SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1994
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: 5,059,053 shares (as of
May 9, 1994)
1 0f 14 <PAGE>
<PAGE>
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 - 9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10 - 12
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a vote of
Security Holders 13
Item 6 - Exhibits and Reports on Form 8-K 13
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<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In Thousands)
<CAPTION>
March 31, December 31,
1994 1993
Assets: --------- -----------
<S> <C> <C>
Cash and cash equivalents $ 7,902 $ 20,349
Short-term investments, at lower of
aggregate cost or market 66,003 54,811
Receivables, net 29,005 27,333
Deferred tax asset 9,815 8,882
Inventories 21,642 22,455
Other current assets 1,752 2,397
-------- --------
Total current assets 136,119 136,227
Property, plant and equipment, at cost 209,142 208,791
Less, accumulated depreciation 140,053 137,361
-------- --------
Property, plant and equipment, net 69,089 71,430
Prepaid pension costs 24,937 24,062
Other assets 5,171 5,228
-------- --------
Total assets $235,316 $236,947
======== ========
Liabilities:
Accounts payable and accrued expenses $ 15,263 $ 14,990
Dividends payable 1,264
Income taxes payable 3,382
Other current liabilities 19,040 28,525
-------- --------
Total current liabilities 38,949 43,515
Long-term debt 14,382 14,426
Deferred income taxes 6,542 6,354
Accrued benefit costs 10,907 10,376
Other liabilities 17,737 18,045
-------- --------
Total liabilities 88,517 92,716
Stockholders' equity:
Common stock, $1 par value 10,000 10,000
Capital surplus 57,172 57,172
Retained earnings 264,152 261,356
Unearned portion of restricted stock (63) (87)
Equity adj from foreign currency translat'n (2,114) (1,862)
-------- --------
329,147 326,579
Less, cost of treasury stock 182,348 182,348
-------- --------
Total shareholders' equity 146,799 144,231
Total liab & shareholders' equity $235,316 $236,947
======== ========
<FN> See notes to consolidated financial statements.
</TABLE> - 3 - <PAGE>
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<TABLE>
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS of EARNINGS
(UNAUDITED)
(In thousands except per share data)
<CAPTION>
Three Months Ended
March 31,
1994 1993
------- -------
<S> <C> <C>
Revenues:
Sales $38,538 $40,727
Rentals and gains and losses on
sales of real estate and equipment 2,100 2,117
Interest, dividends and gains & losses on
sales of short-term investments, net 825 1,002
Other income, net 198 137
------- -------
Total revenues 41,661 43,983
Cost and expenses:
Product and engineering 27,144 29,423
Selling and service 1,357 1,472
Administrative and general 6,515 6,983
Interest 88 145
------- -------
Total costs and expenses 35,104 38,023
Earnings before income taxes and
cumulative effect of changes
in accounting principles 6,557 5,960
Provision for income taxes 2,252 2,153
------- -------
Earnings before cumulative effect
of changes in acct'g principles 4,305 3,807
Cumulative effect of changes in
acct'g principles (net of applicable taxes) (244) (2,671)
------- -------
Net earnings $ 4,061 $ 1,136
======= =======
Weighted average number of common
shares outstanding 5,061 5,061
Net earnings per common share:
Earnings before cumulative effect
of changes in acct'g principles $ .85 $ .75
Cumulative effect of changes in
accounting principles (.05) (.53)
Net earnings per common share $ .80 $ .22
======== ========
Dividends per common share $ .25 $ .25
======== ========
<FN> See notes to consolidated financial statements.
</TABLE> - 4 - <PAGE>
<PAGE>
<TABLE>
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS of CASH FLOWS
(UNAUDITED)
(In thousands)
<CAPTION>
Three Months Ended
March 31
--------------------
1994 1993
-------- --------
<S> <C> <C>
Cash Flows from operating activities:
Net earnings $ 4,061 $ 1,136
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Cumulative effect of changes in acct'g principles 244 2,671
Depreciation and amortization 2,721 3,047
Net gains on short-term investments (495) (335)
Increase (decrease) in deferred taxes (614) (1,263)
Changes in operating assets and liabilities:
Proceeds from sales of trading securities 31,043
Purchases of trading securities (40,500)
Increase in receivables (1,582) (3,199)
Increase in retainages (125)
Decrease in inventory 515 1,029
Increase (decrease) in progress payments 208 (302)
Inc/(dec) in accts payable & accrued expenses (1,276) 1,165
Increase (decrease) in income taxes payable 3,637 (84)
Increase in other assets (428) (1,299)
Increase in other liabilities 786 178
Litigation settlement (8,880)
Other, net (218) 313
-------- -------
Total adjustments (14,839) 1,796
Net cash provided (used) by operat'g activities (10,778) 2,932
-------- -------
Cash flows from investing activities:
Proceeds (losses) on sales of real estate & equipm't (57) 40
Additions to property, plant and equipment (334) (1,387)
Proceeds from sales of short-term investments 108,584
Purchases of short-term investments (125,334)
-------- -------
Net cash used by investing activities (391) (18,097)
-------- -------
Cash flows from financing activities:
Principal payments on long-term debt (25) (2,647)
-------- -------
Net cash used by financing activities (25) (2,647)
-------- -------
Net decrease in cash and cash equivalents (11,194) (17,812)
Cash and cash equivalents at beginning of period 20,349 28,134
-------- -------
Cash and cash equivalents at end of period $ 9,155 $ 10,322
========= =========
<FN> See notes to consolidated financial statements.
</TABLE> - 5 - <PAGE>
<PAGE>
<TABLE>
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS of STOCKHOLDERS' EQUITY
(UNAUDITED)
(In thousands of dollars)
<CAPTION>
Equity
Unearned Adjustments
|-Common Stock-| Portion of from Foreign
Shares Capital Retained Restricted Currency Treasury Stock
Issued Amount Surplus Earnings Stock Translation Shares Amount
---------- ------- ------- -------- ------ ------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1992 10,000,000 $10,000 $57,062 $272,038 $(317) ($1,231) 4,939,257 $182,348
Net earnings (5,623)
Common dividends (5,059)
Amortization of
unearned portion
of restricted
stock (110) 230
Translation ad-
justments, net (631)
---------- ------- ------- -------- ------ ------- --------- --------
December 31, 1993 10,000,000 10,000 57,172 261,356 (87) (1,862) 4,939,257 182,348
Net earnings 4,061
Common dividends (1,265)
Amortization of
unearned portion
of restricted
stock 24
Translation ad-
justment, net (252)
---------- ------- ------- -------- ------ ------- --------- --------
March 31, 1994 10,000,000 $10,000 $57,172 $264,152 $ (63) $(2,114) 4,939,257 $182,348
========== ======= ======= ======== ====== ======= ========= ========
<FN> see notes to consolidated financial statements.
</TABLE> - 6 - <PAGE>
<PAGE>
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The information furnished in this report 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 1993 Annual Report to
Stockholders. 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
with the current consolidated financial presentation.
2. CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1994, Curtiss-Wright adopted Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits" (SFAS No. 112). This statement requires that
provision be made for benefits for former or inactive employees, after
employment but before retirement, such as salary continuation, severance
benefits and disability-related items. Under the new accounting rules, the
Corporation recorded a projected obligation for these benefits of $375,000.
This obligation resulted in an after-tax charge to earnings for the first
quarter of 1994 of $244,000 or $.05 per share.
3. SHORT-TERM INVESTMENTS
Effective January 1, 1994, the Corporation began accounting for its
short-term investments in accordance with Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (SFAS No. 115). This statement requires that the Corporation's
investments in equity securities be classified as "trading securities" or
"available for sale securities." The Corporation's short-term investments
are comprised of marketable equity and non-equity securities, all
classified as trading securities at March 31, 1994, under SFAS No. 115.
Short term investments have an aggregate cost of $66,717,000 and an
aggregate market value of $66,003,000 at March 31, 1994, compared to an
aggregate cost of $54,811,000 and an aggregate market value of $54,869,000
at December 31, 1993. Included in the determination of net earnings were
net realized gains on the sales of short-term investments, determined on
the specific identification cost basis, totaling $1,209,000 and $335,000
for the first quarter of 1994 and 1993, respectively. Also included in the
determination of net earnings for the first quarter of 1994 were net
unrealized holding losses on trading securities totaling $714,000.
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<PAGE>
4. RECEIVABLES
Receivables, at March 31, 1994 and December 31, 1993, 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:
<TABLE>
<CAPTION>
(In thousands)
---------------------------
March 31, December 31,
1994 1993
-------- --------
<S> <C> <C>
Accounts receivable, billed $23,048 $25,004
Less: progress payments applied 1,956 4,108
-------- --------
21,097 20,896
Unbilled charges on long-term contracts 23,824 20,265
Less: progress payments applied 14,997 12,935
-------- --------
8,827 7,330
-------- --------
Allowance for doubtful accounts (914) (893)
-------- --------
Receivables, net $29,005 $27,333
======== ========
5. INVENTORIES
Inventories are valued at the lower of cost (principally average cost)
or market. The composition of inventories at March 31, 1994 and December
31, 1993 is as follows:
In thousands
---------------------------
March 31, December 31,
1994 1993
-------- --------
Raw material $ 4,717 $ 5,626
Work-in-process 8,806 7,905
Finished goods 2,027 2,385
Inventoried costs related to U. S. Gov't
and other long-term contracts 9,075 9,224
-------- --------
Total inventories 24,625 25,140
Less: progress payments applied,
principally related to long-term contracts 2,983 2,685
-------- --------
Net inventories $21,642 $22,455
======== ========
</TABLE> - 8 - <PAGE>
<PAGE>
6. ENVIRONMENTAL MATTERS
The Corporation is subject to federal, state and local laws and
regulations concerning the environment, and is currently participating in
administrative or court proceedings involving a number of sites under these
laws, usually as a participant in an industry group of potentially
responsible parties. Many of these proceedings are at an early stage where
it is impossible to estimate with any certainty the total cost of
remediation, the timing and extent of remedial actions which may be
required by governmental authorities, and the amount of the liability, if
any, of the Corporation alone or in relation to that of any other
responsible parties. The Corporation also has been seeking to establish
insurance coverage with respect to many of these matters, in some cases
through litigation initiated against certain insurance carriers. When it
is possible to make a reasonable estimate of the Corporation's liability
with respect to such a matter, a provision is recorded as appropriate.
Actual costs to be incurred in future periods may vary from these
estimates.
Based on facts presently known to it, the Corporation does not believe
that the outcome of any one of these proceedings, in excess of amounts
provided, will have a material adverse effect on its results of operations
or financial condition.
7. CONSOLIDATED STATEMENTS OF CASH FLOWS
Interest payments of $62,000 and $131,000 were made primarily in
association with long-term debt in the first quarters of 1994 and 1993,
respectively. The Corporation made an estimated federal income tax payment
of $2,709,000 for the first quarter of 1993, while no estimated payment was
necessary for the first quarter of 1994.
Cash flows from purchases and sales of trading securities have been
classified as cash flows from operating activities for the first quarter of
1994, in accordance with SFAS No. 115. Cash flows from purchases and sales
of short-term investments for the first quarter of 1993 are classified as
investing activities.
8. EARNINGS PER SHARE
Earnings per share were computed by dividing the applicable amount of
earnings by the weighted average number of common shares outstanding during
each period shown in the accompanying Consolidated Statements of Earnings.
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<PAGE>
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 Corporation posted consolidated net earnings for the
first quarter of 1994 totaling $4.1 million, or $.80 per share, compared to
net earnings of $1.1 million, or $.22 per share, for the first quarter of
1993. Net earnings of both periods reflect the cumulative effects of
changes in accounting principles. Accounting changes for postemployment
benefits (SFAS No. 112), primarily relating to severance, life insurance
and disability related obligations, resulted in a charge against earnings
of $.2 million, or $.05 per share, for the first quarter of 1994.
Accounting changes for postretirement health care costs (SFAS No. 106) and
income taxes (SFAS No. 109) resulted in a net charge of $2.7 million, or
$.53 per share, recorded in the first quarter of 1993. Excluding these
charges, earnings were $4.3 million, or $.85 per share, for the first
quarter 1994, 13% above earnings of $3.8 million, or $.75 per share, for
the same period of 1993.
Sales for the first quarter of 1994 amounted to $38.5 million,
compared to sales of $40.7 million for the first quarter of 1993. Despite
a 5% decline in sales, earnings before interest and taxes totaled $6.6
million for the first quarter of 1994, a 9% improvement over the $6.1
million of earnings before interest and taxes for the same period of the
prior year. Curtiss-Wright received new orders of $26.8 million in the
first three months of 1994, slightly below orders of $27.3 million received
in the first three months of 1993.
The backlog of unshipped orders for the Corporation totaled $137.5 million
at March 31, 1994, also slightly below the backlog of $138.6 million at
March 31, 1993.
Segment Performance:
The Corporation's Aerospace segment posted lower results for the first
quarter of 1994, with sales and operating earnings declining 7% and 5%,
respectively, from the results reported in the first quarter of 1993. The
declines continue to reflect the depressed state of the Aerospace industry
overall. Specifically, sales declines reflect lower production volume on
Curtiss-Wright actuation equipment for the Lockheed F-16 program and lower
pricing on the current and final U. S. Air Force F-16 retrofit order
received in 1992. Sales of commercial actuation products primarily for
Boeing transport aircraft also declined in the first quarter of 1994 as
compared to the same period of the prior year. Declines in current
production programs were partially offset by increases in both military and
commercial spare parts sales and the Corporation's successful efforts to
expand its overhaul operations. Sales of shot peening and peen forming
services also declined slightly, when comparing the first quarter of 1994
to the first quarter of 1993. The declines are largely attributable to the
closure of a Los Angeles area facility as a result of the California
earthquake. Increases in sales of shot peening and peen forming services from
foreign operations, generated by increased Airbus production, partially offset
the lower domestic sales. Operating income from the Aerospace segment was
reduced in the first quarter of 1994 by charges for anticipated additional
costs on fixed fee actuation development programs, and by anticipated costs
related to the California earthquake.
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<PAGE>
Improved operating income generated by the increased sales of
actuation spare parts, overhaul services and foreign shot peening and peen
forming services helped offset the additional charges. New orders received
in the first quarter of 1994 by the Aerospace segment were $14.8 million,
compared to $15.0 million received in the first quarter of 1993, while
backlog levels totaled $95.7 million at March 31, 1994, compared to $91.1
million at March 31, 1993.
Sales and operating results for the Flow Control and Marine segment
improved slightly when comparing the first quarter of 1994 to the same
period of 1993. Improvements reflect higher revenue from valve products
for government programs and higher sales of commercial valve spare parts.
Operating income also improved through reduced selling and administrative
expenses, when comparing the first quarter of 1994 to the first quarter of
1993. Sales of extruded tubular products remained even with 1993 levels
but operating earnings showed a slight improvement due to lower material
costs. New orders for the Flow Control and Marine segment totaled $2.6
million in the first quarter of 1994, compared to $3.0 million in the first
quarter of 1993. Backlog for this segment also declined from the prior
year to $38.7 million at March 31, 1994, as compared to $44.3 million at
March 31, 1993.
The Corporation's Industrial segment posted slightly lower sales but
improved operating earnings when comparing the first quarter of 1994 to the
first quarter of 1993. Sales of shot peening and heat treating services in
the 1994 period improved 18%, primarily due to an increase in volume from
automotive industry customers. This, however, was more than offset by
a lack of Swench product line sales in the 1994 quarter. The Corporation
had received a large contract for Swench products in 1992, on which final
shipments were made in early 1993. When comparing the first quarter of
1994 to the first quarter of 1993, higher operating earnings in this segment
primarily reflect the higher sales of shot peening services and heat treating
services. New orders received in the first quarter of 1994 totaled $9.4
million, virtually even with new orders of $9.3 received in first quarter
of 1993. Backlog levels for the Industrial segment are historically low
relative to sales, totaling $3.1 million at March 31, 1994, as compared to
$3.2 million at March 31, 1993.
Other Revenue and Costs:
Other revenues recorded by the Corporation in the first quarter of
1994 totaled $3.1 million, compared to $3.3 million reported for the same
period of 1993. The change in other revenue is primarily reflective of
lower overall investment income for the 1994 period, when compared to the
prior year. Operating costs, for the Corporation as a whole, were 8% lower
for the first quarter of 1994 than costs incurred in the first quarter of
1993. Lower costs are primarily reflective of the lower overall sales from
our operating segments, as detailed above, recorded in the first quarter of
1994, as compared with the prior year's period. Administrative and general
expenses recorded in the first quarter of 1994 declined on a period to
period basis primarily due to continued cost containment efforts, including
a 7% decline in total employees at March 31, 1994, compared to total
employees at March 31, 1993. Administrative expenses for the first
quarters of both years were reduced $.9 million by accrued income generated
from the Corporation's overfunded pension plan.
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<PAGE>
CHANGES IN FINANCIAL CONDITION:
Liquidity and Capital Resources:
The Corporation's working capital was $97.2 million at March 31, 1994,
an increase of 5% from working capital at December 31, 1993 and 9% over
working capital at March 31, 1993. The ratio of current assets to current
liabilities at March 31, 1994 also improved to 3.5 to 1, from a ratio of
3.1 to 1 at December 31, 1993. The increase in working capital reflects
significantly lower current liabilities at March 31, 1994 compared to
December 31, 1993. Other current liabilities were reduced by an $8.9
million payment made in January 1994 to the U.S. Government in settlement
of the litigation against Target Rock Corporation, which had been provided
for in December 1993. Despite the settlement payment, cash and short-term
investment balances declined only slightly when March 31, 1994 totals are
compared to December 31, 1993.
The Corporation continues to maintain a $45.0 million revolving credit
lending facility with a group of banks, to provide an additional source of
capital to the Corporation. This agreement, of which $28.1 million remains
unused at March 31, 1994, encompasses various letters of credit issued
primarily in connection with outstanding industrial revenue bonds.
During the first quarter of 1994, internally generated funds were more
than adequate to meet capital requirements. Projected funds from operating
sources are expected to be more than adequate to cover future cash
requirements, including anticipated capital expenditures of approximately
$7.3 million for the balance of the year and anticipated expenditures
connected with environmental remediation programs.
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<PAGE>
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 6, 1994, the Registrant held its annual meeting of share-
holders. The vote received by the Registrant's current directors was as
follows:
For Withheld
----------- --------
Thomas R. Berner 4,541,467 14,142
Shirley D. Brinsfield 4,540,621 14,988
John S. Bull 4,541,080 14,529
David Lasky 4,541,501 14,108
William W. Sihler 4,542,802 12,807
J. McLain Stewart 4,541,186 14,423
There were no votes against or broker nonvotes.
The shareholders also approved the retention of Price Waterhouse as
independent accountants and auditors for the Registrant. The holders of
4,550,201 voted in favor; 1,593 voted against, and 3,815 abstained. There
were no broker nonvotes.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(none)
(b) Reports on Form 8-K
The Registrant filed a report on Form 8-K on January 19, 1994
announcing that its wholly-owned subsidiary, Target Rock Corporation, had
agreed to pay $17,500,000 to settle litigation brought by the U.S.
Government and that the Registrant had expected to report a loss for the
fourth quarter and for the full year of 1993. This information was
submitted in response to Item 5. Other Events.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
CURTISS-WRIGHT CORPORATION
--------------------------
(Registrant)
By: Robert A. Bosi
Robert A. Bosi,
Vice-President Finance
By: Kenneth P. Slezak
Kenneth P. Slezak,
Controller
Dated: May 13, 1994
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