Page 1 of 109
Exhibit Index - Page 22
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_______ to________
Commission File Number 1-134
CURTISS-WRIGHT CORPORATION
--------------------------
(Exact name of Registrant as specified in its charter)
Delaware 13-0612970
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(State or other jurisdiction of I.R.S. Employer Identification No.
incorporation or organization)
1200 Wall Street West, Lyndhurst, N.J. 07071
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 896-8400
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, par value $1 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
------
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes [X] No [ ]
The aggregate market value of the voting stock held by non-affiliates* of the
Registrant is $126,397,420 (based on the closing price of the Registrant's
Common Stock on the New York Stock Exchange on March 7, 1997 of $53.00.
Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock, as of the latest practicable date.
Number of Shares
Class Outstanding at March 7, 1997
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Common Stock, par value $1 per share 5,079,783
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report of the Registrant to stockholders for the year
ended December 31, 1996 are incorporated by reference into Parts I, II and IV.
Portions of the Proxy Statement of the Registrant with respect to the 1997
Annual Meeting of Stockholders are incorporated by reference into Part III.
- ---------------------
* Shares held by Unitrin, Inc. and Argonaut Group, Inc. have been excluded from
the amount shown solely because of the definition of the term "affiliate" in the
regulations promulgated pursuant to the Securities Exchange Act of 1934. Also,
for purposes of this computation, all directors and executive officers of
Registrant have been deemed to be affiliates, but the Registrant disclaims that
any of such directors or officers is an affiliate. See material referred to
under Item 12, below.
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Introduction
Pursuant to the Securities Exchange Act of 1934, the Registrant,
Curtiss-Wright Corporation, ("Curtiss-Wright", the "Corporation" or the
"Registrant"), hereby files its Form 10-K Annual Report for the year 1996.
References in the text to the "Corporation," "Curtiss-Wright" or the
"Registrant" include Curtiss-Wright Corporation and its consolidated
subsidiaries unless the context indicates otherwise.
PART I
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Item 1. Business.
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Curtiss-Wright Corporation was incorporated in 1929 under the laws of the
State of Delaware. Curtiss-Wright operates in two industry segments: Aerospace &
Marine, and Industrial.
Aerospace & Marine Segment
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Control and actuation systems are designed, developed, manufactured and
overhauled by the Corporation for the aerospace industry by Curtiss-Wright
Flight Systems, Inc. ("Flight Systems"), a wholly-owned subsidiary of the
Registrant. Manufactured products offered consist of electro-mechanical and
hydro-mechanical actuation components and systems which are designed to position
aircraft control surfaces, or to operate canopies, landing gear or weapon bay
doors or other devices. They include actuators and control systems for the
Lockheed Martin F-16 and McDonnell Douglas F/A-18 fighter planes, the Boeing
737, 747, 757, 767 and 777 jet airliners and the Sikorsky Black Hawk and Seahawk
helicopters.
In 1996 Flight Systems began production deliveries of trailing edge flap
rotary actuators for Boeing 767 aircraft and trailing edge flap transmissions
for the new Boeing 737-700 aircraft. These production contracts run through the
year 2002. Flight Systems also manufactures trailing edge flap transmissions for
the Boeing 757 aircraft.
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Flight Systems is a major supplier for the Lockheed Martin F-22 Advanced
Tactical Fighter plane which has been described as the Air Force's future air
superiority fighter. While substantial production on this program is not
expected for several years, the design phase has been completed, test hardware
has been delivered and the system's hardware qualification test phase is now
proceeding.
Flight Systems continues to work on a control system for the new
Bell/Boeing tilt rotor V-22 aircraft which is also in the qualification testing
and initial hardware phase of an engineering and manufacturing development
program. Flight Systems began delivering hardware in 1996 and has completed
safety of flight testing. Qualification testing is proceeding.
Engineering, manufacturing and development work is also proceeding for the
FA-18E/F Lex Vent Drive System under a contract awarded in 1993, with actual
production currently scheduled to begin in 1999.
Flight Systems' manufactured products are sold in competition with a number
of other systems suppliers, some of which have broader product lines and
financial resources greater than those of the Corporation and significant
technological and human resources. This Curtiss-Wright unit and these suppliers
compete to have their systems selected to perform control and actuation
functions on new aircraft. Flight Systems competes primarily on the basis of
engineering capability, quality and price. Competition has intensified because
of relatively low production levels for military aircraft in recent years and a
limited number of new production programs for both military and commercial
aircrafts. Flight Systems has achieved some degree of success in capturing
programs for which it was not the original supplier, such as the actuators and
transmissions referred to above for the Boeing 767 and 757 aircraft. Products
are marketed directly to Flight Systems' customers by employees.
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Flight Systems also provides the commercial airlines, military and general
aviation with component overhaul and repair services. Before 1996 Flight
Systems' overhaul activities were in large measure limited to furnishing spare
parts for, and the overhaul and repair of components that it had manufactured.
The scope of overhaul services was increased in 1996, with the acquisition of
the Accessory Services unit of Aviall, Inc. This acquisition expanded Flight
Systems' overhaul capability to include a variety of hydraulic, pneumatic,
mechanical, electro-mechanical, electrical and electronic components found on
Boeing, McDonnell Douglas, Lockheed Martin and Airbus aircraft. Curtiss-Wright
Flight Systems Europe A/S (an 80% owned subsidiary located in Denmark) provides
overhaul and repair services, spare parts and components to the European and
North African markets.
Flight Systems' overhaul services are sold in competition with a number of
other overhaul and repair facilities. Competition in the overhaul business is
based upon quality, delivery and price. Marketing is accomplished through sales
representatives and by direct sales. The overhaul business is not dependent upon
any single customer.
Metal Improvement Company, Inc. ("MIC"), a wholly-owned subsidiary of the
Corporation, performs shot-peening and peen-forming operations for aerospace
manufacturers and their suppliers. Shot peening is a physical process used
primarily to increase fatigue life in metal parts. MIC provides shot-peening
services to jet engine manufacturers, landing gear suppliers and many other
aerospace manufacturers. Peen forming is a process used to form curvatures in
panel shape metal parts to very close tolerances. These panels are used as the
"wing skins" after assembly on many commercial, military and executive aircraft
in service today. Currently, MIC is peen-forming "wing skins" for Airbus and
McDonnell Douglas commercial aircraft.
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MIC's marketing is accomplished through direct sales. While MIC competes
with a great many firms and often deals with customers which have the resources
to perform for themselves the same services as are provided by MIC, MIC
considers that its greater technical expertise and superior Page 5 quality
provide it with a competitive advantage.
Curtiss-Wright Flow Control Corporation ("CWFC"), formerly named Target
Rock Corporation, a wholly-owned subsidiary of the Corporation, manufactures and
refurbishes highly engineered valves of various types and sizes, such as motor
operated and solenoid operated globe, gate, control and safety relief valves.
The ultimate customer for the CWFC valves for the marine industry is the U.S.
Navy, which uses them in nuclear propulsion systems. CWFC also supplies
actuators and controllers for valves of its own manufacture as well as for
valves manufactured by others. Sales are made by responding directly to requests
for proposals from customers. The production of valves for the U. S. Navy is
characterized by long lead times from order placement to delivery. CWFC's
customers are sophisticated and demanding. Strong competition in valves is
encountered primarily from a small number of domestic firms in the military
market. Despite a declining market, CWFC has been able to increase its market
share and to maintain its sales volume. Performance, quality, technology,
delivery and price are the principal areas of competition.
Although the Aerospace & Marine segment had no single customer that
accounted for 10% or more of total sales in 1996 and 1995, the Corporation
believes that the segment would be materially affected by the loss of any one of
several important customers. A substantial portion of segment sales are made to
the Boeing Company for commercial transport aircraft and to Lockheed Martin
Corporation for F-22 engineering and design work and for F-16 actuators. A
substantial amount of the sales of CWFC are made to the Westinghouse Electric
Corporation for United States Navy end use. Furthermore, the possibility of
future reductions in military programs due to reduced spending continues to
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exist. U.S. Government direct and end use sales of this segment in 1996, 1995
and 1994 were $37.4, $38.0 and $44.0 million, respectively.
The backlog of the Aerospace & Marine segment as of January 31, 1997 was
$102.1 million as compared with $119.4 million as of January 31, 1996. Of the
January 31, 1997 amount, approximately 64% is expected to be shipped during
1997. None of the business of this segment is seasonal. Raw materials are
generally available in adequate quantities from a number of suppliers.
Industrial Segment
------------------
The MIC subsidiary of the Corporation is engaged in the business of
performing shot peening and heat treating for a broad spectrum of industrial
customers, principally in the automotive, agricultural equipment, construction
equipment and oil and gas industries. Heat treating is a metallurgical process
used primarily to harden metals in order to provide increased durability and
service life. MIC marketing and sales activity are done on a direct sales basis.
Operations are conducted in facilities in the United States, Canada, England,
France and Germany. Although numerous companies compete in the shot-peening
field, and many customers for shot-peening services have the resources to
perform such services themselves, MIC believes that its greater technical
know-how provides it with a competitive advantage. MIC experiences substantial
competition from other companies in heat-treating metal components. MIC also
competes on the basis of quality, service, price and delivery.
MIC is also engaged in the business of precision stamping and finishing of
high strength steel reed valves used by various manufacturers of products such
as refrigerators, air compressors, and small engines.
The Corporation's Flight Systems subsidiary has designed and developed
a commercial rescue tool using its power hinge aerospace technology which is
being marketed under the name Power Hawk.(TM) The primary use for this tool is
the extrication of automobile accident victims. A distribution network for the
United States market has been completed and limited commercial sales have
commenced.
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The CWFC subsidiary of the Corporation manufactures and refurbishes highly
engineered valves of various types and sizes for commercial markets, such as
motor operated and solenoid operated globe, gate, control and safety relief
valves. These valves are used to control the flow of liquids and gases, and to
provide safe relief in the event of system overpressure in new and existing
commercial nuclear and fossil fuel power plants and in facilities for process
steam regeneration in the petroleum, paper and chemical industries. It also
supplies actuators and controllers for its own valves as well as for valves
manufactured by others. CWFC's packless electronic control valve is offered as a
replacement item for competitors' commercial valves containing packing. The
success of this valve is dependent upon the future application of stringent new
Federal standards limiting air pollution from "fugitive" emissions from valves
now widely in use.
CWFC's products are sold to domestic and foreign end users. Foreign sales
have been for use in nuclear power plant construction projects principally for
Asian markets.
Strong competition in valves is encountered primarily from a large number
of domestic and foreign sources in the commercial market. Sales to commercial
users are accomplished through independent marketing representatives and by
direct sales. These valve products are sold to customers who are sophisticated
and demanding. Performance, quality, technology, delivery and price are the
principal areas of competition.
The business of the Industrial segment is not materially dependent upon any
single source of supply. The backlog of this segment (which has historically
been low relative to sales of the segment) as of January 31, 1997 was $2.8
million as compared with $ 4.4 million as of January 31, 1996. Virtually all of
the January 31, 1997 backlog is expected to be shipped in 1997. None of the
business of this segment is seasonal. Raw materials, though not particularly
significant to these operations, are available in adequate quantities.
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Other Information
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Government Sales
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In 1996, 1995 and 1994, direct sales to the United States Government and
sales for United States Government end use aggregated 23%, 25% and 31%,
respectively, of total sales for all segments. United States Government sales,
both direct and subcontract, are generally made under one of the standard types
of government contracts, including fixed price and fixed price- redeterminable.
In accordance with normal practice in the case of United States Government
business, contracts and orders are subject to partial or complete termination at
any time, at the option of the customer. In the event of a termination for
convenience by the Government, there generally are provisions for recovery by
the Corporation of its allowable incurred costs and a proportionate share of the
profit or fee on the work done, consistent with regulations of the United States
Government. Subcontracts for Navy nuclear valves usually provide that CWFC must
absorb most of any overrun of "target" costs. In the event that there is a cost
underrun, however, the customer is to recoup a portion of the underrun based
upon a formula in which the customer's portion increases as the underrun exceeds
certain established levels.
It is the policy of the Corporation to seek customary progress payments on
certain of its contracts. Where such payments are obtained by the Corporation
under United States Government prime contracts or subcontracts, they are secured
by a lien in favor of the Government on the materials and work in process
allocable or chargeable to the respective contracts. (See Notes 1.C, 4 and 5 to
the Consolidated Financial Statements, on pages 25, 26 and 27 of the 1996 Annual
Report to Stockholders, which is attached hereto as Exhibit 13 and hereinafter
referred to as the "Registrant's Annual Report".) In the case of most valve
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products for United States Government end use, the subcontracts typically
provide for the retention by the customer of stipulated percentages of the
contract price, pending completion of contract closeout conditions.
Research and Development
- ------------------------
Research and development expenditures sponsored by the Corporation amounted
to approximately $997,000 in 1996 as compared to about $1,180,000 in 1995 and
$1,196,000 in 1994. During 1996, Curtiss-Wright spent an additional $ 15,248,000
for customer-sponsored development work. The Corporation owns and is licensed
under a number of United States and foreign patents and patent applications
which have been obtained or filed over a period of years. The Corporation does
not consider that the successful conduct of its business is materially dependent
upon the protection of any one or more of these patents, patent applications or
patent license agreements under which it now operates.
Environmental Protection
- ------------------------
The effect of compliance upon the Corporation with present legal
requirements concerning protection of the environment is described in the
material in Note 11 to the Consolidated Financial Statements which appears on
page 30 of the Registrant's Annual Report and is incorporated by reference in
this Form 10-K Annual Report.
Employees
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At the end of 1996, the Corporation had approximately 1,700 employees. Most
production employees are represented by labor unions and are covered by
collective bargaining agreements.
Certain Financial Information
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The industry segment information is described in the material in Note 15 to
the Consolidated Financial Statements, which appears on Pages 32 and 33 of the
Registrant's Annual Report and is incorporated by reference in this Form 10-K
Annual Report. It should be noted that in recent years a significant percentage
of the pre-tax earnings from operations of the Corporation has been derived from
European operations of MIC. The Corporation does not regard the risks attendant
to these foreign operations to be materially greater than those applicable to
its business in the U.S.
Item 2. Properties.
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The principal physical properties of the Corporation and its subsidiaries
are described below:
Owned/
Location Description(1) Leased Principal Use
Wood-Ridge, 2,322,000 Owned(2) Multi-tenant industrial
New Jersey sq. ft. on rental facility.
144 acres
Fairfield, 450,000 Owned(3) Manufacture of actuation
New Jersey sq. ft. on and control systems
26.7 acres (Aerospace & Marine segment).
Brampton, 87,000 Owned Shot-peening and peen-forming
Ontario, sq. ft. on operations (Aerospace &
Canada 8 acres Marine segment).
East 195,000 Owned(4) Manufacture of valves
Farmingdale, sq. ft. on (Aerospace & Marine
New York 11 acres and Industrial segments).
Shelby, 121,000 Owned(5) Manufacture and overhaul of
North Carolina sq. ft. on actuation and control systems
29 acres. (Aerospace & Marine segment).
Miami, Florida 65,000 Leased Overhaul of aircraft components
sq. ft. on (Aerospace & Marine segment).
2.6 acres.
Columbus, 75,000 Owned Heat-treating
Ohio sq. ft. on (Industrial segment).
9 acres
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Deeside, 81,000 Owned Shot-peening and peen-forming
Wales sq. ft. on (Aerospace & Marine segment).
United Kingdom 2.2 acres
(1) Sizes are approximate. Unless otherwise indicated, all properties are
owned in fee, are not subject to any major encumbrance and are occupied
primarily by factory and/or warehouse buildings.
(2) Approximately 2,230,000 square feet are leased to others and
approximately another 92,000 square feet are vacant and available for
lease.
(3) Approximately 247,000 square feet are leased to other parties.
(4) Title to approximately six acres of land and the building located
thereon is held by the Suffolk County Industrial Development Agency in
connection with the issuance of an industrial revenue bond.
(5) The Corporation's facility in Shelby, North Carolina was expanded in
1996 because of new contractual awards and increases in commercial
overhaul activities.
In addition to the properties listed above, MIC (Aerospace & Marine and
Industrial segments) leases an aggregate of approximately 304,000 square feet of
space at nineteen different locations in the United States and England and owns
buildings encompassing about 294,000 square feet in fifteen different locations
in the United States, France, Germany, Belgium and England. Curtiss-Wright
Flight Systems, Inc. leases a 25,000 square foot building in Lattimore, North
Carolina for warehouse purposes. Curtiss-Wright Flight Systems Europe A/S, an
80% owned subsidiary, leases 8,000 square feet of space in Karup, Denmark. The
Corporation leases approximately 14,000 square feet of office space in
Lyndhurst, New Jersey, for its corporate office.
It is the Corporation's opinion that the buildings on the properties
referred to in this Item generally are well maintained, in good condition, and
are suitable and adequate for the uses presently being made of them by the
Corporation. No examination of titles to properties owned by the Corporation has
been made for the purposes of this Form 10-K Report.
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The following undeveloped tracts, owned by the Registrant, are not
attributable to a particular industry segment and are being held for sale:
Hardwick Township, New Jersey, 678 acres; Fairfield, New Jersey, 12.3 acres
subdivided from the Fairfield facility's property; Perico Island, Florida, 158
acres, the bulk of which is below water; and Nantucket, Massachusetts, 33 acres.
A portion of the Perico Island property, and all of the Nantucket parcel, are
covered by contracts for their sale. The Registrant owns approximately 7.4 acres
of land in Lyndhurst, New Jersey which is leased, on a long-term basis, to the
owner of the commercial building located on the land.
Item 3. Legal Proceedings.
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In the ordinary course of business, the Corporation and its
subsidiaries are subject to various pending claims, lawsuits and contingent
liabilities. The Corporation does not believe that disposition of any of these
matters will have a material adverse effect on the Corporation's consolidated
financial position or results of operations. Item 4. Submission of Matters to a
Vote of Security Holders.
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Not applicable.
Executive Officers of the Registrant.
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The following table sets forth the names, ages, and principal occupations
and employment of all executive officers of Registrant. The period of service is
for at least the past five years and such occupations and employment are with
Curtiss-Wright Corporation, except as otherwise indicated:
Name Principal Occupation
and Employment Age
David Lasky Chairman (since May 1995) and President (since May 1993);
previously Senior Vice President, General Counsel and
Secretary. 64
Robert E. Mutch Executive Vice President; President of Curtiss-Wright
Flight Systems, Inc., a wholly-owned subsidiary. 52
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Gerald Nachman Executive Vice President; President of Metal Improvement
Company, Inc., a wholly-owned subsidiary. 67
George J. Yohrling Vice President; Senior Vice President since July 1996 of
Curtiss-Wright Flight Systems, Inc., a wholly-owned
subsidiary; previously Vice President and General Manager
of Curtiss-Wright Flight Systems/Shelby, Inc., then a
wholly owned subsidiary. 56
Martin A. Benante Vice President (since April 1996); President (since March
1995) of Curtiss-Wright Flow Control Corporation
("CWFC") a wholly owned subsidiary; previously Vice
President/General Manager of CWFC. 44
Robert A. Bosi Vice President-Finance (since January 1993); previously
Treasurer. 41
Dana M. Taylor, Jr. Secretary, General Counsel (since May 1993); Assistant
General Counsel (July 1992 to May 1993); previously
Senior Attorney. 64
Gary J. Benschip Treasurer (since January 1993); previously Assistant
Treasurer. 49
Kenneth P. Slezak Controller (since July, 1990). 45
The executive officers of the Registrant are elected annually by the Board
of Directors at its organization meeting in April and hold office until the
organization meeting in the next subsequent year and until their respective
successors are chosen and qualified.
There are no family relationships among these officers, or between any of
them and any director of Curtiss-Wright Corporation, nor any arrangements or
understandings between any officer and any other person pursuant to which the
officer was elected.
PART II
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Item 5. Market for Registrant's Common Stock
and Related Stockholder Matters.
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See the information contained in the Registrant's Annual Report on page 35
under the captions "Common Stock Price Range," "Dividends," and "Stock Exchange
Listing" which informa tion is incorporated herein by reference. The approximate
number of record holders of the Common Stock, $1.00 par value, of Registrant was
4,500 as of March 14, 1997.
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Item 6. Selected Financial Data.
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See the information contained in the Registrant's Annual Report on page 34
under the caption "Consolidated Selected Financial Data," which information is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
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See the information contained in the Registrant's Annual Report at pages 16
through 19, under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which information is incorporated herein
by reference.
Item 8. Financial Statements and Supplementary Data.
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The following Consolidated Financial Statements of the Registrant and its
subsidiaries, and supplementary financial information, are included in the
Registrant's Annual Report, which information is incorporated herein by
reference.
Consolidated Statements of Earnings for the years ended December 31,
1996, 1995 and 1994, page 21.
Consolidated Balance Sheets at December 31, 1996 and 1995, page 22.
Consolidated Statements of Cash Flows for the years ended December 31,
1996, 1995 and 1994, page 23.
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1996, 1995 and 1994, page 24.
Notes to Consolidated Financial Statements, pages 25 through 33,
inclusive, and Quarterly Results of Operations on page 34 .
Report of Independent Accountants for the three years ended December
31, 1996, 1995 and 1994, page 20.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.
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Not applicable.
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PART III
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Item 10. Directors and Executive Officers
of the Registrant.
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Information required in connection with directors and executive officers is
set forth under the title "Executive Officers of the Registrant," in Part I
hereof, at pages 12 and 13, and under the caption "Election of Directors," in
the Registrant's Proxy Statement, which information is incorporated herein by
reference.
Item 11. Executive Compensation.
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Information required by this Item is included under the captions "Executive
Compensation" and in the "Summary Compensation Table" in the Registrant's Proxy
Statement, which information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial
Owners and Management.
- --------------------------------------------------
See the following portions of the Registrant's Proxy Statement, all of
which information is incorporated herein by reference: (i) the material under
the caption "Security Ownership and Transactions with Certain Beneficial Owners"
and (ii) material included under the caption "Election of Directors."
Item 13. Certain Relationships and Related Transactions.
- ---------------------------------------------------------
Information required by this Item is included under the captions "Executive
Compensation" and "Security Ownership and Transactions with Certain Beneficial
Owners" in the Registrant's Proxy Statement, which information is incorporated
herein by reference.
PART IV
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Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K.
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(a)(1) Financial Statements:
The following Consolidated Financial Statements of the Registrant and
supplementary financial information, included in Registrant's Annual
Report, are incorporated herein by reference in Item 8:
(i) Consolidated Statements of Earnings for the years ended December
31, 1996, 1995 and 1994.
(ii) Consolidated Balance Sheets at December 31, 1996 and 1995.
(iii) Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994.
(iv) Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1996, 1995 and 1994.
(v) Notes to Consolidated Financial Statements.
(vi) Report of Independent Accountants for the years ended December
31, 1996, 1995 and 1994.
(a)(2) Financial Statement Schedules:
The items listed below are presented herein on pages 20 through 21.
Report of Independent Accountants on Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts
Schedules other than those listed above have been omitted
since they are not required, are not applicable, or because
the required information is included in the financial
statements or notes thereto.
(a)(3) Exhibits:
(3)(i) Restated Certificate of Incorporation, as amended May
8, 1987 (incorporated by reference to Exhibit 3(a) to
Registrant's Form 10-Q Report for the quarter ended
June 30, 1987).
(3)(ii) By-Laws as amended through January 30, 1997
(4)(i) Agreement to furnish to the Commission upon request,
a copy of any long term debt instrument where the
amount of the securities authorized thereunder does
not exceed 10% of the total assets of the Registrant
and its subsidiaries on a consolidated basis
(incorporated by reference to Exhibit 4 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1985).
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(4)(ii) Revolving Credit Agreement dated October 29, 1991
between Registrant, the Lenders parties thereto from
time to time, the Issuing Banks referred to therein
and Mellon Bank, N.A. Article I Definitions, Section
1.01 Certain Definitions; Article VII Negative
Covenants, Section 7.07, Limitation on Dividends and
Stock Acquisitions (incorporated by reference to
Exhibit 10(b), to Registrant's Form 10-Q Report for
the quarter ended September 30, 1991). Amendment No.
1 dated January 7, 1992 and Amendment No. 2 dated
October 1, 1992 to said Agreement (incorporated by
reference to Exhibit 4(ii) to Registrant's Annual
Report on Form 10-K for the year ended December 31,
1993). Third Amendment to Credit Agreement dated as
of October 29, 1994 (incorporated by reference to
Exhibit (4)(ii) to Registrant's Annual Report on Form
10-K for the year ended December 31, 1994). Fourth
Amendment to Credit Agreement dated as of October 29,
1996.
(4)(iii) Short-Term Credit Agreement dated as of October 29,
1994 among Curtiss- Wright Corporation, as Borrower,
the Lenders Parties and Mellon Bank, N.A., as Agent
(incorporated by reference to Exhibit (4)(iii) to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994). First Amendment to Short
Term Credit Agreement dated as of October 26, 1996.
(10) Material Contracts:
(i) Modified Incentive Compensation Plan, as amended
November 9, 1989 (incorporated by reference to
Exhibit 10(a) to Registrant's Form 10-Q Report for
the quarter ended September 30, 1989).
(ii) Curtiss-Wright Corporation 1995 Long-Term Incentive
Plan (incorporated by reference to Exhibit 4.1 to
Registrant's Form S-8 Registration Statement No.
95602114 filed December 15, 1995).
(iii) Standard Severance Agreement with Officers of
Curtiss-Wright (incorporated by reference to Exhibit
10(iv) to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1991).
(iv) Retirement Benefits Restoration Plan as amended May
9, 1989 (incorporated by reference to Exhibit 10(b)
to Registrant's Form 10-Q Report for the quarter
ended September 30, 1989).
(v) Curtiss-Wright Corporation Retirement Plan dated
September 1, 1994 (incorporated by reference to
Exhibit (10)(vi) to Registrant's Annual Report on
Form10-K for the year ended December 31, 1994).
<PAGE>
Page 18
(vi) Curtiss-Wright Corporation Savings and Investment Plan
dated March 1, 1995 (incorporated by reference to Exhibit
(10)(vii) to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1994).
(vii) Curtiss-Wright Corporation 1996 Stock Plan for
Non-Employee Directors (incorporated by reference to
Exhibit 4.1 to Registrant's Form S-8 Registration
Statement No. 96583181, filed June 19, 1996).
(13) Annual Report to Stockholders for the year ended December 31,
1996.
(21) Subsidiaries of the Registrant.
(23) Consents of Experts and Counsel - see Consent of Independent
Accountants.
(27) Financial Data Schedule.
(b) Reports on Form 8-K
No report on Form 8-K was filed during the three months ended December
31, 1996.
<PAGE>
Page 19
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CURTISS-WRIGHT CORPORATION
(Registrant)
By: /s/ David Lasky
David Lasky
Chairman and President
Date: March 14, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: March 14, 1997 By: /s/ Robert A. Bosi
Robert A. Bosi
Vice President - Finance
Date: March 14, 1997 By: /s/ Kenneth P. Slezak
Kenneth P. Slezak
Controller
Date: March 11, 1997 By: /s/ Thomas R. Berner
Thomas R. Berner
Director
Date: March 11, 1997 By: /s/ James B. Busey
James B. Busey IV
Director
Date: March 14, 1997 By: /s/ David Lasky
David Lasky
Director
Date: March 14, 1997 By: /s/ William B. Mitchell
William B. Mitchell
Director
Date: March 13, 1997 By: /s/ John R. Myers
John R. Myers
Director
Date: March 11, 1997 By: /s/ William W. Sihler
William W. Sihler
Director
Date: March , 1997 By:
J. McLain Stewart
Director
<PAGE>
Page 20
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
Our audits of the consolidated financial statements referred to in our report
dated January 30, 1997 appearing on page 20 of the 1996 Curtiss-Wright
Corporation Annual Report (which report and consolidated financial statements
are incorporated by reference in this Annual Report on Form 10-K) also included
an audit of the Financial Statement Schedule listed in Item 14(a)(2) of this
Form 10-K. In our opinion, this Financial Statement Schedule presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Morristown, New Jersey
January 30, 1997
<PAGE>
Page 21
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
SCHEDULE II - VALUATION and QUALIFYING ACCOUNTS
for the years ended December 31, 1996, 1995 and 1994
(In thousands)
<TABLE>
<CAPTION>
Additions
Charged to
Balance at Charged to Other Balance at
Beginning Costs and Accounts - Deductions - End of
Description of Period Expenses Describe Describe Period
Deducted from assets to which they apply:
Reserves for doubtful accounts and notes:
<S> <C> <C> <C> <C> <C>
Year-ended December 31, 1996 $ 760 $506 $ 300(A) $ 9 $1,557
======= ==== ======== ====== ======
Year-ended December 31, 1995 $ 694 $ 93 $ 27 $ 760
======= ==== ======= =====
Year-ended December 31, 1994 $ 893 $ 32 $ 231(C) $ 694
======= ==== ======= =====
Deferred tax asset valuation allowance:
Year-ended December 31, 1996 $1,094 $171 $ 289(D) $1,212
====== ==== ====== ======
Year-ended December 31, 1995 $5,460 $ 52 $(3,058)(B) $1,360(D) $1,094
====== ==== ======= ====== ======
Year-ended December 31, 1994 $5,861 $193 $ 594(D) $5,460
====== ==== ======= ======
</TABLE>
Notes:
(A) Acquired from the purchase of Accessory Services business.
(B) Expiration of available capital-loss carryforwards.
(C) Write off of bad debts.
(D) Utilization of tax benefits under capital-loss carryforward.
<PAGE>
Page 22
EXHIBIT INDEX
-------------
The following is an index of the
exhibits included in this report or
incorporated herein by reference.
Exhibit Name Page
No.
(3)(i) Restated Certificate of Incorporation, as amended May 8, 1987 *
(incorporated by reference to Exhibit 3(a) to Registrant's Form
10-Q Report for the quarter ended June 30, 1987).
(3)(ii) By-Laws as amended through January 30, 1997. 24
(4)(i) Agreement to furnish to the Commission upon request, a copy of *
any long term debt instrument where the amount of the securities
authorized thereunder does not exceed 10% of the total assets
of the Registrant and its subsidiaries on a consolidated basis
(incorporated by reference to Exhibit 4 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1985).
(4)(ii) Revolving Credit Agreement dated October 29, 1991 between *
Registrant, the Lenders parties thereto from time to time, the
Issuing Banks referred to therein and Mellon Bank, N.A. Article
I Definitions, Section 1.01 Certain Definitions; Article VII
Negative Covenants, Section 7.07, Limitation on Dividends and
Stock Acquisitions (incorporated by reference to Exhibit 10(b),
to Registrant's Form 10-Q Report for the quarter ended
September 30, 1991). Amendment No. 1 dated January 7,
1992 and Amendment No. 2 dated October 1, 1992 to said
Agreement (incorporated by reference to Exhibit 4(ii) to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993).
Third Amendment to Credit Agreement dated as of October 29, *
1994 (incorporated by reference to Exhibit (4)(ii) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994).
Fourth Amendment to Credit Agreement dated as of October 29,
1996. 54
(4)(iii) Short-Term Credit Agreement dated as of October 29, 1994 *
among Curtiss-Wright Corporation, as Borrower, the Lenders
parties and Mellon Bank, N.A. (incorporated by reference to Exhibit
(4)(iii) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994).
<PAGE>
Page 23
First Amendment to Short Term Credit Agreement dated as of
October 26, 1996. 61
(10)(i)** Modified Incentive Compensation Plan, as amended November 9, *
1989 (incorporated by reference to Exhibit 10(a) to
Registrant's Form 10-Q Report for the quarter ended September
30, 1989).
(10)(ii)**Curtiss-Wright Corporation 1995 Long-Term Incentive Plan *
(incorporated by reference to Exhibit 4.1 to Registrant's Form S-8
Registration Statement No. 95602114 filed December 15, 1995).
(10)(iii)**Standard Severance Agreement with Officers of Curtiss-Wright *
(incorporated by reference to Exhibit 10(iv) to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1991).
(10)(iv)** Retirement Benefits Restoration Plan as amended May 9, 1989, *
(incorporated by reference to Exhibit 10(b) to Registrant's Form
10-Q Report for the quarter ended September 30, 1989).
(10)(v)** Curtiss-Wright Corporation Retirement Plan dated September *
1, 1994 (incorporated by reference to Exhibit (10)(vi) to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994).
(10)(vi)** Amended Curtiss-Wright Corporation Savings and Investment *
Plan dated March 1, 1995 (incorporated by reference to Exhibit
(10)(vii) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994).
(10(vii)** Curtiss-Wright Corporation 1996 Stock Plan for Non-Employee *
Directors (incorporated by reference to Exhibit 4.1 to Registrant's
Form S-8 Registration Statement No. 96583181 filed June 19, 1996).
(13) Annual Report to Stockholders for the year ended December 31,
1996 (only those portions expressly incorporated herein by
reference in this document are deemed "filed.") 67
(21) Subsidiaries of the Registrant 107
(23) Consents of Experts and Counsel - see Consent of Independent
Accountants 108
(27) Financial Data Schedule 109
- ------------------------
* Incorporated by reference as noted.
** Management contract or compensatory plan or arrangement.
Page 24
Exhibit 3(ii)
- --------------------------------------------------------------------------------
C U R T I S S - W R I G H T C O R P O R A T I O N
B Y - L A W S
As amended through January 1997
- --------------------------------------------------------------------------------
<PAGE>
Page 25
B Y - L A W S
ARTICLE I.
OFFICES.
SECTION 1. Registered Office. The registered office of Curtiss-Wright
Corporation (hereinafter called the Corporation) in the State of Delaware, shall
be in the City of Wilmington, County of New Castle.
SECTION 2. Other Offices. The Corporation may also have an office or
offices at such other place or places either within or without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the Corporation require.
ARTICLE II.
MEETING OF STOCKHOLDERS.
SECTION 1. Place of Meetings. All meetings of Stockholders for the
election of directors or for any other purpose shall be held at such place
either within or without the State of Delaware as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting or in
a duly executed waiver of notice thereof.
SECTION 2. Annual Meetings. The annual meeting of the stockholders for
the election of directors and for the transaction of such other proper business
as may come before the meeting shall be held on a date and at a time as may be
<PAGE>
Page 26
designated from time to time by the Board of Directors and stated in the notice
of the meeting or in a duly executed waiver of notice thereof. If the election
of directors shall not be held on the date so designated for any annual meeting
or at any adjournment of such meeting, the Board of Directors shall cause the
election to be held at a special meeting as soon thereafter as conveniently may
be. At such special meeting the stockholders may elect the directors and
transact other business with the same force and effect as at an annual meeting
duly called and held.
SECTION 3. Special Meetings. A special meeting of the stockholders for
any purpose or purposes, unless otherwise prescribed by statute, may be called
at any time by the Chairman or the President, by the Board of Directors, or by
the Secretary at the request in writing of holders of a majority of the shares
of the Corporation outstanding and entitled to vote.
SECTION 4. Notice of Meetings. Except as otherwise provided by statute,
notice of each meeting of the stockholders, whether annual or special, shall be
given not less than ten days nor more than sixty days before the day on which
the meeting is to be held, to each stockholder of record entitled to vote at
such meeting by delivering a written or printed notice thereof to him
personally, or by mailing such notice in a postage prepaid envelope addressed to
him at his post office address furnished by him to the Secretary of the
Corporation for such purpose, or, if he shall not have furnished to the
Secretary of the Corporation his address for such purpose, then at his post
office address as it appears on the records of the Corporation, or by
transmitting a notice thereof to him at such address by telegraph, cable, telex,
facsimile transmitter or other similar means. Except where expressly required by
law, no publication of any notice of a meeting of stockholders shall be
required. Every such notice shall state the place, date and hour of the meeting
and in the case of special meetings, and annual meetings where business other
than the election of directors may be transacted, the purpose or purposes for
which the meeting is called. Notice of any meeting of stockholders shall not be
required to be given to any stockholder who shall attend such meeting in person
or by proxy except as otherwise provided by statute; and if any stockholder
shall in person or by attorney thereunto authorized, in writing or by telegraph,
cable, telex, facsimile transmitter or other similar means, waive notice
<PAGE>
Page 27
of any meeting, whether before or after such meeting be held, notice thereof
need not be given to him. Notice of any adjourned meeting of the stockholders
shall not be required to be given, except when expressly required by law. Notice
of any meeting of stockholders as herein provided shall not be required to be
given to any stockholder where the giving of such notice is prohibited or is
rendered impossible by the laws of the United States of America.
SECTION 5. List of Stockholders. It shall be the duty of the Secretary
or other officer who shall have charge of the stock ledger either directly or
through a transfer agent appointed by the Board of Directors, to prepare and
make, at least ten days before every meeting of stockholders, complete lists of
the stockholders entitled to vote thereat, arranged in alphabetical order, and
showing the address of each stockholder, the holders of each class of stock
appearing separately, and indicating the number of shares held by each,
certified by the Secretary or Transfer Agent. For said ten days such lists shall
be open to the examination of any stockholder for any purpose germane to the
meeting at the place where said meeting is to be held, or at a place permitted
by the Delaware General Corporation Law, and shall be produced and kept at the
time and place of the meeting during the whole time thereof, and subject to the
inspection of any stockholder who may be present. Upon the wilful neglect or
refusal of the directors to produce such lists at any meeting, they shall be
ineligible to any office at such meeting. The original or a duplicate stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, such lists, or the books of the Corporation or to vote
in person or by proxy at such meeting.
SECTION 6. Quorum. At each meeting of the stockholders, the holders of
not less than a majority of the issued and outstanding stock of the Corporation
present either in person or by proxy and entitled to vote at such meeting shall
constitute a quorum except where otherwise provided by law or by the Certificate
of Incorporation or these by-laws. In the absence of a quorum, the stockholders
of the Corporation present in person or by proxy and entitled to vote, by
majority vote, or, in the absence of all the stockholders, any officer entitled
to preside or act as Secretary at such meeting, shall have the power to adjourn
the meeting from time to time, until stockholders holding the requisite amount
<PAGE>
Page 28
of stock shall be present or represented. At any such adjourned meeting at which
a quorum may be present any business may be transacted which might have been
transacted at the meeting as originally called. The absence from any meeting of
the number required by the laws of the State of Delaware or by the Certificate
of Incorporation of the Corporation or by these by-laws for action upon any
given matter shall not prevent action at such meetings upon any other matter or
matters which may properly come before the meeting, and if the holders of not
less than a majority of the issued and outstanding stock of the Corporation
entitled to vote at that time upon such other matter or matters shall be present
either in person or by proxy at such meeting, a quorum for the consideration of
such other matter or matters shall be present and the meeting may proceed
forthwith and take action upon such other matter or matters.
SECTION 7. Organization. The Chairman or, in his absence, the
President, or, in the absence of both of them, any Vice President present, shall
call meetings of the stockholders to order and shall act as Chairman thereof. In
the absence of all of the foregoing officers, the holders of a majority in
interest of the stock present in person or by proxy and entitled to vote may
elect any stockholder of record present and entitled to vote to act as Chairman
of the meeting until such time as any one of the foregoing officers shall
arrive, whereupon he shall act as Chairman of the meeting. The Secretary or, in
his absence, an Assistant Secretary shall act as secretary at all meetings of
the stockholders. In the absence from any such meeting of the Secretary and the
Assistant Secretary or Secretaries, the Chairman may appoint any person present
to act as secretary of the meeting. Such person shall be sworn to the faithful
discharge of his duties as such secretary of the meeting before entering
thereon.
SECTION 8. Business and Order of Business. At each meeting of the
stockholders such business may be transacted as may properly be brought before
such meeting, except as otherwise in these by-laws expressly provided. The order
of business at all meetings of the stockholders shall be as determined by the
Chairman.
<PAGE>
Page 29
SECTION 9. Voting. Each stockholder of the Corporation shall, except as
otherwise provided by statute or in these by-laws or in the Certificate of
Incorporation of the Corporation, at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
of the Corporation registered in his name on the books of the Corporation on the
date fixed pursuant to Section 6 of Article VII of these by-laws as the record
date for the determination of stockholders entitled to vote at such meeting.
Persons holding in a fiduciary capacity stock having voting rights shall be
entitled to vote the shares so held, and persons whose stock having voting
rights is pledged shall be entitled to vote, unless in the transfer by the
pledgor on the books he shall have expressly empowered the pledgee to vote
thereon, in which case only the pledgee, or his proxy, may represent said stock
and vote thereon. Any vote on stock may be given by the stockholder entitled
thereto in person or by his proxy appointed by an instrument in writing,
subscribed by such stockholder or by his attorney thereunto authorized, and
delivered to the secretary of the meeting; provided, however, that no proxy
shall be voted on after three years from its date unless said proxy provides for
a longer period. At all meetings of the stockholders, all matters (except those
specified in Sections 3 and 12 of Article III and Article XI of these by-laws,
and except also in special cases where other provision is made by statute, and
except as otherwise provided in the Certificate of Incorporation) shall be
decided by the vote of a majority in interest of the stockholders present in
person or by proxy and entitled to vote thereat, a quorum being present. Except
as otherwise provided by statute, the vote on any question need not be by
ballot. On a vote by ballot each ballot shall be signed by the stockholder
voting, or in his name by his proxy if there be such proxy, and shall state the
number of shares voted by him.
SECTION 10. Inspectors of Election. On each matter or election at each
meeting of the stockholders where a vote by ballot is taken, the polls shall be
opened and closed, the proxies and ballots shall be received and be taken in
charge, and all questions touching the qualification of voters and the validity
of proxies and the acceptance or rejection of votes, shall be decided by two
inspectors of election who shall be appointed by the Chairman of such meeting.
The inspectors of election need not be stockholders. No candidate for the office
of director shall act as inspector at any election of directors. Inspectors
<PAGE>
Page 30
shall count and ascertain the number of shares voted; and shall declare the
result of the election or of the voting as the case may be; and shall make out a
certificate accordingly, stating the number of shares issued and outstanding and
entitled to vote at such election or on such matters and the number of shares
voted and how voted. Inspectors shall be sworn to faithfully perform their
duties and shall certify to the returns in writing. They shall hold office from
the date of their appointment until their successors shall have been appointed
and qualified.
SECTION 11. Action by Consent. Whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken for or in connection with
any corporate action, by any provision of statute or of the Certificate of
Incorporation or of these by-laws, the meeting, prior notice thereof, and vote
of stockholders may be dispensed with, and the action taken without such
meeting, notice and vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares of stock of the Corporation entitled to
vote thereon were present and voted. In order that the Corporation may determine
the stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which date shall not be more than ten days after
the date upon which the resolution fixing the record date is adopted by the
Board of Directors. Any stockholder of record seeking to have the stockholders
authorize or take corporate action by written consent shall, by written notice
to the Secretary, request the Board of Directors to fix a record date. Such
written notice shall be directed to the Secretary at the Corporation's principal
place of business, shall be by hand or by certified or registered mail, return
receipt requested, and shall set forth the corporate action proposed to be
taken. The Board of Directors shall promptly, but in all events within ten days
after the date on which such a request is received by the Secretary, adopt a
resolution fixing the record date. If no record date has been fixed by the Board
of Directors within ten days of the date on which such a request is received,
the record date for determining stockholders entitled to consent to such
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by applicable law, shall be the first date on which a
<PAGE>
Page 31
signed written consent setting forth such action taken or proposed to be taken
is delivered to the Corporation by delivery to its principal place of business,
or any officer or agent of the Corporation having custody of the book in which
proceedings of stockholders meetings are recorded, to the attention of the
Secretary of the Corporation. Delivery shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
applicable law, the record date for determining stockholders entitled to consent
to corporate action in writing without a meeting shall be the close of business
on the date on which the Board of Directors adopts the resolution taking such
prior action. No consent to corporate action without a meeting of stockholders
shall be effective prior to the record date determined as set forth herein.
Prompt notice of the taking of any corporate action without a meeting of
stockholders by less than unanimous written consent shall be given to those
stockholders who have not consented to such action in writing.
<PAGE>
Page 32
ARTICLE III
BOARD OF DIRECTORS.
SECTION 1. General Powers. The property, affairs and business of the
Corporation shall be managed by or under the direction of the Board of
Directors.
SECTION 2. Number, Qualifications and Terms of Office. The number of
directors may be fixed from time to time by the affirmative vote of a majority
of the whole Board of Directors, but the number may be diminished to not less
than three, by amendment of these by-laws. Directors need not be stockholders.
The directors shall be elected annually and each director shall hold office
until his successor shall have been elected and shall qualify, or until his
death or until he shall resign or shall have been removed in the manner
hereinafter provided.
SECTION 3. Election of Directors. At each meeting of the stockholders
for the election of directors, at which a quorum is present, the persons
receiving the greatest number of votes shall be the directors. In case of any
increase in the number of directors, the additional directors may be elected by
the directors then in office at any regular meeting or special meeting, or by
the stockholders at the first annual meeting held after such increase or at a
special meeting called for the purpose.
SECTION 4. Quorum and Manner of Acting. Except as otherwise provided by
statute or by these by-laws, one-third of the whole Board of Directors (but not
less than two) shall be required to constitute a quorum for the transaction of
business at any meeting, and the act of a majority of the directors present at
any meeting at which a quorum is present shall be the act of the Board of
Directors. In the absence of a quorum, a majority of the directors present may
adjourn any meeting from time to time until a quorum be had. Notice of any
adjourned meeting need be given only to those directors who were not present at
any meeting at which the adjournment was taken, provided the time and place of
<PAGE>
Page 33
the adjourned meeting were announced at the meeting at which the adjournment was
taken. The directors shall act only as a board and the individual directors
shall have no power as such.
SECTION 5. Place of Meeting, etc. The Board of Directors may hold its
meetings, at such place or places within or without the State of Delaware as the
Board of Directors may from time to time determine or as shall be specified or
fixed in the respective notices or waivers of notice thereof.
SECTION 6. First Meeting. After each annual election of directors and
within a reasonable time thereafter, the Board of Directors shall meet for the
purpose of organization, the election of officers and the transaction of other
business at such hours and place as shall be convenient. Notice of such meeting
shall be given as hereinafter provided for special meetings of the Board of
Directors or in a consent and waiver of notice thereof signed by all the
directors.
SECTION 7. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such place and at such times as the Board of Directors shall
from time to time by resolution determine or as shall be specified in the Notice
of Meeting. If any day fixed for a regular meeting shall be a legal holiday at
the place where the meeting is to be held, then the meeting which would
otherwise be held on that day shall be held at the same hour on the next
succeeding business day not a legal holiday. Notice of the regular meetings need
not be given.
SECTION 8. Special Meetings: Notice. Special meetings of the Board of
Directors shall be held whenever called by the Chairman, the President or by one
of the directors. Notice of each such meeting shall be mailed to each director,
addressed to him at his residence or usual place of business, at least two days
before the day on which the meeting is to be held, or shall be sent to him at
such place by telegraph, cable, telex, facsimile transmitter or other similar
means, or be delivered personally or by telephone, not later than the day before
the day on which the meeting is to be held. Every such notice shall state the
time and place of the meeting but need not state the purpose thereof except as
<PAGE>
Page 34
otherwise in these by-lawsor by statute expressly provided. Notice of any
meeting of the Board of Directors need not be given to any director, however, if
waived by him in writing or by telegraph, cable, telex, facsimile transmitter or
other similar means whether before or after such meeting be held or if he shall
be present at the meeting; and any meeting of the Board of Directors shall be a
legal meeting without any notice thereof having been given if all of the
directors shall be present thereat.
SECTION 9. Organization. At each meeting of the Board of Directors, the
Chairman or, in his absence, the President, or, in the absence of both of them,
a director chosen by a majority of the directors present shall act as Chairman.
The Secretary or, in his absence, an Assistant Secretary or, in the absence of
both the Secretary and Assistant Secretaries, any person appointed by the
Chairman shall act as secretary of the meeting.
SECTION 10. Order of Business. At all meetings of the Board of
Directors business shall be transacted in the order determined by the Board of
Directors.
SECTION 11. Resignations. Any director of the Corporation may resign at
any time by giving written notice to the Chairman, the President or to the
Secretary of the Corporation. The resignation of any director shall take effect
at the time of the receipt of such notice or at any later time specified
therein; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 12. Removal of Directors. Any director may be removed, either
with or without cause, at any time, by the affirmative vote of a majority in
interest of the holders of record of the stock having voting power at a meeting
of the stockholders and the vacancy in the Board of Directors caused by any such
removal may be filled by the stockholders at such meeting.
<PAGE>
Page 35
SECTION 13. Vacancies.
13.1 Any vacancy in the Board of Directors caused by death,
resignation, removal, disqualification, an increase in the number of directors,
or any cause may be filled by the directors then in office or by the
stockholders of the Corporation at the next annual meeting or any special
meeting called for the purpose and at which a quorum is present, and each
director so elected shall hold office until his successor shall be duly elected
and qualified, or until his death or until he shall resign or shall have been
removed in the manner herein provided. In case of a vacancy in the Board of
Directors, the remaining Directors shall continue to act, but if at any time the
number of directors in office shall be reduced to less than a majority of the
number necessary to constitute a full Board of Directors, the remaining
directors shall forthwith call a special meeting of the stockholders for the
purpose of filling vacancies. In case all the directors shall die or resign or
be removed or disqualified, any officer or any stockholder having voting power
may call a special meeting of the stockholders, upon notice given as herein
provided for meetings of the stockholders, at which directors for the unexpired
term may be elected.
13.2 A director who resigns, retires, or does not stand for reelection
may, in the discretion of the Board of Directors, be elected a Director
Emeritus. A Director Emeritus shall receive reimbursement for reasonable
expenses for attendance at meetings of the Board to which he is invited. Such
attendance shall be in a consulting capacity and he shall not be entitled to
vote or have any duties or powers of a Director of the Corporation.
SECTION 14. Regular Stipulated Compensation and Fees. Each director
shall be paid such regular stipulated compensation, if any, as shall be fixed by
the Board of Directors and/or such fee, if any, for each meeting of the Board of
Directors which he shall attend as shall be fixed by the Board of Directors and
in addition such transportation and other expenses actually incurred by him in
connection with services to the Corporation.
SECTION 15. Action by Consent. Unless restricted by the Certificate of
<PAGE>
Page 36
Incorporation, any action required or permitted to be taken by the Board of
Directors or any Committee thereof may be taken without a meeting if all members
of the Board of Directors or such Committee, as the case may be, consent thereto
in writing, and the writing or writings are filed with the minutes of the
proceedings of the Board of Directors or such Committee, as the case may be.
SECTION 16. Telephonic Meeting. Unless restricted by the Certificate of
Incorporation, any one or more members of the Board of Directors or any
Committee thereof may participate in a meeting of the Board of Directors or such
Committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other.
Participation by such means shall constitute presence in person at a meeting.
<PAGE>
Page 37
ARTICLE IV.
COMMITTEES.
SECTION 1. Committees. The Board of Directors may by resolution or
resolutions passed by a majority of the whole Board, designate one or more
Committees, each Committee to consist of two or more of the directors of the
Corporation, which, to the extent provided for in said resolution or resolutions
or in these by-laws, shall have and may exercise such powers as shall be
permitted by law to be, and shall be delegated to such Committee by the Board.
The Committee or Committees appointed by the Board shall be subject to the
supervision and direction of the Board of Directors.
SECTION 2. Term of Office and Vacancies. Each member of a Committee
shall continue in office until a director to succeed him shall have been elected
and shall have qualified, or until his death or until he shall have resigned or
shall have been removed in the manner hereinafter provided. Any vacancy in a
Committee shall be filled by the vote of a majority of the whole Board of
Directors at any regular or special meeting thereof.
SECTION 3. Organization. Except as otherwise provided in these by-laws,
the Chairman of each Committee shall be designated by the Board of Directors.
The Chairman of each Committee may designate a secretary of each such Committee.
In the absence from any meeting of any Committee of its Chairman or its
secretary such Committee shall appoint a temporary Chairman or secretary, as the
case may be, of the meeting unless otherwise provided in these by-laws. Each
Committee shall keep a record of its acts and proceedings and report the same
from time to time to the Board of Directors.
SECTION 4. Resignations. Any member of a Committee may resign at any
time by giving written notice to the Chairman, President or Secretary of the
Corporation. Such resignation shall take effect at the time of the receipt of
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such notice or at any later time specified therein, and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 5. Removal. Any member of a Committee may be removed with or
without cause at any time by the affirmative vote of a majority of the whole
Board of Directors given at any regular meeting or at any special meeting called
for the purpose.
SECTION 6. Meetings. Regular meetings of each Committee, of which no
notice shall be necessary, shall be held on such days and at such place as shall
be fixed by a resolution adopted by the vote of a majority of all the members of
such Committee. Special meetings of each Committee may be called by the Chairman
of such Committee or by the Chairman, President or Secretary of the Corporation.
Notice of each special meeting of the Committee shall be sent by mail to each
member thereof, addressed to him at his residence or usual place of business,
not later than the day before the day on which the meeting is to be held, or
shall be sent to each such member by telegraph, cable, telex, facsimile
transmitter or other similar means, or delivered to him personally or by
telephone, not less than three (3) hours before the time set for the meeting.
Every such notice shall state the time and place, but need not state the
purposes, of the meeting. Notice of any such meeting need not be given to any
member of a Committee, however, if waived by him in writing or by telegraph,
cable, telex, facsimile transmitter or other similar means, or if he shall
attend such meeting in person, and any meeting of a Committee shall be a legal
meeting without any notice thereof having been given if all of the members of
the Committee shall be present thereat.
SECTION 7. Quorum and Manner of Acting. Unless otherwise provided by
resolution of the Board of Directors one less than a majority of a Committee,
but not less than two, shall constitute a quorum for the transaction of business
and the act of a majority of those present at a meeting at which a quorum is
present shall be the act of such Committee. If at any time it shall be
determined that a quorum of a Committee for any regular or special meeting
thereof cannot be had, any member or members thereof shall have the right to
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invite one or more members of the Board of Directors who are not members of such
Committee to attend any such meeting and to be counted as a member thereof for
the purpose of making a quorum. The members of each Committee shall act only as
a Committee and the individual members shall have no power as such.
SECTION 8. Ex Officio Members. The Chairman and the President of the
Corporation shall be ex officio members of all Committees.
SECTION 9. Fees. Each member of a Committee shall be paid such fee, if
any, as shall be fixed by the Board of Directors, for each meeting of such
Committee which he shall attend, and in addition such transportation and other
expenses actually incurred by him in connection with his services as such
member.
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ARTICLE V.
OFFICERS, EMPLOYEES AND AGENTS: POWERS AND DUTIES.
SECTION 1. Officers. The elected officers of the Corporation shall be a
Chairman and a President (each of whom shall be a director), such Executive Vice
Presidents, such Senior Vice Presidents and other Vice Presidents as the Board
may elect, a Controller, a Treasurer, and a Secretary. The Board of Directors or
any Committee constituted pursuant to Article IV of these by-laws with power for
the purpose may also appoint one or more Assistant Controllers, one or more
Assistant Treasurers, one or more Assistant Secretaries, and such other officers
and agents as, from time to time, may appear to be necessary or advisable in the
conduct of the affairs of the Corporation. Any number of offices may be held by
the same person, except that any person serving as Chairman or President shall
not also serve as Secretary.
SECTION 2. Term of Office: Vacancies. So far as practicable, all
elected officers shall be elected at the organization meeting of the Board of
Directors in each year, and shall hold office until their respective successors
are chosen and qualified or until their earlier resignations or removals. All
other officers shall hold office during the pleasure of the Board. If any
vacancy occurs in any office, the Board of Directors, or, in the case of an
appointive office, any Committee constituted pursuant to Article IV of these
by-laws with power for the purpose, may elect or appoint a successor to fill
such vacancy for the remainder of the term.
SECTION 3. Removal of Elected Officers. Any elected officer may be
removed at any time, either for or without cause, by affirmative vote of a
majority of the whole Board of Directors, at any meeting called for the purpose.
SECTION 4. Chairman. The Chairman shall function under the general
supervision of the Board of Directors. During any period in which there is a
vacancy in the office of President, the Chairman shall, pending action by the
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Board, perform the duties and exercise the powers of the President. The Chairman
shall advise the Directors as to matters affecting the overall policy of the
Corporation, including its strategic direction. On behalf of the Board, the
Chairman also shall be responsible for the general oversight of the management
of the Corporation. He shall preside, when present, at all meetings of the
stockholders and of the Board of Directors and shall see to it that appropriate
agendas are developed for such meetings. He shall have such other powers and
duties (if any) as may from time to time be committed to him by the Board of
Directors or by any Committee constituted pursuant to Article IV of these
by-laws with power for the purpose.
SECTION 5. President. Under the general oversight of the Chairman and
supervision of the Board of Directors, the President shall have general and
active management of the business, affairs and property of the Corporation. He
shall preside, when the Chairman is not present, at all meetings of the
stockholders and of the Board of Directors. He shall have general authority to
execute bonds, mortgages, deeds, contracts and other instruments in the name of
the Corporation; to sign any or all certificates of stock of the Corporation; to
cause the employment or appointment of such employees and agents of the
Corporation as the proper conduct of operations may require; and to fix their
compensation, subject to the provisions of these by-laws; to remove or suspend
any employee or agent who shall have been employed or appointed under his
authority or under authority of an officer subordinate to him; to suspend for
cause, pending final action by the authority which shall have elected or
appointed him, any officer subordinate to the President, and, in general, he
shall have all the duties and power usually appertaining to the office of
president of a corporation except as otherwise provided in these by-laws. In the
absence of the President, his duties shall be performed and his powers may be
exercised by the Vice Presidents, as shall be designated by the President or the
Chairman, subject in either case to review and superseding action by the Board
of Directors.
SECTION 6. Vice Presidents. Under the direction of the President, the
Vice Presidents shall perform all such duties and exercise all such powers as
may be provided by these by-laws or as may from time to time be determined by
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the Board of Directors, any Committee constituted pursuant to Article IV of
these by-laws with power for the purpose, the Chairman, or the President.
SECTION 7. Controller. The Controller shall be the chief accounting
officer of the Corporation and shall see that the accounts of the Corporation
and its subsidiary corporations are maintained in accordance with generally
accepted accounting principles; and all decisions affecting the accounts shall
be subject to his approval or concurrence. He shall supervise the manner of
keeping all vouchers for payments by the Corporation and its subsidiary
corporations and all other documents relating to such payments, shall receive
and consolidate all operating and financial statements of the Corporation, its
various departments, divisions and subsidiary corporations; shall have
supervision of the books of account of the Corporation and its subsidiary
corporations, their arrangement and classification; shall supervise the
accounting practices of the Corporation and its subsidiary corporations and
shall have charge of all matters relating to taxation.
SECTION 8. Assistant Controllers. At the request of the Controller or
in his absence or disability the Assistant Controller designated by him or
(failing such request or designation) the Assistant Controller or other officer
designated by the President shall perform all the duties of the Controller and,
when so acting, shall have all the powers of, and be subject to all the
restrictions upon, the Controller.
SECTION 9. Treasurer. The Treasurer shall be the fiscal officer of the
Corporation. He shall have the care and custody of all moneys, funds and
securities of the Corporation, and shall cause the same to be deposited in such
bank or banks or depositories as from time to time may be designated, pursuant
to Section 4 and Section 5 of Article VI of these by-laws; shall advise upon all
terms of credit granted by the Corporation and its subsidiary corporations,
respectively; shall be responsible for the collection of their accounts, and
shall cause to be recorded, daily, a statement of all receipts and disbursements
of the Corporation and its subsidiary corporations, in order that proper entries
may be made in the books of account; and shall have power to give proper
receipts or discharges for all payments to the Corporation. He shall also have
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power to sign any or all certificates of stock of the Corporation.
SECTION 10. Assistant Treasurers. At the request of the Treasurer or in
his absence or disability the Assistant Treasurer designated by him or (failing
such request or designation) the Assistant Treasurer or other officer designated
by the President shall perform all the duties of the Treasurer and, when so
acting, shall have the powers of, and be subject to all the restrictions upon,
the Treasurer.
SECTION 11. Secretary. The Secretary shall attend to the giving of
notice of all meetings of stockholders and of the Board of Directors and shall
record all the proceedings of the meetings thereof in books to be kept for that
purpose. He shall have charge of the corporate seal and have authority to attest
any and all instruments or writings to which the same may be affixed. He shall
be custodian of all books, documents, papers and records of the Corporation,
except those for which some other officer or agent is properly accountable. He
shall have authority to sign any or all certificates of stock of the
Corporation, and, in general, shall have all the duties and powers usually
appertaining to the office of secretary of a corporation.
SECTION 12. Assistant Secretaries. At the request of the Secretary or
in his absence or disability the Assistant Secretary designated by him or
(failing such request or designation) the Assistant Secretary or other officer
designated by the President shall perform all the duties of the Secretary and,
when so acting, shall have all the powers of, and be subject to all the
restrictions upon, the Secretary.
SECTION 13. Additional Duties and Powers. In addition to the foregoing
especially enumerated duties and powers, the several officers of the Corporation
shall perform such other duties and exercise such further powers as may be
provided in these by-laws or as may from time to time be determined by the Board
of Directors, or any Committee constituted pursuant to Article IV of these
by-laws with power for the purpose, or by any competent superior officer.
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SECTION 14. Compensation. The compensation of all officers, except
assistant officers, of the Corporation shall be fixed, from time to time by the
Board of Directors, or any Committee constituted pursuant to Article IV of these
by-laws with power for the purpose.
SECTION 15. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors, the Chairman, the President, or the
Secretary. Any such resignation shall take effect at the date of receipt of such
notice or at any later time specified therein; and unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
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ARTICLE VI.
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. Contracts, etc., How Executed. The Board of Directors, or
any Committee constituted pursuant to Article IV of these by-laws with power for
the purpose, except as in these by-laws otherwise provided, may authorize any
officer or officers, agent or agents, of the Corporation to enter into any
contract or execute and deliver any instrument in the name of and on behalf of
the Corporation, and such authority may be general or confined to specific
instances; and, unless so authorized by the Board of Directors or by such
Committee or by these by-laws, no officer, agent, or employee shall have any
power or authority to bind the Corporation by any contract or agreement or to
pledge its credit or to render it liable pecuniarily for any purpose or to any
amount.
SECTION 2. Loans. No loan shall be contracted on behalf of the
Corporation, and no negotiable paper shall be issued in its name, unless
authorized by the Board of Directors or by any Committee constituted pursuant to
Article IV of these by-laws with power for the purpose. When so authorized, the
Chairman, President or a Vice President or the Secretary or the Treasurer or the
Assistant Treasurer of the Corporation may effect loans and advances at any time
for the Corporation from any bank, trust company or other institution, or from
any firm, corporation or individual and for such loans and advances may make,
execute and deliver promissory notes or other evidences of indebtedness of the
Corporation and, when authorized as aforesaid, as security for the payment of
any and all loans, advances, indebtedness and liabilities of the Corporation,
may mortgage, pledge, hypothecate or transfer any real or personal property at
any time held by the Corporation and to that end execute instruments of mortgage
or pledge or otherwise transfer such property. Such authority may be general or
confined to specific instances.
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SECTION 3. Checks, Drafts, etc. All checks, drafts or other orders for
the payment of money, notes, or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officer or officers, employee
or employees, of the Corporation as shall from time to time be determined by
resolution of the Board of Directors or by any Committee constituted pursuant to
Article IV of these by-laws with power for the purpose, or by any officer or
officers authorized pursuant to Section 4 or Section 5 of this Article to
designate depositaries or to open bank accounts.
SECTION 4. Deposits. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositories as the Board of Directors or any Committee
constituted pursuant to Article IV of these by-laws with power for the purpose
may from time to time designate, or as may be designated by an officer or
officers of the Corporation to whom such power may be delegated by the Board of
Directors, or by such Committee, and for the purpose of such deposit, the
President, or a Vice President, or the Treasurer, or an Assistant Treasurer, or
the Secretary, or an Assistant Secretary, may endorse, assign and deliver
checks, drafts and other orders for the payment of money which are payable to
the order of the Corporation.
SECTION 5. General and Special Bank Accounts. The Board of Directors or
any Committee constituted pursuant to Article IV of these by-laws with power for
the purpose, or any officer or officers of the Corporation to whom such powers
may be delegated by the Board of Directors, or by such Committee, may from time
to time authorize the opening and keeping with such banks, trust companies or
other depositaries as it, or they, may designate of general and special bank
accounts, and may make such special rules and regulations with respect thereto,
not inconsistent with the provisions of these by-laws, as it, or they, may deem
expedient.
SECTION 6. Proxies. Except as otherwise in these by-laws or in the
Certificate of Incorporation of the Corporation provided, and unless otherwise
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provided by resolution of the Board of Directors, or of any Committee
constituted pursuant to Article IV of these by-laws with power for the purpose,
the Chairman or President may from time to time appoint an attorney or attorneys
or agent or agents, of the Corporation, in the name and on behalf of the
Corporation to cast the votes which the Corporation may be entitled to cast as a
stockholder or otherwise in any other corporation any of whose stock or other
securities may be held by the Corporation, at meetings of the holders of the
stock or other securities of such other corporation, or to consent in writing to
any action by such other corporation, and may instruct the person or persons so
appointed as to the manner of casting such votes or giving such consent, and may
execute or cause to be executed in the name and on behalf of the Corporation and
under its corporate seal, or otherwise, all such written proxies or other
instruments as he may deem necessary or proper in the premises.
SECTION 7. Independent Public Accountants. The stockholders of the
Corporation shall, at each annual meeting, appoint independent public
accountants for the purpose of auditing and certifying the annual financial
statements of the Corporation for its current fiscal year as sent to
stockholders or otherwise published by the Corporation. If the stockholders
shall fail to appoint such independent public accountants or if the independent
public accountants so appointed by the stockholders shall decline to act or
resign, or for some other reason be unable to perform their duties, the Board of
Directors shall appoint other independent public accountants to perform the
duties herein provided.
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ARTICLE VII.
SHARES AND THEIR TRANSFER.
SECTION 1. Shares. The shares of the Corporation shall be represented
by certificates or shall be uncertificated. Each registered holder of shares,
upon request to the Corporation, shall be provided with a certificate of stock,
representing the number of shares owned by such holder. Absent a specific
request for such a certificate by the registered owner or transferee thereof,
all shares shall be uncertificated upon the original issuance thereof by the
Corporation or upon the surrender of the certificate representing such shares to
the Corporation. Certificates for shares of the capital stock of the Corporation
shall be in such form as shall be approved by the Board of Directors or by any
Committee constituted pursuant to Article IV of these by-laws with power for the
purpose. They shall be numbered, shall certify the number of shares held by the
holder thereof and shall be signed by the Chairman, President or a Vice
President and the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Corporation, and the seal of the Corporation shall be
affixed thereto. Where any such certificate is countersigned by a transfer
agent, other than the Corporation or its employee, or by a registrar, other than
the Corporation or its employee, any other signature and the seal of the
Corporation on such certificate may be a facsimile, engraved, stamped or
printed. In any case any such officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon any such certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such officer, transfer agent, or registrar were such officer, transfer
agent or registrar at the date of its issue.
SECTION 2. Transfer of Stock. Transfers of shares of the capital stock
of the Corporation shall be made only on the books of the Corporation by the
holder thereof, or by his attorney thereunto authorized by a power of attorney
duly executed and filed with the Secretary of the Corporation, or a transfer
agent of the Corporation, if any, and on surrender of the certificate or
certificates for such shares, properly endorsed, or upon receipt of proper
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transfer instructions from the owner of uncertificated shares, or upon the
escheat of said shares under the laws of any state of the United States. A
person in whose name shares of stock stand on the books of the Corporation shall
be deemed the owner thereof as regards the Corporation, provided that whenever
any transfer of shares shall be made for collateral security, and not
absolutely, such fact, if known to the Secretary or to said transfer agent,
shall be so expressed in the entry of transfer.
SECTION 3. Addresses of Stockholders. Each stockholder shall designate
to the Secretary of the Corporation an address at which notices of meetings and
all other corporate notices may be served or mailed to him, and if any
stockholder shall fail to designate such address, corporate notices may be
served upon him by mail directed to him at his last known post office address as
it appears on the records of the Corporation.
SECTION 4. Lost, Stolen, Destroyed and Mutilated Certificates. To deal
with the eventuality of lost, stolen, destroyed and mutilated certificates of
stock the Board of Directors or any Committee constituted pursuant to Article IV
of these by-laws with power for the purpose may establish by appropriate
resolutions such rules and regulations as they deem expedient concerning the
issue to such holder uncertificated shares or, if requested by such holder, a
new certificate or certificates of stock, including, without limiting the
generality of the foregoing, such rules and regulations as they may deem
expedient with respect to the proof of loss, theft or destruction and the
surrender of mutilated certificates and the requirements as to the giving of a
bond or bonds to indemnify the Corporation against any claim which may be made
against it on account of the alleged loss, theft or destruction of any such
certificate. The holder of any stock of the Corporation shall immediately notify
the Corporation and/or the appropriate transfer agent of such stock of any loss,
theft, destruction or mutilation of the certificate therefor.
SECTION 5. Transfer Agent and Registrar: Regulations. The Corporation
shall, if and whenever the Board of Directors or any Committee constituted
pursuant to Article IV of these by-laws with power for the purpose shall so
determine, maintain one or more transfer offices or agencies, each in charge of
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a transfer agent designated by the Board of Directors or by such Committee,
where the shares of the capital stock of the Corporation shall be directly
transferable, and also one or more registry offices, each in charge of a
registrar designated by the Board of Directors or by such Committee, where such
shares of stock shall be registered, and no certificate for shares of the
capital stock of the Corporation, in respect of which a registrar and transfer
agent shall have been designated, shall be valid unless countersigned by such
transfer agent and registered by such registrar. A firm may act at the same time
as both transfer agent and registrar of the Corporation. The Board of Directors
or any such Committee may also make such additional rules and regulations as it
may deem expedient concerning the issue, transfer and registration of
uncertificated shares or certificates for shares of the capital stock of the
Corporation.
SECTION 6. Fixing Record Date. The Board of Directors or any Committee
constituted pursuant to Article IV of these by-laws with power for the purpose
may fix, in advance, a date, not exceeding sixty days preceding the date of any
meeting of stockholders, or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversation or
exchange of capital stock shall go into effect, as a record date for the
determination of the stockholders entitled to notice of, and to vote at, any
such meeting or entitled to receive payment of any such dividend, or to any such
allotment of rights, or to exercise the rights in respect of any change,
conversation or exchange of the capital stock, and in each such case only such
stockholders as shall be stockholders of record on the date so fixed shall be
entitled to notice of, or to vote at, such meeting, or to receive payment of
such dividend, or to receive such allotment of rights, or to exercise such
rights, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date as aforesaid.
SECTION 7. Examination of Books by Stockholders. The Board of Directors
or any Committee constituted pursuant to Article IV of these by-laws with power
for the purpose shall, subject to the laws of the State of Delaware, have power
to determine, from time to time, whether and to what extent and under what
conditions and regulations the accounts and books of the Corporation, or any of
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them, shall be open to the inspection of the stockholders; and no stockholder
shall have any right to inspect any account, book or document of the
Corporation, except as conferred by the laws of the State of Delaware, unless
and until authorized so to do by resolution of the Board of Directors or any
Committee constituted pursuant to Article IV of these by-laws with power for the
purpose or of the stockholders of the Corporation.
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ARTICLE VIII.
DIVIDENDS, SURPLUS, ETC.
Subject to the provisions of the Certificate of Incorporation and any
restrictions imposed by statute, the Board of Directors may declare dividends
from the surplus of the Corporation or from the net profits arising from its
business, whenever, and in such amounts as, in its opinion, the condition of the
affairs of the Corporation shall render advisable. If the date appointed for the
payment of any dividend shall in any year fall on a legal holiday then the
dividend payable on such date shall be payable on the next succeeding business
day. The Board of Directors in its discretion may from time to time set aside
from such surplus or net profits such sum or sums as it, in its absolute
discretion, may think proper as a working capital or as a reserve fund to meet
contingencies, or for the purpose of maintaining or increasing the property or
business of the Corporation, or for any other purpose it may think conducive to
the best interests of the Corporation. All such surplus or net profits, until
actually declared in dividends, or used and applied as aforesaid, shall be
deemed to have been so set aside by the Board for one or more of said purposes.
ARTICLE IX.
SEAL.
The corporate seal of the Corporation shall consist of a metallic
stamp, circular in form, bearing in its center the figures and word "1929,
Delaware", and at the outer edge the name of the Corporation.
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ARTICLE X.
FISCAL YEAR.
The fiscal year of the Corporation shall begin on the first day of
January in each year.
ARTICLE XI.
AMENDMENTS.
All by-laws of the Corporation shall be subject to alteration or
repeal, and new by-laws not inconsistent with any provision of the Certificate
of Incorporation of the Corporation or any provision of law, may be made, either
by the affirmative vote of the holders of record of a majority of the
outstanding stock of the Corporation entitled to vote in respect thereof, given
at an annual meeting or at any special meeting or by the Board of Directors at
any regular or special meeting.
Page 54
Exhibit 4(ii)
FOURTH AMENDMENT TO CREDIT AGREEMENT
------------------------------------
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT, dated as of October 29, 1996
(this "Amendment"), by and between CURTISS-WRIGHT CORPORATION, a Delaware
corporation (the "Borrower"), the lenders parties hereto from time to time (the
"Lenders", as defined further below), the Issuing Banks referred to herein (the
"Issuing Banks") and MELLON BANK, N.A., a national banking association, as agent
for the Lenders and the Issuing Banks hereunder (in such capacity, together with
its successors in such capacity, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Issuing Banks and the Agent are
parties to a Credit Agreement, dated as of October 29, 1991 (as amended, the
"Credit Agreement"), pursuant to which the Lenders have made Loans to the
Borrower and certain Issuing Banks have issued Letters of Credit on behalf of
the Borrower and its Subsidiaries; and
WHEREAS, the Borrower has requested the Lenders (i) to extend the Revolving
Credit Maturity Date to October 29, 1999 and (ii) make certain other changes to
the Credit Agreement; and
WHEREAS, NationsBank, N.A. (formerly NationsBank of North Carolina, N.A.)
("NationsBank") does not wish to continue as a Lender under the Credit
Agreement; and
WHEREAS, the Lenders (other than NationsBank) are willing to so extend the
Revolving Credit Maturity Date and to amend the Credit Agreement upon the terms
and conditions hereinafter set forth; and
WHEREAS, capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the Credit Agreement;
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NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT.
The Credit Agreement is hereby amended as follows:
(a) Section 1.01 is amended as follows:
(i) The definition of the term "Revolving Credit Maturity Date" is amended
to substitute the date "October 29, 1999" for the date "October 29, 1998".
(ii) The definition of the term "Lender" is amended by adding the words ";
PROVIDED, HOWEVER, as of the Effective Date of this Fourth Amendment,
NationsBank of North Carolina, N.A. is not a Lender hereunder notwithstanding
that it is listed on the signature pages hereof" immediately following the
phrase "ceasing to be Lenders".
(b) The Revolving Credit Committed Amount of each Lender shall be increased
such that the Total Revolving Credit Committed Amount for each Lender shall be
as follows:
Mellon Bank, N.A. $9,500,000
PNC Bank,
National Association 6,500,000
The Bank of Nova Scotia 6,500,000
(c) In accordance with Sections 1(a) and 1(b) above, after the Effective
Date of this Amendment, the Commitment Percentage for each Lenders shall be as
follows:
Mellon Bank, N.A. 42.2222%
PNC Bank,
National Association 28.8889%
The Bank of Nova Scotia 28.8889%
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SECTION 2. CONDITIONS PRECEDENT. The effectiveness of this Amendment is
subject to the accuracy as of the date hereof of the representations and
warranties herein contained, to the performance by the Borrower of its
obligations to be performed hereunder on or before the date hereof and to the
satisfaction, on or before October 29, 1996 (the date of such satisfaction being
referred to herein as the "Effective Date"), of the following further conditions
precedent:
(a) AMENDMENT. Each Lender shall have received a counterpart of this
Amendment, duly executed by the Borrower.
(b) REPRESENTATIONS AND WARRANTIES; EVENTS OF DEFAULT AND POTENTIAL
DEFAULTS. The representations and warranties contained in Section 3 hereof
shall be true and correct on and as of the Effective Date with the same
effect as though made on and as of such date. On the Effective Date, no
Event of Default and no Potential Default shall have occurred and be
continuing or shall exist or shall occur or exist after giving effect to
this Amendment and the transactions contemplated hereby. On the Effective
Date, there shall have been delivered to the Agent a certificate, dated the
Effective Date and signed on behalf of the Borrower by the President,
Treasurer or chief financial officer of the Borrower, that (a) the
representations and warranties set forth in Section 3 hereof are true and
correct on and as of such date and (b) on such date no Event of Default or
Potential Default has occurred and is continuing or exists or will occur or
exist after giving effect to this Amendment and the transactions
contemplated hereby.
(c) PROCEEDINGS AND INCUMBENCY. On the Effective Date, there shall
have been delivered to the Agent, with an original counterpart for each
Lender, a certificate dated the Effective Date and signed on behalf of the
Borrower by the Secretary or an Assistant Secretary of the Borrower,
certifying as to (i) true copies of the articles of incorporation and
bylaws of the Borrower as in effect on such date (or a certificate of the
Secretary or Assistant Secretary of the Borrower to the effect that there
have been no changes in such articles of incorporation or bylaws from the
forms thereof previously delivered to the Agent and the Lenders or, if
there have been any such changes, attaching copies thereof), (ii) true
copies of all corporate action taken by the Borrower relative to this
Amendment and (iii) the names, true signatures and incumbency of the
officer or officers of the Borrower authorized to execute and deliver this
Amendment and the other documents and instruments to be executed and
delivered under the Credit Agreement, as amended hereby. The Agent shall be
entitled to conclusively rely on such certificate unless and until a later
certificate revising the prior certificate has been furnished to the Agent.
<PAGE>
Page 57
(d) OPINIONS OF COUNSEL. On the Effective Date, there shall have been
delivered to the Agent written opinions, dated the Effective Date, of
General Counsel to the Borrower in form and substance satisfactory to the
Agent and as to such matters incident to the transactions contemplated
hereby as the Agent may reasonably request.
(e) DETAILS, PROCEEDINGS AND DOCUMENTS. All legal details and
proceedings in connection with the transactions contemplated by this
Amendment shall be satisfactory to the Lenders, and, on the Effective Date,
the Agent shall have received all such counterpart originals or certified
or other copies of such documents and proceedings in connection with such
transactions, in form and substance satisfactory to the Agent and the
Lenders, as the Agent or any Lender may reasonably request.
(f) SATISFACTION OF NATIONSBANK OBLIGATIONS. The Agent and each Lender
shall have received from NationsBank confirmation in form and substance
satisfactory to the Agent that the Obligations of Borrower to NationsBank
have been discharged. Upon the Effective Date, NationsBank shall have no
further Commitments, obligations or responsiblities under the Credit
Agreement.
<PAGE>
Page 58
(g) SUBSTITUTE NOTES. The Borrower shall have delivered to the Agent
for each Lender new notes in the form attached as Exhibit A to the Credit
Agreement with the blanks appropriately filled evidencing the change in the
Revolving Credit Committed Amounts of the Lenders as set forth in Section
1(b) of this Fourth Amendment. Upon receipt of such substitute notes, each
of the Lenders shall return their original note to the Agent which shall
forward such notes to the Borrower with an appropriate designation.
SECTION 3. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents
and warrants to the Agent and the Lenders that the representations and
warranties set forth in the Credit Agreement, as amended by this Amendment, are
true and correct on and as of the date hereof as if made on and as of the date
hereof, and that no Event of Default or Potential Default has occurred and is
continuing or exists on and as of the date hereof; provided, however, that, for
purposes of the foregoing, all references in the Credit Agreement to "this
Agreement" shall be deemed to be references to this Amendment and the Credit
Agreement as amended by this Amendment. In addition, the reference in Section
4.05 of the Credit Agreement to the financial statements of the Borrower and its
consolidated Subsidiaries as of December 31, 1989 and December 31, 1990 shall be
deemed to be a reference to the financial statements of the Borrower and its
consolidated Subsidiaries as of December 31, 1994 and December 31, 1995,
respectively, the reference in such Section to the parallel interim consolidated
financial statements for and as of the end of the six months ended June 30, 1991
shall be deemed to be a reference to the parallel interim consolidated financial
statements for and as of the end of the second fiscal quarter of the fiscal year
beginning January 1, 1996, and the references in the last sentence of Section
4.05 of the Credit Agreement to June 30, 1991 and December 31, 1990 shall be
deemed to be references to June 30, 1996 and December 31, 1995, respectively;
and the reference in Section 4.10 of the Credit Agreement to December 31, 1990
shall be deemed to be a reference to December 31, 1995.
<PAGE>
Page 59
SECTION 4. AGREEMENT AMONG LENDERS. To effectuate the changes contemplated
by Sections 1(a)(ii), 1(b) and 1(c) of this Amendment, the Agent and each Lender
agree that, on the Effective Date, the proceeds of each Lender's increased
Revolving Credit Committed Amount will be used (i) to increase each Lender's
interest in each outstanding Letter of Credit by the amount necessary to make
such Lender's percentage interest in any such outstanding Letter of Credit equal
to such Lender's Commitment Percentage and (ii) to distribute to NationsBank by
wire transfer in immediately available funds the amount of (a) such Lender's
Commitment Percentage times (b) the amount of Obligations owing by the Borrower
to NationsBank. Each of the parties hereto agrees that such distribution or
payment to NationsBank is being made on behalf of and with the acknowledgement
and consent of the Borrower in order to satisfy the Obligations owing by the
Borrower to NationsBank.
SECTION 5. EFFECTIVENESS OF AMENDMENT. This Amendment shall be effective
from and after the Effective Date upon satisfaction of the conditions precedent
referred to herein.
SECTION 6. EFFECT OF AMENDMENT. The Credit Agreement, as amended by this
Amendment, is in all respects ratified, approved and confirmed and shall, as so
amended, remain in full force and effect.
SECTION 7. GOVERNING LAW. This Amendment shall be deemed to be a contract
under the laws of the State of New York and for all purposes shall be governed
by and construed and enforced in accordance with the laws of said State.
[Remainder of page intentionally left blank]
<PAGE>
Page 60
SECTION 8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
CURTISS-WRIGHT CORPORATION
By /s/ Gary Benschip
-----------------------
Title Treasurer
-----------------------
MELLON BANK, N.A., individually
and as Agent
By /s/ Joseph F. Bond Jr.
----------------------
Title Joseph F. Bond Jr.
Vice President
----------------------
PNC BANK, NATIONAL ASSOCIATION
By /s/ Alpheus J. Norman IV
------------------------
Title V.P.
----------------------
THE BANK OF NOVA SCOTIA
By /s/ Brian S, Allen
--------------------------
Title Sr. Relationship Manager
--------------------------
NATIONSBANK, N.A. (formerly
NATIONSBANK OF NORTH
CAROLINA, N.A.)
By /s/ Thomas J. Kane
--------------------------
Title Thomas J. Kane
Corporate Finance Office
--------------------------
Page 61
Exhibit 4(iii)
FIRST AMENDMENT TO SHORT TERM CREDIT AGREEMENT
----------------------------------------------
THIS FIRST AMENDMENT TO SHORT TERM CREDIT AGREEMENT, dated as of October
26, 1996 (this "Amendment"), by and between CURTISS-WRIGHT CORPORATION, a
Delaware corporation (the "Borrower"), the lenders parties hereto from time to
time (the "Lenders", as defined further below), and MELLON BANK, N.A., a
national banking association, as agent for the Lenders hereunder (in such
capacity, together with its successors in such capacity, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agent are parties to a Short
Term Credit Agreement, dated as of October 29, 1994 (as amended, the "Credit
Agreement"), pursuant to which the Lenders have made Loans to the Borrower; and
WHEREAS, the Borrower has requested the Lenders (i) to extend the
Expiration Date to October 24, 1997 and (ii) make certain other changes to the
Credit Agreement; and
WHEREAS, NationsBank, N.A. (formerly NationsBank of North Carolina, N.A.)
("NationsBank") does not wish to continue as a Lender under the Credit
Agreement; and
WHEREAS, the Lenders (other than NationsBank) are willing to so extend the
Expiration Date and to amend the Credit Agreement upon the terms and conditions
hereinafter set forth; and
WHEREAS, capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT.
The Credit Agreement is hereby amended as follows:
(a) Section 1.01 is amended as follows:
(i) The date "October 29, 1995" appearing in the definition of the term
"Expiration Date" is hereby amended to be "October 24, 1997".
<PAGE>
Page 62
(ii) The definition of the term "Lender" is amended by adding the words ";
PROVIDED, HOWEVER, as of the Effective Date of this Amendment, NationsBank of
North Carolina, N.A. is not a Lender hereunder notwithstanding that it is listed
on the signature pages hereof" immediately following the phrase "ceasing to be
Lenders".
(b) The Revolving Credit Committed Amount of each Lender shall be increased
such that the Total Revolving Credit Committed Amount for each Lender shall be
as follows:
Mellon Bank, N.A. $9,500,000
PNC Bank,
National Association 6,500,000
The Bank of Nova Scotia 6,500,000
(c) In accordance with Sections 1(a) and 1(b) above, after the Effective
Date of this Amendment, the Commitment Percentage for each Lenders shall be as
follows:
Mellon Bank, N.A. 42.2222%
PNC Bank,
National Association 28.8889%
The Bank of Nova Scotia 28.8889%
SECTION 2. CONDITIONS PRECEDENT. The effectiveness of this Amendment is
subject to the accuracy as of the date hereof of the representations and
warranties herein contained, to the performance by the Borrower of its
obligations to be performed hereunder on or before the date hereof and to the
satisfaction, on or before October 27, 1996 (the date of such satisfaction being
referred to herein as the "Effective Date"), of the following further conditions
precedent:
(a) AMENDMENT. Each Lender shall have received a counterpart of this
Amendment, duly executed by the Borrower.
(b) REPRESENTATIONS AND WARRANTIES; EVENTS OF DEFAULT AND POTENTIAL
DEFAULTS. The representations and warranties contained in Section 3 hereof
shall be true and correct on and as of the Effective Date with the same
effect as though made on and as of such date. On the Effective Date, no
Event of Default and no Potential Default shall have occurred and be
continuing or shall exist or shall occur or exist after giving effect to
this Amendment and the transactions contemplated hereby. On the Effective
Date, there shall have been delivered to the Agent a certificate, dated the
Effective Date and signed on behalf of the Borrower by the President,
Treasurer or chief financial officer of the Borrower, that (a) the
representations and warranties set forth in Section 3 hereof are true and
correct on and as of such date and (b) on such date no Event of Default or
Potential Default has occurred and is continuing or exists or will occur or
exist after giving effect to this Amendment and the transactions
contemplated hereby.
<PAGE>
Page 64
(c) PROCEEDINGS AND INCUMBENCY. On the Effective Date, there shall
have been delivered to the Agent, with an original counterpart for each
Lender, a certificate dated the Effective Date and signed on behalf of the
Borrower by the Secretary or an Assistant Secretary of the Borrower,
certifying as to (i) true copies of the articles of incorporation and
bylaws of the Borrower as in effect on such date (or a certificate of the
Secretary or Assistant Secretary of the Borrower to the effect that there
have been no changes in such articles of incorporation or bylaws from the
forms thereof previously delivered to the Agent and the Lenders or, if
there have been any such changes, attaching copies thereof), (ii) true
copies of all corporate action taken by the Borrower relative to this
Amendment and (iii) the names, true signatures and incumbency of the
officer or officers of the Borrower authorized to execute and deliver this
Amendment and the other documents and instruments to be executed and
delivered under the Credit Agreement, as amended hereby. The Agent shall be
entitled to conclusively rely on such certificate unless and until a later
certificate revising the prior certificate has been furnished to the Agent.
(d) OPINIONS OF COUNSEL. On the Effective Date, there shall have been
delivered to the Agent written opinions, dated the Effective Date, of
General Counsel to the Borrower in form and substance satisfactory to the
Agent and as to such matters incident to the transactions contemplated
hereby as the Agent may reasonably request.
(e) DETAILS, PROCEEDINGS AND DOCUMENTS. All legal details and
proceedings in connection with the transactions contemplated by this
Amendment shall be satisfactory to the Lenders, and, on the Effective Date,
the Agent shall have received all such counterpart originals or certified
or other copies of such documents and proceedings in connection with such
transactions, in form and substance satisfactory to the Agent and the
Lenders, as the Agent or any Lender may reasonably request.
<PAGE>
Page 65
(f) SATISFACTION OF NATIONSBANK OBLIGATIONS. The Agent and each Lender
shall have received from NationsBank confirmation in form and substance
satisfactory to the Agent that the Obligations of Borrower to NationsBank
have been discharged. Upon the Effective Date, NationsBank shall have no
further Commitments, obligations or responsiblities under the Credit
Agreement.
(g) SUBSTITUTE NOTES. The Borrower shall have delivered to the Agent
for each Lender new notes in the form attached as Exhibit A to the Credit
Agreement with the blanks appropriately filled evidencing the change in the
Revolving Credit Committed Amounts of the Lenders as set forth in Section
1(b) of this Amendment. Upon receipt of such substitute notes, each of the
Lenders shall return their original note to the Agent which shall forward
such notes to the Borrower with an appropriate designation.
SECTION 3. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents
and warrants to the Agent and the Lenders that the representations and
warranties set forth in the Credit Agreement, as amended by this Amendment, are
true and correct on and as of the date hereof as if made on and as of the date
hereof, and that no Event of Default or Potential Default has occurred and is
continuing or exists on and as of the date hereof; provided, however, that, for
purposes of the foregoing, all references in the Credit Agreement to "this
Agreement" shall be deemed to be references to this Amendment and the Credit
Agreement as amended by this Amendment.
SECTION 4. AGREEMENT AMONG LENDERS. To effectuate the changes contemplated
by Sections 1(a), 1(b) and 1(c) of this Amendment, the Agent and each Lender
agree that, on the Effective Date, the proceeds of each Lender's increased
Revolving Credit Committed Amount will be used to distribute to NationsBank by
wire transfer in immediately available funds the amount of (a) such Lender's
Commitment Percentage times (b) the amount of Obligations owing by the Borrower
to NationsBank. Each of the parties hereto agrees that such distribution or
payment to NationsBank is being made on behalf of and with the acknowledgement
and consent of the Borrower in order to satisfy the Obligations owing by the
Borrower to NationsBank.
SECTION 5. EFFECTIVENESS OF AMENDMENT. This Amendment shall be effective
from and after the Effective Date upon satisfaction of the conditions precedent
referred to herein.
<PAGE>
Page 65
SECTION 6. EFFECT OF AMENDMENT. The Credit Agreement, as amended by this
Amendment, is in all respects ratified, approved and confirmed and shall, as so
amended, remain in full force and effect.
SECTION 7. GOVERNING LAW. This Amendment shall be deemed to be a contract
under the laws of the State of New York and for all purposes shall be governed
by and construed and enforced in accordance with the laws of said State.
[Remainder of page intentionally left blank]
<PAGE>
Page 66
SECTION 8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
CURTISS-WRIGHT CORPORATION
By /s/ Gary Benschip
---------------------
Title Treasurer
---------------------
MELLON BANK, N.A., individually
and as Agent
By /s/ Joseph F. Bond Jr.
----------------------
Title Joseph F.Bond, Jr.
Vice President
----------------------
PNC BANK, NATIONAL ASSOCIATION
By /s/ Alpheus J. Norman, IV
-------------------------
Title V.P.
-------------------------
THE BANK OF NOVA SCOTIA
By /s/ Brian S. Allen
----------------------------
Title Sr. Relationship Manager
----------------------------
NATIONSBANK, N.A. (formerly
NATIONSBANK OF NORTH
CAROLINA, N.A.)
By /s/ Thomas J. Kane
----------------------------
Title Thomas J. Kane
Corporate Finance Officer
----------------------------
Page 67
Exhibit 13
1996
--------------------------
CURTISS-WRIGHT CORPORATION
--------------------------
ANNUAL REPORT
EXPANDING
OUR MARKETS
<PAGE>
Page 68
Curtiss-Wright Corporation, headquartered in Lyndhurst, N.J., 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 Company employs approximately 1,700 people. Operations are
conducted principally by three wholly-owned subsidiaries: Curtiss-Wright Flight
Systems, Inc., Metal Improvement Company, Inc. and Curtiss-Wright Flow Control
Corporation. The group's principal operations include three domestic
manufacturing facilities, thirty-two Metal Improvement service facilities
located in North America and Europe, and three component overhaul facilities
located in Florida, North Carolina and Denmark.
Contents
Industry Focus 1
Financial Highlights 2
Letter to Stockholders 3
Review of Operations 6
At a Glance 9
Expanding Our Markets 10
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
Quarterly Results of Operations and Stock Information (Unaudited) 34
Consolidated Selected Financial Data 34
Corporate Information 35
Corporate Directory 36
<PAGE>
Page 69
--------
INDUSTRY
--------
FOCUS
--------
Changes in the aerospace/defense industry in the 1990's required participants
to re-examine how they will conduct business in the future. These changes
started with reduced commercial aircraft production rates which coincided with
lower procurement levels in the defense sector. These factors initiated a
consolidation movement within the industry that is still in progress. While
production rates of commercial aircraft have been increasing, there will be few
new commercial and military aircraft programs. Under these circumstances, the
ability to gain position on these programs becomes increasingly important.
In addition to the reduced level of new projects in the defense sector,
development programs have become more expensive and customers have required
their suppliers to bear substantial portions of the costs involved. The size of
these expenditures, the increasing demands by customers for cost efficiencies
and the increase in the time horizons for these programs to move into
production, have raised the financial risks of investing in these programs.
Companies, such as Curtiss-Wright which operate in niche markets, must
re-examine their positions in order to expand those markets they serve. Their
market positions must be broadened to allow operations to deal with the cyclical
nature of the industry. We have concluded that we must expand not only into the
overhaul and repair of our own aerospace components, but also to other areas of
the aftermarket. With this expansion the customer base changes. The focus shifts
to include the end user of the product: airlines and freight carriers. The
relationship with these new customers requires the establishment of a new and
distinct marketing and distribution organization from those which traditionally
had been in place. In effect, while the product may remain basically the same,
an entirely new business must be established. This is the direction that we have
been following in our aerospace business.
We also have determined that wherever possible we should expand our service
offerings, acting alone or with others whose functions complement our own. This
expansion affects both our aerospace and industrial markets. Finally, we have
been active in the geographic expansion of our markets, both domestically and
overseas.
Curtiss-Wright continues to take an adaptive approach to servicing its
markets. It has expanded its served markets beyond its traditional customers. It
will continue to build "new business" as it expands on its established business
base to broaden the products and services it provides and extends its markets to
new customers and new geographic regions.
<PAGE>
Page 70
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Dollars in thousands except per share data) 1996 1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Performance:
Sales $ 170,536 $ 154,446 $ 155,001
Earnings before interest, taxes, depreciation and amortization 33,462 37,553 40,041
Net earnings 16,109 18,169 19,303
Net earnings per common share 3.17 3.59 3.81
Return on sales 9.4% 11.8% 12.5%
Return on assets 6.3% 7.4% 8.1%
Return on average stockholders' equity 9.1% 11.0% 12.7%
Research and development costs: Corporation sponsored 997 1,180 1,196
Customer sponsored 15,248 17,362 9,059
New orders 171,649 150,870 122,367
Backlog at year-end 109,336 103,566 116,554
- ----------------------------------------------------------------------------------------------------
Year-End Financial Position:
Working capital $ 115,417 $ 120,571 $ 108,329
Current ratio 3.7 to 1 4.6 to 1 4.0 to 1
Total assets $ 267,164 $ 246,201 $ 238,694
Stockholders' equity $ 183,363 $ 172,179 $ 158,769
Stockholders' equity per common share $ 36.09 $ 33.91 $ 31.37
- ----------------------------------------------------------------------------------------------------
Other Year-End Data:
Depreciation and amortization $ 8,946 $ 9,512 $ 10,883
Capital expenditures $ 14,156 $ 6,985 $ 4,609
Shares of common stock outstanding 5,081,103 5,077,823 5,060,743
Number of stockholders 4,719 5,944 6,409
Number of employees 1,738 1,482 1,496
- ----------------------------------------------------------------------------------------------------
Dividends per Common Share $ 1.00 $ 1.00 $ 1.00
====================================================================================================
</TABLE>
[GRAPHS OMITTED]
2 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
<PAGE>
Page 71
LETTER TO STOCKHOLDERS
----------------------
FELLOW STOCKHOLDERS:
For several years, Curtiss-Wright Corporation has been following a strategy of
developing and maintaining positions in market segments which it believes will
result in substantial profitable growth with a resultant increase in
stockholders' value. In pursuit of these objectives, in the context of the
Industry Focus highlighted earlier in this Annual Report, the Company's focus
has been to expand the products and services it provides, enlarge its customer
base and increase its global presence. This has required a substantial and
continuing investment in both development programs and plant and equipment. Our
progress to date is outlined in the balance of this letter and in the Review of
Operations segment of this Annual Report which follows.
Product and Service Capability Expansion
During 1996, we delivered the initial quantities of trailing edge flap
transmissions to The Boeing Company for its Next-Generation 737 aircraft and
production quantities of trailing edge flap rotary actuators for their 767
airliner. These milestones were reached while we continued to supply components
for Boeing's 737 "classic" and all other aircraft transports they currently have
in production. In recognition of our efforts, we were awarded the Boeing
Commercial Airplane Group's 1996 President's Award for Excellence. This
designation as "Supplier of the Year" in the category of systems and equipment
resulted from our superior service, outstanding products and innovative ideas.
In addition, late in 1996, we received notification that we have been selected
as supplier for trailing edge flap transmissions for Boeing's newly-announced
757-300 airliner. Our expanding market position with Boeing is in addition to
our continuing role as a provider of shot-peen wing forming for Airbus and
McDonnell Douglas commercial jetliners.
We anticipate supplying a trailing edge flap drive flight control system
for a business jet currently under development that will mark our entry as a
manufacturer of actuation and control equipment for this market. It expands the
presence we previously established in the business jet aircraft market with
other manufacturers through our forming of wings utilizing our shot-peening
process.
Curtiss-Wright previously identified the aerospace overhaul market segment
as a strategically important area for participation by the Company. The 1996
acquisition of a repair and overhaul facility in Miami, Florida, from Aviall,
Inc., for approximately $16.6 million, is an important addition to our internal
efforts to expand within this service segment of the industry. It was a good
combination with our existing overhaul business. The customer bases and product
lines were complementary to both organizations. The Miami addition has more than
met our expectations. We will continue to look to the overhaul segment to
globally expand our capabilities through both acquisition and internal
development and growth.
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 3
<PAGE>
Page 72
In our shot-peening business, we perform a metal-treating process used
primarily to increase the fatigue life of metal parts. We have developed a
computer software program which can provide users of shot-peening a prediction
of the residual stresses which are induced in the component by the process. As a
post shot-peening treatment, Curtiss-Wright is marketing a chemically-assisted
surface enhancement process that we believe is superior to traditional finishing
methods such as honing and polishing. In addition we are offering, in
conjunction with a nationally recognized independent laboratory, an economical
method of measuring resultant residual stress profiles after shot peening. We
have developed a non-destructive method for exposing exfoliation corrosion on
aging airplanes and are providing this service in the field. Again, the
objective is to expand our offerings to the market to enable us to grow.
In Curtiss-Wright's valve business, new product development over the last
five years accounts for 70% of the products we currently sell. This includes new
and improved products for the nuclear electrical utility industry which will
extend our offerings and increase our sales and profitability. Some of these new
valves improve maintenance costs and provide solutions to problems experienced
in nuclear power plants throughout the world.
As a result of the activities described above, we now have achieved a
balance in which we are as much a service organization as a manufacturer of
precision components. This evolution mirrors the trend in American industry and
provides us with broader market opportunities.
If we are to be successful in our expansion efforts, our highly engineered
precision-manufactured products and our technology-based services must meet the
current and anticipated needs of our customers. In order to satisfy ever more
demanding and sophisticated customers, we must be a prime source of technical
innovation, delivering goods and services of the highest quality while
maintaining competitive prices.
Customer Base Growth
In our aerospace business, the Company has now positioned itself as a full range
provider with the ability both to supply products and services to the OEM air
frame assemblers and to participate in the aftermarket by servicing airlines and
air freight haulers. With this positioning, our customer base has increased
dramatically as has our ability to participate both in the increased production
of new aircraft in the coming years and the overhaul requirements of existing
fleets. The Company also can now more effectively take advantage of the
developing trend of major airlines to outsource their maintenance and repair
activities.
Increase in Global Presence
Curtiss-Wright is now a more global company than it was a year ago. Pre-tax
earnings generated outside of North America increased 75% from 1995 and
represented 33.5%
4 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
<PAGE>
Page 73
LETTER TO STOCKHOLDERS
----------------------
of the Company's total pre-tax profit in 1996 vs. 16.8% last year. Related
foreign sales composed 17.5% of our total revenue in 1996.
The Company has always had a foreign presence due to the international
nature of the aerospace industry. The global airline industry long has been the
end user of the aircraft for which Curtiss-Wright provides OEM products and
services. This limited participation has been expanded upon through the
Company's increased involvement in the aerospace aftermarket where it now deals
directly with airlines and air cargo handlers on an international basis. This
shift to a more global perspective is continuing and is not limited to our
aerospace business.
Currently, we are establishing a shot-peening facility in Belgium, and a
second one is being opened to service the south German market. As a result we
will be operating at least eight facilities in Europe in 1997. A presence in the
Pacific Rim for our aerospace overhaul operations is also planned for 1997. In
addition, we participate as a supplier of nuclear valves to the expanding
electrical utility markets in South Korea and Taiwan and are focusing now on
gaining a foothold in select European markets and China for our valve products.
Outlook
We expect 1997 to be a year which will be filled with opportunities and
challenges for our organization. Curtiss-Wright will be aggressively looking for
growth situations both internally and through selective acquisition and teaming
arrangements. In addition, our operations will be working to meet the increased
delivery schedules for Boeing and Airbus, while improving productivity and
lowering costs. At the same time we must complete the development and testing
programs relating to military actuation and control equipment projects which
have significantly penalized our earnings over the past few years. The
successful accomplishment of these activities will require the continued
dedication of our employees. For their efforts we are most appreciative.
/s/ David Lasky
David Lasky
Chairman and President
January 30, 1997
[Photo of David Lasky]
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 5
<PAGE>
Page 74
REVIEW OF OPERATIONS
Financial Performance Overview
The financial performance of the Corporation in 1996 did not measure up to the
levels which we have come to expect, based on our results in recent years. Net
earnings in 1996 of $16.1 million, or $3.17 per share, were $2.1 million, or
$.42 per share less than earnings in 1995. This shortfall is attributable to a
number of unusual items. Net earnings in 1996 were reduced by $2.5 million, or
$.49 per share, due to additional reserves for engineering cost overruns on
military actuation and control development contracts, and additional
environmental reserves and related legal and administrative costs and other
unusual items.
Absent these unusual items, 1996 net earnings would have been $18.6
million, or $3.66 per share, as compared with 1995 earnings of $18.2 million, or
$3.59 per share.
Sales in 1996 of $170.5 million increased 10.4% over sales in 1995. The
improved earnings produced by the increased sales were offset by the engineering
cost overruns on the actuation and control equipment development programs
(including the reserves referred to above) and by learning and other costs
associated with the start-up of production on new Boeing commercial aircraft
programs. In 1997, we plan to make significant progress in reducing our
manufacturing costs on these programs. Also in 1997, we are scheduled to have
substantially completed the testing phase of the development programs.
Our financial position was strong enough to readily absorb over $30 million
of expenditures for capital equipment and the acquisition of the repair and
overhaul business in Miami. We are well positioned to take advantage of internal
and external growth opportunities as we move into 1997, with some $62 million in
liquid resources and significant unused borrowing capacity.
Aerospace Component and Overhaul
Our Shelby, North Carolina, operation has completed a building addition that has
doubled the physical size of that facility. The total investment which will be
made in that location when all of the machinery and equipment has been put in
place will exceed $15,000,000. The need for this expansion is due to several
factors, the most significant of which are the production requirements of the
plant's major customer, The Boeing Airplane Company. Sales to Boeing are
expected to more than double in the next few years as a result of increases in
Boeing's production rates. The products covered by new contracts with Boeing are
the trailing edge flap transmissions for the 757 commercial transport, the
trailing edge flap rotary actuators for the 767 airliners and trailing edge flap
transmissions for the new Boeing 737-700 aircraft. In addition to the increased
Boeing requirements the growth that has occurred in the overhaul and repair
business performed at that location has created additional capacity demands.
6 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
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REVIEW OF OPERATIONS
--------------------
The Company had identified the overhaul and repair business as an area in
which it wanted to expand its involvement. It did so in 1996 with the
acquisition from Aviall, Inc. of its component overhaul facility located in
Miami, Florida. This was an addition to the overhaul operations Curtiss-Wright
already had in place in Shelby and an 80%-owned joint venture located in Karup,
Denmark, which opened in 1995. In 1997, we plan to establish a location in the
Pacific Rim to better support the customer base located in that growing market.
Our participation in the overhaul and repair sector has grown from minor amounts
six years ago to sales of approximately $27,000,000 in 1996. We now have the
capabilities to repair and overhaul more than 6,500 types of hydraulic,
pneumatic, electrical and electronic aircraft accessories. Curtiss-Wright has
moved beyond merely servicing the components it manufactures as an OEM supplier.
We can fulfill the desire of an increasing number of airlines to have suppliers
provide a broad range of overhaul and repair services, regardless of the
original source of such accessories and components.
Curtiss-Wright's involvement with military aerospace programs is focused on
the development and testing phases of three projects. The programs to which we
will be supplying actuation and control equipment are the F-22, V-22 and F/A-18
E/F aircraft. The V-22 program is to enter low rate production levels in 1997
with the other two projects scheduled for 1999. If these programs reach
currently projected build rates, sales in the military sector will exceed that
volume which we have historically realized for our actuation and control
equipment.
Metal Treatment Services
Curtiss-Wright's metal treatment services (shot-peening and heat-treating)
produced profitable growth in 1996. Its facilities operate in North America and
Western Europe. In addition to the new shot-peening facilities referred to in
the Letter to Stockholders, the Company has relocated our shot-peening operation
in Charlotte, North Carolina to a larger facility to service the expanding
market in the Carolinas.
We also plan to expand from our current base of three heat-treating
operations by acquisition of other established facilities. The heat-treating
industry is currently going through a consolidation process and we are actively
seeking to expand our operations geographically to establish a network which can
effectively compete nationally as does our shot-peening business which has 21
facilities in North America. Through operations in Columbus, Ohio, Wichita,
Kansas and Lafayette, Louisiana, Curtiss-Wright's heat treating business
addresses automobile, agricultural, construction, oil and gas, aircraft and
other industries. This business has grown by more than a third in the last four
years. Curtiss-Wright's shot-peening business has also recorded substantial
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 7
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Page 76
growth in sales over the period. It primarily services aerospace,
transportation, automobile and general industrial markets. It is supplemented by
an operation which is engaged in the business of the precision stamping and
finishing of high strength steel reed valves used by manufacturers of products
such as refrigerators, air compressors and small engines.
It should be noted that the significant growth that we have achieved in our
metal-treating businesses has more than met our criteria for profitability.
Curtiss-Wright continues to see global opportunities for expansion of its
shot-peening and heat-treating operations. The opportunities will be realized
from both the start-up of new facilities and the acquisition of established
operations. Both of these alternatives are currently being actively pursued.
Valves
In our valve business the Company has been able to supplant both military and
commercial competitors through technological innovations, accelerated deliveries
and improved quality.
An objective of the Company has been to become the dominant valve supplier
for the U.S. Naval Nuclear Program. This position was further solidified in 1996
with the receipt of contracts to supply valves beyond those we have
traditionally supplied to the Navy. It is anticipated that 30% of our sales to
the Navy will be composed of products for applications that Curtiss-Wright has
not previously provided. The Company is also working with the Navy in the
redesign of nuclear valves and the utilization of new materials to better deal
with the hazardous environment to which they are exposed. While the shipbuilding
rates for nuclear submarines and aircraft carriers are expected to continue at
the current reduced levels, it still will provide an adequate core business base
for us.
The second major market for our valves is the nuclear utility industry.
Domestically, activity is limited to replacement valves, components, repair and
service. There are, however, active construction programs for new nuclear plants
in Korea, Taiwan and China. Curtiss-Wright has been building relationships in
Korea and Taiwan and continues to participate in projects underway in those
countries. Activities are now being conducted to establish a distribution system
or other teaming arrangements to address the aftermarket which exists in Europe.
8 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
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AT A GLANCE
-----------
- --------------------------------------------------------------------------------
Aerospace & Marine
Control and Actuation Components and Systems
Shot-peening and Peen-forming Services
Aerospace Overhaul Services
Military Nuclear / Non-nuclear Valves (globe, gate, control, safety, solenoid
and relief)
U.S. Government Agencies
Foreign Governments
Commercial Airlines / Military / General Aviation
Aerospace Manufacturers
Helicopter Manufacturers
Missile Manufacturers
U.S. Navy Propulsion Systems
U.S. Navy Shipbuilding
- --------------------------------------------------------------------------------
Industrial
Shot-peening and Heat-treating Services
Compressor Valve Reeds
Commercial Nuclear / Non-nuclear Valves (globe, gate, control, safety,
solenoid and relief)
Rescue Tools
Metal Working Industries
Oil / Petrochemical / Chemical Construction
Oil and Gas Drilling / Exploration
Power Generation
Nuclear and Fossil Fuel Power Plants
Agricultural Equipment
Automotive and Truck Manufacturers
Rescue Tool Industry
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] Curtiss-Wright's Flight Systems was one of five suppliers to
receive Boeing's 1996 President's Award for Excellence as a
result of their superior service, outstanding products and
innovative ideas.
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 9
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EXPANDING OUR MARKETS
- ---------------------
[GRAPH OMITTED]
The chart illustrates historical
shipments and the projected
increase in delivery of commercial
aircraft transports.
Source: Lehman Brothers
- --------------------------------------------------------------------------------
AEROSPACE
Commercial Aerospace
Curtiss-Wright provides products or services to Boeing, McDonnell Douglas and
Airbus, the three largest commercial airframe assemblers. We participate on
every model they currently have in production. This industry sector will be
experiencing significantly higher aircraft build rates in the coming years.
Curtiss-Wright is looking forward to its involvement in this ramp-up. This
increased activity for the industry, and additional work on the Boeing 757, 767
and redesigned 737 models has led to the expansion of our Shelby, North
Carolina, plant. Additions there have doubled the capacity of that facility.
Military Aerospace
Curtiss-Wright's concentration is on the development and testing of actuation
and control equipment for the F-22, V-22 and F/A18 E/F aircraft programs. Our
customers include Lockheed-Martin, Boeing, Textron and McDonnell Douglas. By
positioning itself on these major projects, the Company expects its long-term
future performance in the military sector to exceed that which it has enjoyed in
its recent history.
10 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
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MARKETS
-------
[GRAPH OMITTED]
AEROSPACE
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 11
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[GRAPHIC OMITTED] Pictured are actuation and control components similar to what
will be used on the F-22, the next generation air superiority
fighter.
Overhaul & Repair
The acquisition of the Miami overhaul facility in 1996 expanded Curtiss-Wright's
base in the overhaul and repair market. The Company now has the capabilities to
overhaul Boeing, McDonnell Douglas and Airbus aircraft components. The
acquisition, in conjunction with the establishment of a joint venture in Denmark
in 1995, expands Curtiss-Wright's global capabilities. Airlines, freight
carriers and other customers which are served by our overhaul operations
numbered approximately 385 in 1996. They are worldwide and provide opportunities
on which the Company has only started to capitalize.
[GRAPHIC OMITTED]
12 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
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MARKETS
-------
[GRAPHIC OMITTED]
INDUSTRIAL
Our participation in the industrial market provides diversification beyond the
aerospace/defense markets. The Company intends to increase activity in this area
through selective acquisitions and applications of existing technology to
products that will provide competitive advantages. An example of this is the
aerospace gear technology utilized in the development of the "Power Hawk" rescue
tool. Other industrial sectors in which Curtiss-Wright participates include:
agricultural equipment, electrical power plants, petrochemical, and oil and gas
exploration. The Company continually identifies applications for shot peening in
the non-aerospace metal working markets and expands its activities in those
areas.
[GRAPHIC OMITTED] Curtiss-Wright's aerospace gear technology was applied to
the "Power Hawk" rescue tool used for extrication of auto
accident victims.
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 13
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EXPANDING OUR MARKETS
- ---------------------
[GRAPHIC OMITTED]
Our shot-peening technology is applied to a wide assortment of component parts
to increase fatigue strength.
- --------------------------------------------------------------------------------
MARINE
Curtiss-Wright has been a supplier of valves to the United States Navy nuclear
submarine and aircraft carrier fleets since their inception. In the 90's,
submarine build rates have been reduced significantly as a result of budget
considerations and reduced threats of large scale conflicts. While procurement
levels will not equal those of the prior years, a slight increase is expected
for the new Centurion Class boat to maintain requirements at a redefined lower
level and retain submarine production capabilities. We have been able to capture
additional valve applications for both submarine and aircraft carrier
requirements and have established a sufficient base of business to profitably
participate in the marine market.
AUTOMOTIVE
Curtiss-Wright has increased its participation in the automotive industry in
recent years. In 1992 sales of services into this sector approximated
$4,000,000. In 1996 revenues exceeded $15,000,000 with our customer base
including (either directly or through intermediate suppliers) every automotive
manufacturing company operating in North America and Western Europe. The Company
has expanded our valve manufacturing capabilities as a result of improving our
position as a supplier of flapper valves for compressors used in
air-conditioning systems.
14 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
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MARKETS
-------
[GRAPHIC OMITTED]
INDUSTRIAL, MARINE AND AUTOMOTIVE
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 15
<PAGE>
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- --------------------------------------------------------------------------------
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 1996 totaling
$16.1 million or $3.17 per share, a decline of 11% when compared with
consolidated net earnings of 1995, which totaled $18.2 million or $3.59 per
share. Consolidated net earnings for 1995 were 6% lower than consolidated net
earnings for 1994 of $19.3 million, or $3.81 per share.
The decline in net earnings for the Corporation primarily reflects lower levels
of non-operating revenue and a high level of environmental related expenditures
in 1996. In the aggregate, pre-tax earnings from the Corporation's business
segments declined 2% and 13%, respectively, when comparing 1996 to 1995, and
1995 to 1994. Losses on current development contracts, caused by the
continuation of significant engineering cost overruns associated with military
aerospace development contracts, substantially offset improvements in sales and
earnings of metal treating operations in 1996. Sales and earnings for the
current year also benefitted from the acquisition of the Miami overhaul facility
in May 1996, as well as the overall growth of our component repair and overhaul
business, as discussed further under the Segment Performance section of this
report.
Sales for the Corporation increased to $170.5 million in 1996, a 10% increase
over sales totals for 1995. When comparing 1996 with the prior year, Aerospace &
Marine segment sales increased 19%, largely due to the acquisition of the
Accessory Services business in Miami, Florida and improvements in metal treating
operations, while sales for the Industrial segment fell 2%, reflecting the
divestiture of the Corporation's Buffalo Extrusion Facility in June 1995. Sales
of $154.4 million in 1995 were only slightly below sales of $155.0 million for
1994, as an 8% decline in sales for the Aerospace & Marine segment was virtually
offset by a 13% improvement in Industrial segment sales, comparing 1995 with the
prior year.
New orders received in 1996 increased 14% to $171.6 million, from orders of
$150.9 million received in 1995. Increased orders generally reflect improvements
in the Corporation's component overhaul and metal treating businesses. New
orders received in 1995 were 23% above 1994 orders. Orders for 1995 reflected
contracts for actuation and control systems on three new Boeing commercial
aircraft, while 1994 orders were hindered by a general decline in the
availability of new aerospace and military shipbuilding production programs
which largely accounted for an 11% decline in the total backlog of unshipped
orders at December 31, 1995, as compared with December 31, 1994 of $116.6
million. Backlog levels at December 31, 1996 have improved to $109.3 million. It
should be noted that metal treating and overhaul services, which account for 62%
and 53% of sales for 1996 and 1995, respectively, are sold with very modest lead
times. Accordingly, backlog for these product lines is less of an indication of
future sales activity than the Corporation's backlog of long-term Aerospace &
Marine contracts.
16 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Segment Performance
Aerospace & Marine
The Corporation's Aerospace & Marine segment posted substantially improved sales
for 1996, totaling $109.9 million compared with $92.4 million for 1995. The
improvements in 1996 largely reflect the growth of the Corporation's component
overhaul and repair business which was augmented by the acquisition of Accessory
Services. The Corporation's overhaul operations accounted for 24% of the
Aerospace & Marine segment sales in 1996, compared with 11% in 1995 and 8% in
1994. Sales of metal treating services also showed large improvements over prior
year levels, particularly within foreign aerospace markets. The Aerospace &
Marine segment's results for 1996, as compared with 1995, included higher
military sales of actuation components for the Corporation's F-16 program in
support of foreign military sales and the initial deliveries under a related Air
Force retrofit contract. Sales levels for commercial actuation and control
programs also improved from 1995 under both production and development programs
for every Boeing jetliner currently in production. The Corporation completed the
design phase of the Lockheed/Martin F-22 development program and began to
deliver development and test hardware, and to conduct tests of that hardware,
resulting in a shortfall in sales recorded in 1996 as compared with 1995.
Operating income for the Aerospace & Marine segment improved 7% in 1996,
totaling $12.5 million, compared with $11.7 million in 1995. Improvements in
operating income were generated by the Accessory Services acquisition and by
higher sales of metal treating and component overhaul services, when comparing
1996 with the prior year. Operating income for 1996 was partially offset by cost
overruns associated with its military actuation and control developmental
contracts relating to the F-22, the V-22 Osprey and the F/A-18 E/F aircraft.
Product and engineering costs in excess of contract price under these firm fixed
price contracts totaled $3.6 million in 1996, compared with $3.3 million in 1995
and $.2 million in 1994. In addition, the Corporation is experiencing higher
than anticipated learning and other costs during the start-up phase of its new
commercial actuation and control production programs.
The Corporation's Aerospace & Marine segment had posted sales of $92.4 million
in 1995, compared with sales of $100.3 million for 1994. Sales reductions
reflect the absence in 1995 of significant actuation production programs
primarily for military customers that characterized earlier years, specifically
sales of actuation and control systems for the F-16 program, a retrofit portion
of which was completed late in 1994. Sales of metal treating services to
aerospace customers also declined, as did the volume of shipments for military
valve products, when comparing 1995 with the prior year. The Aerospace & Marine
segment showed substantial improvements during the second half of 1995,
primarily from the growth of our commercial domestic component overhaul
services. Overhaul service sales were also strengthened by the addition of
Curtiss-Wright Flight Systems/Europe, which began its operations during the
second quarter of 1995. A decline in volume for military valve products, when
comparing 1995 with 1994, was partially offset by revenue from the settlement of
a termination claim in 1995, relating to part of a military valve actuation
contract.
Operating income for the Aerospace & Marine segment totaled $11.7 million in
1995, 38% below operating income of $18.7 million for 1994. In addition to the
impact of lower sales levels, operating income for 1995 was further impaired by
significant engineering cost overruns on the aforementioned military actuation
and control developmental contracts and start-up costs at the Corporation's
European overhaul facility.
New orders received by the Aerospace & Marine segment totaled $112.4 million for
1996, 30% above orders received in 1995. During 1996, the Corporation received
$9.2 million in follow-on orders from Boeing for actuation components on its
long-standing 737-400 program. These orders are scheduled to ship throughout
1997 and into the first quarter of 1998. In addition, the increase in new orders
received in 1996 reflects higher levels of overhaul services, particularly as a
result of the Accessory Services acquisition, as well as an increase in F-16
foreign military orders, increased sales of metal treating services and an
increase in orders for military valve products for use by the U.S. Nuclear Navy.
In 1995, the Corporation had received significant orders from The Boeing
Commercial Airplane Group for actuation equipment for the new 737-700 and the
757 and 767 airliners.
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 17
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Industrial
The Corporation's Industrial segment posted sales of $60.6 million for 1996,
slightly below sales of $62.0 million posted in 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 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 primarily reflect a higher volume of metal treating services for its oil
tool, agriculture, petrochemical and other customers in 1996. The Corporation
also began to receive sales in 1996 for its internally developed rescue tool,
the "Power Hawk." 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.
Operating income for 1996 declined 10% from 1995 levels, largely due to
development costs associated with the Corporation's new rescue tool product
line. Operating income from metal treating services also declined in 1996 as a
result of lower 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.
The Corporation's Industrial segment had shown substantial improvements in both
sales and operating income when comparing 1995 with 1994. Sales for the
Industrial segment totaled $62.0 million for 1995, compared with sales of $54.7
million for 1994. The segment benefited from substantial increases in sales of
shot-peening services throughout North America and Europe and in all sectors of
its industrial markets during 1995. Sales of the segment increased 13% despite
the absence of sales in the second half of the year from the Buffalo Extrusion
Facility. Excluding results generated by the Buffalo facility from both years,
sales of this segment for 1995 were 24% higher than those of 1994. Sales of
commercial valve products also improved for 1995, as compared with 1994 sales,
primarily due to an increase in shipments for foreign nuclear construction.
Operating income for the Industrial segment totaled $11.5 million for 1995, an
improvement of 47% from operating income of $7.8 million for 1994. Improvements
in the Industrial segment's operating income are largely reflective of higher
sales of shot-peening and heat-treating services to automotive and other
customers. Despite higher sales, operating income from commercial valve products
for 1995 was lower than that of the prior year, due to cost overruns on foreign
nuclear contracts and lower sales of commercial valve spare parts.
Corporate and Other Expenses
The Corporation recorded a significantly higher level of costs associated with
its environmental obligations in 1996. Environmental expenditures in excess of
amounts previously reserved, inclusive of remediation efforts and administrative
costs, totaled $2.4 million in 1996, compared with $.8 million in both 1995 and
1994. The increase in expenditures relates primarily to legal services provided
for the defense or pursuit of environmental and related claims. The Corporation
also incurred higher expenses related to its strategic endeavors when comparing
1996 with the prior year.
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 $3.9 million in 1996, as compared with $3.0 million
in 1995 and $4.0 million recognized in 1994. The amount recorded reflects the
extent to which this income exceeds the net cost of providing benefits in the
same year, as detailed in Note 13 to consolidated financial statements.
18 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Other Revenue and Costs
The Corporation recorded other non-operating net revenue for 1996 aggregating
$5.3 million, compared with $7.4 million for 1995. The decline in other revenue
largely reflects reduced overall investment income as a result of lower levels
of available cash and short-term investments due to the Accessory Services
acquisition. Investment income totaled $3.0 million for 1996, a 28% decline from
investment income of $4.1 million recorded in 1995. The Corporation also
recorded losses on write-offs of fixed assets in 1996, compared with
non-recurring gains from sales of machinery and equipment recorded in the prior
year, adding to the decline in other revenue when comparing 1996 with 1995.
Non-operating net revenue for 1995 had increased 41% over the $5.3 million
recorded in 1994 attributable, in part, to the aforementioned net gains on sales
of real estate and equipment, as compared with net losses of $.9 million
recorded in 1994. Revenue generated by the Corporation's short-term investments
increased by $1.1 million, or 36% for 1995, when compared to 1994.
CHANGES IN FINANCIAL CONDITION
Liquidity and Capital Resources
The Corporation's working capital was $115.4 million at December 31, 1996, a 4%
decrease from working capital at December 31, 1995 of $120.6 million. The ratio
of current assets to current liabilities was 3.7 to 1 at December 31, 1996,
compared with a current ratio of 4.6 to 1 at December 31, 1995. The decline in
working capital and its associated ratio primarily reflect the 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 $62.0 million
at December 31, a decline of $16.8 million from balances at the prior year-end,
again, primarily reflecting the acquisition cost of the Accessory Services
business.
Inventories and net billed receivables at December 31, 1996 have increased
substantially compared with their levels at December 31, 1995, primarily
reflecting an $8.3 million increase in inventory due to the acquisition of
Accessory Services. Current inventory levels also reflect an increase associated
with aerospace development contracts, inventory needed to support the ramp-up of
production on the new actuation production programs for Boeing, as well as
inventory to support the growth in overhaul services.
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 $7.8 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 at December 31,
1996, was $30.3 million. There were no cash borrowings made on the credit
agreements during 1996 or 1995.
Capital expenditures were $14.2 million in 1996, more than double those of 1995
and $9.5 million more than capital expenditures in 1994. Actual expenditures
related primarily to the building expansion of our Shelby, North Carolina
facility, which was necessary to meet the demands of the new Boeing contracts
and the growth experienced in overhaul services. Aerospace-related expenditures
accounted for $9.8 million, or approximately 69%, of the total spent in 1996.
The Corporation also increased its fixed asset base through the acquisition of
Accessory Services in 1996. A projected increase in expenditures for 1997
primarily represents expected machinery and equipment purchases within the
Aerospace & Marine segment, including the expansion of metal treating operations
in Europe. At December 31, 1996, the Corporation had committed approximately
$3.9 million for future expenditures, primarily for machinery and equipment to
be used in its operating segments.
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.
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 19
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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, cash flows and stockholders' equity present
fairly, in all material respects, the financial position of Curtiss-Wright
Corporation and its subsidiaries at December 31, 1996 and 1995, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1996, 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, 1997
20 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
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CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
(In thousands except per share data) For the years ended December 31, 1996 1995(1) 1994(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 170,536 $154,446 $ 155,001
Cost of sales 117,067 104,178 105,128
- ---------------------------------------------------------------------------------------------------------------------
Gross margin 53,469 50,268 49,873
Research and development costs 997 1,180 1,196
Selling expenses 6,337 6,092 5,368
General and administrative expenses 24,556 21,548 18,666
Environmental remediation and administrative expenses 2,397 835 753
- ---------------------------------------------------------------------------------------------------------------------
Operating income 19,182 20,613 23,890
Investment income, net 2,968 4,147 3,040
Rental income, net 2,816 2,862 2,811
Other income (expense), net (450) 419 (583)
Interest expense 387 549 401
- ---------------------------------------------------------------------------------------------------------------------
Earnings before income taxes and cumulative effect of change in accounting principle 24,129 27,492 28,757
Provision for income taxes 8,020 9,323 9,210
- ---------------------------------------------------------------------------------------------------------------------
Earnings before cumulative effect of change in accounting principle 16,109 18,169 19,547
Cumulative effect of change in accounting principle (net of applicable taxes) (244)
- ---------------------------------------------------------------------------------------------------------------------
Net earnings $ 16,109 $ 18,169 $ 19,303
Net Earnings per Common Share:
Earnings before cumulative effect of change in accounting principle $ 3.17 $ 3.59 $ 3.86
Cumulative effect of change in accounting principle (net of applicable taxes) (.05)
- ---------------------------------------------------------------------------------------------------------------------
Net earnings $ 3.17 $ 3.59 $ 3.81
=====================================================================================================================
</TABLE>
See notes to consolidated financial statements
(1) Prior year information has been restated to conform to current
presentation.
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 21
<PAGE>
Page 90
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(In thousands) December 31, 1996 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Current assets:
Cash and cash equivalents $ 6,317 $ 8,865
Short-term investments 55,674 69,898
Receivables, net 37,708 36,277
Deferred tax assets 8,769 7,149
Inventories 46,987 29,111
Other current assets 2,378 2,325
- -------------------------------------------------------------------------------------------------------------
Total current assets 157,833 153,625
- -------------------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land 4,613 4,504
Buildings and improvements 84,762 79,352
Machinery, equipment and other 120,855 114,195
- -------------------------------------------------------------------------------------------------------------
210,230 198,051
Less, accumulated depreciation 146,268 141,782
- -------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net 63,962 56,269
Prepaid pension costs 35,016 31,128
Other assets 10,353 5,179
- -------------------------------------------------------------------------------------------------------------
Total assets $ 267,164 $ 246,201
=============================================================================================================
Liabilities:
Current liabilities:
Accounts payable $ 13,144 $ 6,286
Accrued expenses 12,062 10,958
Income taxes payable 3,189 2,000
Other current liabilities 14,021 13,810
- -------------------------------------------------------------------------------------------------------------
Total current liabilities 42,416 33,054
- -------------------------------------------------------------------------------------------------------------
Long-term debt 10,347 10,347
Deferred income taxes 8,686 7,447
Accrued postretirement benefit costs 10,302 10,488
Other liabilities 12,050 12,686
- -------------------------------------------------------------------------------------------------------------
Total liabilities 83,801 74,022
- -------------------------------------------------------------------------------------------------------------
Contingencies and Commitments (Notes 9 and 14)
Stockholders' Equity:
Preferred stock, $1 par value, 650,000 authorized, none issued
Common stock, $1 par value, 12,500,000 authorized, 10,000,000 shares issued
(outstanding shares 5,081,103 for 1996 and 5,077,823 for 1995) 10,000 10,000
Capital surplus 57,127 57,141
Retained earnings 299,740 288,710
Unearned portion of restricted stock (608) (780)
Equity adjustments from foreign currency translation (1,506) (1,330)
- -------------------------------------------------------------------------------------------------------------
364,753 353,741
Less, treasury stock at cost (4,918,897 shares for 1996 and 4,922,177 shares for 1995) 181,390 181,562
- -------------------------------------------------------------------------------------------------------------
Total stockholders' equity 183,363 172,179
- -------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 267,164 $ 246,201
=============================================================================================================
</TABLE>
See notes to consolidated financial statements.
22 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
<PAGE>
Page 91
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(In thousands) For the years ended December 31, 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 16,109 $ 18,169 $ 19,303
- ----------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net earnings to net cash provided by operating activities:
Cumulative effect of change in accounting principle 244
Depreciation and amortization 8,946 9,512 10,883
Net (gains) losses on sales and disposals of real estate and equipment 473 (219) 855
Net gains on short-term investments (1,014) (1,134) (1,013)
Deferred taxes (168) 2,056 901
Changes in operating assets and liabilities, net of business acquired:
Proceeds from sales of trading securities 333,577 270,923 216,992
Purchases of trading securities (323,172) (271,833) (231,145)
(Increase) decrease in receivables 5,500 (2,093) (10,135)
Increase in inventories (12,057) (6,533) (2,400)
Increase (decrease) in progress payments (2,622) 594 4,967
Increase in accounts payable and accrued expenses 6,810 1,994 260
Increase (decrease) in income taxes payable 1,189 (105) 2,360
Increase in other assets (4,705) (2,380) (2,922)
Increase (decrease) in other liabilities 4,222 (393) (5,562)
Litigation settlement (8,880)
Other, net 143 (1,130) (2,321)
- ----------------------------------------------------------------------------------------------------------------------
Total adjustments 17,122 (741) (26,916)
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) operating activities 33,231 17,428 (7,613)
- ----------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sales and disposals of real estate and equipment 96 3,290 1,326
Additions to property, plant and equipment (14,156) (6,985) (4,609)
Acquisition of Accessory Services business (16,640)
- ----------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (30,700) (3,695) (3,283)
- ----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments on long-term debt (4,054) (149)
Dividends paid (5,079) (5,059) (5,059)
- ----------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities (5,079) (9,113) (5,208)
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (2,548) 4,620 (16,104)
Cash and cash equivalents at beginning of year 8,865 4,245 20,349
- ----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 6,317 $ 8,865 $ 4,245
======================================================================================================================
</TABLE>
See notes to consolidated financial statements.
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 23
<PAGE>
Page 92
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Equity
Unearned Adjustments
Portion of from
Restricted Foreign
Common Capital Retained Stock Currency Treasury
(In thousands) Stock Surplus Earnings Awards Translation Stock
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1993 $ 10,000 $ 57,172 $ 261,356 $ (87) $(1,862) $ 182,348
- ----------------------------------------------------------------------------------------------------------------------------
Net earnings 19,303
Common dividends (5,059)
Amortization of earned portion of restricted stock (33) 87
Translation adjustments, net 240
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 1994 10,000 57,139 275,600 -- (1,622) 182,348
- ----------------------------------------------------------------------------------------------------------------------------
Net earnings 18,169
Common dividends (5,059)
Exchange of common shares for the exercise of stock options 71
Stock options exercised (31) (110)
Stock awards issued 33 (780) (747)
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 (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
============================================================================================================================
</TABLE>
See notes to consolidated financial statements.
24 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
<PAGE>
Page 93
- --------------------------------------------------------------------------------
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Curtiss-Wright Corporation is a diversified multi-national manufacturing and
service concern which designs, manufactures and overhauls precision components
and systems and provides highly engineered services to aerospace, automotive,
shipbuilding, oil, petrochemical, agricultural equipment, power generation,
metal working and fire and rescue industries.
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
Curtiss-Wright Corporation and all majority owned subsidiaries (the
Corporation), after elimination of all significant inter-company 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 military
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.
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, 1996 and 1995. 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, as defined under Statement of Financial Accounting
Standards No. 119, "Disclosures about Derivative Financial Instruments and Fair
Value of Financial Instruments," consisting of forward currency exchange
contracts and 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. Such amounts, if quantified, reflect
the Corporation's estimate
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 25
<PAGE>
Page 94
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. Earnings per Share
Earnings per share are computed by dividing the applicable amount of earnings by
the weighted average number of common shares outstanding during each year
(5,079,000 shares for 1996, 5,062,000 shares for 1995 and 5,061,000 shares for
1994). The Corporation has outstanding stock options for each of the three years
presented, as reported in Note 10. The assumed exercise of these stock options
had an immaterial dilutive effect on earnings per share for each year presented.
J. Accounting for Stock-Based Compensation
The Corporation has elected to continue following Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25), in
accounting for its employee stock options, rather than adopt the alternative
method of accounting provided under Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123). Under APB 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 and
a prior Stock Option Plan is provided in Note 10.
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
Net earnings per common share 3.24
- --------------------------------------------------------------------------------
3. Short-Term Investments
The composition of short-term investments at December 31 is as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
- ----------------------------------------------------------------------------------
Cost Fair Value Cost Fair Value
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money market preferred stock $ 19,000 $ 19,000 $ 41,999 $ 41,999
Tax-exempt money market preferred stock 25,322 25,322 12,874 12,874
Common and preferred stocks 1,135 1,167 1,135 1,064
Utility common stocks purchased 22,678 22,539 22,694 22,452
Utility common stocks sold short (12,250) (12,354) (11,599) (11,985)
Treasury bills 3,494 3,494
- ----------------------------------------------------------------------------------
Total short-term investments $ 55,885 $ 55,674 $ 70,597 $ 69,898
==================================================================================
</TABLE>
Investment income for the years ended December 31 consists of:
(In thousands) 1996 1995 1994
- -------------------------------------------------------------------------------
Net realized gains on the sale of trading securities $ 527 $ 1,282 $ 1,563
Interest and dividend income, net 1,954 3,014 2,027
Net unrealized holding gains (losses) 487 (149) (550)
- -------------------------------------------------------------------------------
Investment income, net $2,968 $ 4,147 $ 3,040
===============================================================================
The Corporation had no forward currency exchange contracts outstanding at
December 31, 1996 and one contract outstanding at December 31, 1995 which
expired in August 1996. The forward currency exchange contract was used to hedge
the Corporation's exposure to foreign currency fluctuations on short-term
Canadian securities. The carrying values of the asset and related forward
contract were $3,377,000 and $3,613,000, respectively, at December 31, 1995.
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.
26 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
<PAGE>
Page 95
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 5% of the total outstanding billed
receivables at December 31, 1996 and 4% of the total outstanding billed
receivables at December 31, 1995. The Corporation performs ongoing credit
evaluations of its customers and establishes appropriate allowances for doubtful
accounts based upon factors surrounding the credit risk of specific customers,
historical trends and other information.
The composition of receivables at December 31 is as follows:
(In thousands) 1996 1995
- --------------------------------------------------------------------------------
Billed Receivables:
Trade and other receivables $37,253 $32,236
Less: progress payments applied 5,701 4,339
Allowance for doubtful accounts 1,557 760
- --------------------------------------------------------------------------------
Net billed receivables 29,995 27,137
- --------------------------------------------------------------------------------
Unbilled Receivables:
Recoverable costs and estimated earnings not billed 19,761 25,128
Less: progress payments applied 12,048 15,988
- --------------------------------------------------------------------------------
Net unbilled receivables 7,713 9,140
- --------------------------------------------------------------------------------
Total receivables, net $37,708 $36,277
================================================================================
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) 1996 1995
- --------------------------------------------------------------------------------
Raw material $ 4,653 $ 3,757
Work-in-process 25,128 14,489
Finished goods/component parts 15,817 4,353
Inventoried costs related to U.S. Government and
other long-term contracts 6,307 11,474
- --------------------------------------------------------------------------------
Gross inventories 51,905 34,073
Less: progress payments applied, principally related
to long-term contracts 4,918 4,962
- --------------------------------------------------------------------------------
Net inventories $46,987 $29,111
================================================================================
6. Accrued Expenses and Other Current Liabilities
Accrued expenses at December 31 consist of the following:
(In thousands) 1996 1995
- --------------------------------------------------------------------------------
Accrued compensation $ 4,866 $ 3,832
Accrued taxes other than income taxes 1,478 1,355
Accrued insurance 1,462 2,177
All other 4,256 3,594
- --------------------------------------------------------------------------------
Total accrued expenses $12,062 $10,958
================================================================================
Other current liabilities at December 31 consist of the following:
(In thousands) 1996 1995
- --------------------------------------------------------------------------------
Current portion of environmental reserves $ 5,553 $ 6,236
Anticipated losses on long-term contracts 3,078 905
Litigation reserves 3,101 3,101
All other 2,289 3,568
- --------------------------------------------------------------------------------
Total other current liabilities $14,021 $13,810
================================================================================
7. Income Taxes
The Corporation had available at December 31, 1996, a capital loss carryforward
of $3,252,000 that will expire on December 31, 1997. A valuation allowance was
established to offset this deferred tax asset, based on management's assessment
of the likely realization of future capital gain income.
The net change in the valuation allowance for deferred tax assets was an
increase of $118,000 in 1996 as a result of an increase in the capital loss
carryforward of $289,000 offset by unrealized gains on securities of $171,000.
During 1995, the valuation allowance decreased by $4,366,000 due to the
expiration of a capital loss carryforward of $3,058,000, realized net capital
gains of $1,360,000 offset by $52,000 of net unrealized losses on securities.
Earnings before income taxes and the cumulative effect of a change in accounting
principle for the years ended December 31 are:
(In thousands) 1996 1995 1994
- --------------------------------------------------------------------------------
Domestic $15,195 $21,861 $24,009
Foreign 8,934 5,631 4,748
- --------------------------------------------------------------------------------
Total $24,129 $27,492 $28,757
================================================================================
The provisions for taxes on earnings before the cumulative effect of a change in
accounting principle for the years ended December 31 consist of:
(In thousands) 1996 1995 1994
- -------------------------------------------------------------------------------
Federal income taxes currently payable $ 4,041 $ 3,715 $ 4,755
Foreign income taxes currently payable 3,388 1,963 1,991
State and local income taxes currently payable 995 1,311 668
Deferred income taxes (233) 2,282 1,603
Federal income tax on net capital gains 184 698 594
Utilization of capital loss carryforwards (184) (698) (594)
Valuation allowance (171) 52 193
- -------------------------------------------------------------------------------
Provision for income tax $ 8,020 $ 9,323 $ 9,210
===============================================================================
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 27
<PAGE>
Page 96
The effective tax rate varies from the U.S. Federal statutory tax rate for the
years ended December 31 principally due to the following:
1996 1995 1994
- -------------------------------------------------------------------------------
U.S. Federal statutory tax rate 35.0% 35.0% 35.0%
Add (deduct):
Utilization of capital loss carryforward (.8) (2.5) (2.1)
Dividends received deduction and tax exempt
dividends (2.3) (2.5) (1.9)
State and local taxes 1.7 4.7 2.3
Valuation allowance (.7) .2 .7
All other .3 (1.0) (2.0)
- -------------------------------------------------------------------------------
Effective tax rate 33.2% 33.9% 32.0%
===============================================================================
The components of the Corporation's deferred tax assets and liabilities at
December 31 are as follows:
(In thousands) 1996 1995
- -------------------------------------------------------------------------------
Deferred tax assets:
Environmental clean-up $ 6,142 $ 6,453
Postretirement/employment benefits 3,737 3,801
Inventories 2,661 2,195
Legal matters 1,181 1,162
Net capital loss carryforwards 1,212 1,094
Other 3,941 3,370
- -------------------------------------------------------------------------------
Total deferred tax assets 18,874 18,075
- -------------------------------------------------------------------------------
Deferred tax liabilities:
Pension 12,247 10,888
Depreciation 4,425 5,041
Other 907 1,350
- -------------------------------------------------------------------------------
Total deferred tax liabilities 17,579 17,279
- -------------------------------------------------------------------------------
Deferred tax asset valuation allowance (1,212) (1,094)
- -------------------------------------------------------------------------------
Net deferred tax liabilities/(assets) $ (83) $ 298
===============================================================================
Deferred tax assets and liabilities are reflected on the Corporation's
consolidated balance sheets at December 31 as follows:
(In thousands) 1996 1995
- -------------------------------------------------------------------------------
Current deferred tax assets $(8,769) $(7,149)
Non-current deferred tax liabilities 8,686 7,447
- -------------------------------------------------------------------------------
Net deferred tax liabilities/(assets) $ (83) $ 298
===============================================================================
Income tax payments of $8,553,000 were made in 1996, $8,114,000 in 1995, and
$7,586,000 in 1994.
8. Long-Term Debt
Long-term debt at December 31 consists of the following:
(In thousands) 1996 1995
- --------------------------------------------------------------------------------
Industrial Revenue Bonds due from 2001 to 2007
Weighted average interest rate is 3.70% and 3.94% per
annum for 1996 and 1995, respectively $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 $383,000, $684,000 and $294,000 were made in
1996, 1995 and 1994, 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, 1996 was $7,753,000.
The commitments made under the Revolving Credit Agreement expire October 29,
1999, 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, 1996. The Short-Term Credit Agreement expires
October 25, 1997. 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, 1996 or
December 31, 1995. 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 $34,052,000 were available for cash dividends
and stock repurchases at December 31, 1996.
At December 31, 1996, 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 $9,300,000.
The Corporation has various other letters of credit outside the Revolving Credit
Agreement totaling approximately $608,000.
28 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
<PAGE>
Page 97
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 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 1995 and 1996,
respectively: a risk-free interest rate of 5.8% and 6.6%; an expected volatility
of 33.21% and 24.38%; an expected dividend yield of 2.1% and 2.0%; and a
weighted average expected life of the option of 10 years for both periods.
For purposes of pro forma disclosures, no expense was recognized on the 1996
options due to the timing of the grant. The estimated fair value of the 1995
option grant is 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
year ended December 31, 1996 is as follows:
(In thousands, except per share data) 1996
- --------------------------------------------------------------------------------
Net earnings:
As reported $ 16,109
Pro forma $ 15,870
Net earnings per common share:
As reported $ 3.17
Pro forma $ 3.12
================================================================================
Long-Term Incentive Plan:
Under a Long-Term Incentive Plan approved by stockholders in 1995, 500,000
shares of common stock were reserved in the aggregate for the grant of stock
options, stock appreciation rights, limited stock appreciation rights,
restricted stock awards, performance shares and/or performance units until May
5, 2005. 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 25,000 shares of common stock
subject to the plan may be awarded in any year to any one participant in the
plan.
In December 1996, the Corporation awarded 734,654 performance units under this
plan to certain key employees. The performance units are denominated in dollars
and payable early in the year 2000, contingent upon continued employment and the
satisfaction of company performance objectives keyed to profitable growth over a
period of three years ending on December 31, 1999. The anticipated cost of such
awards will be expensed over the three year period beginning January 1, 1997.
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 to certain
key employees to purchase 34,649 shares of common stock at a price of $50.38 per
share, the market price on the date of the grant. In December 1995, the
Corporation granted non-qualified stock options under this plan to certain key
employees to purchase 32,365 shares of common stock at a price of $48.00 per
share, the market price on the date of the grant. 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 after three years from the date of
grant. Also in 1995, the Corporation awarded 16,180 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 $48.00 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 Option Plan:
The Corporation's 1985 Stock Option Plan, as amended on November 16, 1993,
expired on February 13, 1995. Under this plan, 175,000 shares of common stock
had been reserved in treasury for issuance to key employees. With the expiration
of the plan, the remaining 79,975 shares of common stock are no longer reserved
for issuance.
During 1994, the Corporation granted nonqualified stock options under this plan
to certain key employees to purchase 51,625 shares of common stock at a price of
$36.00 per share, the market price on the date of the grant. The options 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 the grant. No options
were granted in 1995 under this plan prior to its expiration.
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 29
<PAGE>
Page 98
The Corporation issued 2,027 and 2,346 shares of common stock from the exercise
of stock options during 1996 and 1995, respectively. As of December 31, 1996,
options to purchase 153,914 shares of common stock remain unexercised, with
options to purchase 3,885 shares having been forfeited.
Stock Plan for Non-Employee Directors: Under a Stock Plan for Non-Employee
Directors, approved by stockholders in 1996, 8,000 shares of common stock were
reserved until April 12, 2006, for the grant of restricted stock awards and, at
the option of the Directors, for payment of regular stipulated compensation and
meeting fees in equivalent shares. In June 1996, pursuant to the plan 1,806
shares of restricted stock were issued to non-employee directors, at no cost to
the directors. The shares have been valued at a price of $51.56 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, 1996, the Corporation had deferred an additional 238 shares, at an average
market value of $46.40, for its non-employee directors pursuant to election by
directors to receive such shares in lieu of payment for earned compensation
under the plan.
11. Environmental Costs
The Corporation has other non-current liabilities consisting primarily of
environmental obligations which totaled $9,798,000 at December 31, 1996 and
$10,806,000 at December 31, 1995.
In 1996, remediation costs paid for the Corporation's Wood-Ridge, New Jersey,
property totaled $2,453,000. This expense had previously been provided in 1990
as part of the $21,000,000 reserve established to remediate the property. The
Corporation has received approval by the State of New Jersey Department of
Environmental Protection to begin actual remediation of the groundwater and
soil. The approved clean-up methods selected are in various stages of
installation.
During 1996, the Corporation incurred expenses of $2,397,000 relating to the
remediation, engineering and professional services for other environmental
obligations and related litigation matters. In 1995 and 1994, the Corporation
recognized costs of $835,000 and $753,000, respectively, for these purposes.
The Corporation is joined with many other corporations and municipalities as
potentially responsible parties (PRPs) in a number of environmental clean-up
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 environmental problems at the above sites are
related to events which occurred decades ago.
The Corporation believes that the outcome of any of these matters would not have
a materially adverse effect on the Corporation's results of operations or
financial condition.
In 1992 the Corporation initiated a lawsuit against a number of its insurers,
alleging that it is entitled to indemnification with respect to certain of the
environmental liabilities referred to above. Since the liability of the insurers
is contested, the possibility of any financial recovery from the lawsuit has
been disregarded in the calculation of the environmental reserves referred to
above.
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 $660,000, $696,000 and $491,000 in 1996, 1995 and
1994, respectively.
Net expenses for the retiree health-benefit plans for the years ended December
31 included the following components:
(In thousands) 1996 1995 1994
- --------------------------------------------------------------------------------
Service cost--benefits attributed to service
during the period $ 214 $ 180 $328
Interest cost on accumulated postretirement benefits 448 494 589
Net amortization and deferral (187) (292)
- --------------------------------------------------------------------------------
Net periodic postretirement benefit cost $ 475 $ 382 $917
================================================================================
30 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
<PAGE>
Page 99
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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) 1996 1995
- --------------------------------------------------------------------------------
Actuarial present value of benefits:
Retired employees $ 4,165 $ 4,575
Active employees--fully eligible 530 712
Other active employees 1,821 1,869
- --------------------------------------------------------------------------------
Accumulated postretirement benefits 6,516 7,156
Unrecognized net gain from past experience different
from that assumed and from
changes in assumptions 3,340 3,332
Unrecognized prior service costs 446
- --------------------------------------------------------------------------------
Accrued postretirement benefit cost $10,302 $10,488
================================================================================
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:
1996 1995
- -------------------------------------------------------------------------------
Weighted average discount rate 7.00% 7.00%
Assumed health care cost trend rates:
Current 9.43% 9.83%
Ultimate 5.50% 5.50%
Years to ultimate 11 12
===============================================================================
A 1% increase in health-care cost trends would result in an increase to the
accumulated postretirement benefits as of December 31, 1996 of $696,000 and an
increase in the net periodic postretirement benefit cost for the year then ended
of $90,000.
Subsequent Event: Effective January 1, 1997, the Corporation has amended its
postretirement health-care coverage to significantly reduce the cost of
providing such benefits. Current retirees receiving health benefits have begun
contributing toward their postretirement medical coverage and reimbursement
levels have been reduced to 80%, from the 100% coverage level effective through
December 31, 1996. The Corporation has also provided an alternative Medicare
Risk HMO 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.
These plan amendments are expected to reduce the Corporation's net periodic
postretirement cost by approximately $388,000 for the fiscal year ending
December 31, 1997.
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 occurs at 20% per year, reaching 100% vesting at five
years of service.
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, 1996, and December
31, 1995, the retirement plan was overfunded (i.e., plan assets exceed
accumulated benefit obligations).
The Corporation had pension credits in 1996, 1995 and 1994 of $3,888,000,
$3,036,000 and $4,016,000, respectively, for domestic plans and had foreign
pension costs in 1996, 1995 and 1994 under defined contribution retirement plans
of $249,000, $208,000 and $188,000, respectively. The funded status of the
Corporation's domestic plans at December 31 are set forth in the following
table:
(In thousands) 1996 1995
- -------------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Vested $ 103,581 $ 110,851
Nonvested 2,527 2,832
- -------------------------------------------------------------------------------
Accumulated benefit obligation 106,108 113,683
Impact of future salary increases 4,411 3,271
- -------------------------------------------------------------------------------
Projected benefit obligation 110,519 116,954
Plan assets at fair value 192,599 183,497
- -------------------------------------------------------------------------------
Plan assets in excess of projected benefit obligation 82,080 66,543
Unrecognized net gain (38,534) (25,763)
Unrecognized prior service cost 365 400
Unrecognized net transition asset (8,895) (10,052)
- -------------------------------------------------------------------------------
Prepaid pension cost $ 35,016 $ 31,128
===============================================================================
At December 31, 1996, approximately 34% of the plans' assets are invested in
debt securities, including a small portion in U.S. Government issues.
Approximately 66% of plan assets are invested in equity securities.
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 31
<PAGE>
Page 100
Included in earnings is net pension income for 1996, 1995 and 1994, comprised of
the following:
(In thousands) 1996 1995 1994
- --------------------------------------------------------------------------------
Service costs--benefits earned during the period $ 3,287 $ 3,119 $ 2,623
Interest cost on projected benefit obligations 7,548 8,457 7,706
Actual return on plan assets (16,749) (32,358) 3,301
Net amortization and deferral 2,026 17,746 (17,646)
- --------------------------------------------------------------------------------
Net pension income $ (3,888) $ (3,036) $ (4,016)
================================================================================
The major assumptions used in accounting for the Corporation's defined-benefit
pension and retirement plans at December 31 are as follows:
1996 1995
- -------------------------------------------------------------------------------
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, 1996, were $53,686,000 and $44,690,000,
respectively, and at December 31, 1995, were $51,501,000 and $43,674,000,
respectively.
Facilities Leased from Others. The Corporation conducts a portion of its
operations from leased facilities, which include manufacturing plants,
administrative offices and warehouses. In addition, the Corporation leases
automobiles and office equipment under operating leases. Rental expenses for all
operating leases amounted to approximately $2,283,000 in 1996, $1,857,000 in
1995 and $1,840,000 in 1994.
At December 31, 1996, 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:
(In thousands)
Rental Rental
Income Commitment
- --------------------------------------------------------------------------------
1997 $ 5,066 $1,914
1998 5,176 1,947
1999 4,053 1,378
2000 3,486 609
2001 2,868 351
2002 and beyond 14,640 1,194
- --------------------------------------------------------------------------------
Total $35,289 $7,393
================================================================================
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) 1996 1995 1994
- -------------------------------------------------------------------------------
Sales:
Aerospace & Marine $ 109.9 $ 92.4 $ 100.3
Industrial 60.6 62.0 54.7
- -------------------------------------------------------------------------------
Total sales $ 170.5 $ 154.4 $ 155.0
===============================================================================
Pre-tax Earnings from Operations:
Aerospace & Marine $ 12.5 $ 11.7 $ 18.7
Industrial 10.4 11.5 7.8
- -------------------------------------------------------------------------------
Total segments 22.9 23.2 26.5
Net pension income 3.9 3.0 4.0
Corporate expense (7.6) (5.6) (6.6)
- -------------------------------------------------------------------------------
Total operating income 19.2 20.6 23.9
Investment income 3.0 4.1 3.0
Rental earnings, net 2.8 2.9 2.8
Other income (expense), net (.5) .4 (.5)
Interest expense (.4) (.5) (.4)
- -------------------------------------------------------------------------------
Total pre-tax earnings $ 24.1 $ 27.5 $ 28.8
===============================================================================
32 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
<PAGE>
Page 101
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In millions) 1996 1995 1994
- -------------------------------------------------------------------------------
Identifiable Assets:
Aerospace & Marine $102.6 $ 74.6 $ 71.9
Industrial 65.2 56.7 42.6
- -------------------------------------------------------------------------------
Total segments 167.8 131.3 114.5
Cash and short-term investments 62.0 78.8 76.4
Other general and corporate 37.4 36.1 47.8
- -------------------------------------------------------------------------------
Total assets at December 31 $267.2 $246.2 $238.7
===============================================================================
Capital Expenditures:
Aerospace & Marine $ 9.8 $ 5.7 $ 2.7
Industrial 2.3 .7 .9
- -------------------------------------------------------------------------------
Total segments 12.1 6.4 3.6
General and corporate 2.1 .6 1.0
- -------------------------------------------------------------------------------
Total capital expenditures $ 14.2 $ 7.0 $ 4.6
===============================================================================
(In millions) 1996 1995 1994
- -------------------------------------------------------------------------------
Depreciation:
Aerospace & Marine $ 5.4 $ 5.4 $ 6.6
Industrial 2.4 3.1 3.3
- -------------------------------------------------------------------------------
Total segments 7.8 8.5 9.9
General and corporate 1.0 1.0 1.0
- -------------------------------------------------------------------------------
Total depreciation $ 8.8 $ 9.5 $ 10.9
===============================================================================
Aerospace & Marine sales had no single customer that accounted for 10% or more
of total sales in 1996 and 1995. However, the segment had one customer that
accounted for 10% of sales in 1994. The Industrial segment did not include any
customers exceeding 10% of total revenue.
Revenues from major product lines consist of:
1996% 1995% 1994
- -------------------------------------------------------------------------------
Actuation and control systems and components 21% 26% 30%
Metal treating services 46 46 40
Overhaul services 16 7 5
Valves 16 18 19
All others 1 3 6
- -------------------------------------------------------------------------------
100% 100% 100%
===============================================================================
Direct sales to the U.S. Government and sales for U.S. and Foreign government
end use accounted for 23%, 25% and 31% of total sales in 1996, 1995 and 1994,
respectively, and were included in all segments as follows:
(In thousands) 1996 1995 1994
- --------------------------------------------------------------------------------
Aerospace & Marine $37,400 $38,000 $44,000
Industrial 2,500 900 3,700
- --------------------------------------------------------------------------------
Total military sales $39,900 $38,900 $47,700
================================================================================
Geographic revenues and earnings are as follows:
(In thousands) 1996 1995 1994
- --------------------------------------------------------------------------------
Sales:
United States $135,422 $127,304 $132,952
Europe 29,865 23,096 18,486
Canada 5,249 4,046 3,563
- --------------------------------------------------------------------------------
Total $170,536 $154,446 $155,001
================================================================================
Pre-Tax Earnings:
United States $15,195 $21,861 $24,009
Europe 8,076 4,624 4,273
Canada 858 1,007 475
- --------------------------------------------------------------------------------
Total $24,129 $27,492 $28,757
================================================================================
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.
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 33
<PAGE>
Page 102
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
QUARTERLY RESULTS OF OPERATIONS AND STOCK
INFORMATION (UNAUDITED)
(In thousands except per share amounts) First Second Third Fourth
- --------------------------------------------------------------------------------
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:
Net earnings per common share .65 1.02 .87 .62
Dividends per common share .25 .25 .25 .25
- --------------------------------------------------------------------------------
1995 Quarters:
Sales $37,543 $36,916 $35,929 $44,058
Gross profit 12,115 11,649 11,998 14,506
Net earnings 4,012 4,225 4,966 4,966
Earnings per share:
Net earnings per common share .79 .83 .98 .98
Dividends per common share .25 .25 .25 .25
================================================================================
CONSOLIDATED SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(In thousands except per share data) 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $170,536 $154,446 $155,001 $ 158,864 $179,737
Earnings (loss) before changes in accounting principles 16,109 18,169 19,547 (2,952)(1) 21,687
Net earnings (loss) 16,109 18,169 19,303 (5,623)(2) 21,687
Total assets 267,164 246,201 238,694 236,947 238,898
Long-term debt 10,347 10,347 9,047 14,426 16,266
Per common share:
Earnings (loss) before changes in accounting principles 3.17 3.59 3.86 (.58) 4.29
Net earnings (loss) 3.17 3.59 3.81 (1.11) 4.29
Cash dividends 1.00 1.00 1.00 1.00 1.00
==============================================================================================================
</TABLE>
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."
34 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
<PAGE>
Page 103
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
CORPORATE INFORMATION
Corporate Headquarters
1200 Wall Street West
Lyndhurst, New Jersey 07071
Tel. (201) 896-8400
Fax (201) 438-5680
- --------------------------------------------------------------------------------
Annual Meeting
The 1997 Annual Meeting of Shareholders will be held on April 11, 1997 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, 1996, the approximate number of holders of record of common
stock, par value $1.00 per share, of the Corporation was 4,500.
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 590, Ridgefield
Park, NJ 07660
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 467,
Washington Bridge Station, New York, NY 10033
Certificate transfers
Stock Transfer Department, P.O. Box 469,
Washington Bridge Station, New York, NY 10033
Please include your name, address, and telephone number with all correspondence.
Telephone inquiries may be made to (800) 416-3743. Internet inquiries should be
addressed to http://www.cmssonline.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.
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 the
Corporate Headquarters.
Common Stock Price Range
1996 1995
- --------------------------------------------------------------------------------
High Low High Low
- --------------------------------------------------------------------------------
First Quarter $55.250 $50.250 $38.250 $35.125
Second Quarter 54.000 50.875 45.250 36.875
Third Quarter 54.625 50.750 45.500 43.500
Fourth Quarter 55.000 49.625 53.750 43.625
================================================================================
Dividends
1996 1995
- --------------------------------------------------------------------------------
First Quarter $.25 $.25
Second Quarter .25 .25
Third Quarter .25 .25
Fourth Quarter .25 .25
================================================================================
CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT 35
<PAGE>
Page 104
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
Curtiss-Wright Flight Systems/
Europe A/S
Steve Collins
General Manager
Karup Air Base
Karup, Denmark
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 and General Manager
1966E Broadhollow Road
East Farmingdale, New York
11735-1768
Directors (left to right):
William B. Mitchell, Thomas R. [Photo of Directors]
Berner, J. McLain Stewart (seated),
Dr. William W. Sihler, David Lasky
(seated), John R. Myers, Admiral
James B. Busey IV
36 CURTISS-WRIGHT CORPORATION 1996 ANNUAL REPORT
<PAGE>
Page 105
Waters Design Associates, Inc. New York City
<PAGE>
Page 106
[Logo]
Curtiss-Wright Corporation
1200 Wall Street West
Lyndhurst, New Jersey 07071
CW
- ------
Listed
- ------
NYSE
This annual report was printed on recycled [Logo] paper.
Page 107
Exhibit (21)
Subsidiaries of Registrant
The information below is provided, as of March 14, 1997, with respect to
the subsidiaries of Registrant. The names of certain inactive subsidiaries and
other consolidated subsidiaries of Registrant have been omitted because all such
subsidiaries, considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary.
Percentage of Voting
Organized Under Securities Owned by
Name the Laws of Immediate Parent
Curtiss-Wright Flight Delaware 100
Systems, Inc.
Metal Improvement Delaware 100
Company, Inc.
Curtiss-Wright Flow Control New York 100
Corporation
Curtiss-Wright Flight Denmark 80
Systems Europe A/S
Page 108
Exhibit (23)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 and S-3 (No. 33-95562329) and in the Registration
Statements on Forms S-8 (Nos. 33-95602114 and 33-96583181) of Curtiss-Wright
Corporation of our report dated January 30, 1997 appearing on page 20 of the
1996 Curtiss-Wright Corporation Annual Report which is incorporated in this
Annual Report on Form 10-K. We also consent to the incorporation by reference of
our report on the Financial Statement Schedule, which appears in this Form 10-K.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Morristown, New Jersey
March 14, 1997
<TABLE> <S> <C>
<ARTICLE>5
<S> <C>
<MULTIPLIER>1,000
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 6,317
<SECURITIES> 55,674
<RECEIVABLES> 39,265
<ALLOWANCES> 1,557
<INVENTORY> 46,987
<CURRENT-ASSETS> 157,833
<PP&E> 210,230
<DEPRECIATION> 146,268
<TOTAL-ASSETS> 267,164
<CURRENT-LIABILITIES> 42,416
<BONDS> 10,347
0
0
<COMMON> 10,000
<OTHER-SE> 173,363
<TOTAL-LIABILITY-AND-EQUITY> 276,164
<SALES> 170,536
<TOTAL-REVENUES> 176,320
<CGS> 117,067
<TOTAL-COSTS> 148,957
<OTHER-EXPENSES> 2,847
<LOSS-PROVISION> 506
<INTEREST-EXPENSE> 387
<INCOME-PRETAX> 24,129
<INCOME-TAX> 8,020
<INCOME-CONTINUING> 16,109
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,109
<EPS-PRIMARY> 3.17
<EPS-DILUTED> 0
</TABLE>
