SECURITIES and EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001
Commission File Number 1-134
CURTISS-WRIGHT CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 13-0612970
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1200 Wall Street West
Lyndhurst, New Jersey 07071
---------------------- ---------
(Address of principal executive offices) (Zip Code)
(201) 896-8400
---------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, par value $1.00 per share: 10,051,969 shares (as of April 12,
2001)
Page 1 of 18
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
TABLE of CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements:
Consolidated Balance Sheets 3
Consolidated Statements of Earnings 4
Consolidated Statements of Cash Flows 5
Consolidated Statements of Stockholders' Equity 6
Notes to Consolidated Financial Statements 7 - 11
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 12 - 15
Item 3 - Quantitative and Qualitative Disclosures about Market Risk 16
Forward-Looking Statements 16
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders 17
Item 6 - Exhibits and Reports on Form 8-K 18
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(UNAUDITED)
March 31, December 31,
2001 2000
----------- ----------
Assets
Current Assets:
Cash and cash equivalents $ 12,635 $ 8,692
Short-term investments 59,578 62,766
Receivables, net 65,290 67,815
Inventories, net 51,840 50,002
Deferred income taxes 9,431 9,378
Other current assets 4,186 3,419
---------- ----------
Total current assets 202,960 202,072
---------- ----------
Property, plant and equipment, at cost 249,799 246,896
Less: accumulated depreciation 158,005 156,443
---------- ----------
Property, plant and equipment, net 91,794 90,453
Prepaid pension costs 62,106 59,765
Goodwill 46,704 47,543
Other assets 9,233 9,583
---------- ----------
Total Assets $412,797 $409,416
========== ==========
Liabilities
Current Liabilities:
Current portion of long-term debt $ 1,300 $ 5,347
Dividends payable 1,302 0
Account payable 13,747 13,766
Accrued expenses 17,969 19,389
Income taxes payable 4,393 4,157
Other current liabilities 9,327 9,634
---------- ----------
Total current liabilities 48,038 52,293
Long-term debt 22,847 24,730
Deferred income taxes 22,996 21,689
Other liabilities 22,368 20,480
---------- ----------
Total Liabilities 116,249 119,192
---------- -----------
Stockholders' Equity
Common stock, $1 par value 15,000 15,000
Capital surplus 50,682 51,506
Retained earnings 419,783 411,866
Unearned portion of restricted stock (18) (22)
Accumulated other comprehensive income (7,852) (5,626)
---------- -----------
477,595 472,724
Less: cost of treasury stock 181,047 182,500
---------- ----------
Total Stockholders' Equity 296,548 290,224
---------- ----------
Total Liabilities and Stockholders' Equity $412,797 $409,416
========== ==========
See notes to consolidated financial statements
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(In thousands except per share data)
Three Months Ended
March 31,
2001 2000
---------- ----------
Net sales $79,917 $82,237
Cost of sales 49,906 53,308
---------- ----------
Gross profit 30,011 28,929
Research & development expenses 897 1,388
Seling expenses 4,593 4,756
General and administrative expenses 13,338 10,579
Environmental remediation and administrative
recoveries, net of expenses (82) 117
---------- ----------
Operating income 11,265 12,089
Investment income, net 843 505
Rental income, net 743 1,160
Pension income, net 2,344 1,744
Other expenses, net (167) (32)
Interest expense (249) (376)
--------- ----------
Earnings before income taxes 14,779 15,090
Provision for income taxes 5,560 5,861
--------- ----------
Net earnings $ 9,219 $ 9,229
========= ==========
Basic earnings per common share $0.92 $0.92
========= ==========
Diluted earnings per common share $0.90 $0.91
========= ==========
Dividends per common share $0.13 $0.13
========= ==========
Weighted average shares outstanding:
Basic 10,039 10,035
Diluted 10,212 10,132
See notes to consolidated financial statements
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
Three Months Ended
March 31,
2001 2000(1)
-------- --------
Cash flows from operating activities:
Net earnings $ 9,219 $ 9,229
--------- ---------
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 3,748 3,559
Net gains on short-term investments (63) (79)
Noncash pension income (2,344) (1,744)
Increase in deferred taxes 1,254 2,511
Changes in operating assets and liabilities
(net of business acquired):
Proceeds from sales of trading securities 105,293 25,800
Purchases of trading securities (102,042) (31,699)
Decrease in receivables 3,356 1,374
Increase in inventory (349) (672)
Decrease in progress payments (648) (354)
(Decrease) increase in accounts payable
and accrued expenses (3,249) 2,161
Increase (decrease) in income taxes payable 236 (847)
Decrease (increase) in other assets 1,584 (162)
Increase (decrease) in other liabilities 102 (7,210)
Other, net 633 158
--------- ---------
Total adjustments 7,511 (7,204)
--------- ---------
Net cash provided by operating activities 16,730 2,025
--------- ---------
Cash flows from investing activities:
Proceeds from sales of real estate and equipment 380 122
Additions to property, plant and equipment (3,322) (2,026)
Acquisition of new business (2,325) 0
--------- ---------
Net cash used by investing activities (5,267) (1,904)
--------- ---------
Cash flows from financing activities:
Debt Repayments (5,089) 0
Common stock repurchases 0 (548)
--------- ---------
Net cash used for financing activities (5,089) (548)
--------- ---------
Effect of exchange rate changes on cash (2,431) (604)
--------- ---------
Net increase (decrease) in cash and cash equivalents 3,943 (1,031)
Cash and cash equivalents at beginning of period 8,692 9,547
--------- ---------
Cash and cash equivalents at end of period $ 12,635 $ 8,516
========= =========
(1) Certain amounts reclassified in order to conform to current presentation
See notes to consolidated financial statements
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
(In thousands)
Unearned Accumulated
Portion of Other
Common Capital Retained Restricted Comprehensive Treasury
Stock Surplus Earnings Stock Income Stock
------- ------- -------- ----------- ------------ ---------
December 31, 1999 $15,000 $51,599 $376,006 $(24) $(2,622) $181,604
-----------------------------------------------------------
Net earnings 41,074
Common dividends (5,214)
Restricted stock
issued 1 (15) (14)
Common stock
repurchased 1,489
Stock options
exercised, net (94) (579)
Amortization of
earned portion
of restricted stock 17
Translation
adjustments, net (3,004)
----------------------------------------------------------
December 31, 2000 15,000 51,506 411,866 (22) (5,626) 182,500
----------------------------------------------------------
Net earnings 9,219
Common dividends (1,302)
Stock options
exercised, net (824) (1,453)
Amortization of
earned portion
of restricted stock 4
Translation
adjustments, net (2,226)
----------------------------------------------------------
March 31, 2001 $15,000 $50,682 $419,783 $(18) $(7,852) $181,047
==========================================================
See notes to consolidated financial statements
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS of PRESENTATION
Curtiss-Wright Corporation and its subsidiaries (the "Corporation") is
a diversified multi-national 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 nine manufacturing facilities,
thirty-nine metal treatment service facilities and four component
overhaul locations.
The information furnished in this report has been prepared in
conformity with US generally accepted accounting principles and as such
reflects all adjustments, consisting primarily of normal recurring
accruals, which are, in the opinion of management, necessary for a fair
statement of the results for the interim periods presented. The
unaudited consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes
thereto included in the Corporation's 2000 Annual Report on Form 10-K.
The results of operations for these interim periods are not necessarily
indicative of the operating results for a full year. Certain
reclassifications of prior period amounts have been made in order to
conform to the current presentation.
2. ACQUISITIONS
On March 23, 2001, the Corporation acquired the operating assets of
Solent & Pratt Ltd. Solent & Pratt is a manufacturer of high
performance butterfly valves and has been a global supplier to the
petroleum, petrochemical, chemical and process industries for over 40
years. The operations are located in Bridport, England and will
continue to operate under the Solent & Pratt name.
The Solent & Pratt butterfly valve product line complements products
that the Corporation currently offers to its existing markets. The
addition also provides Curtiss-Wright with a European manufacturing
presence for its Flow Control business segment and strengthens its
distribution capabilities in that region. Solent & Pratt has a
substantial installed base of butterfly valves worldwide.
The Corporation purchased the assets and assumed certain operating
liabilities of Solent & Pratt for approximately $1.5 million in cash
and the retirement of outstanding debt. The acquisition was accounted
for as a purchase in the first quarter of 2001. The excess of the
purchase price over the fair value of the net assets acquired is
estimated at $1.8 million and is being amortized over 30 years. The
fair value of the net assets acquired is based on preliminary estimates
and may be revised at a later date.
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
(UNAUDITED)
3. RECEIVABLES
Receivables at March 31, 2001 and December 31, 2000, include amounts
billed to customers and unbilled charges on long-term contracts
consisting of amounts recognized as sales but not billed as of the
dates presented. Substantially all amounts of unbilled receivables are
expected to be billed and collected within a year. The composition of
receivables for those periods is as follows:
(In thousands)
--------------------------
March 31, December 31,
2001 2000
---------- -----------
Accounts receivable, billed $53,711 $60,927
Less: progress payments applied (65) (1,508)
--------- ----------
53,646 59,419
--------- ----------
Unbilled charges on long-term contracts 22,134 18,090
Less: progress payments applied (7,851) (7,040)
--------- ----------
14,283 11,050
--------- ----------
Allowance for doubtful accounts (2,639) (2,654)
--------- ----------
Receivables, net $65,290 $67,815
========= ==========
4. INVENTORIES
Inventories are valued at the lower of cost (principally average cost)
or market. The composition of inventories at March 31, 2001 and
December 31, 2000 is as follows:
(In thousands)
------------------------
March 31, December 31,
2001 2000
--------- -----------
Raw materials $12,834 $11,955
Work-in-process 11,518 10,815
Finished goods/component parts 34,489 32,621
Inventoried costs related to US government
and other long-term contracts 5,875 5,961
---------- ------------
Gross inventory 64,716 61,352
Less: inventory reserves (12,486) (10,944)
Less: progress payments (390) (406)
---------- ------------
Inventories, net $51,840 $50,002
========== ============
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
(UNAUDITED)
5. ENVIRONMENTAL MATTERS
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
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 the
current values of anticipated remediation, not reduced by any potential
recovery from insurance carriers or through contested third-party legal
actions, and are not discounted for the time value of money.
The Corporation is joined with many other corporations and
municipalities as potentially responsible parties (PRPs) in a number of
environmental cleanup sites, which include but are not limited to the
Caldwell Trucking landfill superfund site, Fairfield, New Jersey;
Sharkey landfill superfund site, Parsippany, New Jersey; Pfohl Brothers
landfill site, Cheektowaga, New York; Amenia landfill site, Amenia, New
York; and Chemsol, Inc. superfund site, Piscataway, New Jersey.
The Corporation believes that the outcome of any of these matters will
not have a material adverse effect on the Corporation's results of
operations, financial condition, or liquidity.
6. SEGMENT INFORMATION
(In thousands) Three Months Ended March 31, 2001
Motion Metal Flow Segment Corporate Consolidated
Control Treatment Control Totals & Other Totals
Revenue from external
customers $29,957 $27,872 $22,088 $79,917 $0 $79,917
Intersegment revenues 0 106 0 106 (106) 0
Segment operating income 4,583 5,463 1,219 11,265 0 11,265
Segment assets 94,957 87,116 86,190 268,263 144,534 412,797
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
(UNAUDITED)
Three Months Ended March 31, 2000
(In thousands)
Motion Metal Flow Segment Corporate Consolidated
Control Treatment Control Totals & Other(1) Totals
Revenue from external
customers $27,344 $28,224 $26,669 $82,237 $0 $82,237
Intersegment revenues 0 158 0 158 (158) 0
Segment operating income 1,409 6,832 2,545 10,786 1,303 12,089
Segment assets 112,477 85,061 87,770 285,308 106,367 391,675
(1) Operating income for Corporate and Other includes a $2.8 million gain for
the curtailment of postretirement benefits associated with the closing of the
Fairfield, NJ facility partially offset by accrued postemployment costs totaling
$.7 million.
Reconciliation:
Three months ended
(In thousands) March 31, 2001 March 31, 2000
-------------- --------------
Consolidated operating income $11,265 $12,089
Investment income, net 843 505
Rental income, net 743 1,160
Pension income, net 2,344 1,744
Other expense, net (167) (32)
Interest expense (249) (376)
--------- ---------
Earnings before income taxes $14,779 $15,090
========= =========
7. COMPREHENSIVE INCOME
Total comprehensive income for the periods ended March 31, 2001 and 2000 are as
follows:
Three months ended
(In thousands) March 31, 2001 March 31, 2000
-------------- --------------
Net earnings $9,219 $9,229
Equity adjustment from foreign currency
translations (2,226) 123
-------- -------
Total comprehensive income $6,993 $9,352
======== =======
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
(UNAUDITED)
8. EARNINGS PER SHARE
The Corporation accounts for its earnings per share (EPS) in accordance
with Statement of Financial Accounting Standards No. 128, "Earnings per
Share" (SFAS No. 128). Diluted earnings per share were computed based
on the weighted average number of shares outstanding plus all
potentially dilutive common shares issuable for the periods. Dilutive
common shares for the three months ended March 31, 2001 and March 31,
2000 were 173,000 and 97,000, respectively.
9. Contingencies and Commitments
The Corporation's Drive Technology subsidiary located in Switzerland
entered into sales agreements with two European defense organizations
which contained offset obligations to purchase approximately 43.0
million Swiss francs of product from suppliers of two European
countries over multi-year periods which expire in 2005 and 2007. The
agreements contain a penalty of 5% of the unmet obligation at the end
of the term of the agreement.
The Corporation expects to fully comply with both its obligations under
these agreements.
10. Accounting for Derivatives and Hedging Activities
The Corporation's adopted Financial Accounting Standard No. 133
"Accounting for Derivatives and Hedging Activities" effective January
1, 2001. The adoption of this standard had no material effect on the
Corporation's results of operation or financial condition due to its
limited use of derivatives.
PART I - ITEM 2
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
MANAGEMENT'S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS of OPERATIONS
RESULTS of OPERATIONS
The Corporation's consolidated net earnings for the first quarter of 2001
totaled $9.2 million, or $0.90 per diluted share. Net earnings for the first
quarter of 2000, which totaled $9.2 million or $0.91 per diluted share included
several unusual items, the net effect of which had a favorable impact of $2.0
million on pre-tax earnings and $1.3 million on after-tax earnings. Excluding
the unusual items, consisting of a gain related to post-retirement medical
benefits, partially offset by additional consolidation costs from the Motion
Control manufacturing consolidation and other post-employment expenses, net
earnings in the first quarter of 2000 would have been $8.0 million, or $0.79 per
diluted share. Net earnings for the first quarter of 2001 (which contained no
unusual or normalizing adjustments) compared to normalized net earnings for the
same period of 2000 reflects a 16% improvement. Operating income rose 12% to
$11.3 million for the first quarter of 2001, as compared with normalized
operating income of $10.0 million for the first quarter of 2000.
Sales for the first quarter of 2001 declined 3% to $79.9 million compared
with $82.2 million for the prior year quarter. The slight decline in sales
largely reflects the adverse impacts of foreign currency exchange rates on sales
and some weakness in a few of the markets served as discussed further in the
Operating Performance section below. Relative foreign currency exchange rates in
the first quarter of 2001, as compared to last year, negatively affected sales
by approximately $1.3 million and operating income by approximately $0.5
million.
New orders received for the first quarter of 2001 totaled $66.9 million,
declining 5% from orders of $70.6 million for the first quarter of 2000. The
Corporation's backlog at March 31, 2001 totaled $169.6 million, down 7% from
backlog of $182.6 million at December 31, 2000.
Operating Performance:
Motion Control
Sales for the Corporation's Motion Control segment improved 10% to $30.0
million in the first quarter of 2001, from $27.3 million in the first quarter of
2000, partially due to increased shipments of production hardware for the F-22
Raptor tactical fighter and light armored vehicles. Operating income for the
quarter improved substantially to $4.6 million from $1.4 million in the first
quarter of 2000. The increase in operating margin to 15.3% in the first quarter
from 5.2% in the same period in 2000 was principally due to increased
effectiveness of lean manufacturing initiatives. The component overhaul and
repair business has been experiencing softened demand in the first quarter of
2001.
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
MANAGEMENT'S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS of OPERATIONS, continued
New orders received for the Motion Control segment totaled $18.8 million in
the first quarter of 2001, declining 20% from orders received in the first
quarter of 2000. The decline in orders reflects lower activity in military
programs and the weaker demand in the component overhaul and repair business.
Metal Treatment
Sales for the Corporation's Metal Treatment segment totaled $27.9 million
for the first quarter of 2001, slightly lower when compared with $28.2 million
in the first quarter of 2000. The first quarter's decline in sales from the same
period last year was the result of unfavorable foreign currency exchange rate
movements that adversely impacted sales by approximately $1.0 million. These
foreign currency exchange rate movements negatively affected operating income by
approximately $0.5 million when compared to the rates that existed in the first
quarter of 2000.
The Metal Treatment business segment experienced softness in the
automotive/truck and agricultural equipment markets. These weaknesses were
offset by improvements in the oil and gas market as well as the aerospace
sector, which represent about 50% of the business activity for this segment.
Operating margins normalized for the adverse influence of foreign currency
exchange rates would have been 21.3% for the first quarter 2001, as compared
with 24.2% for the first quarter of 2000 and 21.9% for the fourth quarter of
2000. This year's performance was also adversely affected by increases in the
cost of natural gas for heat-treating operations, transition costs associated
with an acquisition completed in December of last year, start-up costs for a new
facility in Indianapolis, and lower volume at some of the Company's facilities
that have a high concentration of business related to the automotive sector.
Flow Control
The Corporation's Flow Control segment posted sales of $22.1 million for
the first quarter of 2001, 17% lower when compared with $26.7 million in the
first quarter of 2000. Lower sales during the first quarter of 2001 versus the
same period last year were primarily the result of delays in the timing of new
construction programs for Asian nuclear power plants and in the release of Navy
contracts. The Company expects the Navy business to be made up during the course
of this year based on contractual delivery schedules to the Navy. It is expected
that sales to the Navy should exceed last year's sales by 15%. The business
segment was also affected by the slowdown in the automotive and heavy truck
markets, offset by very strong demand for product going to the petrochemical and
oil and gas markets, primarily for maintenance, repair and overhaul
applications.
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
MANAGEMENT'S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS of OPERATIONS, continued
Corporate and Other
The Corporation had no non-segment operating income in the first quarter of
2001 as compared with $1.3 million of non-segment operating income in the same
period for the prior year. In the first quarter of 2000, the Corporation
recognized a $2.8 million reduction to general and administrative expenses from
the curtailment of postretirement benefits associated with the closing of the
Fairfield, New Jersey facility. This benefit was partially offset by other
non-recurring postemployment expenses. Corporate overhead costs for the first
quarter of 2001 were reduced by 33% from the prior year period and benefited
from a small adjustment to a final environmental insurance settlement recorded
in the fourth quarter of 2000.
Non-Operating Revenues and Costs
For the first quarter of 2001, the Corporation recorded other non-operating
net revenue totaling $3.8 million, compared with $3.4 million for the first
quarter of 2000. The increase was primarily caused by higher pension income,
reflecting the higher overfunded status of the Corporation's pension plan. On a
period to period basis, investment income improved but was offset by a decline
in net rental income due to a tax appeal recovery recorded in the first quarter
of 2000.
CHANGES IN FINANCIAL CONDITION:
Liquidity and Capital Resources:
The Corporation's working capital was $154.9 million at March 31, 2001, a
3% improvement over working capital at December 31, 2000 of $149.8 million. The
ratio of current assets to current liabilities was 4.22 to 1 at March 31, 2001,
compared with a current ratio of 3.86 to 1 at December 31, 2000.
Cash, cash equivalents and short-term investments totaled $72.2 million in
the aggregate at March 31, 2001, increasing slightly from $71.5 million at the
prior year-end. During the first quarter of 2001, the Corporation repaid a $4.0
million industrial revenue bond and paid down its long-term Swiss debt by $1.0
million. Also in the period, the Corporation acquired the net assets of Solent &
Pratt Ltd. for cash, as discussed in Note 2 to the Consolidated Financial
Statements and under Other Developments, below. Cash flow for the first quarter
of 2001 also benefited from a substantial decrease in billed receivables. Days
sales outstanding at March 31, 2001 was also reduced to 58 days from 63 at
December 31, 2000.
The Corporation has two credit agreements, a Revolving Credit Agreement and
a Short-Term Credit Agreement, in effect aggregating $100.0 million with a group
of five banks. The credit agreements allow for borrowings to take place in US or
certain foreign currencies. The Revolving Credit Agreement commits a maximum of
$60.0 million to the Corporation for cash borrowings and letters of credit. The
unused credit
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
MANAGEMENT'S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS of OPERATIONS, continued
available under this facility at March 31, 2001 was $33.3 million. 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 $40.0 million, all of which was
available at March 31, 2001. The Short-Term Credit Agreement expires on December
14, 2001. The Short-Term Credit Agreement may be extended, with the consent of
the bank group, for additional periods not to exceed 364 days each. Cash
borrowings under the two credit agreements at March 31, 2001 were at a US Dollar
equivalent of $9.4 million, compared with cash borrowing of $18.6 million at
March 31, 2000. Borrowings under these agreements were used to finance the
acquisition of Drive Technology in December 1998 and have a remaining balance of
16.5 million Swiss francs. The loans had variable interest rates averaging 3.75%
for the first quarter of 2001 and variable interest rates averaging 2.97% for
the first quarter of 2000.
During the first quarter of 2001, internally available funds were adequate
to meet capital expenditures of $3.3 million. Expenditures incurred during the
first quarter were primarily for machinery and equipment within the Motion
Control and Metal Treatment segments. The Corporation is expected to make
additional capital expenditures of approximately $15 million during the balance
of the year, primarily for machinery and equipment for the business segments.
Funds from internal sources are expected to be adequate to meet planned capital
expenditures, environmental and other obligations for the remainder of the year.
Other Developments
As discussed in Note 2 to the Consolidated Financial Statements, during the
first quarter of 2001, the Corporation made a small but strategic acquisition of
Solent & Pratt, an English valve manufacturer. This acquisition gives the
Corporation a complementary product line and a very strong distribution network
in the European petrochemical valve market. In addition, the Corporation sold a
distribution business in Western Canada to a well-positioned distribution firm
in the area, resulting in a small gain in the first quarter of 2001.
PART I - ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the Corporation's market risk during the
three months ended March 31, 2001. Information regarding market risk and market
risk management policies is more fully described in item 7A. "Quantitative and
Qualitative Disclosures about Market Risk" of the Corporation's Annual Report on
Form 10-K for the year ended December 31, 2000.
FORWARD-LOOKING INFORMATION
Except for historical information contained herein, this Quarterly Report on
Form 10-Q does contain "forward looking" information within the meaning of
Section 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act
of 1934. Examples of forward looking information include, but are not limited
to, (a) projections of or statements regarding return on investment, future
earnings, interest income, other income, earnings or loss per share, investment
mix and quality, growth prospects, capital structure and other financial terms,
(b) statements of plans and objectives of management, (c) statements of future
economic performance, and (d) statements of assumptions, such as economic
conditions underlying other statements. Such forward looking information can be
identified by the use of forward looking terminology such as "believes,"
"expects," "may," "will," "should," "anticipates," or the negative of any of the
foregoing or other variations thereon or comparable terminology, or by
discussion of strategy. No assurance can be given that the future results
described by the forward looking information will be achieved. Such statements
are subject to risks, uncertainties, and other factors which are outside our
control that could cause actual results to differ materially from future results
expressed or implied by such forward looking information. Readers are cautioned
not to put undue reliance on such forward-looking information. Such statements
in this Report include, without limitation, those contained in Part I, Item 2,
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Notes to the Consolidated Financial Statements including,
without limitation, the Environmental Matters Note. Important factors that could
cause the actual results to differ materially from those in these
forward-looking statements include, among other items, (i) a reduction in
anticipated orders; (ii) an economic downturn; (iii) unanticipated environmental
remediation expenses or claims; (iv) changes in the need for additional
machinery and equipment and/or in the cost for the expansion of the
Corporation's operations; (v) changes in the competitive marketplace and/or
customer requirements; (vi) an inability to perform customer contracts at
anticipated cost levels; (vii) changes in foreign currency exchange rates and
(viii) other factors that generally affect the business of companies operating
in the Corporation's Segments.
PART II - OTHER INFORMATION
Item 4. SUBMISSION of MATTERS to a VOTE of SECURITY HOLDERS
On May 4, 2001, the Registrant held its annual meeting of stockholders. The
matters submitted to a vote by the stockholders were the election of directors
and the retention of independent accountants for the Registrant.
The vote received by the director nominees was as follows:
For Withheld
Martin R. Benante 8,524,148 1,078,956
James B. Busey IV 8,524,089 1,079,015
S. Marce Fuller 8,523,813 1,079,291
Dave Lasky 8,441,999 1,161,105
William B. Mitchell 8,523,975 1,079,129
John Myers 8,523,010 1,080,094
William W. Sihler 8,524,384 1,078,720
J. McLain Stewart 8,521,192 1,081,912
There were no votes against or broker non-votes. The stockholders approved
the retention of PricewaterhouseCoopers LLP, independent accountants for the
Registrant. The holders of 8,520,172 shares voted in favor; 1,080,586 voted
against; 2,346 abstained. There were no broker non-votes.
Item 6. EXHIBITS and REPORTS on FORM 8-K
(a) Exhibits
2.2 Amended and Restated Distribution Agreement, dated
as of January 9, 2001, between the Company and
Unitrin, Inc. (incorporated by reference to Appendix
A to the Company's Preliminary Schedule 14C with
respect to the recapitalization of the Company dated
January 12, 2001.)
2.3 Amended and Restated Agreement and Plan of Merger,
dated as of January 9, 2001, among the Company,
Unitrin, Inc., and CW Disposition Company
(incorporated by reference to Appendix B to the
Company's Preliminary Schedule 14C with respect to
the recapitalization of the Company dated January 12,
2001.)
(b) Reports on Form 8-K
The Registrant did not file any report on Form 8-K during
the quarter ended March 31, 2001.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
CURTISS-WRIGHT CORPORATION
--------------------------
(Registrant)
By: /s/ Robert A. Bosi
-------------------------
Robert A. Bosi
Vice President - Finance
By: /s/ Glenn E. Tynan
-------------------------
Glenn E. Tynan
Controller
Dated: May 15, 2001