:
Net earnings =
39,045 $39,045
Translation adjustments, net =
178 178
- ------------------------------------------------------------------------=
- ----------------------------------------------------------
Total comprehensive income =
$39,223
- ------------------------------------------------------------------------=
- ----------------------------------------------------------
Common dividends =
(5,257)
Common stock repurchase =
5,400
Stock options exercised, net (70) =
(290)
Amortization of earned
portion of restricted
stock awards =
16
- ------------------------------------------------------------------------=
- ----------------------------------------------------------
December 31, 1999 $15,000 $51,599 =
$376,006 $ (24) $(2,622) $181,604
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
See notes to consolidated financial statements.
22 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Curtiss-Wright Corporation and its subsidiaries (the "Corporation") is =
a
diversified multinational manufacturing and service concern that =
designs,
manufactures and overhauls precision components and systems and =
provides highly
engineered services to the aerospace, defense, automotive, =
shipbuilding,
processing, oil, petrochemical, agricultural equipment, railroad, power
generation, and metalworking industries. Operations are conducted =
through eight
manufacturing facilities, thirty-seven metal treatment service =
facilities and
four component overhaul locations.
A. Principles of Consolidation
The financial statements of the Corporation have been prepared in =
conformity
with generally accepted accounting principles and such preparation has =
required
the use of management's estimates in presenting the consolidated =
accounts of the
Corporation, after elimination of all significant intercompany =
transactions and
accounts. Management's estimates include assumptions that affect the =
reported
amount of assets, liabilities, revenue and expenses in the accompanying
financial statements. Actual results may differ from these estimates. =
Certain
prior year information has been restated to conform to current year's
presentation.
B. Cash Equivalents
Cash equivalents consist of money market funds and commercial paper =
that are
readily convertible into cash, all with original maturity dates of =
three months
or less.
C. Progress Payments
Progress payments received under U.S. Government prime contracts and
subcontracts have been deducted from receivables and inventories as =
disclosed in
the appropriate following notes.
With respect to such contracts, the Government has a lien on all =
materials and
work-in-process to the extent of progress payments.
D. Revenue Recognition
The Corporation records sales and related profits for the majority of =
its
operations as units are shipped, services are rendered, or as =
engineering
milestones are achieved. Sales and estimated profits under long-term =
valve
contracts are recognized under the percentage-of-completion method of
accounting. Profits are recorded pro rata, based upon current estimates =
of
direct and indirect manufacturing and engineering costs to complete =
such
contracts.
Losses on contracts are provided for in the period in which the loss =
becomes
determinable. Revisions in profit estimates are reflected on a =
cumulative basis
in the period in which the basis for such revisions becomes known.
In accordance with industry practice, inventoried costs contain amounts =
relating
to contracts and programs with long production cycles, a portion of =
which will
not be realized within one year.
E. Property, Plant and Equipment
Property, plant and equipment are carried at cost. Major renewals and
betterments are capitalized, while maintenance and repairs that do not =
improve
or extend the life of the assets are expensed in the period they occur.
Depreciation is computed using the straight-line method based upon the =
estimated
useful lives of the respective assets.
Average useful lives for property and equipment are as follows:
Buildings and improvements 10 to =
40 years
Machinery and equipment 4 to =
15 years
Office furniture and equipment 3 to =
10 years
=20
F. Intangible Assets
Intangible assets consist primarily of the excess purchase price of the
acquisitions over the fair value of net tangible assets acquired. The
Corporation amortizes such costs on a straight-line basis over the =
estimated
period benefited but not exceeding 30 years.
The Corporation periodically reviews the recoverability of all =
long-term assets,
including the related amortization period, whenever events or changes =
in
circumstances indicate that the carrying amount of an asset might not =
be
recoverable. The Corporation determines whether there has been an =
impairment by
comparing the anticipated undiscounted future net cash flows to the =
related
asset's carrying value. If an asset is considered impaired, the asset =
is written
down to fair value which is either deter mined based on discounted cash =
flows or
appraised values, depending on the nature of the asset. There were no =
such write
downs in 1999, 1998, and 1997.
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 23
G. Financial Instruments
The financial instruments with which the Corporation is involved are =
primarily
of a traditional nature. The Corporation's short-term investments are =
comprised
of equity and debt securities, all classified as trading securities, =
which are
carried at their fair value based upon the quoted market prices of =
those
investments at December 31, 1999 and 1998. Accordingly, net realized =
and
unrealized gains and losses on trading securities are included in net =
earnings.
The Corporation also, where circumstances warrant, participates in =
derivative
financial instruments consisting primarily of commitments to purchase =
stock.
H. Environmental Costs
The Corporation establishes a reserve for a potential environmental
responsibility when it concludes that a determination of legal =
liability is
probable, based upon the advice of counsel. Such amounts, if =
quantifiable,
reflect the Corporation's estimate of the amount of that liability. If =
only a
range of potential liability can be estimated, a reserve will be =
established at
the low end of that range. Such reserves represent today's values of =
anticipated
remediation not recognizing any recovery from insurance carriers, or =
third-party
legal actions, and are not discounted.
I. Accounting for Stock-Based Compensation
The Corporation follows Accounting Principles Board Opinion No. 25, =
"Accounting
for Stock Issued to Employees" (APB No. 25), in accounting for its =
employee
stock options, rather than the alternative method of accounting =
provided under
Statement of Financial Accounting Standards No. 123, "Accounting for =
Stock-Based
Compensation" (SFAS No. 123). Under APB No. 25, the Corporation does =
not
recognize compensation expense on stock options granted to employees =
when the
exercise price of the options is equal to the market price of the =
underlying
stock on the date of the grant. Further information concerning options =
granted
under the Corporation's Long-Term Incentive Plan is provided in Note =
10.
J. Capital Stock
On April 11, 1997, the stockholders approved an increase in the number =
of
authorized common shares from 12,500,000 to 22,500,000. On November 17, =
1997,
the Board of Directors declared a two-for-one stock split in the form =
of a 100%
stock dividend. The split, in the form of one share of common stock for =
each
share outstanding, was payable on December 23, 1997. To effectuate the =
stock
split, the Corporation issued 5,000,000 original shares at $1.00 par =
value from
capital surplus and the remaining 87,271 shares from its treasury =
account at
cost, with a corresponding reduction in retained earnings of =
$4,014,000.
Accordingly, all references throughout this annual report to number of =
shares,
per share amounts, stock option data and market prices of the =
Corporation's
common stock have been restated to reflect the effect of the split for =
all
periods presented.
In October 1998 the Corporation initiated a stock repurchase program, =
approved
by its Board of Directors, under which the Company is authorized to =
purchase up
to 300,000 shares or approximately 3% of its outstanding common stock. =
Purchases
were authorized to be made from time to time in the open market or =
privately
negotiated transactions, depending on market and other conditions, =
based upon
the view of the Corporation that recent market prices of the stock did =
not
adequately reflect the true value of the Corporation. Accordingly, it
represented an attractive investment opportunity for the Corporation.
K. Comprehensive Income
Effective January 1, 1998, the Corporation adopted Statement of =
Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS =
No. 130).
SFAS No. 130 establishes standards for reporting and displaying changes =
in
equity from non-owner sources. Total comprehensive income for the years =
ended
December 31, 1999, 1998 and 1997 is shown in the Statements of =
Stockholders'
Equity.
24 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
L. Earnings per Share
The Corporation is required to report both basic earnings per share =
(EPS) as
based on the weighted average number of common shares outstanding and =
diluted
earnings per share as based on the weighted average number of common =
shares
outstanding plus all potentially dilutive common shares issuable. At =
December
31, 1999, the Corporation had approximately 334,000 additional stock =
options
outstanding that could potentially dilute basic EPS in the future. The =
effect of
these options were not included in the computation of diluted EPS =
because to do
so would have been antidilutive for the period. Earnings per share =
calculations
for the years ended December 31, 1999, 1998 and 1997 are as follows:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
Weighted
Average
Net Shares =
Per Share
(In thousands, except per share data) Income Outstanding =
Amount
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
1999
Basic earnings per share $39,045 10,115 =
$ 3.86
Effective of dilutive securities:
Stock options 99
Deferred stock compensation 1
- ------------------------------------------------------------------------=
- --------
Diluted earnings per share $39,045 10,215 =
$ 3.82
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
1998
Basic earnings per share $29,053 10,194 =
$ 2.85
Effective of dilutive securities:
Stock options 109
Deferred stock compensation 2
- ------------------------------------------------------------------------=
- --------
Diluted earnings per share $29,053 $10,305 =
$ 2.82
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
1997
Basic earnings per share $27,885 10,172 =
$ 2.74
Effective of dilutive securities:
Stock options 118
Deferred stock compensation 1
- ------------------------------------------------------------------------=
- --------
Diluted earnings per share $27,885 10,291 =
$ 2.71
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
M. Newly Issued Accounting Pronouncements
In June 1999, the Financial Accounting Standards Board issued Statement =
No. 137
deferring the effective date of Statement No. 133, "Accounting for =
Derivatives
and Hedging Activities (SFAS No. 133). SFAS No. 133 is now effective =
for all
fiscal quarters of all fiscal years beginning after June 15, 2000 =
(January 1,
2001 for the Corporation). SFAS No. 133 requires that all derivative =
instruments
be recorded on the balance sheet at their fair value. Changes in the =
fair value
of derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated =
as part of
a hedge transaction and, if it is, the type of hedge transaction. =
Management of
the Corporation anticipates that, due to its limited use of derivative
instruments, the adoption of SFAS No. 133 will not have a significant =
effect on
its results of operations or its financial position.
2. ACQUISITIONS
The Corporation acquired three businesses in 1999 and three in 1998, as
described below. All companies acquired have been accounted for as =
purchases
with the excess of the purchase price over the estimated fair value of =
the net
assets acquired recorded as goodwill. The results of each operation =
have been
included in the consolidated financial results of the Corporation from =
the date
of acquisition.
Farris Engineering and Sprague Products
On August 27, 1999, the Corporation completed its acquisition of the =
Farris and
Sprague business units of Teledyne Fluid Systems, an Allegheny Teledyne
Incorporated company.
Farris is one of the world's leading manufacturers of pressure-relief =
valves for
use in processing industries, which include refineries, =
petrochemical/chemical
plants and pharmaceutical manufacturing. Products are manufactured in
Brecksville, Ohio and Brantford, Ontario. A service and distribution =
center is
located in Edmonton, Alberta. The Sprague business, also located in =
Brecksville,
Ohio, provides specialty hydraulic and pneumatic valves and air-driven =
pumps and
gas boosters under the "Sprague" and "PowerStar" trade names for =
general
industrial applications as well as directional control valves for truck
transmissions and car transport carriers.
The Corporation acquired the net assets of the Farris and Sprague =
businesses for
approximately $44.0 million in cash, subject to adjustment as provided =
for in
the agreement. This acquisition has been accounted for as a purchase in =
the
third quarter of 1999. The excess of purchase price over the fair value =
of the
net assets acquired is approximately $18.3 million and is being =
amortized over
30 years. The fair value of the net assets acquired was based on =
preliminary
estimates and may be revised at a later date.
Metallurgical Processing Inc.
On June 30, 1999, the Corporation acquired Metallurgical Processing, =
Inc. (MPI),
a Midwest supplier of commercial heat-treating services, primarily to =
the
automotive and industrial markets. MPI provides a number of =
metal-treatment
processes including carburizing, hardening, and carbonitriding and =
services a
broad spectrum of customers from its Fort Wayne, Indiana location.
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 25
The Corporation acquired the stock of MPI for approximately $7.4 =
million in cash
(of which $1.0 million has been deferred for two years) and accounted =
for the
acquisition as a purchase in the second quarter of 1999. The excess of =
purchase
price over the fair value of the net assets acquired is approximately =
$2.4
million and is being amortized over 25 years. The fair value of the net =
assets
acquired was based on preliminary estimates and may be revised at a =
later date.
Curtiss-Wright Antriebstechnik GmbH (Drive Technology)
On December 31, 1998, the Corporation completed the acquisition of the =
shares of
SIG-Antriebstechnik AG, a unit of SIG Swiss Industrial Company Holding =
Ltd., for
approximately $22.8 million in cash. The acquired company, was renamed
Curtiss-Wright Antriebstechnik GmbH (Curtiss-Wright Drive Technology, =
Ltd.), and
is a leading provider of high-technology drive solutions for three =
principal
markets: military tracked and wheeled vehicles, high-speed railroad =
trains, and
commercial marine propulsion. The Company's drive system solutions =
involve
electromechanical and electrohydraulic actuation components and systems
including electronic controls. The excess of purchase price over the =
fair value
of the net assets is approximately $17.5 million, and is being =
amortized over 30
years.
Enertech
On July 31, 1998, the Corporation purchased the assets of Enertech, LLC
(Enertech) which distributes, represents and manufactures a number of =
products
for sale into commercial nuclear power plants, both domestically and
internationally. Enertech also provides a broad range of overhaul and
maintenance services for such plants from its two principal locations =
in
California and Georgia. The Corporation acquired the net assets of =
Enertech for
approxi mately $14.2 million in cash. The excess of purchase price over =
the fair
value of the net assets is approximately $9.3 million and is being =
amortized
over 30 years.
Alpha Heat Treaters
The Corporation purchased the assets of the Alpha Heat Treaters (Alpha) =
division
of Alpha-Beta Industries, Inc. on April 30, 1998. Alpha services a =
broad
spectrum of customers from its York, Pennsylvania location and provides =
a number
of metal-treatment processes including carburizing, surface hardening, =
stress
relieving, induction hardening and black oxide surface treatment =
services. The
Corporation acquired the net assets of Alpha for approximately $6.1 =
million in
cash. The excess of purchase price over the fair value of the net =
assets is
approximately $1.0 million, which is being amortized over 25 years.
The unaudited pro forma consolidated results of operations shown below =
have been
prepared as if the above acquisitions had occurred at the beginning of =
1999 and
1998, respectively:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
(In thousands, except per share data) 1999 =
1998
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Net sales $325,893 =
$277,945
Net earnings 41,413 =
30,280
Diluted earnings per common share 4.05 =
2.94
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
3. SHORT-TERM INVESTMENTS
The composition of short-term investments at December 31 is as follows:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
(In thousands) 1999 1998
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Cost Fair Value Cost =
Fair Value
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Money market
preferred stock $11,400 $11,400 $54,797 =
$54,797
Tax-exempt money
market preferred
stock -- -- 2,995 =
2,995
Common and
preferred stocks 2,104 1,960 6,007 =
6,203
Options -- -- 49 =
49
Tax exempt revenue
bonds 12,200 12,200 2,400 =
2,400
- ------------------------------------------------------------------------=
- --------
Total short-term
investments $25,704 $25,560 $66,248 =
$66,444
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Investment income for the years ended December 31 consists of:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D
(In thousands) 1999 1998 =
1997
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Net realized gains on the sales of
trading securities $ 274 $ 141 =
$1,435
Interest and dividend income, net 2,361 2,940 =
1,715
Net unrealized holding (losses) gains (340) 125 =
282
- ------------------------------------------------------------------------=
- --------
Investment income, net $2,295 $3,206 =
$3,432
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
4. RECEIVABLES
Receivables include amounts billed to customers, claims and other =
receivables
and unbilled charges on long-term contracts consisting of amounts =
recognized as
sales but not billed. Substantially all amounts of unbilled receivables =
are
expected to be billed and collected in the subsequent year.
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES
Credit risk is generally diversified due to the large number of =
entities
comprising the Corporation's customer base and their geographic =
dispersion. The
largest single customer represented 8% of the total outstanding billed
receivables at December 31, 1999 and 7% of the total outstanding billed
receivables at December 31, 1998. The Corporation performs ongoing =
credit
evaluations of its customers and establishes appropriate allowances for =
doubtful
accounts based upon factors surrounding the credit risk of specific =
customers,
historical trends and other information.
The composition of receivables at December 31 is as follows:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
(In thousands) 1999 =
1998
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Billed Receivables:
Trade and other receivables $66,652 =
$63,412
Less: progress payments applied 1,922 =
11,687
Allowance for doubtful accounts 3,230 =
1,910
- ------------------------------------------------------------------------=
- --------
Net billed receivables 61,500 =
49,815
- ------------------------------------------------------------------------=
- --------
Unbilled Receivables:
Recoverable costs and estimated earnings
not billed 16,473 =
17,447
Less: progress payments applied 7,244 =
6,350
- ------------------------------------------------------------------------=
- --------
Net unbilled receivables 9,229 =
11,097
- ------------------------------------------------------------------------=
- --------
Total receivables, net $70,729 =
$60,912
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
5. INVENTORIES
Inventories are valued at the lower of cost (principally average cost) =
or
market. The composition of inventories at December 31 is as follows:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
(In thousands) 1999 =
1998
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Raw material $10,713 =
$ 8,862
Work-in-process 14,519 =
22,802
Finished goods/component parts 28,978 =
23,130
Inventoried costs related to U.S. Government
and other long-term contracts 7,714 =
4,780
- ------------------------------------------------------------------------=
- --------
Inventories 61,924 =
59,574
Less: progress payments applied,
principally related to
long-term contracts 1,340 =
5,526
- ------------------------------------------------------------------------=
- --------
Net inventories $60,584 =
$54,048
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses at December 31 consist of the following:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
(In thousands) 1999 =
1998
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Accrued compensation $ 7,545 =
$ 5,967
Accrued taxes other than income taxes 1,961 =
1,108
Accrued insurance 1,623 =
1,662
All other 8,334 =
8,517
- ------------------------------------------------------------------------=
- --------
Total accrued expenses $19,463 =
$17,254
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Other current liabilities at December 31 consist of the following:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
(In thousands) 1999 =
1998
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Customer advances $ 2,338 =
$ 4,655
Current portion of environmental reserves 2,717 =
1,881
Anticipated losses on long-term contracts 2,280 =
1,878
Due tenants on tax recovery 3,520 =
--
All other 3,060 =
3,134
- ------------------------------------------------------------------------=
- --------
Total other current liabilities $13,915 =
$11,548
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
7. INCOME TAXES
There was no valuation allowance recorded in 1999 or 1998 because it is =
more
likely than not that all deferred tax assets will be realized. During =
1997, the
Corporation fully utilized its capital loss carryforward of $3,252,000 =
that
would have expired on December 31, 1997. In 1997, the valuation =
allowance of
$1,212,000 that was established to offset this deferred tax asset was =
reversed.
Earnings before income taxes for the years ended December 31 are:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
(In thousands) 1999 1998 =
1997
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Domestic $47,088 $33,320 =
$29,965
Foreign 16,221 14,260 =
11,934
- ------------------------------------------------------------------------=
- --------
Total $63,309 $47,580 =
$41,899
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 27
The provisions (benefits) for taxes on earnings for the years ended =
December 31
consist of:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
(In thousands) 1999 1998 =
1997
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Current:
Federal $ 11,843 $ 8,835 =
$ 7,523
State 3,619 3,045 =
4,197
Foreign 6,000 5,019 =
1,910
- ------------------------------------------------------------------------=
- --------
21,462 16,899 =
13,630
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Deferred:
Federal 2,143 1,231 =
332
State 407 397 =
126
Foreign 252 -- =
--
- ------------------------------------------------------------------------=
- --------
2,802 1,628 =
458
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Federal income tax on
net capital gains -- -- =
1,135
Utilization of capital
loss carryforwards -- -- =
(1,135)
Valuation allowance -- -- =
(74)
- ------------------------------------------------------------------------=
- --------
Provision for income tax $ 24,264 $ 18,527 =
$ 14,014
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
The effective tax rate varies from the U. S. Federal statutory tax rate =
for the
years ended December 31 principally due to the following:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D
1999 1998 =
1997
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
U.S. Federal statutory tax rate 35.0% 35.0% =
35.0%
Add (deduct):
Utilization of capital loss
carryforward -- -- =
(2.7)
Dividends received deduction
and tax exempt income (0.8) (1.4) =
(1.2)
State and local taxes 4.1 4.7 =
3.3
Valuation allowance -- -- =
(.2)
All other -- .6 =
(.8)
- ------------------------------------------------------------------------=
- --------
Effective tax rate 38.3% 38.9% =
33.4%
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
The components of the Corporation's deferred tax assets and liabilities =
at
December 31 are as follows; however, 1998 figures have been =
reclassified for
reporting purposes.
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
(In thousands) 1999 =
1998
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Deferred tax assets:
Environmental cleanup $ 6,119 =
$ 6,428
Postretirement/employment benefits 3,540 =
4,065
Inventories 4,407 =
3,805
Vacation pay 1,048 =
932
Other 4,961 =
4,756
- ------------------------------------------------------------------------=
- --------
Total deferred tax assets $20,075 =
$19,986
- ------------------------------------------------------------------------=
- --------
Deferred tax liabilities:
Retirement plans $19,265 =
$16,901
Depreciation 4,697 =
3,773
Other 1,538 =
1,185
- ------------------------------------------------------------------------=
- --------
Total deferred tax liabilities $25,500 =
$21,859
- ------------------------------------------------------------------------=
- --------
Net deferred tax liabilities $ 5,425 =
$ 1,873
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Deferred tax assets and liabilities are reflected on the Corporation's
consolidated balance sheets at December 31 as follows:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D
(In thousands) 1999 =
1998
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Current deferred tax assets $ 8,688 =
$ 7,841
Non-current deferred tax liabilities (14,113) =
(9,714)
- ------------------------------------------------------------------------=
- --------
Net deferred tax liabilities $ (5,425) =
$ (1,873)
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Income tax payments of $20,954,000 were made in 1999, $16,321,000 in =
1998, and
$12,432,000 in 1997.
28 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
8. LONG-TERM DEBT
Long-term debt at December 31 consists of the following:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
(In thousands) 1999 =
1998
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Short-term credit agreement borrowing,
due 1999. Interest rate is 2.31% for 1998 $ -- =
$20,523
Industrial Revenue Bonds, due from 2000
to 2028. Weighted average interest
rate is 3.12% and 2.52% per annum
for 1999 and 1998, respectively 18,747 =
$18,747
- ------------------------------------------------------------------------=
- --------
Revolving Credit Agreement Borrowing,
due 2004. Weighted average interest rate is
2.94% for 1999 and 2.31% for 1998 19,471 =
1,415
- ------------------------------------------------------------------------=
- --------
Total debt 38,218 =
40,685
- ------------------------------------------------------------------------=
- --------
Less: Portion due within one-year 4,047 =
20,523
- ------------------------------------------------------------------------=
- --------
Total Long-Term Debt $34,171 =
$20,162
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Short-term credit agreement borrowings of $20,523,000 in 1998 were =
transferred
to the Revolving Credit Agreement in 1999, and have a maturity date of =
December
17, 2004.
Debts under the Corporation's short-term credit agreement and revolving =
credit
agreement are denominated in Swiss francs. Actual borrowings at =
December 31,
1999 and 1998 total 31,000,000 Swiss francs.
Aggregate maturities of debt are as follows:
(In thousands)
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
2000 =
$ 4,047
2001 =
1,300
2002 =
--
2003 =
--
2004 =
19,471
2005 and beyond =
13,400
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Interest payments of approximately $818,000, $470,000 and $347,000 were =
made in
1999, 1998 and 1997, respectively.
9. CREDIT AGREEMENTS
The Corporation has two credit agreements in effect aggregating =
$100,000,000
with a group of five banks. The credit agreements allow for borrowings =
to be
denominated in a number of foreign currencies. The Revolving Credit =
Agreement
commits a maximum of $60,000,000 to the Corporation for cash borrowings =
and
letters of credit. The unused credit available under this facility at =
December
31, 1999 was $18,226,000. The commitments made under the Revolving =
Credit
Agreement expire December 17, 2004, but may be extended annually for =
successive
one-year periods with the consent of the bank group. The Corporation =
also has in
effect a Short-Term Credit Agreement which allows for cash borrowings =
of
$40,000,000, of which $40,000,000 was available at December 31, 1999. =
The
Short-Term Credit Agreement expires December 17, 2000. The Short-Term =
Credit
Agreement may be extended, with the consent of the bank group, for an =
additional
period not to exceed 364 days. Cash borrowings under the Revolving =
Credit
Agreement at December 31, 1999 were $19,471,000 with a weighted average =
interest
rate of 2.94%. Cash borrowings at December 31, 1998 were $21,938,000 =
with a
weighted average interest rate of 2.31%. The Corporation is required =
under these
Agreements to maintain certain financial ratios, and meet certain net =
worth and
indebtedness tests for which the Corporation is in compliance.
At December 31, 1999, substantially all of the industrial revenue bond =
issues
are collateralized by real estate, machinery and equipment. Certain of =
these
issues are supported by letters of credit, which total approximately
$17,793,000. The Corporation has various other letters of credit, most =
of which
are now included under the Revolving Credit Agreement.
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 29
10. STOCK COMPENSATION PLANS
Stock-Based Compensation: Pro forma information regarding net earnings =
and
earnings per share is required by SFAS No. 123 and has been determined =
as if the
Corporation had accounted for its 1999, 1998 and 1997 employee stock =
option
grants under the fair value method of that Statement. Information with =
regards
to the number of options granted, market price of the grants, vesting
requirements and the maximum term of the options granted appears by =
plan type in
the sections below. The fair value for these options was estimated at =
the date
of grant using a Black-Scholes option pricing model with the following =
weighted
average assumptions for 1999, 1998 and 1997, respectively: a risk-free =
interest
rate of 6.09%, 4.80% and 5.88%; an expected volatility of 25.06%, =
18.80% and
18.18%; an expected dividend yield of 1.37%, 1.38% and 1.37%; and a =
weighted
average expected life of the option of 7 years. For purposes of pro =
forma
disclosures, no expense was recognized on the 1999 options due to the =
timing of
the grant. The estimated fair value of the option grants are presented =
as
amortized to expense over the options' vesting period beginning January =
1 of the
following year. The Corporation's pro forma information for the years =
ended
December 31, 1999, 1998 and 1997 are as follows:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
(In thousands, except per share data) 1999 1998 =
1997
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Net earnings:
As reported $ 39,045 $ 29,053 $ =
27,885
Pro forma $ 38,430 $ 28,509 $ =
27,570
Net earnings per common share:
As reported:
Basic $ 3.86 $ 2.85 $ =
2.74
Diluted $ 3.82 $ 2.82 $ =
2.71
Pro forma:
Basic $ 3.80 $ 2.80 $ =
2.71
Diluted $ 3.76 $ 2.77 $ =
2.68
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Long-Term Incentive Plan: Under a Long-Term Incentive Plan approved by
stockholders in 1995, an aggregate total of 1,000,000 shares of common =
stock
were reserved for issuance under said Plan. No more than 50,000 shares =
of common
stock subject to the plan may be awarded in any year to any one =
participant in
the plan.
Under this Plan, the Corporation awarded 1,539,778 performance units in =
1999,
1,184,604 in 1998 and 997,841 in 1997 to certain key employees. The =
performance
units are denominated in dollars and are contingent upon the =
satisfaction of
performance objectives keyed to profitable growth over a period of =
three fiscal
years commencing with the fiscal year following such awards. The =
anticipated
cost of such awards is expensed over the three-year performance period. =
However,
the actual cost of the performance units may vary from total value of =
the awards
depending upon the degree to which the key performance objectives are =
met.
The Corporation has also granted nonqualified stock options in 1999, =
1998 and
1997 to key employees. Stock options granted under this Plan expire ten =
years
after the date of the grant and are exercisable as follows: up to =
one-third of
the grant after one full year, up to two-thirds of the grant after two =
full
years and in full three years from the date of grant. Stock option =
activity
during the periods is indicated as follows:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
Weighted
Average
Exercise =
Options
Shares Price =
Exercisable
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Outstanding at December 31, 1996 308,720 $ 20.38 =
165,360
Granted 89,286 38.00
Exercised (19,302) 17.08
Forfeited (8,878) 22.33
- ------------------------------------------------------------------------=
- --------
Outstanding at December 31, 1997 369,826 24.762 =
16,398
Granted 118,886 37.66
Exercised (31,554) 19.13
Forfeited (20,657) 30.59
- ------------------------------------------------------------------------=
- --------
Outstanding at December 31, 1998 436,501 28.632 =
42,071
Granted 147,551 37.82
Exercised (6,155) 21.01
Forfeited (20,276) 34.78
- ------------------------------------------------------------------------=
- --------
Outstanding at December 31, 1999 557,621 $ 30.92 =
310,586
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
30 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
Stock Plan for Non-Employee Directors: The Stock Plan for Non-employee
Directors, approved by stockholders in 1996, authorized the grant of =
restricted
stock awards and, at the option of the directors, the payment of =
regular
stipulated compensation and meeting fees in equivalent shares. In June =
1996,
pursuant to the Plan 3,612 shares of restricted stock were issued to
non-employee directors, at no cost to them. The shares have been valued =
at a
price of $25.78 per share, the fair market price on the date of the =
award. The
cost of the restricted stock awards is being amortized over their =
five-year
restriction period. During 1999, the Corporation had deferred an =
aggregate
additional 9,531 shares, at an average market value of $27.45, for its
non-employee directors pursuant to election by directors to receive =
such shares
in lieu of payment for earned compensation under the plan. Depending on =
the
extent to which the non-employee directors elect to receive future =
compensation
in shares, total awards under this Plan could reach or exceed 16,000 =
shares by
April 12, 2006, the termination date of the Plan. Pursuant to =
elections, 2,072
shares were issued as compensation in 1999 under the Plan.
11. ENVIRONMENTAL COSTS
The operation of the Corporation's Wood-Ridge, New Jersey to remediate =
site
ground water and soil continued through 1999. The cost of constructing =
and
operating this site was provided for in 1990 when the Corporation =
established a
$21,000,000 reserve to remediate the property. Costs for operating and
maintaining this site in 1999 totaled $563,000. The Corporation has =
been named
as a potentially responsible party, as have many other corporations and
municipalities, in a number of environmental clean-up sites. The =
Corporation
continues to make progress in resolving these claims through settlement
discussions and payments from reserves previously established. The =
lawsuit by
the Corporation against several insurance carriers seeking recovery for
environmental costs will continue into 2000. The Corporation did settle =
with two
carriers in 1999 and another carrier in 1998, but the lawsuit is moving =
toward a
trial with the remaining carriers. No potential recovery from this =
lawsuit has
been utilized to offset or reduce any of the Corporation's =
environmental
liabilities. During the year, one site did require an increase in the =
reserve
for that site by $2,984,000. Significant sites remaining open at the =
end of the
year are: Caldwell Trucking landfill superfund site, Fairfield, New =
Jersey;
Pfohl Brothers landfill site, Cheektowaga, New York; Sharkey landfill =
superfund
site, Parsippany, New Jersey and Chemsol, Inc. superfund site, =
Piscataway, New
Jersey. The Corporation believes the outcome for any of these remaining =
sites
will not have a materially adverse effect on the Corporation's results =
of
operations or financial condition.
The noncurrent environmental obligation on the books at December 31, =
1999 was
$8,857,000, compared to $10,469,000 at December 1998.
12. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
The Corporation maintains a noncontributory defined benefit pension =
plan
covering substantially all employees. The Curtiss-Wright Retirement =
Plan
nonunion formula is based on years of credited service and the five =
highest
consecutive years' compensation during the last ten years of service =
and a "cash
balance" benefit; union employees who have negotiated a benefit under =
this plan
are entitled to a benefit based on years of service multiplied by a =
monthly
pension rate. Employees are eligible to participate in this plan after =
one year
of service and are vested after five years of service. At December 31, =
1999 and
December 31, 1998, the Corporation had prepaid pension costs of =
$50,447,000 and
$43,822,000, respectively, under this plan. The Corporation also =
maintains a
nonqualified Restoration Plan covering those employees whose =
compensation or
benefits exceeds the IRS limitation for pension benefits. Benefits =
under this
plan are not funded and as such, the Corporation had an accrued pension
liability of $2,102,000 and $2,142,000 at December 31, 1999 and 1998,
respectively. Disclosures made below are aggre gated in accordance with
Statement of Financial Accounting Standards No. 132, "Employers' =
Disclosures
about Pensions and Other Postretirement Benefits," and are reflective =
of a
measurement period from October 1 to September 30 for the respective =
years.
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 31
Pension Benefits =
Other Benefits
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D
(In thousands) 1999 =
1998 1999 1998
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D
=
=20
Change in Benefit Obligation:
Benefit obligation at beginning of Year $ 109,487 $ =
113,718 $ 5,187 $ 4,125
Service cost 4,703 =
3,770 191 177
Interest cost 7,377 =
7,399 298 335
Plan participants' contributions -- =
-- 42 --
Actuarial gain (338) =
(1,805) (264) 999
Benefits paid (14,264) =
(13,595) (401) (449)
Change due to curtailment of benefits -- =
-- (1,098) --
- ------------------------------------------------------------------------=
- ---------------------------------
Benefit obligation at end of year 106,965 =
109,487 3,955 5,187
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D
Change in Plan Assets:
Fair value of plan assets at beginning of year 216,882 =
230,743 -- --
Actual return on plan assets 35,105 =
(343) -- --
Employer contribution 90 =
77 359 449
Plan participants' contribution -- =
-- 42 --
Benefits paid (14,264) =
(13,595) (401) (449)
- ------------------------------------------------------------------------=
- ---------------------------------
Fair value of plan assets at end of year 237,813 =
216,882 -- --
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D
Funded status 130,848 =
107,395 (3,955) (5,187)
Unrecognized net actuarial gain (78,326) =
(59,314) (2,925) (2,560)
Unrecognized transition obligation (4,394) =
(6,582) -- --
Unrecognized prior service costs 217 =
181 (1,635) (1,828)
- ------------------------------------------------------------------------=
- ---------------------------------
Prepaid (accrued) benefit cost $ 48,345 $ =
41,680 $ (8,515) $ (9,575)
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D
Weighted-average assumptions as of December 31:
Discount rate 7.00% =
6.75% 7.00% 6.75%
Expected return on plan assets 8.50% =
8.50% -- --
Rate of compensation increase 4.50% =
4.50% -- --
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D
For measurement purposes, an 8.63% annual rate of increase in the per =
capita
cost of covered health care benefits was assumed for 1999. The rate was =
assumed
to decrease gradually to 5.5% for 2008 and remain at that level =
thereafter.
32 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
Pension =
Benefits Other Benefits
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
(In thousands) 1999 =
1998 1999 1998
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D
=
=20
Components of Net Periodic Benefit Cost (Revenue):
Service cost $ 4,703 $ =
3,770 $ 191 $ 177
Interest cost 7,377 =
7,399 298 335
Expected return on plan assets (15,579) =
(14,562) -- --
Amortization of prior service cost (36) =
(37) (193) (193)
Amortization of transition obligation (2,188) =
(1,157) -- --
Recognized net actuarial loss (851) =
(539) (184) (145)
Benefit cost reduction due to curtailment -- =
-- (813) --
- ------------------------------------------------------------------------=
- ------------------------------
Net periodic benefit cost (revenue) $ (6,574) $ =
(5,126) $ (701) $ 174
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D
=
1% 1%
=
Increase Decrease
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D
=
=20
Effect on total of services and interest cost components $ =
72 $ (60)
Effect on postretirement benefit obligation $ =
551 $ (461)
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D
The Corporation had foreign pension costs in 1999, 1998 and 1997 under
retirement plans of $734,000, $367,000 and $312,000, respectively. At =
December
31, 1999, approximately 31% of the plan's assets are invested in debt
securities, including a portion in U. S. Government issues. =
Approximately 69% of
plan assets are invested in equity securities.
Included in earnings for 1999, 1998, and 1997 is net pension income of
$6,574,000 $5,126,000 and $3,312,000, respectively. The Corporation =
discontinued
postretirement medical coverage for the former employees of its Buffalo =
plant
which resulted in a cost reduction of $813,000 for 1999.
13. LEASES
Buildings and Improvements Leased to Others: The Corporation leases =
certain of
its buildings and related improvements to outside parties under =
noncancelable
operating leases. Cost and accumulated depreciation of the leased =
buildings and
improvements at December 31, 1999, were $50,878,000 and $44,095,000,
respectively, and at December 31, 1998, were $50,816,000 and =
$44,559,000,
respectively.
Facilities Leased from Others: The Corporation conducts a portion of =
its
operations from leased facilities, which include manufacturing and =
service
facilities, administrative offices and warehouses. In addition, the =
Corporation
leases automobiles, machinery and office equipment under operating =
leases.
Rental expenses for all operating leases amounted to approximately =
$2,770,000 in
1999, $2,586,000 in 1998 and $2,239,000 in 1997.
At December 31, 1999, the approximate future minimum rental income and
commitment under operating leases that have initial or remaining =
noncancelable
lease terms in excess of one year are as follows:
Rental =
Rental=20
(In thousands) Income =
Commitment
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
2000 $ 5,571 =
$3,281
2001 5,277 =
2,930
2002 3,618 =
2,724
2003 2,442 =
2,448
2004 1,905 =
1,860
2005 and beyond 10,303 =
2,557
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
14. INDUSTRY SEGMENTS
The Corporation has adopted Statement of Financial Accounting Standards =
No. 131,
"Disclosures about Segments of an Enterprise and Related Information" =
(SFAS No.
131). SFAS No. 131 establishes new standards for reporting information =
about
operating segments and related disclosures about products and services =
and
geographic areas. Operating segments are defined as components of an =
enterprise
about which separate financial information is available, such that it =
is
evaluated regularly by the chief operating decision-maker in assessing
performance and allocating resources. The Corporation's chief operating
decision-maker is its Chairman and CEO. The operating segments are =
managed
separately because each offers different products and serves different =
markets.
The principle products and major markets of=20
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 33
the three operating segments are described in the At a Glance section =
of this
Annual Report.
The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies. Interest =
income is
not reported on an operating segment basis because short-term =
investments and
returns on those investments are aggregated and evaluated separately =
from
business operations.
The Corporation is changing the names of its segments in this report to =
better
reflect the activity of the business units and simplify references to =
them. The
name changes are as follows:
Motion Control (formerly Actuation and
Control Products & Services)
Metal Treatment (formerly Precision Manufacturing
Products & Services)
Flow Control (formerly Flow Control Products & Services)
The Corporation had one customer in the motion control segment which =
accounted
for 14% of consolidated revenue in 1999, 16% in 1998 and 15% in 1997.
CONSOLIDATED INDUSTRY SEGMENT INFORMATION:
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
Motion Metal =
Flow Segment Corporate Consolidated
(In thousands) Control Treatment =
Control Total & Other Total
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D
=
=20
Year Ended December 31, 1999:
Revenue from external customers $ 124,155 $ 104,143 =
$ 64,965 $ 293,263 $ -- $ 293,263
Intersegment revenues -- 337 =
-- 337 -- 337
Interest expense 449 170 =
224 843 446 1,289
Depreciation and amortization expense 5,056 4,407 =
2,355 11,818 1,046 12,864
Income tax expense 2,834 9,128 =
2,380 14,342 9,922 24,264
Segment net income 5,199 14,416 =
3,641 23,256 15,789 39,045
Segment assets 112,943 83,350 =
95,214 291,507 95,619 387,126
Expenditures for long-lived assets 3,433 14,530 =
1,543 19,506 377 19,883
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D
Year Ended December 31, 1998:
Revenue from external customers $ 105,400 $ 105,999 =
$ 38,014 $ 249,413 $ -- $ 249,413
Intersegment revenues -- 554 =
-- 554 -- 554
Interest expense 148 78 =
253 479 6 485
Depreciation and amortization expense 3,608 3,792 =
1,246 8,646 1,015 9,661
Income tax expense (benefit) (240) 11,671 =
1,997 13,428 5,099 18,527
Segment net income (loss) (1,033) 18,213 =
3,010 20,190 8,863 29,053
Segment assets 119,351 68,198 =
40,080 227,629 125,111 352,740
Expenditures for long-lived assets 2,111 6,053 =
2,180 10,344 298 10,642
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D
Year Ended December 31, 1997:
Revenue from external customers $ 97,369 $ 95,362 =
$ 26,664 $ 219,395 $ -- $ 219,395
Intersegment revenues -- 691 =
-- 691 -- 691
Interest expense 138 78 =
171 387 -- 387
Depreciation and amortization expense 3,455 3,656 =
1,005 8,116 981 9,097
Income tax expense 805 9,328 =
1,409 11,542 2,472 14,014
Segment net income 2,116 14,932 =
2,161 19,209 8,676 27,885
Segment assets 94,473 56,254 =
15,986 166,713 117,995 284,708
Expenditures for long-lived assets 4,675 4,838 =
1,244 10,757 474 11,231
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D
32 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
Reconciliations: =
December 31,
=
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
(In thousands) =
1999 1998 1997
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
=
=20
Revenues: =
=20
Total segment revenue =
$293,263 $249,413 $219,395 =20
Intersegment revenue =
337 554 691
Elimination of intersegment revenue =
(337) (554) (691)
- ------------------------------------------------------------------------=
- -----------------------------------------
Total consolidated revenues =
$293,263 $249,413 $219,395
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
Net Income: =
=20
Total segment net income =
$ 23,256 $20,190 $ 19,209
Insurance settlement =
7,354 1,116 --
Rental income, net =
2,531 1,873 2,634
Investment Income =
1,824 2,581 3,181
Pension income =
3,889 3,131 2,164
Corporate and other =
191 162 697
- ------------------------------------------------------------------------=
- -----------------------------------------
Total consolidated profit or loss =
$ 39,045 $ 29,053 $ 27,885
- ------------------------------------------------------------------------=
- -----------------------------------------
Assets: =
=20
Total assets for reportable segments =
$291,507 $227,629 $166,713
Short-term investments =
25,560 66,444 61,883
Pension assets =
50,447 43,822 38,674
Other assets =
19,652 14,914 17,528
Elimination of intersegment receivables =
(40) (69) (90)
- ------------------------------------------------------------------------=
- -----------------------------------------
Total consolidated assets =
$387,126 $352,740 $284,708
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
December 31, 1999 =
December 31, 1998 December 31, 1997
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
Long-Lived =
Long-Lived Long-Lived
(In thousands) Revenues(1) Assets =
Revenues(1) Assets Revenues(1) Assets
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
=
=20
Geographic Information: =
=20
United States $200,253 $209,370 =
$165,567 $217,668 $155,279 $201,718
United Kingdom 29,762 20,986 =
32,320 11,454 22,842 7,405
Other foreign countries 63,248 11,644 =
51,526 8,093 41,274 10,464
- ------------------------------------------------------------------------=
- -----------------------------------------
Consolidated total $293,263 $242,000 =
$249,413 $237,215 $219,395 $219,587
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
(1) Revenues are attributed to countries based on the location of the
customer.
CURTISS-WRIGHT CORPORATION AND =
SUBSIDIARIES | 35
- -------------------
CORPORATE DIRECTORY
- -------------------
DIRECTORS
Martin R. Benante
President and Chief Operating Officer
Thomas R. Berner
Partner
Law firm of Berner & Berner, P.C.
Admiral James B. Busey IV
Admiral, U.S. Navy (Ret.)
Former President and Chief Executive Officer
AFCEA International
David Lasky
Chairman and Chief Executive Officer
William B. Mitchell
Former Vice Chairman
Texas Instruments Inc.
John R. Myers
Management Consultant
Former Chairman of the Board
Garrett Aviation Services
Dr. William W. Sihler
Ronald E. Trzcinski Professor of Business Administration
Darden Graduate School of Business Administration
University of Virginia
J. McLain Stewart
Director
McKinsey & Co.
Management Consultants
OFFICERS
David Lasky
Chairman and Chief Executive Officer
Martin R. Benante
President and Chief Operating Officer
Gerald Nachman
Executive Vice President
George J. Yohrling
Vice President
Robert A. Bosi
Vice President-Finance
Brian D. O'Neill
General Counsel and Secretary
Gary J. Benschip
Treasurer
Kenneth P. Slezak
Controller
Gary R. Struening
Assistant Controller
James V. Maher
Assistant Secretary
36 | CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D
CORPORATE INFORMATION CORPORATE HEADQUARTERS
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
1200 Wall Street West, Lyndhurst, New =
Jersey 07071
Tel. (201) 896-8400 Fax. (201) 438-5680
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D
Annual Meeting
The 2000 Annual Meeting of Stockholders will be held on April 7, 2000, =
at 2:00
p.m., at the Novotel Meadowlands Hotel, One Polito Avenue, Lyndhurst, =
New Jersey
07071.
Stock Exchange Listing
The Corporation's common stock is listed and traded on the New York =
Stock
Exchange. The stock transfer symbol is CW.
Common Stockholders
As of December 31, 1999, the approximate number of holders of record of =
common
stock, par value $1.00 per share, of the Corporation was 3,848.
Stock Transfer Agent and Registrar
For services such as changes of address, replacement of lost =
certi/cates or
dividend checks, and changes in registered ownership, or for inquiries =
as to
account status, write to ChaseMellon Shareholder Services, L.L.C., at =
the
following addresses:
STOCKHOLDER INQUIRIES/ADDRESS CHANGES/CONSOLIDATIONS
P.O. Box 3315, South Hackensack, NJ 07606
DUPLICATE MAILINGS
If you receive duplicate mailings because of slight differences in the
registration of your accounts and wish to eliminate the duplication, =
please call
ChaseMellon's toll-free number, (800) 416-3743, or write to ChaseMellon
Shareholder Services, L.L.C., 85 Challenger Road, Ridge/eld Park, NJ =
07660 for
instructions on combining your accounts.
DIRECT STOCK PURCHASE PLAN/DIVIDEND REINVESTMENT PLAN
A plan administered by the Chase Manhattan Bank is available to =
purchase or sell
shares of Curtiss-Wright that provides a low-cost alternative to the =
traditional
methods of buying, holding, and selling stock. The plan also provides =
for the
automatic reinvestment of Curtiss-Wright dividends. For more =
information contact
our transfer agent, ChaseMellon Shareholder Services, L.L.C., toll-free =
at (888)
266-6793.
LOST CERTIFICATES/CERTIFICATE REPLACEMENT
Estoppel Department, P.O. Box 3317,=20
South Hackensack, NJ 07606
CERTIFICATE TRANSFERS
Stock Transfer Department, P. O. Box 3312,=20
South Hackensack, NJ 07606
Please include your name, address, and telephone number with all =
correspondence.
Telephone inquiries may be made to (800) 416-3743. Foreign: (201) =
329-8660.
Domestic hearing-impaired: (800) 231-5469. Foreign hearing-impaired: =
(201)
329-8354. Internet inquiries should be addressed to =
http://www.chasemellon.com
Investor Information
Investors, stockbrokers, security analysts, and others seeking =
information about
Curtiss-Wright Corporation should contact Robert A. Bosi, Vice
President--Finance, or Gary J. Benschip, Treasurer, at the Corporate
Headquarters; telephone (201) 896-1751.
Internet Address
Use http://www.curtisswright.com to reach the Curtiss-Wright home page =
for
information about Curtiss-Wright on the World Wide Web.
Financial Reports
This Annual Report includes most of the periodic /nancial information =
required
to be on /le with the Securities and Exchange Commission. The Company =
also /les
an Annual Report on Form 10-K, a copy of which may be obtained free of =
charge.
These reports, as well as additional /nancial documents such as =
quarterly
shareholder reports, proxy statements, and quarterly reports on Form =
10-Q, may
be obtained by written request to Gary J. Benschip, Treasurer, at =
Corporate
Headquarters.
COMMON STOCK PRICE RANGE
=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
1999 1998 =
=20
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
High Low High =
Low
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
First Quarter $ 40.6250 $ 31.0000 $ 39.1875 =
$33.8125
Second Quarter 39.0625 31.1875 41.8750 =
38.1250
Third Quarter 38.8750 30.3750 48.3750 =
39.1875
Fourth Quarter 38.6250 31.5000 39.5000 =
33.0625
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
Dividends =20
=
=3D=3D=3D=3D=3D=3D=3D
1999 =
1998
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
First Quarter $0.130 =
$0.130
Second Quarter $0.130 =
$0.130
Third Quarter $0.130 =
$0.130
Fourth Quarter $0.130 =
$0.130
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D
DESIGN: WATERSDESIGN.COM NEW YORK CITY PHOTOGRAPHY: MATTHEW KLEIN AND =
JOHN RAY
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CURTISS-WRIGHT CORPORATION
1200 Wall Street West
Lyndhurst, New Jersey 07071
CW
Listed
NYSE
THE NEW YORK STOCK EXCHANGE