SECURITIES and EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998 Commission File Number 1-134 CURTISS-WRIGHT CORPORATION (Exact name of Registrant as specified in its charter) Delaware 13-0612970 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1200 Wall Street West Lyndhurst, New Jersey 07071 (Address of principal executive offices) (Zip Code) (201) 896-8400 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, par value $1.00 per share: 10,203,724 shares (as of July 31, 1998) Page 1 of 41
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES TABLE of CONTENTS PAGE PART I - FINANCIAL INFORMATION Item 1 - Financial Statements: Consolidated Balance Sheets 3 Consolidated Statements of Earnings 4 Consolidated Statements of Cash Flows 5 Consolidated Statements of Stockholders' Equity 6 Notes to Consolidated Financial Statements 7 - 11 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 12 - 15 Forward-Looking Statements 16 PART II - OTHER INFORMATION Item 5 - Other Information 17 Item 6 - Exhibits and Reports on Form 8-K 18 -2-
PART I - FINANCIAL INFORMATION Item 1 - Financial Statements CURTISS-WRIGHT CORPORATION and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands) June 30, December 31, 1998 1997 Assets: Cash and cash equivalents $ 9,495 $ 6,872 Short-term investments 64,608 61,883 Receivables, net 44,433 41,590 Deferred tax asset 8,191 8,806 Inventories 51,232 49,723 Other current assets 2,241 2,506 ----------- ----------- Total current assets 180,200 171,380 ----------- ----------- Property, plant and equipment, at cost 226,736 219,587 Less, accumulated depreciation 157,682 153,704 ----------- ----------- Property, plant and equipment, net 69,054 65,883 Prepaid pension costs 40,621 38,674 Other assets 9,684 8,771 ---------- ----------- Total assets $299,559 $284,708 ========== =========== Liabilities: Accounts payable and accrued expenses $ 25,139 $ 24,540 Dividends payable 1,323 Income taxes payable 4,916 4,845 Other current liabilities 9,187 9,244 ----------- ----------- Total current liabilities 40,565 38,629 ----------- ----------- Long-term debt 10,347 10,347 Deferred income taxes 9,405 8,799 Other liabilities 22,136 22,080 ---------- ---------- Total liabilities 82,453 79,855 ---------- ---------- Stockholders' equity: Common stock, $1 par value 15,000 15,000 Capital surplus 51,241 52,010 Retained earnings 330,133 318,474 Unearned portion of restricted stock (198) (342) Accumulated other comprehensive income (3,377) (3,289) ---------- ----------- 392,799 381,853 Less, cost of treasury stock 175,693 177,000 --------- --------- Total stockholders' equity 217,106 204,853 --------- --------- Total liabilities and stockholders' equity $299,559 $284,708 ========= ======== See notes to consolidated financial statements. -3-
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES CONSOLIDATED STATEMENTS of EARNINGS (UNAUDITED) (In thousands except per share data) <TABLE> <CAPTION> Six Months Ended Three Months Ended June 30, June 30, ------------------------- ------------------ 1998 1997 1998 1997 ---- ---- ---- ---- <S> <C> <C> <C> <C> Net sales $120,251 $107,560 $59,405 $54,412 Cost of sales 80,380 71,791 37,656 35,287 ---------- ---------- -------- -------- Gross margin 39,871 35,769 21,749 19,125 Research and development costs 591 946 286 348 Selling expenses 4,856 3,936 2,551 2,001 General and administrative 14,714 15,627 7,846 7,746 --------- ---------- --------- --------- Operating income 19,710 15,260 11,066 9,030 Investment income, net 1,581 1,848 502 1,210 Rental income, net 1,763 1,741 850 801 Other income (expense), net 79 (251) (20) (144) Interest expense 185 189 96 116 ------------ ---------- ----------- --------- Earnings before taxes 22,948 18,409 12,302 10,781 Provision for taxes 8,642 6,404 4,601 3,731 ---------- ---------- --------- --------- Net earnings $ 14,306 $ 12,005 $ 7,701 $ 7,050 ========= ========= ======== ======= Weighted average number of common shares outstanding 10,187 10,170 10,187 10,170 ====== ====== ====== ====== Basic earnings per common share $1.40 $1.18 $0.76 $0.69 ===== ===== ===== ===== Diluted earnings per common share $1.38 $1.17 $0.75 $0.69 ===== ===== ===== ===== Dividends per common share $0.130 $0.125 $0.130 $0.125 ====== ====== ====== ====== </TABLE> See notes to consolidated financial statements. -4-
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES CONSOLIDATED STATEMENTS of CASH FLOWS (UNAUDITED) (In thousands) Six Months Ended June 30, 1998 1997 Cash flows from operating activities: Net earnings $14,306 $12,005 ------- ------- Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 4,881 4,948 Net gains on short-term investments (170) (1,070) Increase in deferred taxes 1,221 14 Changes in operating assets and liabilities: Proceeds from sales of trading securities 197,151 135,263 Purchases of trading securities (197,895) (136,621) Increase in receivables (2,218) (4,636) (Increase) decrease in inventory 86 (1,603) Decrease in progress payments (2,220) (1,684) Increase (decease) in accounts payable and accrued expenses 599 (253) Increase in income taxes payable 71 2,672 Increase in other assets (3,027) (1,252) Decrease in other liabilities (1,812) (873) Other, net 1,381 (1,411) --------- --------- Total adjustments (1,952) (6,506) --------- --------- Net cash provided by operating activities 12,354 5,499 --------- --------- Cash flows from investing activities: Proceeds from sales of real estate and equipment 280 18 Additions to property, plant and equipment (2,581) (5,911) Acquisition of Alpha Heat Treaters business (6,106) --------- --------- Net cash used by investing activities (8,407) (5,893) --------- --------- Cash flows from financing activities: Dividends paid (1,324) (1,271) --------- ---------- Net cash used by financing activities (1,324) (1,271) --------- ---------- Net increase (decrease) in cash and cash equivalents 2,623 (1,665) Cash and cash equivalents at beginning of period 6,872 6,317 --------- --------- Cash and cash equivalents at end of period $ 9,495 $ 4,652 ========= ========= See notes to consolidated financial statements. -5-
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES CONSOLIDATED STATEMENTS of STOCKHOLDERS' EQUITY (UNAUDITED) (In thousands) <TABLE> <CAPTION> Unearned Accumulated Portion of Other Common Capital Retained Restricted Comprehensive Treasury Stock Surplus Earnings Stock Awards Income Stock <S> <C> <C> <C> <C> <C> <C> December 31, 1996 $10,000 $57,127 $299,740 $(608) $(1,506) $181,390 Net earnings 27,885 Common dividends (5,137) Stock dividend (two for one split) 5,000 (5,000) (4,014) (4,014) Stock options exercised, net (117) (376) Amortization of earnings portion of restricted stock 266 Translation adjustments, net (1,783) -------- -------- --------- ------ -------- --------- December 31, 1997 15,000 52,010 318,474 (342) (3,289) 177,000 Net earnings 14,306 Common dividends (2,647) Stock options exercised, net (769) (1,307) Amortization of earned portion of restricted stock 144 Translation adjustment, net (88) -------- --------- --------- ------ -------- ---------- June 30, 1997 $15,000 $51,241 $330,133 $(198) $(3,377) $175,693 ======== ========= ========= ====== ======== ========== </TABLE> See notes to consolidated financial statements. -6-
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES NOTES to CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS of PRESENTATION Curtiss-Wright Corporation (the "Corporation") is a diversified multi-national manufacturing and service concern that designs, manufactures and overhauls precision components and systems and provides highly engineered services to the aerospace, automotive, shipbuilding, oil, petrochemical, agricultural equipment, power generation, metal working and fire & rescue industries. The Corporation's principal operations include four domestic manufacturing facilities, thirty-five metal treatment service facilities located in North America and Europe, and five component overhaul locations. The information furnished in this report has been prepared in conformity with generally accepted accounting principles and as such reflects all adjustments, consisting primarily of normal recurring accruals, which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation's 1997 Annual Report on Form 10-K. The results of operations for these interim periods are not necessarily indicative of the operating results for a full year. Certain reclassifications of prior year amounts have been made in order to conform to the current presentation. 2. ACQUISITIONS On April 30, 1998, the Corporation purchased the Alpha Heat Treaters ("Alpha") division of Alpha-Beta Industries, Inc. Alpha services a broad spectrum of customers from its York, Pennsylvania location and provides a number of metal treating processes including carburizing, surface hardening, stress relieving, induction hardening and black oxide surface treatment services. The Corporation acquired the net assets of Alpha for approximately $6.1 million in cash and has accounted for the acquisition as a purchase. The excess of purchase price over the fair value of the net assets is approximately $1.0 million and is expected to be amortized over 25 years. The fair value of the net assets acquired was based on preliminary estimates and may be revised at a later date. Subsequent Event On July 31, 1998, the Corporation purchased the assets of Enertech, LLC (Enertech) which distributes, represents and manufactures a number of products for sale into commercial nuclear power plants, both domestically and internationally. Enertech also provides a broad range of overhaul and maintenance services for such plants from its two principal locations in Brea, California and Suwanne, Georgia. Enertech has annual sales of about $25.0 million. The Corporation acquired the net assets of Enertech for approximately -7-
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued (UNAUDITED) $15.0 million in cash and will account for the acquisition as a purchase in the third quarter of 1998. The excess of the purchase price over the fair value of the net assets acquired will be recorded as goodwill. 3. RECEIVABLES Receivables, at June 30, 1998 and December 31, 1997, include amounts billed to customers and unbilled charges on long-term contracts consisting of amounts recognized as sales but not billed at the dates presented. Substantially all amounts of unbilled receivables are expected to be billed and collected within a year. The composition of receivables for those periods is as follows: (In thousands) June 30, December 31, 1998 1997 Accounts receivable, billed $50,881 $49,110 Less: progress payments applied 10,614 10,460 -------- -------- 40,267 38,650 -------- -------- Unbilled charges on long-term contracts 13,367 13,022 Less: progress payments applied 7,556 8,335 -------- -------- 5,811 4,687 --------- --------- Allowance for doubtful accounts (1,645) (1,747) --------- --------- Receivables, net $44,433 $41,590 ======= ======= 4. INVENTORIES Inventories are valued at the lower of cost (principally average cost) or market. The composition of inventories at June 30, 1998 and December 31, 1997 is as follows: -8-
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued (UNAUDITED) (In thousands) June 30, December 31, 1998 1997 Raw materials $ 6,829 $ 5,514 Work-in-process 20,891 22,686 Finished goods 22,550 21,782 Inventoried costs related to U.S. Government and other long-term contracts 5,173 5,547 --------- --------- Total inventories 55,443 55,529 Less: progress payments applied, principally related to long-term contracts 4,211 5,806 --------- --------- Net inventories $51,232 $49,723 ======= ======= 5. ENVIRONMENTAL MATTERS The Corporation establishes a reserve for a potential environmental responsibility when it concludes that a determination of legal liability is probable. Such amounts, if quantified, 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 reduced by any potential recovery from insurance carriers or through contested third-party legal actions, and are not discounted for the time value of money. The Corporation is joined with many other corporations and municipalities as potentially responsible parties (PRPs) in a number of environmental cleanup sites, which include the Sharkey Landfill Superfund Site, Parsippany, N. J., Caldwell Trucking Company Superfund Site, Fairfield, N. J., and Pfohl Brothers Landfill Site, Cheektowaga, N. Y., identified to date as the most significant sites. Other environmental sites in which the Corporation is involved include but are not limited to Chemsol, Inc. Superfund Site, Piscataway, N. J., and PJP Landfill, Jersey City, N. J. The Corporation believes that the outcome of any of these matters would not have a material adverse effect on the Corporation's results of operations or financial condition. -9-
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued (UNAUDITED) 6. COMPREHENSIVE INCOME Effective January 1, 1998, the Corporation adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS No. 130). SFAS No. 130 establishes standards for reporting and displaying changes in equity from non-owner sources. Total comprehensive income for the six months ended June 30, 1998 and 1997 is as follows: (In thousands) June 30, June 30, 1998 1997 Net earnings $14,306 $12,005 -------- -------- Equity adjustments from foreign currency translations (88) (1,983) Proforma tax effects (31) (694) -------- -------- Net adjustments (57) (1,289) -------- -------- Total comprehensive income $14,249 $10,716 ======== ======== 7. EARNINGS PER SHARE The Corporation accounts for its earnings per share (EPS) in accordance with Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS No. 128). Diluted earnings per share were computed based on the weighted average number of shares outstanding plus all potentially dilutive common shares issuable for the periods. Dilutive common shares for the second quarters of 1998 and 1997 were 14 and 50, respectively, and were 148 and 121 for the six months ended June 30, 1998 and 1997, respectively, consisting primarily of outstanding stock options. Prior year earnings per share information has been restated to reflect a 2 for 1 stock split paid December 23, 1997. 8. RECENTLY ISSUED ACCOUNTING STANDARDS On June 15, 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivatives and Hedging Activities" (SFAS No. 133). SFAS No. 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999 (January 1, 2000 for the Corporation). SFAS No. 133 requires that all derivative instruments be -10-
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued (UNAUDITED) recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. Management of the Corporation anticipates that, due to its limited use of derivative instruments, the adoption of SFAS No. 133 will not have a significant effect on its results of operations or its financial position. -11-
PART I - ITEM 2 CURTISS-WRIGHT CORPORATION and SUBSIDIARIES MANAGEMENT'S DISCUSSION and ANALYSIS of FINANCIAL CONDITION and RESULTS of OPERATIONS RESULTS of OPERATIONS Curtiss-Wright posted net earnings for the second quarter of 1998 totaling $7.7 million, or $.75 per diluted share, 9% above net earnings reported for the second quarter of 1997. In the aggregate, operating earnings totaled $11.1 million for the second quarter of 1998, a 23% increase over the same quarter of last year. Sales totaled $59.4 million for the 1998 second quarter compared with sales of $54.4 million for the prior year period. New orders received during the 1998 period also increased, reaching $59.8 million, compared with orders of $53.4 million received in the same period of 1997. Increases in sales, new orders, and net earnings reflect the continued improvements generated by our business segments. For the first six months of 1998 Curtiss-Wright posted consolidated net earnings of $14.3 million, or $1.38 per share, a 19% improvement as compared with net earnings of $12.0 million, or $1.17 per share, posted for the first six months of 1997. Sales for the 1998 first half were $120.3 million, 12% higher than sales of $107.6 million posted for the first half of 1997. Operating income rose 29%, to $19.7 million for the first six months of 1998, compared with operating income of $15.3 million for the same 1997 period. New orders received in the first half of 1998 totaled $116.7 million, compared with new orders of $99.0 million received during the first half of 1997. Operating Performance The Corporation's metal-treating businesses achieved substantial increases in sales for the second quarter of 1998 as compared with the same period of 1997. These sales improvements reflect a continuing increase in the number of applications for metal-treating services across a variety of worldwide markets, a contribution from the recently acquired Alpha Heat Treaters business, and newly opened facilities in Germany, England and the United States. For the first six months of 1998, sales of metal-treating services increased 14% over the first six-months of 1997. Operating income for these product lines also improved over the prior year for both the second quarter and first half of 1998, generally reflecting the improved sales in most markets served. Sales of aerospace component overhaul and repair services for the second quarter increased from the level posted for the same prior year period. Despite the improvement, operating income for the period was on a par with the prior year period. Over the first six-months of 1998, the Company's sales of overhaul and repair services in the aggregate have improved 11% compared with the prior year period, while operating income has declined, reflecting inventory and related adjustments recorded in the first quarter of 1998. -12-
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES MANAGEMENT'S DISCUSSION and ANALYSIS of FINANCIAL CONDITION and RESULTS of OPERATIONS, Continued Sales generated by aerospace actuation product lines increased in the second quarter of 1998, compared with the second quarter of 1997, primarily reflecting the continued high level of original equipment manufactured (OEM) products for the Boeing Company. Increases in sales of actuation components and systems for commercial customers for the first six months of 1998 also reflect Boeing's high production rates. In addition, sales of commercial actuation spare parts showed considerable growth in both the second quarter and first six-month periods of 1998 as compared with those same respective periods of 1997. Operating income attributable to this commercial business increased as a result of these sales increases. Sales of military actuation products declined in the second quarter of 1998 reflecting the end of an F-16 Hill Air Force retrofit shafts contract and lower foreign military sale procurements. Military sales for the first half of 1998 benefited from the completion of "safety of flight testing" on certain F-22 components, but sales of military programs overall remained below first half 1997 levels. In the aggregate, operating income for military OEM production programs declined for the three and six-month 1998 periods, the result of inefficiencies, higher-than-expected manufacturing costs, inventory write-offs, and provisions for higher anticipated costs related to development program test efforts. The Corporation's valve product lines posted slight declines in sales and operating income on a year-over-year basis for both the second quarter and first half. These declines primarily reflect reduced sales of military valve products on a comparative basis due, in part, to a test program during the first quarter of 1997, that did not recur in 1998. Increased sales of commercial valve products largely offset the decline in military product sales. Non-Operating Revenues and Costs For the second quarter of 1998, the Corporation recorded other non-operating net revenue totaling $1.3 million, compared with $1.9 million for the second quarter of 1997, reflecting a reduction in investment income. Non-operating revenue totaled $3.4 million for the six-month 1998 period and $3.3 million for the same 1997 period. Administrative expenses for the second quarter and first half of 1998 and 1997 were reduced by accrued income generated from the Corporation's overfunded pension plan. Net pension income totaled $1.8 million for the first half of both years. -13-
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES MANAGEMENT'S DISCUSSION and ANALYSIS of FINANCIAL CONDITION and RESULTS of OPERATIONS, Continued Acquisitions As discussed in Note 2 to the Consolidated Financial Statements, the Corporation purchased the Alpha Heat Treaters ("Alpha") division of Alpha-Beta Industries, Inc., in April 1998 for approximately $6.0 million in cash. Alpha services a broad spectrum of customers from its York, Pennsylvania location and provides a number of metal treating processes including carburizing, surface hardening, stress relieving, induction hardening and black oxide surface treatment services. Alpha has annual sales of approximately $4.0 million. Subsequent to the end of the second quarter of 1998, the Corporation completed the purchase of the assets of Enertech, LLC, (Enertech). Enertech distributes, represents, and manufactures a number of products for sale into commercial nuclear power plants, both domestically and internationally, and provides a broad range of overhaul and maintenance services for such plants. The acquired operation generates annual sales of about $25.0 million from its two principle locations in Brea, California and Suwanne, Georgia. The Corporation acquired the net assets of Enertech for approximately $15.0 million in cash and will account for the acquisition as a purchase in the third quarter of 1998. CHANGES IN FINANCIAL CONDITION: Liquidity and Capital Resources: The Corporation's working capital was $139.6 million at June 30, 1998, 5% above working capital at December 31, 1997 of $132.8 million. The ratio of current assets to current liabilities was 4.4 to 1 at June 30 1998, even with the current ratio of at December 31, 1997. Cash, cash equivalents and short-term investments totaled $74.1 million in aggregate at June 30, 1998, increasing from $68.8 million at the prior year end. Changes in working capital reflect an increase in accounts receivable from trade customers largely due to the continued increase in sales. Net unbilled receivables also increased at June 30, 1998, over the prior year-end, due to a reduction in progress payments received on long-term valve contracts. Net inventory also increased slightly as the result of reduction in offsetting progress payments received during the first half of 1998. Working capital was reduced by accrued dividends payable for the second quarter of 1998. -14-
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES MANAGEMENT'S DISCUSSION and ANALYSIS of FINANCIAL CONDITION and RESULTS of OPERATIONS, Continued 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 $11.0 million remains unused at June 30, 1998, encompasses various letters of credit issued primarily in connection with outstanding industrial revenue bonds. There were no cash borrowings during the first half of 1998 and no outstanding balances for borrowed funds under the agreement at June 30, 1998. During the half of 1998, internally generated funds were adequate to meet capital expenditures of $2.6 million. Expenditures incurred during the first six months were primarily for machinery and equipment needed for the expansion of our metal treating operations. Internally generated funds were also used for the April 1998 purchase of Alpha Heat Treaters, and to purchase the assets of Enertech, LLC, on July 31, 1998, as detailed above. Approximately $10 million of capital expenditures are anticipated for the balance of the year to be used primarily for purchasing machinery and equipment for our operations. An additional $.8 million of expenditures connected with environmental remediation programs at the Corporation's Wood-Ridge, New Jersey Business Complex are anticipated in the remaining six months of the year. RECENTLY ISSUED ACCOUNTING STANDARDS: As discussed in Note 7 to the Consolidated Financial Statements, the Corporation is reviewing the requirements for the adoption of Statement of Financial Accounting Standards No. 133, "Accounting for Derivatives and Hedging Activities." It is anticipated that the statement will not have a material effect on the Corporation's results of operations or financial condition due to the limited use of derivative instruments. The statement is effective for the Corporation beginning January 1, 2000. YEAR 2000: The Corporation continues to take 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. -15-
FORWARD-LOOKING STATEMENTS Because forward-looking statements involve risks and uncertainties, actual results may differ materially from those which are expressed or implied. Such statements in this report include those contained in (a) environmental costs referred to in the Environmental Matters note to the Consolidated Financial Statements and in the Results of Operations portion of the Management Discussion and Analysis ("MD&A") section hereof, (b) projections relative to the costs of compliance with SFAS No. 133, referred to in a note to the Consolidated Financial Statements and in the Results of Operations portion of the Management's Discussion and Analysis section and (c) information relating to future capital expenditures contained in the Changes in Financial Condition portion of the MD&A section hereof. 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 and industrial companies. -16-
PART II - OTHER INFORMATION Item 5. OTHER INFORMATION (a) On July 31, 1998, Curtiss-Wright Flow Control Corporation, a wholly owned subsidiary of the Registrant, completed the acquisiiton of privately-held Enertech, LLC. The transaction was structured as an asset acquisition. Enertech, headquartered in Brea, California, is a provider of flow control equipment to the commercial nuclear power industry. Enertech has annual sales of about $25.0 million. The Company manufactures, represents and distributes flow control products including advanced valves, actuators, snubbers and hydraulic systems for sale into commercial nuclear power plants both domestically and internationally. Additionally, Enertech provides value-added services including diagnostic testing, predictive maintenance, parts repair and rebuilding, as well as training, engineering programs and staff augmentation to reduce downtime and improve plant efficiency. Enertech also serves the commercial hydraulics industry through its Paul-Munroe Enertech (PME) division. The Corportion acquired the Enertech assets for approximately $15.0 million in cash. The business will retain the Enertech and PME names, and its management team will remain in place to continue to service customers from its principal locations in Brea, California and Suwanee, Georgia. The acquired business unit will be a division of Curtiss-Wright Flow Control Corporation. (b) In the event a shareholder proposal is intended to be presented at the Corporation's 1999 Annual Meeting of Shareholders and inclusion has not been sought in the Corporation's proxy material pursuant to Rule 14a-8, the proposal must be received by the Secretary of the Corporation, Dana M. Taylor, Jr., Curtiss-Wright Corporation, Suite 501, 1200 Wall Street West, Lyndhurst, New Jersey 07071 by January 27, 1999. Pursuant to amended SEC Rule 14a-4(c)(1), the Corporation shall exercise discretionary voting authority to the extent conferred by proxy with respect to shareholder proposals received after that date. -17-
OTHER INFORMATION, Continued Item 6. EXHIBITS and REPORTS on FORM 8-K (a) Exhibits Exhibit 10 - Material Contracts (i) Standard Severance Protection Agreement dated June 19, 1998 between the Registrant and Officers of the Registrant. The Agreement signed by David Lasky is attached. The other seven are substantially identical except that the signing officers were Martin R. Benante, Gary J. Benschip, Robert A. Bosi, George J. Yohrling, Gerald Nachman, Kenneth P. Slezak and Dana M. Taylor, and that the contract with Dana M. Taylor was attested on behalf of Registrant by Stephen R. Bosin, Assistant Secretary. (ii) Amendments to Curtiss-Wright Retirement Plan dated April 1, 1998, April 29, 1998, April 30, 1998 and June 30, 1998. Exhibit 27 - Financial Data Schedules (Page 41) (b) Reports on Form 8-K The Registrant did not file any report on Form 8-K during the quarter ended June 30, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undesigned thereunto duly authorized. CURTISS-WRIGHT CORPORATION (Registrant) By: S/Robert A. Bosi ---------------------- Robert A. Bosi Vice President-Finance By: S/Kenneth P. Slezak ---------------------- Kenneth P. Slezak Dated: August 14, 1998 Controller -18-