CURTISS-WRIGHT CORPORATION
1997 ANNUAL REPORT
Building on basic strengths for
balanced growth
Expanding our markets
globalization
Focusing on our customers' needs
Curtiss-Wright Corporation, headquartered in Lyndhurst, N.J., 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, automotive, shipbuilding, oil, petrochemical,
agricultural equipment, power generation, metalworking, and fire and rescue
industries. The Company employs approximately 1,850 people. Operations are
conducted through three domestic manufacturing facilities, 34 metal treatment
service facilities located in North America and Europe, and five component
overhaul facilities located in New Jersey, Florida, North Carolina, Denmark and
Singapore.
Contents
Industry Focus 1
Financial Highlights 2
Letter to Stockholders 3
Review of Operations 6
At a Glance 9
Building on Basic Strengths
Innovation 10
Globalization 12
Partnerships 14
Management's Discussion and Analysis of Financial Condition
and Results of Operations 16
Report of the Corporation 20
Report of Independent Accountants 20
Consolidated Financial Statements 21
Notes to Consolidated Financial Statements 25
Forward-Looking Statements 34
Quarterly Results of Operations (Unaudited) 35
Consolidated Selected Financial Data 35
Corporate Directory and Information 36
The commercial aerospace industry is currently experiencing a dramatic ramp-up
in aircraft production schedules, with additional increases anticipated. This
follows a consolidation that has taken place through acquisitions, cutbacks and
rationalization activities during an extended slowdown period that began in
1992. Reversing direction so quickly has presented difficulties for a large
number of suppliers in meeting delivery date commitments to airlines. Despite
these difficulties, Curtiss-Wright has been a dependable, on-time supplier of
our products to airframe assemblers.
Commercial aircraft delivery schedules are projected to continue at
relatively high levels for the next few years. This presents a unique
opportunity to Curtiss-Wright as a supplier of products or services for every
Boeing and Airbus airliner. Many major airlines have made long-term order
commitments and have aligned themselves with either Boeing or Airbus to gain
favorable pricing. The result may be a reduction in the cyclicality of the
industry as production schedules can be smoothed out and extended. The fact
remains that not all of the orders are "firm." A meaningful portion reflects
options, and future deliveries may be affected by the profitability of the
airline industry. Economic cycles, fuel costs and regional factors such as the
currency and business uncertainties in Asia will continue to influence airline
requirements.
--------------
industry focus
--------------
Scheduled overhaul, repair and maintenance of commercial aircraft have
increased due to the increase in airline traffic. This aftermarket business will
continue to be driven by aircraft utilization levels and aging of the fleets.
Currently, airlines perform about two-thirds of the total world airframe
maintenance in-house, with the balance being outsourced to third parties.
Recently, however, there has been a trend toward more outsourcing as a more
effective practice for some airlines. This will increase the size of the market
available for independent overhaul and repair operators such as Curtiss-Wright.
Procurement levels by the United States military for tactical aircraft
remain depressed. Concentration has been on the development of new aircraft, and
two of these programs, the V-22 Osprey and F/A-18 E/F Super Hornet, are entering
the low-level production stage of their development. The F-22 Raptor is
currently scheduled to begin production in 1999. While initial delivery
schedules for these aircraft will be slow, they will increasingly contribute to
sales volume for the U.S. military sector. Curtiss-Wright participates in all
three of these programs. The extent of production of these aircraft is subject
to the uncertainty of future procurement actions by the U.S. government.
The industrial segments where we participate have enjoyed several years of
stable growth. Generally the outlook is still positive for the coming year. One
area of our involvement is as a supplier of valves and their spare parts to
nuclear power plants for aftermarket applications in the United States, which
historically have not been closely tied to economic cycles. Another important
area for our metal treatment operations is the automotive industry, where the
overall level of production is expected to remain favorable.
While a major consolidation in the United States has already taken place
in the aerospace industry, particularly at the prime contractor level, we
believe that this trend will continue at the subcontractor level. Curtiss-Wright
continues to seek acquisition opportunities. We are not limiting ourselves to
the aerospace segment but are also looking to grow in other markets in which we
do business. In addition, the Company plans to continue to expand and produce
balanced internal growth among all of our businesses.
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Cincinnati, Ohio Long Island, New York Minneapolis, Minnesota Unna, Germany
Miami, Florida
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2
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Dollars in thousands except per share data) 1997 1996 1995
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Performance:
Sales $219,395 $170,536 $154,446
Earnings before interest, taxes, depreciation and amortization 51,383 33,462 37,553
Net earnings 27,885 16,109 18,169
Basic earnings per common share 2.74 1.59 1.79
Return on sales 12.7% 9.4% 11.8%
Return on assets 10.1% 6.3% 7.4%
Return on average stockholders' equity 14.4% 9.1% 11.0%
Research and development costs:
Corporation sponsored 1,877 997 1,180
Customer sponsored 12,403 15,248 17,362
New orders 259,260 171,649 150,870
Backlog at year-end 149,201 109,336 103,566
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Year-End Financial Position:
Working capital $132,751 $115,417 $120,571
Current ratio 4.4 to 1 3.7 to 1 4.6 to 1
Total assets $284,708 $267,164 $246,201
Stockholders' equity $204,853 $183,363 $172,179
Stockholders' equity per common share $ 20.13 $ 18.04 $ 16.95
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Other Year-End Data:
Depreciation and amortization $ 9,097 $ 8,946 $ 9,512
Capital expenditures $ 11,231 $ 14,156 $ 6,985
Shares of common stock outstanding 10,175,140 10,162,206 10,155,646
Number of stockholders 4,142 4,719 5,944
Number of employees 1,884 1,738 1,482
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Dividends per Common Share $ .505 $ .50 $ .50
=======================================================================================================
Sales/New Orders Operating Income/Net earnings Return on Equity
(in thousands) (in thousands) (percentage)
[Line Graph Omitted] [Line Graph Omitted] [Line Graph Omitted]
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Windsor, Connecticut Milwaukee, Wisconsin London, United Kingdom
St. Truiden, Belgium
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3
LETTER TO STOCKHOLDERS
>> Fellow Stockholders: In 1997, Curtiss-Wright enjoyed its most profitable year
since 1989, with performance improvements over 1996 occurring in all of our
operations. Net earnings increased 73% from 1996 on a sales increase of 29%.
These improvements resulted not only from growth in our markets but also from
past efforts to improve our positions in those markets. In 1997, the Company
also has made additional progress to improve our future profitability. Our faith
in the future of the Company is evidenced by the two-for-one stock split
effectuated at year-end 1997.
Balanced Growth
While Curtiss-Wright is benefiting from an upturn in the commercial aerospace
market, we nonetheless have taken steps to reduce exposure to the cyclical
nature of that business. We have been building upon the basic strengths of the
organization to broaden ourselves in several areas in order to generate a more
balanced growth in the future. This balance applies to growth not only within
the aerospace industry, but also in other areas in which we operate.
The elements of balance in Curtiss-Wright are reflected in a number of
interrelated trends in its current businesses:
o Growth in the aftermarket segment o Customer diversification
o Globalization o Increasing role as a service provider
o Diversification of industries served
Curtiss-Wright Has Expanded Its Business Base Within the Aerospace Industry
Curtiss-Wright always has been recognized as an aerospace manufacturer. For the
most part, we have been a supplier of products and services to three primary
customers: Boeing, Lockheed-Martin and Airbus. Outside of spare part sales, the
Company was formerly tied to the production of new aircraft and exposed to the
highly cyclical nature of that segment of the industry. We were not taking
advantage of the core competencies of the Company to expand our business beyond
our traditional operations. We have now established a presence in the overhaul
and repair segment of the industry and are able to participate over the entire
life cycle of the aircraft rather than being limited to initial production and
spare parts support.
We Have Become More Balanced in Our Aerospace/Marine Markets
In our aerospace and marine market segment the Company has achieved greater
balance within product categories. The manufacture of flight control and
actuation systems, as a result of our expansion in other areas, now represents
only one-third of our sales for this market segment. There is now a more even
distribution among the operations we perform. Much of the redistribution is a
result of our success in expanding our peen-forming services and in developing
our overhaul and repair business. These operations are now almost equal in size.
The overhaul and repair segment has grown from a sales base of only a few
million dollars in 1992 to a volume of approximately $42 million in 1997. The
result is a reduction of our dependence on new aircraft production and an
expansion of value to Curtiss-Wright from every aircraft produced. We have made
significant advances in this direction.
The Company Has Expanded Its Customer Base
Establishing overhaul and repair operations has enlarged our customer base. We
have successfully been able to build upon Curtiss-Wright's reputation in our
traditional market both to expand into a new area and to leverage our reputation
to
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Lynn, Massachusetts Wellington, Kansas Cleveland, Ohio Bayonne, France
Phoenix, Arizona
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4
dramatically increase the customer base we serve. We now include all airlines
and airfreight haulers as potential customers for our aftermarket services. In
addition, we have extended our aerospace activities to the manufacture of wing
flap actuation systems for business jets, an entirely separate and new market
for us. Our entry into these areas has increased the total amount of potential
business available to us. These accomplishments will also provide additional
platforms for continued growth of the Company.
As we have increased the number of our metal treatment facilities, the
number of customers included in our served markets also has increased. The
requirement to be local to the customer in order to provide rapid turnaround
time for our services limits the geographical area that can be effectively
serviced by each of our locations. We added two new facilities in 1997 and
continue to expand to new geographic markets and identify new global
opportunities for our services. In addition, we constantly are extending our
services to new customers and new applications at existing locations.
The Company Has Market Diversification
Even with the growth that occurred in our aerospace business in 1997, a
significant portion of our sales was generated from other markets. Marine, power
generation, automotive, transportation, agriculture and other industrial areas
represented approximately one-third of our sales for the year. We continue to
look to these markets for additional growth opportunities and have made
investments to add to our level of diversification. The fact that some of our
products and services are applicable to a number of market areas can provide
some additional offset to the cyclicality of the aerospace industry.
We Have Become More International in Managing Our Businesses
Only a few years ago, our customer base was predominately concentrated in North
America. This was especially true in our aerospace and marine segment.
We have continued to add to the number of our metal treatment facilities,
with two new foreign operations being opened in 1997 and another scheduled for
early 1998. Other markets with good potential have been identified and are
currently being evaluated. They include not only additions in the United States
and Europe, where we now operate, but also new geographical areas.
Our industrial valve business continues to improve its position in Asia,
where construction of nuclear power plants is occurring. We have placed product
in Taiwan and South Korea while developing relationships to participate in the
extensive nuclear power construction program that is planned for China. In order
to compete, trade restrictions with China will have to be lifted to allow
participation by United States companies. This market is an important one for
the expansion of our valve business. It not only would provide sales related to
new construction but also would allow us to establish an installed base of
product that would lead to future product improvement, replacement and spare
parts sales. This is an important ingredient of the business we do in the United
States and permits us to retain a presence in this market despite the lack of
new construction programs in this country.
Our Current Profile
Illustrated in the charts on page five are the changes that have taken place in
the profile of the Company since 1992. The changes are the result of the actions
we have taken to better position the Company while responding to changes in our
markets.
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Detroit, Michigan Ontario, Canada Fairfield, New Jersey Dallas, Texas
Los Angeles, California
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5
Sales Profile
[Pie Chart Omitted]
Curtiss-Wright now generates approximately 64% of its business from the
service sector, as compared to 38% in 1992. Activities in this area include our
metal treatment services of shot-peening, shot-peen forming and heat-treating.
We also provide aftermarket activities for the repair and overhaul of aircraft
components and systems and valves for the industrial and marine markets.
We have reduced our dependence on military procurement programs. As can be
seen in the charts presented here, the military market's contribution to
Curtiss-Wright's sales declined to 20% in 1997 from 37% in 1992. We expect our
activity related to the production of tactical fighter aircraft and nuclear
submarines to increase from current levels, but the Company will be less
dependent upon government projects for our overall profitability than we have
been in the past.
Outlook
While we feel we have improved our position for achievement of long-term growth,
we must not lose sight of the tasks we currently have before us. The significant
increase we have seen in the production of new aircraft is a welcome event and
we look forward to the additional volume projected for 1998. Keeping pace with
these production requirements has not come without a cost. The rapid ramp-up has
strained our manufacturing capabilities and resulted in inefficiencies that must
be reduced. Margin pressures are compounded by our participation in new programs
on which we are not very far along the learning curve. We must reduce costs and
improve margins in this area. In the metal treatment area we will continue to
establish new operations as well as to pursue potential acquisitions. Our
employees have performed exceptionally well but still have much to accomplish to
continue moving Curtiss-Wright ahead. We appreciate their efforts and the
advancements made to date. We have absolute confidence in their abilities to
continue taking your Company forward.
[Photo Omitted]
Sincerely,
/s/ David Lasky
David Lasky
Chairman and President
January 30, 1998
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Karup, Denmark Newbury, United Kingdom Chicago, Illinois
Wood-Ridge, New Jersey Columbus, Ohio
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6
REVIEW OF OPERATIONS
>> Financial Performance Overview: The financial performance of the Company in
1997 generated a level of profits that was the highest experienced since 1989.
Net earnings for 1997 of $27.9 million, or $2.74 per share, were 73% greater
than 1996 earnings of $16.1 million, or $1.59 per share. Earnings in 1997
included a gain from the sale of real estate amounting to $2.0 million, or $.20
per share. Absent real estate sales, earnings in 1997 would have been $25.9
million, or $2.54 per share, 60% more than comparable 1996 income. (All per
share amounts reflect the two-for-one split of Curtiss-Wright's stock in
December 1997.) This outstanding earnings performance was primarily attributable
to a 74% increase in operating earnings resulting from higher sales volume and
improved efficiency of our metal treatment operations.
Sales in 1997 of $219.4 million represented an increase of 29% over 1996
sales of $170.5 million. Substantial increases in production levels of
commercial aircraft were a major contributor to our higher sales volume, and
further increases are anticipated to continue in 1998. The sales increase also
reflects a greater volume of metal treatment services and a full year's
operations at our Miami repair and overhaul facility acquired in mid-1996.
We have completed the year with a strong balance sheet. Cash flows
generated from our operations were more than adequate to fund our capital
expenditure and other internal requirements, although we did make use of an
operating lease arrangement to finance a portion of our capital requirements.
Metal Treatment Services
Curtiss-Wright's metal treatment business in 1997 experienced continued growth
in sales and earnings. This operation services regional markets from 34
facilities located in North America and Europe and has a diversified market
base. Its improved performance benefited from growth in most of these markets
and operating efficiencies put in place during the year.
The aerospace market remains the most influential for our metal treatment
business, representing approximately 49% of our revenue base. Our services are
utilized in processes to increase the tensile and fatigue strength of component
parts, to increase resistance to stress corrosion cracking, and to induce
aerodynamic curvatures in wing skins. While aerospace applications provided the
early base for our shot-peening processes, the utilization of the benefits of
these processes has been extended to other industries. Curtiss-Wright now has
the advantage of looking at this larger base when identifying markets where new
facilities can be established.
1997 Sales by Industry
[Pie Chart Omitted]
Advancements in 1997 for expansion globally were made with the opening of
two metal treatment facilities in Europe. These additions in Belgium and Germany
increased the number of European metal treatment operations to eight, with a
ninth to be opened in England in early 1998. One additional facility will be
opened in North America in 1998.
We continue seeking to grow our heat-treating operation through
acquisition from its current base of four locations. The heat-treating industry
in the United States is fragmented, and we are working toward establishing an
effective network operation similar to what we have in place for our
shot-peening services. The Company has been very successful in establishing a
centralized organization for the effective management of its shot-peening
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Sunderland, United Kingdom Feuchtwangen, Germany Houston, Texas
Shelby, North Carolina
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7
operations. This, and the ability to service a multitude of regional markets,
each with unique and customized needs, has been a key ingredient for our
success.
In 1997, the Company also made technological advances in our shot-peening
operations. For example, we entered into an arrangement with Lawrence Livermore
National Laboratory for the development and commercialization of a laser
shot-peening process called Lasershot sm peening. The success of this program
would expand the market for shot-peening of component parts. Our exclusive
worldwide license for this technology further expands our capabilities and
opportunities for growth.
The Company has also introduced a new metal treatment process that is
complementary to shot-peening of component parts. The process is referred to as
C.A.S.E.(SM) (chemically assisted surface engineering). In some instances there
is a need to extend the surface fatigue life beyond that provided by
shot-peening. The C.A.S.E.(SM) process provides a cost-effective way to do this,
in addition to producing a desirable smoother surface finish. New applications
continue to emerge, and we look to this development to extend the metal
treatment processes we can make available to our customers.
Component Overhaul & Repair
Sales (in millions)
[Graphic Omitted]
Component Manufacturing
and Overhaul Services
1997 Sales Balance
[Graphic Omitted]
Aerospace Component Manufacturing and Overhaul Services
The challenge in 1997 was to respond to the rapid ramp-up in delivery
requirements for our actuation and control equipment associated with the
increased production levels of commercial aircraft. Entering 1997, activity
levels at our Shelby, North Carolina facility reflected a level of 23 aircraft
per month. This compares to a level of 18 per month at the beginning of 1996. By
the end of 1997, production activity had increased to a level of 40 per month.
In 1997, Curtiss-Wright completed an expansion that doubled the size of our
Shelby plant. This was primarily in response to increased Boeing requirements
but also because of the growth of our overhaul and repair business. We have also
added a substantial amount of machinery capacity during the year to keep pace
with demand. In addition, a significant number of new employees were hired and
trained.
Meeting our customers' requirements went much further than expansion of
our physical and employee capabilities. Just as our capacity levels became
strained, so did those of our suppliers. In managing our resources we have
increased our utilization of a supplier base. In some cases, as much as 50% of
our machine shop work has been outsourced to various precision machine shops
throughout the United States. The coordination of our suppliers with our own
requirements and the requirements of our customers demanded an effort far beyond
what we previously had experienced.
In 1996, we made an acquisition that significantly increased our
capabilities in the overhaul and repair sector of the aerospace market, and we
now have the capability to service over 7,000 component parts. The charts to the
right illustrate the sales growth of our overhaul and repair services as well as
the balance we have achieved between that segment and the manufacturing of
component parts and systems.
In 1997, we also increased geographically the markets we serve with our
overhaul services. With the opening of a facility in Singapore, we have expanded
our global presence and
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Derby, United Kingdom Singapore Montargis, France Carlstadt, New Jersey
Wichita, Kansas
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8
can now better serve all airlines and airfreight carriers within our market.
During the year, we also acquired a further 20% of our overhaul and repair joint
venture in Karup, Denmark, to increase our ownership to 100%.
Curtiss-Wright has completed or is nearing the final stages of work on
several military development programs. The Company experienced significant cost
overruns on these programs in 1996 and the early part of 1997 with a resultant
adverse impact on earnings. Since that time, performance has substantially
improved. Low-level production stages for the V-22 Osprey and the F/A-18 E/F
Super Hornet have begun and we are now supplying product for those aircraft. The
other major program we participate in is the F-22 Raptor. This program is
entering the final stages of systems testing and is scheduled to be fully
completed in 1998. Final development hardware will be delivered in 1999. While
these programs will not generate substantial sales in the immediate future,
based upon current procurement schedules we view them as being significant
long-term contributors.
Valves
In 1997, the Company's valve business achieved significant advances in
solidifying and expanding its traditional military and commercial nuclear base.
Sales of valves to the United States Navy increased slightly in 1997.
Procurement levels for nuclear-powered submarines remain at one ship per year,
with a nuclear aircraft carrier anticipated in the year 2000. With continued
industry consolidation and a shrinking supplier base, Curtiss-Wright has
established a strong position as a key supplier and is well postured to increase
its role in the nuclear program and to seek additional opportunities on
conventionally powered ships. In 1997, we continued our leadership in the Navy
nuclear program and were awarded contracts to supply valves for the
next-generation submarine, the Centurion. The Company also is pursuing
opportunities beyond the propulsion systems of nuclear-powered ships. These
include nonnuclear systems on nuclear-powered ships and valve applications on
conventionally powered ships. Specifically, we believe that there are many
shipboard systems that can utilize flow control and relief valve technologies
originally developed by Curtiss-Wright for the commercial nuclear power
industry.
In 1997, the Company continued to increase its share of the Korean nuclear
power market. Korean awards totaled approximately $5.0 million. Most significant
of these was a major award for safety relief valves. The safety relief contract
represents expansion of Curtiss-Wright's products to applications outside of the
nuclear containment portion of power plants. This strengthens our position as a
major supplier of relief valves at a time when increased regulatory overview is
creating new market opportunities domestically. In addition, we are actively
pursuing potential major awards in Taiwan. Based on these developments, we
believe that the Company is well positioned to be a significant participant in
new nuclear power plant construction programs in China. China is regarded as the
richest potential market available, with the Chinese planning to build as many
as 150 reactors over the next 40 years to meet the growing power needs of their
1.2 billion people.
Valves Sales 1997
[Graphic Omitted]
These foreign markets offer greater potential opportunities than just
supplying valves for new plants. As demonstrated in the United States, it is
important to have an established installed product base. The aftermarket for
spare parts and replacement valves is driven by the successes in providing
original product for these facilities.
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Lyndhurst, New Jersey Chester, United Kingdom Lafayette, Louisiana
Charlotte, North Carolina
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9
AT A GLANCE
Aerospace & Control and Actuation Components U.S. Government Agencies
Marine and Systems
Foreign Governments
Shot-Peening, Heat-Treating and
Peen-Forming Services Commercial Airlines /
Military / General Aviation
Aerospace Overhaul Services
Aerospace Manufacturers
Military Nuclear / Nonnuclear
Valves (globe, gate, control, Helicopter Manufacturers
safety, solenoid and relief)
Missile Manufacturers
U.S. Navy Propulsion Systems
U.S. Navy Shipbuilding
Metalworking Industries
Industrial Shot-Peening and Heat-Treating
Services
Oil / Petrochemical / Chemical
Compressor Valve Reeds Construction
Commercial Nuclear / Nonnuclear Oil and Gas Drilling /
Valves (globe, gate, control, Exploration
safety, solenoid and relief)
Power Generation
Rescue Tools
Nuclear and Fossil Fuel Power
Plants
Agricultural Equipment
Automotive and Truck
Manufacturers
Rescue Tool Industry
10
>> Doing Things Better
o An essential part of Curtiss-Wright's success in growing the metal
treatment business has been our ability to identify areas for performance
improvements in the products of our customers and to apply technological
advances to our processing of those products. This trend continues. The
application of shot-peening and heat-treating to component parts improves
fatigue strength and hardness, respectively, to maintain or increase
performance characteristics. Areas where it is important to make things
lighter and stronger while maintaining strength and/or durability
requirements provide opportunities for Curtiss-Wright. We work with our
customers to identify new applications for our metal treatment processes
to accomplish these goals.
o Airline customers must optimize the utilization of their aircraft fleets
if they are to maximize the profitability of their operations. An
important ingredient of improved efficiency is minimal downtime related to
aircraft maintenance. Curtiss-Wright established a new industry standard
by providing a seven-day turnaround time for the repair and overhaul of
actuation system components we manufacture. Seeking ways to continue to
reduce turnaround times not only for our own products, but also for the
more than 7,000 components we overhaul and repair, is an important area of
concentration for us.
o Our engineering and design capabilities are strengths the Company has
utilized for both new products and services and the adaptation of existing
technologies to new applications. In our valve business, approximately 78%
of 1997 sales were represented by product designs that did not exist five
years ago. For example, valves used in propulsion systems for nuclear
submarines were redesigned by Curtiss-Wright to utilize low-cobalt
materials to reduce life cycle costs. We also have applied the gear
technologies from our flight control actuation systems to develop the
"Power Hawk" rescue tool, which offers advantages over other alternatives
available on the market.
We turn problems into solutions, by listening to our customers and focusing upon
the industries we serve.
Curtiss-Wright realizes that an important aspect of its businesses is being a
solution provider. As a supplier of component parts and systems, our ability to
work with our customers to effectively improve the performance of their final
product is a key ingredient in the success of our businesses. This is equally
true for the services we provide, whether metal treatment or the overhaul and
repair of industrial and marine valves or aerospace components. Engineering
design and metallurgical knowledge at our business units are skills that
Curtiss-Wright considers a strong point in its ability to capture and, more
importantly, retain business. Innovation also extends to our customers' other
needs, such as timely delivery schedules and rapid turnaround times for the
services we provide. We turn problems into solutions, by listening to our
customers and focusing upon the industries we serve.
11
We research and explore ways to make products and services better.
> innovation
[Photo Omitted]
Engineering and technical support for our customers is a strength of all our
businesses.
[Photo Omitted]
Curtiss-Wright offers airlines seven-day turnaround on the overhaul and repair
of components we manufacture, such as these Boeing 737-700 flap transmissions.
12
>> Global Expansion
o In 1995, our aerospace overhaul and repair activities were provided out of
our facilities in Shelby, North Carolina and Fairfield, New Jersey,
servicing a customer base composed predominately of North American
airlines and cargo haulers. Since then we have expanded both our facility
operations and customer base. Services are now provided out of five
facilities, with added locations in Miami, Florida; Karup, Denmark; and
Singapore. Our customer base has expanded to include a strong presence in
South America, and we now also have the capability to service Europe, the
Middle East, Africa and the Pacific Rim.
o With no new construction of nuclear power plants in the United States in
recent years, Curtiss-Wright was limited in that market to replacement of
valves used in power generation plants. We have now looked beyond our
traditional market to become a more effective global competitor in the
pursuit of new business. Relationships have been established and contracts
awarded to Curtiss-Wright in Taiwan and South Korea. We are now well
positioned to participate in future programs scheduled for these regions.
This base is being expanded to include projects planned for China, and we
look forward to a lifting of trade restrictions by the United States that
will allow us to compete in this growth market for construction of new
nuclear power plants.
o Years ago, Curtiss-Wright extended its metal treatment network from the
United States to Europe. In 1997, two new facilities were opened, bringing
our European facility total to eight. An additional facility in England is
scheduled to begin operations early in 1998. The Company now has a network
of 34 facilities in North America and Europe to serve regional markets. We
have become successful in introducing our services to new geographical
areas, and new opportunities continue to be identified. Global expansion
of the network will continue to supplement our domestic growth.
To maximize our effectiveness we must carry our products and services to
customers worldwide.
To achieve balanced growth, Curtiss-Wright seeks out and takes advantage of
global opportunities. To maximize our effectiveness we must carry our products
and services to customers worldwide. The Company has reorganized its operations
to better accomplish this expansion. The proper structure for addressing a
global market varies between our different operations. It can take the form of
our metal treatment business, which is a decentralized organization with
multiple facilities to service regional areas with different market
characteristics. Other businesses, such as our valve operation, service an
international clientele from a centralized location with local customer support.
While there is still work to be done, each business unit now has the basic
structure in place to compete globally. Our future activity will continue to
build upon these established organizational structures.
13
[Photo Omitted]
Shot-peen forming of aircraft wing skins is one of the metal treatment services
provided by some of our 34 facilities in North America and Europe.
[Photo Omitted]
Our aerospace overhaul and repair business now has a global presence operating
out of five locations.
> globalization
We match our resources to international opportunities.
14
>> Long-Term Relationships = Strong Alliances
o Curtiss-Wright's relationship with the United States Navy's nuclear
program dates back to the Nautilus, which was the first nuclear submarine
built. A close working partnership has developed, and the Navy is
providing us with expanded opportunities to participate in the design,
testing and manufacture of critical valve products. During 1997,
Curtiss-Wright's unique test facilities were utilized extensively by the
Navy to diagnose, resolve and improve valve performance in support of
operational fleet requirements. The Navy also has depended upon us
recently to expedite the manufacture of valves when required to meet its
schedules.
o The rapid ramp-up in the production schedules for commercial aircraft has
strained the resources available in the industry, resulting in missed
delivery dates to the airline customer. Curtiss-Wright made a significant
additional investment in our Shelby, North Carolina plant, doubling the
size of the facility and adding machinery and equipment in order to meet
these increased requirements. We have been working closely with our
customers and suppliers to deal with the extraordinary demands of this
situation. While timely delivery has been a problem within the industry,
Curtiss-Wright has been a dependable supplier, meeting shipment schedules.
o Customer support in our metal treatment business is an effort that
continues on a daily basis. This business has a large active customer base
that requires constant communications and coordination of activities. In
addition to aerospace customers, we serve a broad spectrum of industrial
customers, helping them to develop innovative solutions to difficult
manufacturing challenges. This starts with the early identification of
areas where our metal treatment processes can improve the final product or
provide a solution to a particular problem. We work closely with our
customers to coordinate the transportation and treating of parts to ensure
timely availability.
Our ability to work with and support our customers is a key to our success.
Curtiss-Wright has made the development of long-term relationships with our
customers a part of our business mission. Because the component products and
systems we supply and the services we provide become part of our customers'
products, it is essential that we work closely together. It is not unusual for
us to become involved in the concept and design stages of our customers'
products. Performance of the final product directly impacts our success. In many
instances we are closely integrated into the manufacturing processes of our
customers, and coordinating delivery of our products and services with their
activities is essential. The Company makes its resources available for
integration with those of our customers in a partner relationship. Our ability
to work with and support our customers is a key to our success.
15
Building strong customer partnerships is part of our business.
> partnerships
[Photo Omitted]
We have made an investment to double the size of our Shelby, N.C. facility to
meet our customers' increased requirements due to the ramp-up in commercial
aircraft production.
[Photo Omitted]
The Company has a long history of working with the U.S. Navy and electric
utility companies to design and manufacture critical valve products for nuclear
applications.
16
- --------------------------------------------------------------------------------
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations:
Curtiss-Wright Corporation posted substantial improvements in sales and
operating earnings for 1997, experiencing its highest profitability levels since
1989. Sales for the Corporation totaled $219.4 million in 1997, a 29% increase
over 1996 sales of $170.5 million, while operating income of $33.3 million for
1997 increased 74% over the prior year. For the year, Curtiss-Wright Corporation
posted consolidated net earnings totaling $27.9 million, or $2.74 per share, a
73% increase when compared with 1996 net earnings of $16.1 million or $1.59 per
share. Net earnings for 1996 had declined 11% when compared with net earnings of
1995, which totaled $18.2 million or $1.79 per share.
The substantial improvement in performance for 1997 is attributable to
several key items: a record volume of metal treatment services; extremely high
production levels of commercial aircraft; reduced development cost overruns
which had penalized prior year results and a full year's operation of our Miami
repair and overhaul facility acquired in mid-1996. In addition, net earnings
benefited from the sale of excess real estate, which along with applicable tax
benefits added $2.0 million or $.20 per share to 1997 results.
Net earnings for 1996 were impacted by losses caused by significant
engineering cost overruns associated with military aerospace development
contracts, lower levels of non-operating revenue and a high level of
environmental related expenditures which substantially offset improvements in
sales and earnings from metal treatment operations, when comparing 1996 with
1995 results. Sales and earnings for 1996 had benefited from the midyear
acquisition of the Miami overhaul facility, as well as the overall growth of our
component repair and overhaul business, while 1995 results included the
Corporation's Buffalo Extrusion Facility until it was sold in mid-1995.
[PHOTO OMITTED]
New orders received in 1997 increased 51% to $259.3 million, from orders
of $171.6 million received in 1996 and were 71% above orders received in 1995.
Increased orders reflect the current high level of commercial aircraft
production, as well as improvements in the Corporation's metal treatment and
component overhaul businesses and increases in orders for our commercial nuclear
valve products. Backlog levels at December 31, 1997 totaled $149.2 million,
their highest level since 1993, and a 36% improvement from backlog levels of
$109.3 million at December 31, 1996.
Segment Performance:
Aerospace & Marine
The Corporation's Aerospace & Marine segment posted substantially improved
results for 1997 when compared with those of 1996. Sales increased 45% in 1997
to $159.0 million, from sales of $109.9 million in 1996, and were 72% higher
than 1995 sales of $92.4 million. Operating income more than doubled, totaling
$25.6 million in 1997, compared to $12.5 million in 1996 and $11.7 million in
1995.
Sales improvements in the Aerospace & Marine segment for 1997 reflect a
34% increase in the Corporation's original equipment manufactured (OEM)
actuation components and systems. OEM sales of commercial aircraft components
more than doubled when comparing 1997 to the prior year. This is reflective of
increased Boeing requirements for actuation and control equipment. As noted in
previous reports, the Corporation participates on every Boeing commercial
aircraft currently flying and production levels were at a record high at the end
of 1997. Sales of metal treatment services to aerospace customers have also
increased significantly when comparing 1997 results with those of the prior
year, benefiting from the worldwide increase in aircraft production.
Aerospace & Marine segment results have also benefited from increased
contributions from our overhaul and repair businesses. Sales of overhaul
services improved 53% in 1997, as compared with 1996, largely reflecting a full
year of contributions from our Miami-based facility, acquired in May 1996. In
the aggregate, sales of overhaul and repair services accounted
17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
for 28% of Aerospace & Marine segment sales for 1997, compared with 24% for 1996
and 11% for 1995. In addition, the segment experienced an increase in sales of
its military valve products, comparing 1997 to the prior year, as a result of
two U. S. Navy programs that are not expected to be repeated in 1998.
In the aggregate, increased operating profits for the Aerospace & Marine
segment in 1997 were primarily attributable to the record sales performance of
our metal treatment business. This increase is largely a result of the worldwide
improvement in the aerospace industry and reflects the diversification of
products serviced by our business, including the peen-forming of wingskins for
commercial, commuter and business aircraft, and shot-peening services on engine
components and other aircraft parts.
Despite significant increases in sales associated with the new Boeing
programs, operating income for those programs in 1997 was impaired as a result
of additions to the work force and associated training and other costs,
reflecting the timing and magnitude of increased production work in response to
Boeing's aggressive ramp-up during 1997. Also reducing Aerospace & Marine
operating income for 1997 were military development program cost overruns, most
of which occurred early in the year. Costs in excess of contract price under
these firm fixed price contracts totaled $1.5 million in 1997, compared with
$3.6 million in 1996 and $3.3 million in 1995.
When comparing 1996 to 1995, sales for the Aerospace & Marine segment were
19% higher than the $92.4 million recorded in 1995. The improvements in 1996
were reflective of growth in the Corporation's component overhaul and repair
business which was augmented by the acquisition of the Miami facility. Sales of
metal treatment services also showed large improvements over prior year levels,
particularly within foreign aerospace markets, as did sales of military
actuation components for the Corporation's F-16 program, in support of foreign
military sales, and sales of commercial actuation and control programs for
Boeing aircraft. During 1996, the Corporation completed much of the design phase
of the Lockheed/Martin F-22 development program and began delivery of
development and test hardware. Operating income improved 7% in 1996, totaling
$12.5 million, compared with $11.7 million in 1995. Improvements in operating
income were generated by the Miami acquisition and by higher sales of metal
treatment and component overhaul services which were partially offset by cost
overruns associated with military actuation and control developmental contracts
and high costs during the start-up phase of its new commercial actuation and
control production programs.
[PHOTO OMITTED]
New orders received by the Aerospace & Marine segment in 1997 totaled
$194.8 million, 73% above orders of $112.4 million received in 1996 and more
than double orders of $86.5 million received in 1995. The Corporation received a
$38.1 million order from Boeing in December 1997 for production hardware on its
737-700 aircraft. During 1997, the Corporation also received a small initial
contract award from Sino Swearingen Aircraft Company of San Antonio, Texas for
trailing edge wing-flap drive systems for the new SJ30-2 Business Jet. The
Corporation currently supplies flap drive systems for various commercial and
military aircraft, and this is its first program providing such components to
the business jet market. Further increases in new orders, comparing 1997 to the
prior year are reflective of the current high sales volumes generated by our
metal-treating and overhaul service businesses.
Industrial
The Corporation's Industrial segment posted sales of $60.4 million for 1997,
substantially the same as 1996 and slightly below sales of $62.0 million for
1995. Sales in the commercial valve area improved slightly for 1997 over 1996,
largely because of a high level of field service and spare parts sales
experienced in the later portion of 1997. Sales of the Industrial segment also
benefited in part from increased market acceptance and many functional
accessories for its new rescue tool product line. When comparing 1996 sales to
1995, the decline in sales reflects the absence of the Corporation's Buffalo
Extrusion Facility which was sold in June 1995. After excluding those 1995 sales
related
18
to the Buffalo facility from the segment total, sales for 1996 were 7% above the
adjusted 1995 total. Improvements in sales of the continuing operations of the
Industrial segment in 1996 reflected a higher volume of metal treating services.
Sales of commercial valve products for 1996 were slightly below 1995 totals due
to declines in original equipment and spare parts sales more than offsetting
increased sales of nuclear valve product remakes and upgrades for power industry
customers.
Despite level sales, operating income of the Industrial segment improved
for 1997 in comparison to 1996. Operating income for 1996 had been hampered by
non-recurring costs associated with our metal-treating businesses and
development costs associated with the Corporation's new rescue tool product
line. Operating income for 1996 was 10% below 1995 levels, largely due to a
decline in heat-treating sales and major expenditures needed to meet automotive
customer quality requirements. The Buffalo facility did not have a material
impact on operating income for 1995.
New orders received by the Industrial segment improved 9% to $64.5 million
in 1997, when compared with $59.3 million in the prior year. The increase in
orders is largely due to commercial nuclear valve orders for Korean power plants
totaling approximately $5.0 million received during 1997.
Corporate and Other Expenses:
The Corporation continues to experience a significantly high level of costs
associated with its environmental obligations. Environmental expenditures in
excess of amounts previously reserved and inclusive of remediation efforts and
administrative costs, totaled $3.1 million in 1997, compared with $2.4 million
in 1996 and $.8 million in 1995. The increase in expenditures relates primarily
to legal services provided for the defense or pursuit of environmental and
related claims.
Offsetting general and administrative expenses for the Corporation is
non-cash pension income which results from the amortization into income of the
excess of the retirement plan's assets over the estimated obligations under the
plan. Pension income amounted to $3.7 million in 1997, a slight decline when
compared with pension income of $3.9 million recorded in 1996. Pension income
totaled $3.0 million in 1995. The amounts recorded as pension income reflects
the extent to which the return on plan assets exceeds the net cost of providing
benefits in the same year, as detailed in Note 13 to consolidated financial
statements.
Other Revenue and Costs:
The Corporation recorded other non-operating net revenue for 1997 aggregating
$9.0 million, compared with $5.3 million for 1996, and $7.4 million for 1995.
The significant increase in non-operating revenue for 1997 was due to the sale
by the Corporation of two parcels of undeveloped land during the third quarter
of 1997. The Corporation recognized net earnings of $2.0 million or $.20 per
share, which reflects tax benefits from the application of a capital-loss
carryforward to the gains realized on the sales. Investment income also
increased in 1997 as compared with the prior year. Investment income for 1996
reflected the lower levels of available cash and short-term investments versus
1995, due to the midyear Miami acquisition which included an expenditure of
approximately $16.6 million. Investment income totaled $3.4 million in 1997, 16%
above the $3.0 million for 1996, but below investment income of $4.1 million for
1995.
Changes in Financial Condition:
Liquidity and Capital Resources
The Corporation's working capital was $132.8 million at December 31, 1997, a 15%
increase from working capital at December 31, 1996 of $115.4 million. The ratio
of current assets to current liabilities was 4.4 to 1 at December 31, 1997,
compared with a current ratio of 3.7 to 1 at December 31, 1996. Working capital
and its associated ratio were lower in 1996 due to fixed assets purchased and
goodwill recorded as a result of the Accessory Services acquisition, as
discussed in Note 2 to consolidated financial statements. The Corporation's
balance of cash and short-term investments totaled $68.8 million at December 31,
1997, an increase of $6.8 million or 11%, from balances at the prior year-end.
Changes in working capital at year end 1997 reflect a substantial increase
in accounts receivable from customers primarily due to the increase in sales in
that year. Gross inventory also increased due to a higher level of finished
goods and component parts maintained at our component overhaul and repair
businesses. Inventory levels at December 31, 1997 also reflect an increase
associated with the substantial ramp-up of production on the new commercial
actuation production programs for Boeing. These increases in gross inventory
levels were partially offset by an increase in progress payments received under
long-term government contracts. Working capital was also
19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
improved through a reduction in the current portion of amounts held in reserve
for the environmental remediation program at the Corporation's Wood-Ridge, New
Jersey Business Complex as a result of the expenditure of $3.4 million on
remediation efforts during 1997.
The Corporation continues to maintain its $22.5 million revolving credit
lending facility and its $22.5 million short-term credit agreement, which
provide additional sources of capital to the Corporation. The revolving credit
agreement, of which $10.8 million remains unused at December 31, encompasses
various letters of credit issued primarily in connection with outstanding
industrial revenue bonds. The maximum available credit unused under these
agreements at December 31, 1997, was $32.9 million. There were no cash
borrowings made under the agreements during 1997 or 1996.
Capital expenditures were $11.2 million in 1997, decreasing from $14.2
million spent in 1996 but well above capital expenditures of $7.0 million for
1995. Actual expenditures related primarily to the purchase of machinery and
equipment within the Aerospace & Marine segment, including the expansion of
metal treatment operations in Europe and new machinery and equipment for our
expanded Shelby, North Carolina facility, which was necessary to meet the
demands of the new Boeing contracts and the growth of the overhaul service
business. Aerospace-related expenditures accounted for $7.9 million, or
approximately 71%, of the total spent in 1997. Capital expenditures are
projected to increase in 1998 primarily because of expected machinery and
equipment purchases for the further expansion of metal treating operations in
Europe and the United States. At December 31, 1997, the Corporation had
committed approximately $2.9 million for future expenditures, primarily for
machinery and equipment to be used in its operating segments.
[PHOTO OMITTED]
[PHOTO OMITTED]
Cash generated from operations is considered to be adequate to meet the
Corporation's overall cash requirements for the coming year, including normal
dividends, planned capital expenditures, expenditures for environmental programs
and other working capital requirements.
Newly Issued Accounting Pronouncements
The Corporation is subject to two newly issued accounting standards beginning
January 1, 1998. Standard No. 130, "Reporting Comprehensive Income," and
Standard No. 131, "Disclosures about Segments of an Enterprise and Related
Information," are currently being evaluated by the Corporation. An overview of
the standards and details of the Corporation's positions appear in Note 1 L. to
consolidated financial statements.
Year 2000
The Corporation has taken steps to address its exposures related to the impact
on its computer systems of the year 2000. Modification of key financial and
operating systems are currently being effectuated. The Corporation does not
expect these system changes to have a material effect on its consolidated
financial position, results of operations or cash flows.
20
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
REPORT OF THE CORPORATION
The consolidated financial statements appearing on pages 21 through 34 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.
Price Waterhouse 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, 1997 and 1996,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. 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 generally accepted auditing
standards 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.
/s/ Price Waterhouse LLP
Morristown, New Jersey
January 30, 1998
21
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands
except per share data) For the years ended December 31, 1997 1996 1995(1)
- ----------------------------------------------------------------------------------------------
Net sales $219,395 $170,536 $154,446
Cost of sales 143,706 117,067 104,178
- ----------------------------------------------------------------------------------------------
Gross margin 75,689 53,469 50,268
Research and development costs 1,877 997 1,180
Selling expenses 7,979 6,337 6,092
General and administrative expenses 29,382 24,556 21,548
Environmental remediation and administrative expenses 3,132 2,397 835
- ----------------------------------------------------------------------------------------------
Operating income 33,319 19,182 20,613
Investment income, net 3,432 2,968 4,147
Rental income, net 3,342 2,816 2,862
Other income (expense), net 2,193 (450) 419
Interest expense 387 387 549
- ----------------------------------------------------------------------------------------------
Earnings before income taxes 41,899 24,129 27,492
Provision for income taxes 14,014 8,020 9,323
- ----------------------------------------------------------------------------------------------
Net earnings $ 27,885 $ 16,109 $ 18,169
==============================================================================================
Net earnings per common share:
Basic earnings per share $ 2.74 $ 1.59 $ 1.79
==============================================================================================
Diluted earnings per share $ 2.71 $ 1.58 $ 1.78
==============================================================================================
See notes to consolidated financial statements.
(1) Prior year information has been restated to conform to current presentation.
22
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands) December 31, 1997 1996
- -------------------------------------------------------------------------------------------------------------
Assets:
Current assets:
Cash and cash equivalents $ 6,872 $ 6,317
Short-term investments 61,883 55,674
Receivables, net 41,590 37,708
Deferred tax assets 8,806 8,769
Inventories 49,723 46,987
Other current assets 2,506 2,378
- -------------------------------------------------------------------------------------------------------------
Total current assets 171,380 157,833
- -------------------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land 4,486 4,613
Buildings and improvements 89,096 84,762
Machinery, equipment and other 126,005 120,855
- -------------------------------------------------------------------------------------------------------------
219,587 210,230
Less, accumulated depreciation 153,704 146,268
- -------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net 65,883 63,962
Prepaid pension costs 38,674 35,016
Other assets 8,771 10,353
- -------------------------------------------------------------------------------------------------------------
Total assets $ 284,708 $ 267,164
=============================================================================================================
Liabilities:
Current liabilities:
Accounts payable $ 9,900 $ 13,144
Accrued expenses 14,640 12,062
Income taxes payable 4,845 3,189
Other current liabilities 9,244 14,021
- -------------------------------------------------------------------------------------------------------------
Total current liabilities 38,629 42,416
- -------------------------------------------------------------------------------------------------------------
Long-term debt 10,347 10,347
Deferred income taxes 8,799 8,686
Accrued postretirement benefit costs 9,850 10,302
Other liabilities 12,230 12,050
- -------------------------------------------------------------------------------------------------------------
Total liabilities 79,855 83,801
- -------------------------------------------------------------------------------------------------------------
Contingencies and commitments (Notes 9 and 14)
Stockholders' equity:
Preferred stock, $1 par value, 650,000 authorized, none issued
Common stock, $1 par value, 22,500,000 authorized, 15,000,000 shares issued
(outstanding shares 10,175,140 for 1997 and 10,162,206 for 1996) 15,000 10,000
Capital surplus 52,010 57,127
Retained earnings 318,474 299,740
Unearned portion of restricted stock (342) (608)
Equity adjustments from foreign currency translation (3,289) (1,506)
- -------------------------------------------------------------------------------------------------------------
381,853 364,753
Less, treasury stock at cost (4,824,860 shares for 1997 and 4,837,794 shares for 1996) 177,000 181,390
- -------------------------------------------------------------------------------------------------------------
Total stockholders' equity 204,853 183,363
- -------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 284,708 $ 267,164
=============================================================================================================
See notes to consolidated financial statements.
23
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) For the years ended December 31, 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings $ 27,885 $ 16,109 $ 18,169
- ---------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization 9,097 8,946 9,512
Net (gains) losses on sales and disposals of real estate and equipment (1,968) 473 (219)
Net gains on short-term investments (1,717) (1,014) (1,134)
Deferred taxes 76 (168) 2,056
Changes in operating assets and liabilities, net of business acquired in
1996:
Proceeds from sales of trading securities 342,416 333,577 270,923
Purchases of trading securities (349,500) (323,172) (271,833)
(Increase) decrease in receivables (4,929) 5,500 (2,093)
Increase in inventories (3,624) (12,057) (6,533)
Increase (decrease) in progress payments 1,934 (2,622) 594
Increase (decrease) in accounts payable and accrued expenses (666) 6,810 1,994
Increase (decrease) in income taxes payable 1,656 1,189 (105)
Increase in other assets (3,860) (4,705) (2,380)
Increase (decrease) in other liabilities (2,458) 4,222 (393)
Other, net (879) 143 (1,130)
- ---------------------------------------------------------------------------------------------------------------
Total adjustments (14,422) 17,122 (741)
- ---------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 13,463 33,231 17,428
- ---------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sales and disposals of real estate and equipment 3,460 96 3,290
Additions to property, plant and equipment (11,231) (14,156) (6,985)
Acquisition of Accessory Services business (16,640)
- ---------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (7,771) (30,700) (3,695)
- ---------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments on long-term debt (4,054)
Dividends paid (5,137) (5,079) (5,059)
- ---------------------------------------------------------------------------------------------------------------
Net cash used for financing activities (5,137) (5,079) (9,113)
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 555 (2,548) 4,620
Cash and cash equivalents at beginning of year 6,317 8,865 4,245
- ---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 6,872 $ 6,317 $ 8,865
===============================================================================================================
See notes to consolidated financial statements.
24
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Equity
Unearned Adjustments
Portion of from Foreign
Common Capital Retained Restricted Currency Treasury
(In thousands) Stock Surplus Earnings Stock Awards Translation Stock
- ------------------------------------------------------------------------------------------------------------------------------------
December 31, 1994 $ 10,000 $ 57,139 $275,600 $ -- $ (1,622) $182,348
- ------------------------------------------------------------------------------------------------------------------------------------
Net earnings 18,169
Common dividends (5,059)
Stock awards issued 33 (780) (747)
Stock options exercised, net (31) (39)
Translation adjustments, net 292
- ------------------------------------------------------------------------------------------------------------------------------------
December 31, 1995 10,000 57,141 288,710 (780) (1,330) 181,562
- ------------------------------------------------------------------------------------------------------------------------------------
Net earnings 16,109
Common dividends (5,079)
Stock awards issued 10 (93) (83)
Stock options exercised, net (24) (89)
Amortization of earned portion of
restricted stock awards 265
Translation adjustments, net (176)
- ------------------------------------------------------------------------------------------------------------------------------------
December 31, 1996 10,000 57,127 299,740 (608) (1,506) 181,390
- ------------------------------------------------------------------------------------------------------------------------------------
Net earnings 27,885
Common dividends (5,137)
Stock options exercised, net (117) (376)
Amortization of earned portion of
restricted stock awards 266
Translation adjustments, net (1,783)
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
====================================================================================================================================
See notes to consolidated financial statements.
25
- --------------------------------------------------------------------------------
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, automotive, shipbuilding, oil,
petrochemical, agricultural equipment, power generation, metal working and fire
and rescue industries. Operations are conducted through three domestic
manufacturing facilities, thirty-four metal treatment service facilities located
in North America and Europe, and five 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.
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 become
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
F. Intangible Assets
Intangible assets consist primarily of the excess purchase price of the
acquisition 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.
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, 1997 and 1996. 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.
Derivative financial instruments are included as short-term investments in the
Corporation's balance sheets and are carried at their fair market value,
information on which appears in Note 3.
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.
26
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 continues to follow 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
because 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 2 for 1 stock split in the form of a 100%
stock dividend. The split, in the form of 1 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.
K. Earnings per Share
Effective for the fiscal year ended December 31, 1997, 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). Under SFAS
No. 128, the Corporation is required to report both basic earnings per share 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. In accordance
with SFAS No. 128, all prior period earnings per share data have been restated.
Earnings per share calculations for the years ended December 31, 1997, 1996 and
1995 are as follows:
Weighted
Average
Net Shares Per Share
(In thousands, except per share data) Income Outstanding Amount
- --------------------------------------------------------------------------------
1997
Basic earnings per share $27,885 10,172 $ 2.74
Effect of dilutive securities:
Stock options 118
Deferred stock compensation 1
- --------------------------------------------------------------------------------
Diluted earnings per share $27,885 10,291 $ 2.71
================================================================================
1996
Basic earnings per share $16,109 10,158 $ 1.59
Effect of dilutive securities:
Stock options 59
- --------------------------------------------------------------------------------
Diluted earnings per share $16,109 10,217 $ 1.58
================================================================================
1995
Basic earnings per share $18,169 10,124 $ 1.79
Effect of dilutive securities:
Stock options 73
- --------------------------------------------------------------------------------
Diluted earnings per share $18,169 10,197 $ 1.78
================================================================================
L. Newly Issued Accounting Pronouncements
Reporting Comprehensive Income: In June 1997, the Financial Accounting Standards
Board issued Statement No. 130, "Reporting Comprehensive Income" (SFAS No. 130).
This statement establishes standards for reporting and display of comprehensive
income and its components within financial statements. Comprehensive income
consists of all changes in equity during a period except those resulting from
investments by owners and distributions to owners. SFAS No. 130 also requires
that all components of comprehensive income be disclosed in a separate financial
statement or on the face of the income statement.
The Corporation has reviewed the provisions of SFAS No. 130 based on its
current Consolidated Statement of Stockholders' Equity. For the year ended
December 31, 1997, the Corporation would have reported comprehensive income
totaling $26,726,000, consisting of net income less equity adjustments from
foreign currency translations on an after-tax basis. This statement is effective
for the Corporation beginning January 1, 1998 and requires reclassification of
prior period information for comparative purposes.
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Disclosures about Segments of an Enterprise and Related Information: In June
1997, the Financial Accounting Standards Board also issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information" (SFAS No.
131). This statement requires a change in reporting business segments to a
"management approach," utilizing financial information that is evaluated
regularly by the chief operating decision maker in deciding how to allocate
resources and in assessing performance. SFAS No. 131 also requires descriptive
information about how the operating segments were determined, the products and
services provided by segments and a reconciliation of segment revenues, profits
or losses and assets, to those of the total Corporation.
The Corporation is reviewing its current operating segments in conjunction
with on-going changes in its business operations and the statement's aggregation
criteria. This statement is effective for the Corporation's 1998 fiscal year
beginning January 1, 1998 and requires reclassification of prior period
information for comparative purposes. Information as required by SFAS No. 131 on
an interim basis is not effective in the initial year of application.
2. Acquisition
On May 20, 1996, the Corporation completed the purchase of the Miami, Florida
based Accessory Services unit of Aviall, Inc. ("Accessory Services").
The Corporation acquired the net assets of Accessory Services for $16.6
million in cash and has accounted for the acquisition as a purchase. The excess
of purchase price over the estimated fair value of the net assets acquired
amounted to approximately $4.0 million and is being amortized on a straight-line
basis over 30 years. The results of operations of Accessory Services have been
included in the consolidated financial statements of the Corporation from the
date of acquisition.
The unaudited pro forma consolidated results of operations shown below
have been prepared as if the acquisition had occurred at the beginning of 1996:
(In thousands, except per share data) 1996
- --------------------------------------------------------------------------------
Net sales $178,816
Net earnings 16,437
Basic earnings per common share 1.62
================================================================================
3. Short-Term Investments
The composition of short-term investments at December 31 is as follows:
(In thousands) 1997 1996
- --------------------------------------------------------------------------------
Cost Fair Value Cost Fair Value
- --------------------------------------------------------------------------------
Money market
preferred stock $ 45,697 $ 45,697 $ 19,000 $ 19,000
Tax-exempt money
market preferred
stock -- -- 25,322 25,322
Common and
preferred stocks 3,090 3,205 1,135 1,167
Utility common stocks
purchased 20,268 20,308 22,678 22,539
Utility common stocks
sold short (11,033) (11,121) (12,250) (12,354)
Tax exempt revenue
bonds 3,790 3,794 -- --
- --------------------------------------------------------------------------------
Total short-term
investments $ 61,812 $ 61,883 $ 55,885 $ 55,674
================================================================================
Investment income for the years ended December 31 consists of:
(In thousands) 1997 1996 1995
- --------------------------------------------------------------------------------
Net realized gains on the sale of
trading securities $ 1,435 $ 527 $ 1,282
Interest and dividend income, net 1,715 1,954 3,014
Net unrealized holding gains (losses) 282 487 (149)
- --------------------------------------------------------------------------------
Investment income, net $ 3,432 $ 2,968 $ 4,147
================================================================================
4. Receivables
Receivables include amounts billed to customers 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.
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 12% of the total outstanding billed
receivables at December 31, 1997 and 5% of the total outstanding billed
receivables at December 31, 1996. 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.
28
The composition of receivables at December 31 is as follows:
(In thousands) 1997 1996
- --------------------------------------------------------------------------------
Billed Receivables:
Trade and other receivables $49,110 $37,253
Less: progress payments applied 10,460 5,701
Allowance for doubtful accounts 1,747 1,557
- --------------------------------------------------------------------------------
Net billed receivables 36,903 29,995
- --------------------------------------------------------------------------------
Unbilled Receivables:
Recoverable costs and estimated earnings not
billed 13,022 19,761
Less: progress payments applied 8,335 12,048
- --------------------------------------------------------------------------------
Net unbilled receivables 4,687 7,713
- --------------------------------------------------------------------------------
Total receivables, net $41,590 $37,708
================================================================================
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:
(In thousands) 1997 1996
- --------------------------------------------------------------------------------
Raw material $ 5,514 $ 4,653
Work-in-process 22,686 25,128
Finished goods/component parts 21,782 15,817
Inventoried costs related to U.S. Government
and other long-term contracts 5,547 6,307
- --------------------------------------------------------------------------------
Gross inventories 55,529 51,905
Less: progress payments applied, principally
related to long-term contracts 5,806 4,918
- --------------------------------------------------------------------------------
Net inventories $49,723 $46,987
================================================================================
6. Accrued Expenses and Other Current Liabilities
Accrued expenses at December 31 consist of the following:
(In thousands) 1997 1996
- --------------------------------------------------------------------------------
Accrued compensation $ 5,878 $ 4,866
Accrued taxes other than income taxes 1,357 1,478
Accrued insurance 1,659 1,462
All other 5,746 4,256
- --------------------------------------------------------------------------------
Total accrued expenses $14,640 $12,062
================================================================================
Other current liabilities at December 31 consist of the following:
(In thousands) 1997 1996
- --------------------------------------------------------------------------------
Current portion of environmental reserves $ 3,036 $ 5,553
Anticipated losses on long-term contracts 1,305 3,078
Litigation reserves 3,101 3,101
All other 1,802 2,289
- --------------------------------------------------------------------------------
Total other current liabilities $ 9,244 $14,021
================================================================================
7. Income Taxes
During 1997, the Corporation fully utilized its capital loss carryforward of
$3,252,000 that would have expired on December 31, 1997. As a result, the
valuation allowance that was established to offset this deferred tax asset has
been reversed.
The net change in the valuation allowance for deferred tax assets was a
decrease of $1,212,000 in 1997 as a result of the utilization of all remaining
loss carryforwards. During 1996, the valuation allowance increased by $118,000
due to an increase in capital loss carryforward of $826,000 offset by unrealized
gains on securities of $487,000.
Earnings before income taxes for the years ended December 31 are:
(In thousands) 1997 1996 1995
- --------------------------------------------------------------------------------
Domestic $29,965 $15,195 $21,861
Foreign 11,934 8,934 5,631
- --------------------------------------------------------------------------------
Total $41,899 $24,129 $27,492
================================================================================
The provisions for taxes on earnings for the years ended December 31 consist of:
(In thousands) 1997 1996 1995
- --------------------------------------------------------------------------------
Federal income taxes currently
payable $ 7,523 $ 4,041 $ 3,715
Foreign income taxes currently
payable 4,197 3,388 1,963
State and local income taxes
currently payable 1,910 995 1,311
Deferred income taxes 458 (233) 2,282
Federal income tax on net capital
gains 1,135 184 698
Utilization of capital loss
carryforwards (1,135) (184) (698)
Valuation allowance (74) (171) 52
- --------------------------------------------------------------------------------
Provision for income tax $14,014 $ 8,020 $ 9,323
================================================================================
The effective tax rate varies from the U.S. Federal statutory tax rate for the
years ended December 31 principally due to the following:
1997 1996 1995
- --------------------------------------------------------------------------------
U.S. Federal statutory tax rate 35.0% 35.0% 35.0%
Add (deduct):
Utilization of capital loss
carryforward (2.7) (.8) (2.5)
Dividends received deduction
and tax exempt income (1.2) (2.3) (2.5)
State and local taxes 3.3 1.7 4.7
Valuation allowance (.2) (.7) .2
All other (.8) .3 (1.0)
- --------------------------------------------------------------------------------
Effective tax rate 33.4% 33.2% 33.9%
================================================================================
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of the Corporation's deferred tax assets and liabilities at
December 31 are as follows:
(In thousands) 1997 1996
- --------------------------------------------------------------------------------
Deferred tax assets:
Environmental clean-up $ 5,879 $ 6,142
Postretirement/employment benefits 3,579 3,737
Inventories 3,368 2,661
Legal matters 1,163 1,181
Net capital loss carryforwards 1,212
Other 4,401 3,941
- --------------------------------------------------------------------------------
Total deferred tax assets 18,390 18,874
- --------------------------------------------------------------------------------
Deferred tax liabilities:
Pension 13,535 12,247
Depreciation 3,785 4,425
Other 1,063 907
- --------------------------------------------------------------------------------
Total deferred tax liabilities 18,383 17,579
- --------------------------------------------------------------------------------
Deferred tax asset valuation allowance -- (1,212)
- --------------------------------------------------------------------------------
Net deferred tax assets $ 7 $ 83
================================================================================
Deferred tax assets and liabilities are reflected on the Corporation's
consolidated balance sheets at December 31 as follows:
(In thousands) 1997 1996
- --------------------------------------------------------------------------------
Current deferred tax assets $ 8,806 $ 8,769
Non-current deferred tax liabilities (8,799) (8,686)
- --------------------------------------------------------------------------------
Net deferred tax assets $ 7 $ 83
================================================================================
Income tax payments of $12,432,000 were made in 1997, $8,553,000 in 1996, and
$8,114,000 in 1995.
8. Long-Term Debt
Long-term debt at December 31 consists of the following:
(In thousands) 1997 1996
- --------------------------------------------------------------------------------
Industrial Revenue Bonds due from 2001
to 2007. Weighted average interest rate
is 3.70% per annum for 1997 and 1996 $10,347 $10,347
Total long-term debt $10,347 $10,347
Aggregate maturities of long-term debt are as follows:
(In thousands)
- --------------------------------------------------------------------------------
2001 $1,300
2002 4,047
2007 5,000
================================================================================
Interest payments of approximately $347,000, $383,000 and $684,000 were made in
1997, 1996 and 1995, respectively.
9. Credit Agreements
The Corporation has two credit agreements in effect aggregating $45,000,000 with
a group of three banks. The Revolving Credit Agreement commits a maximum of
$22,500,000 to the Corporation for cash borrowings and letters of credit. The
unused credit available under this facility at December 31, 1997 was
$10,807,000. The commitments made under the Revolving Credit Agreement expire
October 29, 2000, 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 $22,500,000, all
of which was available at December 31, 1997. The Short-Term Credit Agreement
expires October 23, 1998. At expiration, the Short-Term Credit Agreement may be
extended, with the consent of the bank group, for an additional period not to
exceed 300 days. No cash borrowings were outstanding at December 31, 1997 or
December 31, 1996. 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. Under the provisions of the
Agreements, retained earnings of $32,854,000 were available for cash dividends
and stock repurchases at December 31, 1997.
At December 31, 1997, 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
$9,260,000. The Corporation has various other letters of credit outside the
Revolving Credit Agreement totaling approximately $1,086,000.
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 1997, 1996 and 1995 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 1997, 1996 and
30
1995, respectively: a risk-free interest rate of 5.88%, 6.6% and 5.8%; an
expected volatility of 18.18%, 24.38% and 33.21%; an expected dividend yield of
1.37%, 2.0% and 2.1%; and a weighted average expected life of the option of 7
years for 1997 and 10 years for 1996 and 1995.
For purposes of pro forma disclosures, no expense was recognized on the
1997 options due to the timing of the grant. The estimated fair value of the
1996 and 1995 option grants are presented as amortized to expense over the
options' vesting period beginning January 1, 1996. No compensation expense is
recognized for 1995 due to the timing of the grant. The Corporation's pro forma
information for the years ended December 31, 1997 and December 31, 1996 are as
follows:
(In thousands, except per share data) 1997 1996
- --------------------------------------------------------------------------------
Net earnings:
As reported $27,885 $16,109
Pro forma $27,570 $15,870
Net earnings per common share:
As reported:
Basic $ 2.74 $ 1.59
Fully diluted $ 2.71 $ 1.58
Pro forma:
Basic $ 2.71 $ 1.56
Fully diluted $ 2.68 $ 1.55
================================================================================
Long-Term Incentive Plan: Under a Long-Term Incentive Plan approved by
stockholders in 1995, an aggregate total (as adjusted for the recent stock
split) of 1,000,000 shares of common stock were reserved for issuance under said
Plan. The total number of shares available for a grant to key employees in each
year will be one percent of the shares outstanding at the beginning of that
year, although that number may be increased by the number of shares available
but unused in prior years and by the number of shares covered by previously
terminated or forfeited awards. 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 997,841 and 734,654 performance
units in 1997 and 1996, respectively, 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. In
addition, the Corporation granted non-qualified stock options in 1997, 1996 and
1995 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:
Weighted
Average
Exercise Options
Shares Price Exercisable
- --------------------------------------------------------------------------------
Outstanding at January 1, 1995 190,050 $ 17.19 28,644
Granted 64,996 24.00
Exercised (4,692) 16.81
Forfeited (1,970) 17.09
- --------------------------------------------------------------------------------
Outstanding at December 31, 1995 248,384 18.98 88,618
Granted 69,298 25.19
Exercised (4,054) 17.19
Forfeited (4,908) 20.07
- --------------------------------------------------------------------------------
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 24.76 216,398
================================================================================
Also in 1995, the Corporation awarded 32,360 shares of restricted common
stock under this plan to certain key employees at no cost to the employees. The
shares have been valued at a price of $24.00 per share, the market price on the
date of the award, and the cost of the issue is being amortized over their
three-year restriction period.
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. At December 31, 1997, the Corporation had deferred an
additional 4,468 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.
31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Environmental Costs
The Corporation continues to be involved in various remediation actions as
required by Federal and State laws. During 1997, the Corporation incurred
expenses of $3,132,000 for remediation, engineering and professional services
relating to known sites. The Corporation maintained a noncurrent environmental
obligation at December 31, 1997 of $9,346,000, compared to $9,798,000 at
December 31, 1996, to remedy these sites.
In 1997, the Corporation's Wood-Ridge, New Jersey site completed
construction of its water treatment and soil vapor extraction system. The plant
was functional at the close of 1997. Remediation costs paid in 1997, in large
part due to the construction of the above systems, totaled $3,450,000. This
expense had previously been provided in 1990 as part of a $21,000,000 reserve
established to remediate the property.
The Corporation, with many other corporations and municipalities, has been
named as a potentially responsible party (PRP) in a number of environmental
clean-up sites. The most significant of these sites are the Sharkey landfill
superfund site, Parsippany, New Jersey; Caldwell Trucking Company superfund
site, Fairfield, New Jersey; the Chemsol, Inc. superfund site, Piscataway, New
Jersey; Pfohl Brothers landfill site, Cheektowaga, New York; and Buffalo Airport
sites, Buffalo, New York. Other environmental sites in which the Corporation is
involved are the Malta Test Station, near Saratoga, New York and PJP landfill,
Jersey City, New Jersey.
The Corporation believes the outcome for any of these sites would not have
a materially adverse effect on the Corporation's results of operations or
financial condition.
In 1997, the Corporation continued its lawsuit against a number of its
insurance carriers with respect to certain of the environmental liabilities
referred to above. Since the liability of the insurers is contested, no
financial recovery from this lawsuit has been recorded to offset the
Corporation's environmental costs.
12. Postretirement Benefits
The Corporation provides postretirement benefits, consisting only of health-care
benefits, covering eligible retirees. However, the benefits are not vested and
as such are subject to modification or termination in whole or in part. The
Corporation does not prefund its postretirement health-care benefits and expects
to continue to fund these benefits on a pay-as-you-go basis. The actual payments
made to provide certain nonvested health-care benefits for specific groups of
retired employees totaled $514,000, $660,000 and $696,000 in 1997, 1996 and
1995, respectively.
Effective January 1, 1997, the Corporation amended its postretirement
health-care coverage to significantly reduce the cost of providing such
benefits. Current non-union retirees receiving health benefits have begun
contributing toward the cost of their postretirement medical coverage and
reimbursement levels have been reduced to 80%, from a 100% coverage level. The
Corporation has also provided an alternative Medicare Risk HMO program which
provides a more comprehensive level of coverage at no cost to its retiree
groups. The amended plan also eliminates all Corporation-subsidized
postretirement benefits for non-union employees hired after December 31, 1996.
Net expenses for the retiree health-benefit plans for the years ended
December 31 included the following components:
(In thousands) 1997 1996 1995
- --------------------------------------------------------------------------------
Service cost--benefits attributed
to service during the period $ 146 $ 214 $ 180
Interest cost on accumulated
postretirement benefits 296 448 494
Net amortization and deferral (380) (187) (292)
- --------------------------------------------------------------------------------
Net periodic postretirement benefit cost $ 62 $ 475 $ 382
================================================================================
The following table sets forth the actuarial present value of benefits and the
funded status at December 31 for the Corporation's domestic plans:
(In thousands) 1997 1996
- --------------------------------------------------------------------------------
Actuarial present value of benefits:
Retired employees $ 2,634 $ 4,165
Active employees--fully eligible 258 530
Other active employees 1,233 1,821
- --------------------------------------------------------------------------------
Accumulated postretirement benefits 4,125 6,516
Unrecognized net gain from past experience
different from that assumed and from changes
in assumptions 3,703 3,340
Unrecognized prior service costs 2,022 446
- --------------------------------------------------------------------------------
Accrued postretirement benefit cost $ 9,850 $10,302
================================================================================
The weighted average discount and health-care cost trend rates used in
determining the accumulated postretirement benefits and periodic postretirement
benefit cost are as follows:
1997 1996
- --------------------------------------------------------------------------------
Weighted average discount rate 7.00% 7.00%
Assumed health-care cost trend rates:
Current 9.02% 9.43%
Ultimate 5.50% 5.50%
Years to ultimate 10 11
================================================================================
32
A 1% increase in health-care cost trends would result in an increase to the
accumulated postretirement benefits as of December 31, 1997 of $429,000 and an
increase in the net periodic postretirement benefit cost for the year then ended
of $59,000.
13. Retirement Plans
The Corporation maintains a non-contributory defined benefit pension plan
covering substantially all employees. The Curtiss-Wright Corporation Retirement
Plan non-union 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(s). Accrued benefits as of August 31, 1994 for non-union
employees are adjusted upward based upon salary growth to date of termination.
Employees are eligible to participate in this plan after one year of service and
are vested in the formula benefit after five years of service. Vesting in the
"cash balance" portion had occurred at 20% per year, reaching 100% vesting at
five years of service, until June 1, 1997 when such vesting requirements became
the same as under the formula portion of the Plan.
The Corporation's funding policy is to provide contributions within the
limits of deductibility under current tax regulations, thereby accumulating
funds adequate to provide for all accrued benefits. At December 31, 1997 and
December 31, 1996, the retirement plan was overfunded (i.e., plan assets exceed
accumulated benefit obligations).
The Corporation had pension credits in 1997, 1996 and 1995 of $3,658,000,
$3,888,000 and $3,036,000, respectively, for domestic plans and had foreign
pension costs in 1997, 1996 and 1995 under retirement plans of $312,000,
$249,000 and $208,000, respectively. The funded status of the Corporation's
domestic plans at December 31 are set forth in the following table:
(In thousands) 1997 1996
- --------------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Vested $103,750 $103,581
Nonvested 3,002 2,527
- --------------------------------------------------------------------------------
Accumulated benefit obligation 106,752 106,108
Impact of future salary increases 3,961 4,411
- --------------------------------------------------------------------------------
Projected benefit obligation 110,713 110,519
Plan assets at fair value 230,743 192,599
- --------------------------------------------------------------------------------
Plan assets in excess of projected benefit
obligation 120,030 82,080
Unrecognized net gain (73,949) (38,534)
Unrecognized prior service cost 331 365
Unrecognized net transition asset (7,738) (8,895)
- --------------------------------------------------------------------------------
Prepaid pension cost $ 38,674 $ 35,016
================================================================================
At December 31, 1997, approximately 34% of the plans' assets are invested in
debt securities, including a portion in U.S. Government issues. Approximately
66% of plan assets are invested in equity securities.
Included in earnings is net pension income for 1997, 1996 and 1995,
comprised of the following:
(In thousands) 1997 1996 1995
- --------------------------------------------------------------------------------
Service costs--benefits earned
during the period $ 3,664 $ 3,287 $ 3,119
Interest cost on projected benefit
obligations 7,481 7,548 8,457
Actual return on plan assets (41,292) (16,749) (32,358)
Net amortization and deferral 26,489 2,026 17,746
- --------------------------------------------------------------------------------
Net pension income $ 3,658 $ 3,888 $ 3,036
================================================================================
The major assumptions used in accounting for the Corporation's defined-benefit
pension and retirement plans at December 31 are as follows:
1997 1996
- --------------------------------------------------------------------------------
Discount rate 7.0% 7.0%
Rate of increase in future compensation levels 4.5% 4.5%
Expected long-term rate of return on plan assets 8.5% 8.5%
================================================================================
The net periodic pension credit is determined using the assumptions as of the
beginning of the year. The funded status is determined using the assumptions as
of the end of the year.
14. 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, 1997, were $50,572,000 and $43,692,000,
respectively, and at December 31, 1996, were $53,686,000 and $44,690,000,
respectively.
33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 $2,239,000 in
1997, $2,283,000 in 1996 and $1,857,000 in 1995.
At December 31, 1997, 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
(In thousands) Income Commitment
- --------------------------------------------------------------------------------
1998 $ 5,404 $ 2,103
1999 4,285 1,990
2000 3,763 1,394
2001 3,509 1,048
2002 2,195 860
2003 and beyond 12,888 1,703
- --------------------------------------------------------------------------------
Total $32,044 $ 9,098
================================================================================
15. Industry Segments
The principal products and services and major markets of the two industry
segments are described on page 9.
Consolidated Industry Segment Information:
(In millions) 1997 1996 1995
- --------------------------------------------------------------------------------
Sales:
Aerospace & Marine $ 159.0 $ 109.9 $ 92.4
Industrial 60.4 60.6 62.0
- --------------------------------------------------------------------------------
Total sales $ 219.4 $ 170.5 $ 154.4
================================================================================
Pre-tax Earnings from Operations:
Aerospace & Marine $ 25.6 $ 12.5 $ 11.7
Industrial 13.1 10.4 11.5
- --------------------------------------------------------------------------------
Total segments 38.7 22.9 23.2
Net pension income 3.7 3.9 3.0
Corporate expense (9.1) (7.6) (5.6)
- --------------------------------------------------------------------------------
Total operating income 33.3 19.2 20.6
Investment income 3.4 3.0 4.1
Rental earnings, net 3.3 2.8 2.9
Other income (expense), net 2.2 (.5) .4
Interest expense (.3) (.4) (.5)
- --------------------------------------------------------------------------------
Total pre-tax earnings $ 41.9 $ 24.1 $ 27.5
================================================================================
(In millions) 1997 1996 1995
- --------------------------------------------------------------------------------
Identifiable Assets:
Aerospace & Marine $ 119.0 $ 107.9 $ 76.7
Industrial 35.8 38.4 40.6
- --------------------------------------------------------------------------------
Total segments 154.8 146.3 117.3
Cash and short-term investments 68.8 62.0 78.8
Other general and corporate 61.1 58.9 50.1
- --------------------------------------------------------------------------------
Total assets at December 31 $ 284.7 $ 267.2 $ 246.2
================================================================================
Capital Expenditures:
Aerospace & Marine $ 7.9 $ 9.8 $ 5.7
Industrial 2.8 2.3 .7
- --------------------------------------------------------------------------------
Total segments 10.7 12.1 6.4
General and corporate .5 2.1 .6
- --------------------------------------------------------------------------------
Total capital expenditures $ 11.2 $ 14.2 $ 7.0
================================================================================
Depreciation:
Aerospace & Marine $ 5.7 $ 5.4 $ 5.4
Industrial 2.1 2.4 3.1
- --------------------------------------------------------------------------------
Total segments 7.8 7.8 8.5
General and corporate 1.1 1.0 1.0
- --------------------------------------------------------------------------------
Total depreciation $ 8.9 $ 8.8 $ 9.5
================================================================================
The Aerospace & Marine segment had one customer (Boeing) which accounted for 20%
and one customer (Westinghouse) which accounted for 11% of total sales in 1997,
but no customers which provided more than 10% of total sales in 1996 or 1995.
The Industrial segment did not have a single customer which accounted for 10% or
more of total sales in 1997, 1996 and 1995.
Revenues from major product lines consist of:
1997 1996 1995
- --------------------------------------------------------------------------------
Actuation and control systems
and components 23% 21% 26%
Metal treatment services 44 46 46
Overhaul services 20 16 7
Valves 12 16 18
All others 1 1 3
- --------------------------------------------------------------------------------
100% 100% 100%
================================================================================
Direct sales to the U.S. Government and sales for U.S. and foreign government
end use accounted for 20%, 23% and 25% of total sales in 1997, 1996 and 1995,
respectively, and were included in all segments as follows:
(In thousands) 1997 1996 1995
- --------------------------------------------------------------------------------
Aerospace & Marine $42,400 $37,400 $38,000
Industrial 2,000 2,500 900
- --------------------------------------------------------------------------------
Total military sales $44,400 $39,900 $38,900
================================================================================
34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AND FORWARD LOOKING STATEMENTS
Geographic revenues and earnings are as follows:
(In thousands) 1997 1996 1995
- --------------------------------------------------------------------------------
Sales:
United States $176,669 $135,422 $127,304
Europe 37,059 29,865 23,096
Canada 5,667 5,249 4,046
- --------------------------------------------------------------------------------
Total $219,395 $170,536 $154,446
================================================================================
Pre-Tax Earnings:
United States $ 29,965 $ 15,195 $ 21,861
Europe 10,107 8,076 4,624
Canada 1,827 858 1,007
- --------------------------------------------------------------------------------
Total $ 41,899 $ 24,129 $ 27,492
================================================================================
Geographic assets outside the United States were less than 10% of total assets
in each period reported.
Export sales were less than 10% of total sales in each period reported.
Intersegment sales, the amount of which are insignificant, are accounted
for on substantially the same basis as sales to unaffiliated customers and have
been eliminated.
Identifiable assets by segments are those assets that are used in the
Corporation's operations included in that segment.
Forward-Looking Statements
Because forward-looking statements involve risks and uncertainties, actual
results may differ materially from those that are expressed or implied. Such
statements include those contained in (a) Management's Discussion and Analysis
of Financial Condition and Results of Operation; (b) the Environmental Matters
note as well as other notes to the Consolidated Financial Statements; (c) the
President's Letter to Stockholders; and (d) other sections of the Annual Report.
Important factors that could cause the actual results to differ materially from
those in these forward-looking statements include, among other items, (i)
unanticipated environmental remediation expenses or claims; (ii) a reduction in
anticipated orders; (iii) an economic downturn; (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; and (vii) other factors that generally affect the
business of aerospace, marine and industrial companies.
35
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
QUARTERLY RESULTS OF OPERATIONS (Unaudited)
(In thousands except
per share amounts) First Second Third Fourth
- --------------------------------------------------------------------------------
1997 Quarters:
Sales $ 53,148 $ 54,412 $ 52,677 $ 59,158
Gross profit 16,644 19,125 19,002 20,918
Net earnings 4,955 7,050 8,076 7,804
Earnings per share:
Basic earnings per common share .49 .69 .79 .77
Dividends per common share .125 .125 .125 .13
- --------------------------------------------------------------------------------
1996 Quarters:
Sales $ 36,316 $ 43,243 $ 44,881 $ 46,096
Gross profit 12,243 14,154 14,381 12,691
Net earnings 3,315 5,202 4,444 3,148
Earnings per share:
Basic earnings per common share .33 .51 .44 .31
Dividends per common share .125 .125 .125 .125
================================================================================
CONSOLIDATED SELECTED FINANCIAL DATA
(In thousands except per share data) 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------
Sales $219,395 $170,536 $154,446 $155,001 $158,864
Earnings (loss) before changes in accounting principles 27,885 16,109 18,169 19,547 (2,952)(1)
Net earnings (loss) 27,885 16,109 18,169 19,303 (5,623)(2)
Total assets 284,708 267,164 246,201 238,694 236,947
Long-term debt 10,347 10,347 10,347 9,047 14,426
Basic earnings per common share:
Earnings (loss) before changes in accounting principles 2.74 1.59 1.79 1.93 (.29)
Net earnings (loss) 2.74 1.59 1.79 1.91 (.56)
Cash dividends .505 .50 .50 .50 .50
===========================================================================================================
See notes to consolidated financial statements for additional financial
information.
(1) Includes after-tax charges for: a litigation settlement of $8,600,000,
environmental remediation costs of $2,462,000, restructuring charges of
$2,357,000 and a deferred tax asset valuation allowance under SFAS No. 109
of $3,586,000.
(2) Includes an after-tax charge of $6,435,000 from the cumulative effect of a
change in accounting principles for the adoption of SFAS No. 106,
"Employers' Accounting for Postretirement Benefits," and an after-tax
benefit of $3,764,000 from the adoption of SFAS No. 109, "Accounting for
Income Taxes."
36
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
CORPORATE DIRECTORY
Directors
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 President
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 President
Robert E. Mutch
Executive Vice President
Gerald Nachman
Executive Vice President
George J. Yohrling
Vice President
Martin R. Benante
Vice President
Robert A. Bosi
Vice President-Finance
Dana M. Taylor
General Counsel and Secretary
Kenneth P. Slezak
Controller
Gary J. Benschip
Treasurer
Curtiss-Wright Flight Systems, Inc.
Robert E. Mutch
President
300 Fairfield Road
Fairfield, New Jersey 07004-1962
Metal Improvement Company, Inc.
Gerald Nachman
President
10 Forest Avenue
Paramus, New Jersey 07652-5214
Curtiss-Wright Flow Control
Corporation (Formerly Target
Rock Corporation)
Martin R. Benante
President
1966E Broadhollow Road
East Farmingdale, New York
11735-1768
[PHOTO OMITTED]
Directors (left to right):
William B. Mitchell, Thomas R. Berner, J. McLain Stewart (seated), Dr. William
W. Sihler, David Lasky (seated), John R. Myers, Admiral James B. Busey IV
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
CORPORATE INFORMATION
Corporate Headquarters
1200 Wall Street West
Lyndhurst, New Jersey 07071
Tel. (201) 896-8400Fax (201) 438-5680
Annual Meeting
The 1998 Annual Meeting of Stockholders will be held on April 24, 1998 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, 1997, the approximate number of holders of record of common
stock, par value $1.00 per share, of the Corporation was 4,150.
Stock Transfer Agent and Registrar
For services such as changes of address, replacement of lost certificates 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:
Shareholder 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, Ridgefield Park, NJ 07660
for instructions on combining your accounts.
Direct Stock Purchase Plan
A plan administered by the Chase Manhattan Bank is available to purchase or
sell shares of Curtiss-Wright which 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,
South Hackensack, NJ 07606
Certificate Transfers
Stock Transfer Department, P.O. Box 3312,
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. Hearing impaired (800) 231-5469. 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 financial information required
to be on file with the Securities and Exchange Commission. The company also
files an Annual Report on Form 10-K, a copy of which may be obtained free of
charge. These reports, as well as additional financial documents such as
quarterly shareholder reports, proxy statements, and quarterly reports on Form
10-Q, may be received by written request to Gary J. Benschip, Treasurer, at
Corporate Headquarters.
Common Stock Price Range
1997 1996
- --------------------------------------------------------------------------------
High Low High Low
- --------------------------------------------------------------------------------
First Quarter $28.1875 $24.7500 $27.6250 $25.1250
Second Quarter 31.1250 26.7500 27.0000 25.4375
Third Quarter 39.8750 29.0938 27.3125 25.3750
Fourth Quarter 39.2500 36.1250 27.5000 24.8125
================================================================================
Dividends
1997 1996
- --------------------------------------------------------------------------------
First Quarter $0.125 $0.125
Second Quarter $0.125 $0.125
Third Quarter $0.125 $0.125
Fourth Quarter $0.130 $0.125
================================================================================
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Curtiss-Wright Corporation
1200 Wall Street West
Lyndhurst, New Jersey 07071