Curtiss-Wright Annual Report 2004

FY2004 Annual Report · Curtiss-Wright

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High Performance.

High performance.
One trait that is common
to all our products
is high performance.
Highly engineered.
Formidable quality.
Absolute reliability.

Curtiss-Wright Corporation
4 Becker Farm Road
Roseland, New Jersey 07068

www.curtisswright.com

Curtiss-Wright Corporation
Annual Report 2004

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High Performance.

High performance.
One trait that is common
to all our products
is high performance.
Highly engineered.
Formidable quality.
Absolute reliability.

Curtiss-Wright Corporation
4 Becker Farm Road
Roseland, New Jersey 07068

www.curtisswright.com

Curtiss-Wright Corporation
Annual Report 2004

High Performance.
The same can be said
of our operating results.
Strong, sustainable
growth and profitability.
Unlimited opportunity
for the future.

Consolidated Historical Performance

Net Sales ($000s)
Sales per Employee ($)
1,000,000

800,000

600,000

400,000

200,000

180,000

160,000

140,000

120,000

100,000

Operating Income ($000s)
Reported
Normalized

Net Earnings ($000s)
Reported
Normalized

120,000

100,000

80,000

60,000

40,000

20,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

‘99 ‘00 ‘01 ‘02 ‘03 ‘04

Flow Control
Design, manufacture, testing and
qualiﬁ cation of severe service
valves, pumps, motors, generators,
instrumentation and controls used
to regulate the ﬂ ow of liquid, gases
and vapors in severe marine, industrial
and nuclear environments.

Products and Services
• Nuclear/non-nuclear valves (butterﬂ y, globe,
gate, control, safety, relief, solenoid)
• Processing industry valves, including coke
drum unheading, catalytic cracking systems,

relief valves

• Nuclear/non-nuclear pumps, motors and

instrumentation and controls

• Nuclear/non-nuclear marine service generators
• Marine secondary plant propulsion systems
• Electromechanical equipment, including
aircraft launch and recovery systems,
ElectroMagnetic gun, elevator drives
• Aircraft carrier ﬂ ight-critical components
• Nuclear reactor plant containment air locks
and doors, fasteners and bolting solutions
• Engineering, inspection, testing and
qualiﬁ cation services
• Process safety management software

$388 million

Motion Control
Innovative and highly engineered
mechanical, electromechanical and
electronic components and subsystems
providing ﬂ ight and drive control actuation,
ﬁ re control, sensors and graphic
data displays for aerospace, defense
and industrial applications worldwide.

$389 million

$178 million

Metal Treatment
Specialized metal treatment services
that extend the life and improve the
performance of critical components
used in the aerospace, ground
transportation, power generation,
oil and gas industries.

Products and Services
• Shot peening
• Shot peen forming
• Laser peening
• Heat treating
• Specialty coatings
• Reed valve manufacturing

Major Markets
• Commercial jet transports
• Business/regional jets
• Military transport and ﬁ ghter aircraft
• Ground defense vehicles
• Unmanned aerial vehicles
• Automated industrial equipment
• High-speed trains
• Marine propulsion
• Space programs
• Security systems
• Naval ships
• Homeland security
• Air, sea and ground simulation

Major Markets
• Commercial jet transports
• Business/regional jets
• Military transport and ﬁ ghter aircraft
• Automotive/truck
• Power generation
• Oil and gas exploration
• Architectural structures
• Agricultural equipment
• Construction and mining equipment
• Industrial processing equipment
• Medical devices

Major Markets
• U.S. Navy nuclear and non-nuclear
programs
• Commercial power generation

(nuclear and fossil)

• Oil and gas exploration, production
and reﬁ ning
• Petrochemical and chemical processing
• Natural gas production and transmission
• Pharmaceutical
• Automotive/truck
• Department of Energy waste

treatment facilities

Products and Services
• Secondary ﬂ ight control actuators
• Weapons bay door actuation systems
• Integrated weapons hoisting systems
• Aircraft utility actuation systems
• Integrated mission management and ﬂ ight
control computers
• Single board embedded computing cards
and graphic solutions
• Fractional horsepower (HP) specialty motors
• Force transducers
• Fire detection and suppression control
systems
• Digital electromechanical aiming and
stabilization systems
• Hydropneumatic suspension systems
• Fire control, sight head, and environmental
control processors for military ground vehicles
• Linear and rotary position sensing devices
• Power conversion products
• Control electronics
• High-performance data communication
products
• Component overhaul and logistics
support services
• Perimeter intrusion detection equipment
• Fuel valves for large HP marine engines
• Servo valves and controllers
• Control handles, joysticks and throttle
quadrants

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High Performance.
The same can be said
of our operating results.
Strong, sustainable
growth and profitability.
Unlimited opportunity
for the future.

Consolidated Historical Performance

Net Sales ($000s)
Sales per Employee ($)
1,000,000

800,000

600,000

400,000

200,000

180,000

160,000

140,000

120,000

100,000

Operating Income ($000s)
Reported
Normalized

Net Earnings ($000s)
Reported
Normalized

120,000

100,000

80,000

60,000

40,000

20,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

‘99 ‘00 ‘01 ‘02 ‘03 ‘04

relief valves

• Nuclear/non-nuclear pumps, motors and

instrumentation and controls

$388 million

$389 million

$178 million

Products and Services
• Shot peening
• Shot peen forming
• Laser peening
• Heat treating
• Specialty coatings
• Reed valve manufacturing

Major Markets
• U.S. Navy nuclear and non-nuclear
programs
• Commercial power generation

(nuclear and fossil)

treatment facilities

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020000040000060000080000010000000100002000030000400005000060000700008000002000004000006000008000001000000010000200003000040000500006000070000800000200000400000600000800000100000001000020000300004000050000600007000080000

Historical Financial Performance

(In thousands, except per share data; unaudited)

2004

2003

2002

PERFORMANCE:
Net sales
Earnings before interest, taxes, depreciation,
amortization and pension
Net earnings
Cash flow from operations
Diluted earnings per share (1)
Return on sales (2)
Return on capital (2)
New orders
Backlog at year-end

YEAR-END FINANCIAL POSITION:
Working capital
Current ratio
Total assets
Stockholders’ equity
Stockholders’ equity per share (1)

OTHER YEAR-END DATA:
Depreciation and amortization
Capital expenditures
Shares of stock outstanding at December 31, (1)
Number of registered stockholders
Number of employees

$ 955,039

$ 746,071

$ 513,278

152,026
65,066
105,347
3.02

7.3%
7.5%

119,435
52,268
83,524
2.50

6.7%
7.6%

85,030
45,136
89,785
2.16

9.1%
8.3%

998,936
627,679

743,115
505,519

478,197
478,494

$ 212,159
2.1 to 1
1,278,440
575,614
26.85

$238,640
2.8 to 1
973,665
478,881
23.04

$ 137,237
1.8 to 1
810,102
411,228
20.02

40,742
32,452
21,438,158
7,460
5,599

31,327
33,329
20,785,856
7,768
4,655

18,693
34,954
20,544,586
8,034
4,244

DIVIDENDS PER SHARE:

0.36

0.32

0.30

(1) Share and per share data for all years have been adjusted to reflect the 2-for-1 stock split on December 17, 2003.

(2) The performance ratios for all years have been shown on a pro forma basis, excluding the results of the acquired

companies in those respective years.

Safety and efficiency,
combined with long-term
reliability, are the
hallmarks of Flow Control’s
world-renowned product
performance.

Process Safety Management
Software ensures plant safety
systems are properly designed
and maintained.

FCC Catalyst Control Valve
and Actuator Systems
promote efﬁcient and reliable
operation of ﬂuidic catalytic
cracking units.

Hermetically Sealed Valves
eliminate fugitive emissions
from the process thereby
protecting personnel and the
environment.

Safety Relief Valves prevent plant
malfunctions by ensuring that
systems and components operate
within an acceptable range.

Flow Control provides products that satisfy our customers’ unique requirements in
markets spanning defense, commercial power, oil and gas processing. We focus on
high-performance, niche markets where our technological expertise can achieve optimum
performance for the systems and components our customers rely on. Our dedication to
precision engineering and long-term reliability reduces our customers’ cost of ownership
while improving personnel safety, environmental controls and efﬁciency of operations.

Digital Valve Controllers with
embedded sensors remotely
monitor and control operating
conditions of the process system,
valves and actuators to achieve
optimum performance levels.

Expansion into new
markets yields record
financial results in
Flow Control.
• 43% Sales CAGR 1999 - 2004
• Development of electromagnetic

technologies

• Expansion of product offerings
through select acquisitions

• Diversification into complementary

commercial markets

Flow Control Products Support Diverse Markets
Defense Market: For over 50 years, Flow Control has provided highly engineered products in
support of the United States Nuclear Navy, a customer demanding excellence in delivery,
performance and reliability. Our products are in mission-critical applications at the very heart
of the United States Navy’s current and future technologies for submarines, aircraft carriers
and surface ships.

Flow Control has extended this tradition of excellence, customer focus and loyalty to a broader
and more diverse range of applications and markets, supplying the highest quality products to
the commercial power generation, oil and gas processing markets.

Commercial Power Market: Our products are helping to ensure reliable and safe operation
of nuclear power plants worldwide. Today, nuclear power supplies electricity at an operating
cost among the lowest in the industry, has minimal impact on the environment and reduces
reliance on non-renewable fossil fuels. We are committed to providing advanced technologies
and innovative solutions that support installed equipment worldwide, and providing plant
performance enhancements. In addition, we are developing state-of-the art technologies for
emerging markets in nuclear power, including new construction in Asia, Europe and other parts
of the world.

Oil and Gas Market: In a typical oil refinery, our valves and control systems regulate the flow
of liquids, gases, solids and vapors, providing assurance of critical plant systems’ integrity and
personnel safety, while promoting reliable and efficient plant operation. By working with refineries
to improve plant performance, our products are helping to reduce dependence on foreign oil.

33%
growth in 2004
in commercial
power, oil and
gas markets.

Expansion of commercial businesses
resulted in more than 50% of
Flow Control sales in 2004.

497%
increase in sales
over the past
ﬁ ve years.
Successful growth achieved through
focus on core competencies, a
targeted market approach and select
strategic acquisitions.

DeltaValve’s DeltaGuard®
unheading device eliminates severe
personnel safety issues, while improving the
efﬁciency of the delayed coking process.

EMD
workers perform ﬁnal functional testing
and quality checks on a reactor coolant
pump motor to ensure optimum operating
performance and reliability once installed
in a commercial nuclear power plant.

Nova’s HydraNut®
bolting solution reduces the time required
to perform bolting operations in nuclear
power plants when compared with
conventional bolting, improving safety
and signiﬁcantly reducing the exposure
of maintenance personnel.

From takeoff to landing,
Motion Control products
combine the most advanced
technologies with the highest
level of performance.

Single Board Computers
and Graphics Cards

Data Concentration and
Mass Memory Units

Weapons Bay Door Actuation
and Hoist Systems

Mission Computers and Navigation
and Radar Control Electronics

On high-performance platforms, every component and system must be synchronized to
maximize performance. That’s why our emphasis is not just on supplying sophisticated
components but designing fully interoperable and integrated subsystems. Through our core
product groups, Engineered Systems, Embedded Computing and Integrated Sensing, we
provide advanced technology solutions for our customers’ most challenging requirements
in the air, on the ground, at sea and under ﬁre.

Canopy Actuation and
Cockpit Sensors

Flight Control Actuation,
Position Sensing and
Control Electronics

Engine and Fuel Control
Position Sensing

Continuous improvement,
customer satisfaction and
successful acquisition
integration resulted
in record sales.
• 26% CAGR 1999 – 2004
• Established core electronics

capability

• Expanded land-based
drive technologies
• Balanced growth in commercial
and military markets

Innovation in Motion Control
A commitment to innovation, technical excellence, superior product quality and customer
satisfaction is the cornerstone of the Motion Control segment of Curtiss-Wright. We specialize
in high-performance mechanical, electromechanical and electronic components and subsystems
for the aerospace, defense and commercial markets.

Engineered Systems’ high performance designs and precision manufacturing capabilities provide
customers with a single source for severe-service, mission-critical components. From flight controls
to tank turret systems and advanced industrial actuation, we develop the most advanced technologies
and transform individual components into fully integrated systems. And we consistently provide
value-added solutions for our customers’ repair and overhaul requirements.

Embedded Computing provides open systems architecture, benign and ruggedized Commercial
Off The Shelf (COTS) computing solutions that span the full range of embedded computing
technologies, from board level products to fully integrated subsystems. Our core capabilities
include high-performance graphics solutions, high-speed input/output (I/O), high-density computing,
specialized chassis design, custom and component engineering and software services, and
legacy manufacturing services.

Integrated Sensing is a global leader in the field of precision sensor engineering, specializing
in the production of engine and flight controls, position sensors, airborne fire protection systems,
rotor ice detection and protection systems, and power conversion units. Whether it’s supplying
jet engine controls, Formula One race car components or electric wheelchair joysticks, our
product portfolio supports original equipment manufacturers (OEM) and retrofit designs to
provide our customers with the latest advancements in technology.

48%
increase in
operating proﬁ t
in 2004.
Tight cost controls in core businesses
and select acquisitions in
complementary, high-growth niches
provided proﬁ table growth.

213%
increase in sales
over the past
5 years.
New markets developed in military
electronics and embedded computing
technologies despite signiﬁ cant
downturn in commercial aerospace.

Boeing 737
•Trailing Edge Flap Actuation Components
•Flight Control Position Sensors
•Cabin Pressure Control Mechanisms

From ground defense
to space exploration,
wherever it moves,
we can drive it.

Global Hawk Unmanned Air Vehicle
•Integrated Mission Management Computer
•Sensor Management Unit
•Radar Data Communication Single
Board Computer Cards

Stryker
•Weapon Autoloader Controller
•Replenisher Controller
•Turret System Electronic Unit

Advanced technologies in
Metal Treatment enhance
performance and extend the
life of critical components
on the most demanding
applications.

Shot Peen Forming shapes
aluminum aircraft wing skins.

Laser Peening extends
durability of titanium turbine
engine fan blades and discs.

The Metal Treatment segment provides precision metal surface treatments through four
primary processes: Shot Peening, Laser Peening, Specialty Coatings and Heat Treating. These
treatments provide enhanced protection against fatigue, corrosion and wear for highly stressed
components. With a network of 56 facilities worldwide, Metal Treatment’s portfolio of services
includes the most sophisticated metallurgical technologies for demanding applications in the
aerospace, automotive, power generation, and oil and gas industries.

Heat Treating ensures
integrity of aluminum
airframe structural parts.

Shot Peening strengthens
steel landing gear.

Specialty Coatings protect
titanium structural fasteners.

2004 record sales
and 11% 5-year CAGR
• Tight operational cost controls
• Internal development of
new technologies
• Expansion of services and
markets through select
acquisitions

Advanced Metal Treatment Technologies
Shot Peening bombards a metal surface with small metal or ceramic balls called “shot.” Each
piece of shot striking the material acts as a tiny peening hammer, compressing and stretching
the metal’s surface. The process greatly enhances the durability of the metal and extends the
service life of critical components in aerospace, automotive and industrial applications. Shot
peen forming takes the process one step further, enabling the metal stretching to precisely
shape aerodynamic curvatures in aluminum aircraft wing skins.

Laser Peening impacts a metal surface with 4 times deeper benefit than shot peening,
providing unprecedented resistance to fatigue and stress corrosion failure. Developed in
partnership with Lawrence Livermore National Laboratories, potential applications have
emerged for turbine engines, civil and military aircraft structures, nuclear power generation
and waste disposal, petroleum drilling, and medical implants. We operate laser peening
facilities in the United States and United Kingdom and will introduce our mobile laser in 2005
to provide this unique technology to customers on site.

Specialty Coatings provide lubrication, corrosion and oxidation resistance for metal
components, which enhances their operating performance and longevity. Curtiss-Wright
formulates proprietary coatings and applies them to steel, titanium and aluminum components
utilized in automotive, aerospace and other industrial applications.

Heat Treating relieves internal stresses and improves the overall strength, ductility and hardness
of fabricated metal parts. Curtiss-Wright specializes in the thermal processing of aluminum,
titanium and alloy steel components used in aerospace, automotive and general industrial
markets. Our facilities have heat treating capabilities and quality approvals specific to their local
customer base.

90%
of Metal Treatment’s
processes
are performed on
OEM parts.
These cost-effective and efﬁ cient
processes enable critical components
to achieve optimal performance.

21%
organic sales
growth in 2004.

Results yielded from improvements
in the global commercial aerospace
market, capture of new business in
automotive markets and a competitive
U.S. dollar environment.

New Mobile Laser
Peening System
Completely self-contained,
environmentally controlled
system brings the technology
to the customer:
• Transportable by tractor
trailer or cargo aircraft
• Ability to treat large,
stationary parts

Laser Peening
of turbine engine airfoils increases their
resistance to fatigue and damage.

Specialty Coatings
applied by robotic machines provide
corrosion protection and lubrication
for ball studs used in the automotive
industry.

Shot Peen Forming
strengthens and shapes the complex
curvatures of the Airbus A380 wing skins.

To Our Shareholders:

75 Years of Innovation
2004 marked our 75th anniversary on the New York Stock Exchange, a singular achievement
that underscores the continued innovation and performance of our 5,600 employees worldwide.
As a result of our employees’ dedication and success, Curtiss-Wright has provided shareholders
with another record year of outstanding growth and unlimited opportunity for our future.

Our strategy of providing advanced technologies for high-performance platforms consistently
results in shareholder value by:
•Meeting challenges in diversified markets;
•Providing customers with innovative solutions and unsurpassed performance; and
•Delivering disciplined growth and superior profitability.

2004 Performance
Successful execution of this strategy was demonstrated in our 2004 results with our 9th straight
year of growth in sales and a 28% increase in our stock price. Net sales in 2004 grew 28%
to $955 million. Operating income growth of 24% to $111 million reﬂects our focus on cost

Martin R. Benante
Chairman and Chief Executive Ofﬁcer

28%

increase in total sales

24%

increase in operating income

24%

increase in net income

High performance is
the key to our success.
From the products we
create and the service
we deliver to clients,
to the results we achieve
for our shareholders.

controls and efﬁcient integration of acquisitions. Both our Flow Control and Motion Control
segments enjoyed a record year for sales and proﬁtability, and our Metal Treatment segment
achieved 21% organic sales growth and a 48% increase in proﬁtability.

In addition, we continued to generate strong cash ﬂow growth and added ﬂexibility to our capital
structure by completing a new, 5-year $400 million credit facility. While we made new investments
that expanded our portfolio of complementary markets and products, we remained focused on
proﬁtability and cash ﬂow. Delivering strong performance enables us to provide our shareholders
with a consistent dividend, while maintaining a solid balance sheet.

We had many highlights in 2004, including winning many production contracts on a variety of
platforms as well as several key developmental contracts that will lay the groundwork for continued
growth in the future. We received a $5 million contract for development work on the next
generation of advanced marine propulsion technology for the U.S. Navy. In addition, we received
a $30 million developmental contract for the U.S. Army’s next-generation ElectroMagnetic gun,
which should provide signiﬁcant additional opportunities for this technology in the future.

On the commercial side, we received an $8 million contract to supply a replacement reactor
vessel closure head and control rod drive mechanism assemblies to Texas Utility’s Comanche
Peak Steam Electric Station. Curtiss-Wright’s unique technology introduces a one-piece design
which will signiﬁcantly enhance reliability for the customer because there are no welded
connections. This contract award represents a signiﬁcant milestone in the expansion and growth
of our commercial power business. Our revolutionary Deltaguard® coke deheading system
had a record year in both sales and new orders, and captured 100% of the new installations
worldwide since the introduction of this product in 2001. Our revolutionary Laser Peening
process continues to attract potential customers based upon our ability to improve the fatigue
life and reliability of their products. We are currently working on approximately 50 potential
applications for this highly technical and proprietary process. In addition to our four existing
lasers, we will be introducing two additional lasers in early 2005, including a mobile laser, and
we expect this business to grow signiﬁcantly in the future.

In our embedded computing business, we have consolidated the six recent acquisitions under
the Curtiss-Wright Controls Embedded Computing brand, creating a single sales channel and
a centralized marketing and communications organization. We believe this structure will provide
customers with a seamless transition for current business, as well as an attractive product
portfolio of fully integrated, interoperable systems.

Achieving Growth
Developing cutting-edge technologies is key to competing successfully in our core markets and
achieving organic growth. Through the ingenuity of our employees, we have made great strides
on both future and current applications.

Defense Market
•Delivering ﬂight critical components on the U.S. military’s F/A-22, F-16 and F/A-18 ﬁghters,
and development work for the F-35 Joint Strike Fighter
•Developing software and integrated electronics to control Unmanned Aerial Vehicles like

the Global Hawk and JUCAS X-45

•Providing electronic subsystems for the Mobile Gun System, a Stryker Light Armored Vehicle III variant
•Designing electronic upgrades for U.S. Army ﬁghting vehicles, such as Bradley and Abrams,
and U.S. Army helicopters for refurbishment and recalibrating capabilities
•Expanding product content on current U.S. Navy platforms like submarines and aircraft carriers
•Winning development competitions on next-generation, advanced technology programs such
as the ElectroMagnetic gun and marine propulsion technology
•Winning ground defense contracts in Europe, Asia and the Middle East
Commercial Market
•Capturing 100% of the new installation market for oil reﬁnery coke deheading valves with

the most advanced technology available

•Creating new market applications for laser peening technology on turbine engines, aircraft
structures, nuclear waste disposal, power generation and medical implants
•Penetrating markets with patented design for improved efﬁciency of tensioning operations

in mining, oil drilling, power generation, and structural, heavy equipment

•Expanding aftermarket capabilities and winning new business globally

In addition, we made select acquisitions to strengthen our portfolio and expand market share
in complementary high-performance defense and commercial markets. In 2004, Curtiss-Wright
completed 11 acquisitions for an aggregate purchase price of approximately $260 million.
These transactions provide Curtiss-Wright with additional technical capabilities, additions to our
talented workforce and access to new markets.

In Flow Control, we acquired ﬁve businesses which provide balanced growth in military and
commercial markets. Enhancing our U.S. Navy business, the acquisition of Government Marine
Business Unit provides an opportunity to expand our content on naval surface platforms such
as destroyers, amphibious ships, frigates, cruisers, mine warfare ships and foreign military
programs. In the commercial markets, our acquisitions of Nova and Trentec provide sophisticated
new products to offer through our strong commercial nuclear power distribution network.
Our acquisition of Groquip provides a more competitive, local presence in the Gulf Coast region
for our oil and gas product portfolio, and our acquisition of Imes expands our process safety
management engineering services for oil and gas reﬁneries.

In Motion Control, we completed four acquisitions -- Dy 4, Primagraphics, Synergy and Dexter-
Wilson. Today, Curtiss-Wright’s Embedded Computing portfolio can support customers from

board-level components to fully integrated, interoperable electronic systems. In addition,
we made signiﬁcant strides in the integration process of this business division, rebranding
the complete portfolio under the Curtiss-Wright banner and streamlining global sales and
marketing channels through two distinct yet complementary product groups, Subsystems
and Modular Components.

In Metal Treatment, we strengthened our presence in the specialty coatings market with the
acquisitions of Everlube and Evesham. These companies formulate and apply proprietary specialty
coatings that enhance the operating performance and longevity of severe-service metal components.
The acquisitions provide additional product capabilities for our signiﬁcant customer base, as well
as the opportunity to cross-market our complementary metal treatment services.

Commitment to Shareholders
Our primary goal remains a steadfast focus on proﬁtability and cash ﬂow, and we support
this commitment to our shareholders with a conservative yet ﬂexible capital structure and a
steady dividend.

In addition, this year we provided shareholders with a proposal to collapse our dual-class share
structure. Our dual-class structure resulted from the spin off of 44% of our stock, which was
held at the time by the Unitrin Corporation, to the Unitrin shareholders in November 2001. While
both classes trade on the NYSE, the segregation of the classes restricts the liquidity of both
classes, but in particular the Class B shares. We believe that a recapitalization of the two classes
into one will simplify our capital structure and enhance the trading liquidity and market valuation
of Curtiss-Wright as a whole.

The Board of Directors has recommended the proposal to shareholders and it will be presented
at the Annual Meeting scheduled for May 19, 2005.

2005 Outlook
Overall, I am pleased to report that our growth has continued its steady climb despite the difﬁcult
geopolitical environment and modest economic expansion in recent years. We have been cautious
in our expectations and are particularly proud of our performance. We believe the modest but
healthy expectations for improvements in the U.S. and global economy, as well as the current
U.S. Administration’s strong stance on defense, will continue to beneﬁt the Company. Together,
our diversiﬁed portfolio should experience improved markets across the board, which will result
in another year of solid growth in 2005.

Martin R. Benante
Chairman and Chief Executive Ofﬁcer

Directors and Officers

Executive Team:
(left to right)

Michael J. Denton
Vice President
Corporate Secretary and General Counsel

Glenn E. Tynan
Vice President – Finance
Treasurer and CFO

David J. Linton
President – Curtiss-Wright Flow Control

Martin R. Benante
Chairman and CEO

George J. Yohrling
President – Curtiss-Wright Motion Control

Edward Bloom
President – Curtiss-Wright Metal Treatment

Directors
Martin R. Benante
Chairman of the Board of Directors

James B. Busey IV
Admiral, U.S. Navy (Ret.)
Director, Mitre Corporation
Former President and Chief Executive Ofﬁ cer of AFCEA
International Aviation Safety and Security Consultant

S. Marce Fuller
President and Chief Executive Ofﬁ cer of Mirant Corporation, Inc.
(formerly known as Southern Energy, Inc.)
Director, Earthlink, Inc.
Director, Mirant Corporation, Inc.

David Lasky
Former Chairman and Chief Executive Ofﬁ cer of
Curtiss-Wright Corporation

Carl G. Miller
Former Chief Financial Ofﬁ cer of TRW, Inc.

William B. Mitchell
Director, Mitre Corporation
Former Vice Chairman of Texas Instruments Inc.

John R. Myers
Former Chairman and Chief Executive Ofﬁ cer of Tru-Circle Corporation
Management Consultant
Former Chairman of the Board of 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
Former Director, McKinsey & Co. Management Consultants

Ofﬁ cers
Martin R. Benante
Chairman and Chief Executive Ofﬁ cer

George J. Yohrling
Executive Vice President

Edward Bloom
Vice President

David J. Linton
Vice President

Glenn E. Tynan
Vice President – Finance, Treasurer and
Chief Financial Ofﬁ cer

Michael J. Denton
Vice President, Corporate Secretary
and General Counsel

Kevin M. McClurg
Corporate Controller

Financial Statements

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

(In thousands, except per share data)

First

Second

Third

Fourth

2 0 0 4
Net sales
Gross proﬁt
Net earnings
Earnings per share:

Basic earnings per share
Diluted earnings per share

Dividends per share

2 0 0 3
Net sales
Gross proﬁt
Net earnings
Earnings per share:

Basic earnings per share
Diluted earnings per share

Dividends per share

$214,933
71,595
15,609

$222,428
76,022
14,324

$236,574
81,849
14,720

$281,104
101,037
20,413

$
$
$

0.75
0.74
0.09

$
$
$

0.68
0.67
0.09

$
$
$

0.69
0.68
0.09

$
$
$

0.95
0.94
0.09

$179,933
59,032
14,122

$182,857
56,682
10,873

$189,618
57,017
12,519

$193,663
68,187
14,754

0.69
$
$
0.68
$ 0.075

0.53
$
$
0.52
$ 0.075

0.61
$
$
0.60
$ 0.075

$
$
$

0.71
0.70
0.09

All per share amounts have been adjusted to reﬂect the Corporation’s 2-for-1 stock split on December 17, 2003.
See notes to the consolidated ﬁnancial statements for additional ﬁnancial information.

CONSOLIDATED SELECTED FINANCIAL DATA

(In thousands, except per share data)

2004

2003

2002

2001

2000

Net sales
Net earnings
Total assets
Long-term debt
Basic earnings per share
Diluted earnings per share
Cash dividends per share

$ 955,039
65,066
1,278,440
340,860
3.07
3.02
0.36

$
$
$

$746,071
52,268
973,665
224,151
2.53
2.50
0.32

$
$
$

$513,278
45,136
810,102
119,041
2.21
2.16
0.30

$
$
$

$343,167
62,880
500,428
21,361
3.12
3.07
0.27

$
$
$

$329,575
41,074
409,416
24,730
2.05
2.02
0.26

$
$
$

FORWARD-LOOKING STATEMENTS

This Annual Report contains not only historical information but also
forward-looking statements regarding expectations for future perfor-
mance of the Corporation. Forward-looking statements involve risk and
uncertainty. Please refer to the Corporation’s 2004 Annual Report on

Form 10-K for a discussion relating to forward-looking statements con-
tained in this Annual Report and risk factors that could cause future
results to differ from current expectations.

2 0

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

General
Curtiss-Wright Corporation is a multinational provider of highly engi-
neered products and services. The Corporation is positioned as a
market leader across a diversiﬁed array of niche markets through engi-
neering and technological leadership, precision manufacturing, and
strong relationships with our customers. The Corporation provides
products and services to a number of global markets, such as defense,
commercial aerospace, nuclear power, oil and gas, automotive, and
general industrial. The Corporation has achieved balanced growth
through the successful application of its core competencies in engi-
neering and precision manufacturing, adapting these competencies to
new markets through internal product development and a disciplined
program of strategic acquisitions. Approximately 50% of revenues are
generated from defense-related markets.

Company Organization
The Corporation manages and evaluates its operations based on the
products and services it offers and the different markets it serves.
Based on this approach, the Corporation has three reportable seg-
ments: Flow Control, Motion Control, and Metal Treatment. The Flow
Control segment primarily designs, manufactures, distributes, and ser-
vices a broad range of highly engineered ﬂow-control products. These
products are for severe service military and commercial applications
including power generation, oil and gas, and general industrial. The
Motion Control segment primarily designs, develops, and manufac-
tures high-performance mechanical systems, drive systems, embed-
ded computing solutions, and electronic controls and sensors for the
defense, aerospace, and general industrial markets. Metal Treatment
provides a variety of metallurgical services, principally shot peening,
laser peening, heat treating, and coatings, for various industries
including aerospace, automotive, construction equipment, oil and gas,
petrochemical, and general industrial. For further information on our
products and services and the major markets served by our three seg-
ments, see the inside cover page of this Annual Report.

The Corporation records sales and related proﬁts on production and ser-
vice type contracts as units are shipped or as services are rendered. This
method is used in our Metal Treatment segment and in some of the busi-
ness units within the Motion Control and Flow Control segments, which
serve commercial markets. For certain contracts that require perfor-
mance over an extended period before deliveries begin, sales and esti-
mated proﬁts are recorded by applying the percentage-of-completion
method of accounting.

Results of Operations

ANALYTICAL DEFINITIONS

Throughout management’s discussion and analysis of ﬁnancial condi-
tion and results of operations, the terms “incremental” and “base”
are used to explain changes from period to period. For quarterly report-
ing purposes, acquisitions are segregated from the results of the
Corporation’s base businesses for a full year or, in the more likely event
of a mid-quarter acquisition, 5 quarters. For full-year reporting pur-
poses, acquisitions remain segregated for two years, and the remain-
ing businesses are referred to as the “base” businesses. An acquisition
is considered base when the reporting period includes fully compara-
ble current and prior-period data. Therefore, for the year ended Decem-
ber 31, 2004, our organic growth excludes all acquisitions since
January 1, 2003.

YEAR ENDED DECEMBER 31, 2004 COMPARED WITH
YEAR ENDED DECEMBER 31, 2003

Curtiss-Wright Corporation recorded consolidated net sales of $955.0
million and net earnings of $65.1 million, or $3.02 per diluted share,
for the year ended December 31, 2004. Sales for the current year
increased 28% over 2003 sales of $746.1 million. Net earnings for
2004 increased 24% from 2003 net earnings of $52.3 million, or
$2.50 per diluted share.

The increase in revenues was mainly driven by a complete year of rev-
enues generated from the 2003 acquisitions of Systran Corporation,
Novatronics/Pickering, E/M Engineered Coatings Solutions, Advanced
Materials Process, and Collins Technology and contributions from the
2004 acquisitions, primarily Dy 4 Systems, Inc., Primagraphics, Nova
Machine Products, Trentec, Inc., Groquip, Synergy, and the Govern-
ment Marine Business Unit of Flowserve Corporation. See Note 2 to the
Consolidated Financial Statements for further information regarding
acquisitions. Including the eleven businesses acquired in 2004, the
Corporation has acquired twenty-four new businesses since 2001. The
acquisitions made during the last two years contributed $154.2 million
in incremental sales in 2004 (or 74% of the total sales increase from
2003). The remaining base business units experienced organic sales
growth of 7% in 2004, led by the Metal Treatment segment, which grew
organically by 21%. The Flow Control and Motion Control segments
experienced solid organic sales growth of 5% and 4%, respectively. The
organic growth in the Flow Control segment was achieved in 2004
despite a decrease in overall revenue from the U.S. Navy of approxi-
mately $9 million.

In our base businesses, higher metal treatment sales of our global shot
peening, laser peening, and heat treating services of $21.8 million,
higher sales of certain ﬂow control products to the power generation
market of $15.0 million, the oil and gas industry of $6.4 million, and
the defense electronics markets of $5.7 million, and higher sales of our
motion control products to the military aerospace market of $14.7 mil-
lion and commercial aerospace aftermarket services of $5.9 million all
contributed to the organic sales growth for 2004 as compared to 2003.
These increases in our base businesses were partially offset by lower
sales of certain ﬂow control products to the U.S. Navy due to timing of
contractual revenues, a decrease of $14.5 million, and lower sales of
motion control electronic products of $10.6 million for use in global
ground defense markets due to the wind down on certain production
projects. Favorable foreign currency translation had a favorable impact
on sales of $15.8 million for 2004 as compared to 2003.

Operating income for 2004 totaled $110.7 million, an increase of 24%
from operating income of $89.3 million in 2003. The increase is pri-
marily attributed to higher sales volume, favorable mix, and previously
implemented cost reduction initiatives. The contributions of the 2003
and 2004 acquisitions mentioned above amounted to $11.0 million in
incremental operating income in 2004 as compared to 2003. In addi-
tion to the contribution of the new acquisitions, 2004 operating
income beneﬁted from organic growth in our remaining base busi-
nesses, which improved 13% overall and was driven by strong organic
growth in our Metal Treatment and Motion Control segments of 55%
and 22%, respectively, from the prior year period. The improvement in
Metal Treatment’s base businesses’ operating income was the result
of higher volume and favorable sales mix due to the higher laser peen-
ing sales. The improvement in the Motion Control’s base businesses’
operating income was due to higher volume, reductions in certain

2 1

reserve requirements, favorable sales mix from commercial aerospace
aftermarket services and spares, and implemented cost control initia-
tives. Operating income from the base businesses within our Flow Con-
trol segment increased 9% in 2004 over 2003, due to higher volume,
contract cost overruns and inventory write-offs in 2003 that did not
reoccur in 2004, and a stronger sales mix for our power generation
products. The increase was partially offset by the lower overall volume
to the U.S. Navy, driven by the proﬁt impact related to the two large
higher margin contracts in 2003 that did not reoccur in 2004. Addi-
tionally, the Corporation increased its reserves for environmental
remediation during 2004, resulting in a $3.9 million increase in envi-
ronmental remediation and administrative expenses over 2003. For-
eign currency translation had a favorable impact on operating income
of $2.9 million for 2004 as compared to 2003.

Overall consolidated operating margins were down slightly in 2004 as
compared to 2003. Strong margins within our business segments
were achieved despite the absorption of $5.3 million of environmental
costs, $2.5 million in costs associated with Sarbanes-Oxley Section
404 compliance, and lower pension income of $2.1 million in 2004,
due to additional costs resulting from the acquisitions and slightly
lower investment returns. The operating margins have been somewhat
lower than historical levels in recent years, principally related to the
large number of acquisitions made since 2001. Although the new
acquisitions continue to have a positive effect on operating income,
the operating margins of the overall Corporation are lower because the
margins of the newly acquired companies are below those of our base
businesses. We consider this to be a short-term issue that will be more
than offset by the beneﬁts of diversiﬁcation, the implementation of
cost control measures, and increased future proﬁtability. The integra-
tion of our recent acquisitions continues to progress as planned. In
addition to having improved operating margins for almost all of our
recent acquisitions, we have initiated programs to cross-market prod-
ucts and share technologies across our businesses.

The increase in net earnings for 2004 as compared to 2003 is mainly
due to higher segment operating income. The improvement in operat-
ing income was partially offset by higher interest expense due to higher
debt levels associated with the funding of the Corporation’s acquisition
program, which accounted for approximately 60% of the increase, and
higher interest rates. Net earnings for 2004 included certain one-time
tax beneﬁts of $3.4 million. The tax beneﬁts primarily resulted from the
change in legal structure of one of our subsidiaries and a favorable IRS
Appeals settlement relating to the 1993 tax year.

Backlog at December 31, 2004 was $627.7 million compared with
$505.5 million at December 31, 2003 and $478.5 million at December
31, 2002. Acquisitions made during 2004 represented $75.8 million of
the backlog at December 31, 2004. New orders received in 2004
totaled $998.9 million, which represents a 34% increase over 2003
new orders of $743.1 million and a 109% increase over new orders
received in 2002. Acquisitions made during 2003 and 2004 con-
tributed $158.4 million in incremental new orders received in 2004. It
should be noted that metal treatment services, repair and overhaul ser-
vices, and after-market sales, which represent approximately 25% of the
Corporation’s total sales for 2004, are sold with very modest lead times.
Accordingly, the backlog for these businesses is less of an indication of
future sales than the backlog of the majority of the products and ser-
vices of the Motion Control and Flow Control segments, in which a sig-
niﬁcant portion of sales is derived from long-term contracts.

2 2

YEAR ENDED DECEMBER 31, 2003 COMPARED WITH
YEAR ENDED DECEMBER 31, 2002

Curtiss-Wright Corporation recorded consolidated net sales of $746.1
million and net earnings of $52.3 million, or $2.50 per diluted share,
for the year ended December 31, 2003. Sales during 2003 increased
45% over 2002 sales of $513.3 million. Net earnings for 2003
increased 16% from 2002 net earnings of $45.1 million, or $2.16 per
diluted share.

The increase in revenues was mainly driven by a complete year of rev-
enues generated from the 2002 acquisitions of EMD, Tapco Interna-
tional, Penny & Giles, and Autronics and contributions from the 2003
acquisitions, primarily E/M Engineered Coatings Solutions and Collins
Technologies. See Note 2 to the Consolidated Financial Statements for
further information regarding acquisitions. Including the seven busi-
nesses acquired in 2003, the Corporation had acquired thirteen new
businesses since 2001. The acquisitions made during 2002 and 2003
contributed $221.8 million in incremental sales during 2003. The
remaining business units experienced organic sales growth of 6% in
2003, led by the Flow Control segment, which grew organically by 13%
due to higher valve sales to the nuclear and non-nuclear naval pro-
grams and higher sales of new products to the commercial nuclear
power generation market. Higher sales of shot peening services for the
aerospace market in Europe, sales from our new laser peening tech-
nology, and higher sales from our domestic aerospace and ground
defense businesses also contributed to the higher sales in 2003.
These increases in our base businesses were partially offset by sales
declines in commercial aerospace component overhaul and repair ser-
vices and commercial aerospace original equipment manufacturers’
(“OEM”) products. Foreign currency translation had a favorable impact
on sales of $14.1 million for the 2003 as compared to 2002.

Operating income for 2003 totaled $89.3 million, an increase of 29%
from operating income of $69.0 million in 2002. The increase is primar-
ily attributed to the contributions of acquisitions mentioned above, which
amounted to $25.1 million in incremental operating income. In 2003, we
reclassiﬁed pension income derived from the Curtiss-Wright Pension
Plan into operating income for all periods presented. The 2003 pension
income decreased $5.6 million from 2002 due to lower investment
returns on the Corporation’s pension assets. The amount recorded as
pension income reﬂects the extent to which the return on plan assets
exceeds the cost of providing beneﬁts in the same year, as detailed fur-
ther in Note 14 to the Consolidated Financial Statements. In addition to
the contribution of the new acquisitions, 2003 operating income bene-
ﬁted from higher sales to the commercial nuclear power generation mar-
kets, higher sales and more favorable sales mix of products to the military
aerospace, domestic ground defense, and naval markets. These
increases were offset by lower margins as a result of lower volume in the
commercial aerospace OEM and overhaul and repair businesses, and
cost overruns and inventory adjustments within our Flow Control seg-
ment. Foreign currency translation had a favorable impact on operating
income of $2.7 million for 2003 as compared to 2002.

The increase in net earnings for 2003 as compared to 2002 was
mainly due to the higher segment operating income. The improvement
in operating income was partially offset by lower non-operating other
income and higher interest expense associated with higher debt levels.

Backlog at December 31, 2003 was $505.5 million compared with
$478.5 million at December 31, 2002 and $242.3 million at December

31, 2001. Acquisitions made during 2003 represented $15.6 million of
the backlog at December 31, 2003. New orders received in 2003 totaled
$743.1 million, which represented a 55% increase over 2002 new orders
of $478.2 million and a 128% increase over new orders received in 2001.
Acquisitions made during 2002 and 2003 contributed $208.0 million in
incremental new orders received in 2003.

Economic and Industry-wide Factors
The softness in both the U.S. economy and the global commercial aero-
space industry in recent years have had an adverse impact on growth
of the Corporation; however, economic reports suggest that both sec-
tors are showing signs of improvement. In addition, steady U.S. military
spending levels and increased penetration into certain other served
markets have provided a positive offset to weaker commercial mar-
kets. Looking forward, many factors could impact the Corporation’s
future performance, including future defense spending in the U.S.,
changes in global gross domestic product, volatility of the geopolitical
situations, and the pace of economic recovery.

GENERAL ECONOMY

Many of our industrial businesses are driven in large part by growth of
the U.S. Gross Domestic Product (GDP). Based upon certain economic
reports, the U.S. economy’s output (real GDP) is expected to grow at a
modest but healthy rate slightly below 4% in 2005. This forecast is pred-
icated on the assumption that oil prices will stabilize or even decline
after reaching extremely high levels in 2004. If this were to occur, it
should help to restrain inﬂation which should prompt the U.S. Federal
Reserve to show restraint in its campaign to raise interest rates in 2005.
According to the economic reports, however, interest rates are expected
to rise modestly throughout 2005. Unemployment is also expected to
drop slowly over the next two years, as the corporate sector increases
output ﬁrst through productivity gains followed by the addition of labor.
This, combined with the recent weakness in the U.S. dollar, should lead
to improvement in the performance of U.S. companies.

It appears that, at least in the U.S., economic indicators are showing
signs of a recovery; however, we remain cautiously optimistic that this
recovery, in fact, will occur in the near term. If and when it does, our
businesses that are largely economic driven, such as commercial aero-
space, oil and gas, and general industrial, are well positioned to take
advantage of the recovery.

DEFENSE

Approximately 50% of our business is in the military sector, predomi-
nantly in the U.S., characterized by long-term programs and contracts
driven primarily by the U.S. Department of Defense (“DoD”) budget.

The U.S. DoD budget reﬂects growing pressure from costs to support
the global war on terrorism and in part initiatives aimed at transform-
ing and modernizing its current platforms and capabilities. The ﬁscal
2005 DoD procurement budget reﬂects a 7% overall increase over ﬁs-
cal 2004 funding levels, after taking into account Congressionally
directed rescissions. The 2005 budget includes continued investment
funding for key programs supportive of transformation initiatives but is
balanced with increased spending for modernization and upgrading of
existing equipment in support of current global operations and require-
ments. We anticipate future DoD spending to produce increased
investment speciﬁcally in electronics for military hardware necessary

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

to upgrade existing platforms and facilitate “network centric warfare”
equipment and systems as part of the military’s transformation plans.

Curtiss-Wright’s Flow Control and Motion Control segments are well
positioned on many high performance defense platforms, including the
next-generation aircraft carrier, the nuclear submarine program, the
F/A-22, the V-22, the Joint Strike Fighter and Unmanned Aerial Vehicle
programs, such as the Global Hawk. As a result of our reputation and
past performance, we are involved in many of the future systems that
are currently in various stages of development. However, growing cost
concerns are driving serious review of critical defense programs, which
may have an impact on U.S. DoD budget levels going forward, as could
many other uncertainties such as budget deﬁcit levels and geopolitical
uncertainty.

In early January 2005, certain news reports indicated that the as yet
unpublished U.S. Deputy Secretary of Defense’s ﬁscal 2006 Future
Year Defense Plan (FYDP) includes a $30 billion proposed cut in the
overall DoD budgets over the next six years. The proposed cuts, if
approved in their entirety, which the Corporation considers unlikely at
this time, are not expected to have a material impact on the Corpora-
tion. The primary proposed budget cut that could impact the Corpora-
tion would be the decrease in the F/A-22 production program from 277
aircraft to 180, which is proposed to take effect primarily in 2009. Cur-
rently, there is much debate about this program cut and it is unclear
whether or not this proposed cut will, in fact, occur. If this proposed
reduction were to be approved, it is not expected to have a material
impact on the Corporation. In addition, the reports suggest that the
FYDP includes a substantial increase in appropriations to the Army,
potentially for programs for which we have content. Although the pro-
gram detail is not as of yet clear as to what programs will be affected,
we are well positioned on many high performance platforms for the
Army which could potentially receive increased funding. In the short
term, the “War on Terrorism” is placing demand on the prime contrac-
tors to service current ﬁeld operations which should lead to increased
outsourcing for the procurement of certain electronic products that the
Company provides. Additionally, delays in new program funding may
result in increased upgrades of existing equipment upon which the Cor-
poration currently has content.

There is the possibility that defense spending may decrease in the
future, which could adversely affect the Corporation’s operations and
ﬁnancial condition. While DoD funding ﬂuctuates year-by-year and pro-
gram-by-program, the biggest risk facing the Corporation would be the
termination of a major program. Other than the proposed reduction in
the F/A-22 program mentioned above, the Corporation is not aware of
any other such material program termination for which the Corporation
has content. If a material program were to be terminated, the termina-
tion process takes several years to wind down, which may provide the
Corporation ample time to react before any potential impact occurs. In
addition to the above, there are other risks associated with our defense
businesses, such as failure of a prime contractor customer to perform
on a contract, pricing and/or design speciﬁcations that may not always
be ﬁnalized at the time the contract is bid, and the failure and/or inabil-
ity of certain sole source suppliers to provide product to the Corpora-
tion, which could have an adverse impact on the Corporation’s ﬁnancial
performance. While alternatives could be identiﬁed to replace a sole
source supplier, a transition could result in increased costs and manu-
facturing delays. Our outlook for our defense business looks positive
for the near to intermediate term.

2 3

Curtiss-Wright’s Flow Control segment is well positioned to take part in
this expansion. The recent history of plant life extension approvals in
the U.S. and continued strong build programs in Asia are encouraging.
However, there is no guarantee that the nuclear alternative will con-
tinue to be fully endorsed in the U.S. and other parts of the world, or
that the Nuclear Regulatory Commission will authorize the construc-
tion of new facilities in the U.S. In addition, the geopolitical climate is
volatile, which could impact future nuclear plant construction levels
around the world.

OIL AND GAS

The drivers that impact this market include capital spending in North
America, Asia, and Europe for new construction and upgrades to comply
with environmental regulations and maintenance and overhaul spend-
ing to retroﬁt existing facilities with improved equipment and technolo-
gies to increase plant ﬂexibility, reliability, production and proﬁtability.
Additionally, increased usage of oil and natural gas, increased demand
from emerging economies and increased demand for aftermarket
services will also affect this market going forward.

The current outlook for hydrocarbon products continues to be optimistic.
According to market data, several encouraging developments occurred
in 2004, including strengthened global reﬁning margins, reﬁning operat-
ing rates continuing to be over 94% in the U.S., increases in petrochemi-
cal production on a global basis, and continued global economic
recovery. Increases in consumer product demand for petrochemicals
and reﬁned products are projected to continue through 2005.

Capital expenditures in the processing industries are expected to
increase in the next few years. A recent article in an industry trade publi-
cation indicated improving economic fundamentals that will bolster most
ﬂow control product-consuming sectors and strengthen underdeveloped
infrastructures in Asia, Latin America, and Eastern Europe.

Based upon market data, capital expenditures in the processing indus-
tries are expected to increase over the next few years. The long-term
global forecast is projecting a solid increase in sales of ﬂow control
products (valves, pumps, motors) to the processing industries. As the
world continues to depend on natural resources, oil exploration deep-
ens, and transport requirements widen, there should be opportunities
to provide our ﬂow control products to meet these challenges. The pro-
posed and enacted environmental regulations in the U.S. and other
developed countries could drive increased demand for ﬂow control
products by as much as 8–10% over the next few years. However, it is
uncertain whether certain economic recoveries can be sustained or
whether anticipated future environmental regulatory changes will actu-
ally occur, and whether such regulatory changes will have an impact on
this industry.

COMMERCIAL AEROSPACE

Approximately 18% of our business serves the global commercial aero-
space industry. Global airline trafﬁc is a primary driver for long-term
growth in the commercial aerospace industry. Economic growth is the
prime driver of global airline trafﬁc demand. For the past several years
global airline trafﬁc has stagnated primarily due to the impact of ter-
rorist attacks, SARS, and the war in Iraq. However, recent improvement
in the global economy has led to increased demand for both passen-
ger and freight air transport. Based upon industry data, global Revenue
Passenger Miles for 2004 have increased approximately 15% over
2003 and are expected to increase at an average annual rate of 6%
over the period 2004-2008. Although a sharp rise in fuel costs in late
2004 put proﬁtability pressure on airlines, which slowed procurement
of new aircraft and extended maintenance schedules, fuel prices are
expected to recover in 2005, which should stimulate procurement of
new aircraft, a key driver of the Corporation’s commercial aerospace
business. In fact, the two major global aircraft manufacturers are pro-
jecting healthy increases in production levels in both 2005 and 2006.
Growth in airline trafﬁc will require increased passenger carrying
capacity (“seats”) in the system, which can be met by a mix of large
commercial aircraft and smaller regional jets supporting the hub-and-
spoke system, and mid-sized long-range aircraft servicing point-to-
point routes. Based upon market data, we expect to see a steady
improvement in the commercial aerospace market in 2005.

Curtiss-Wright’s Motion Control segment is a provider of OEM aerospace
components and systems and its Metal Treatment segment provides
services to aircraft manufacturers. While the emergence of low cost car-
riers and improved economic conditions has contributed to this indus-
try’s recovery, concerns still exist regarding the ﬁnancial weakness of
many airlines and the threat of another major terrorist attack, which
could have an adverse impact on this industry and the Corporation’s
operating results and ﬁnancial position.

Over the past several years, the Corporation has diversiﬁed itself away
from dependence on commercial aerospace and has sized its resources
to appropriate levels in order to protect proﬁtability. The Corporation is
well positioned on a number of commercial aerospace platforms and
will beneﬁt from a recovery in this industry, which is expected to occur
over the next couple of years.

POWER GENERATION

There are several factors that might precipitate an expansion in com-
mercial nuclear power, including increasing pressure on environmen-
tal issues, a pro-nuclear U.S. political leadership, and continued growth
in global demand for power. Nuclear power has minimal impact on the
environment, is one of the most economical forms of generating elec-
tricity, and does not depend upon oil and gas imports. The U.S. nuclear
power industry is expected to grow primarily since most of the 103
existing plants are or will be applying for plant life extensions. As of
December 31, 2004, approximately 30 plants have received 20 year
life extensions and 16 additional plants’ applications are pending
approval. In addition, several plants are evaluating the potential to add
capacity through plant expansion and upgrades. This expansion, com-
bined with new plant construction in Asia and other parts of the world,
as well as the possibility of new plant construction in the U.S., should
drive expansion in this industry.

2 4

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

2004 Segment Performance
Curtiss-Wright operates in three principal operating segments on the basis of products and services offered: Flow Control, Motion Control, and Metal
Treatment. See Note 16 to the Consolidated Financial Statements for further segment ﬁnancial information. The following table sets forth revenues,
operating income, operating margin, and the percentage changes on those items, as compared with the prior year periods, by operating segment:

Year Ended December 31,

Percent Changes

(In thousands, except percentages)

2004

2003

2002

2004
vs. 2003

2003
vs. 2002

S A L E S :
Flow Control
Motion Control
Metal Treatment

Total Curtiss-Wright

O P E R AT I N G I N C O M E :
Flow Control
Motion Control
Metal Treatment

Total Segments
Pension (Expense) Income
Corporate & Other

Total Curtiss-Wright

O P E R AT I N G M A R G I N S :
Flow Control
Motion Control
Metal Treatment

Total Segments
Total Curtiss-Wright

FLOW CONTROL

The Corporation’s Flow Control segment reported sales of $388.1 mil-
lion for 2004, a 14% increase over 2003 sales of $341.3 million. The
higher sales are primarily due to the contributions of the 2004 asset
acquisitions of Nova Machine Products Corporation, Trentec, Inc., Groth
Equipment Corporation, and the Government Marine Business Unit. The
2004 incremental sales from these acquisitions amounted to $30.7
million. The remaining business units of this segment produced organic
sales growth of 5%. The solid organic growth was lead by stronger sales
of valves, pumps, other electro-mechanical products, and ﬁeld services
to the power generation market, which increased $15.0 million due to
additional orders, new teaming arrangements, and expedited plant out-
age service requirements. Increased demand helped drive record new
orders of our coker valves for the oil and gas industry, which positively
impacted sales by $9.2 million, and higher sales of our electronic prod-
ucts to the U.S. Navy, which increased $5.7 million, also contributed to
the organic growth. This increase was partially offset by lower sales of
ﬂow control products to the U.S. Navy of $14.5 million due to the timing
of contractual revenues. In 2003, the Flow Control segment completed
the shipment of two large projects to the U.S. Navy, which generated
approximately $25 million in sales. The segment was able to partially
offset the impact of these completed naval projects with higher sales of
pumps and other generators for aircraft carriers and submarines and
increased demand for the non-nuclear ball valves to the U.S. Navy. Sales

13.7%
46.1%
28.4%

28.0%

11.7%
48.0%
48.4%

97.9%
13.9%
29.3%

45.4%

93.3%
2.6%
32.3%

38.2%
–77.6%
41.1%

29.4%

$388,139
388,576
178,324

$341,271
265,905
138,895

$172,455
233,437
107,386

$955,039

$746,071

$513,278

$ 44,651
44,903
28,279

117,833
(500)
(6,614)

$ 39,991
30,350
19,055

$ 20,693
29,579
14,403

89,396
1,611
(1,677)

64,675
7,208
(2,846)

31.8%
–131.0%
294.4%

$110,719

$ 89,330

$ 69,037

23.9%

11.5%
11.6%
15.9%

12.3%
11.6%

11.7%
11.4%
13.7%

12.0%
12.0%

12.0%
12.7%
13.4%

12.6%
13.5%

of the remaining valve product lines to the oil and gas industry were
down in 2004 as compared to the prior year. In addition, foreign cur-
rency translation favorably impacted sales by $2.3 million in 2004 as
compared to 2003.

Operating income for the year increased by 12% over the prior year. The
increase was mainly due to solid organic growth of 9% and the contri-
butions from the 2004 acquisitions, which generated operating
income of $1 million in 2004. The increase in organic operating income
is mainly due to contract cost overruns on a safety relief valve project
and inventory write-offs of approximately $2.9 million in 2003 that did
not reoccur in 2004, higher volume and a stronger sales mix within our
power generation products, and higher overall volumes for our valve
products to the oil and gas industry and electronic products to the U.S.
Navy. The increase was partially offset by the lower volume to the U.S.
Navy, driven by the proﬁt impact related to the two large higher margin
contracts in 2003 that did not reoccur in 2004. These projects con-
tributed approximately $9.7 million in operating income in 2003. For-
eign currency translation had a $0.2 million positive impact on 2004
operating income as compared to 2003.

The Corporation’s Flow Control segment reported sales of $341.3 mil-
lion for 2003, a 98% increase over 2002 sales of $172.5 million. The
higher sales largely reﬂect the full year of revenues from the acquisi-
tions of EMD and TAPCO International, Inc. completed in the fourth
quarter of 2002. The 2003 incremental sales from these acquisitions

2 5

amounted to $170.3 million, driven mainly by strong ﬁnancial perfor-
mance from EMD. The remaining business units of this segment pro-
duced organic sales growth of 13%, which was driven by higher sales to
the commercial nuclear power generation market, nuclear and non-
nuclear naval programs, and domestic and international oil and gas
markets. Higher sales to the commercial nuclear power generation mar-
kets were due to the launch of new product lines and the expedited out-
age service requirements by the power generation plants. The
non-nuclear naval products sales growth was due to new products, such
as ball valves and JP-5 fuel valve systems, and higher electronic sales
drove the nuclear naval product growth. Sales of the coker valve prod-
ucts to the petrochemical and oil and gas markets were up due to new
orders while the remaining product lines in those markets were essen-
tially ﬂat with the prior year. In addition, foreign currency translation
favorably impacted sales by $2.4 million in 2003 as compared to 2002.

Operating income for 2003 increased by 93% over 2002. Acquisitions
made in the fourth quarter of 2002 generated incremental operating
income of $21.3 million in 2003, while the balance of the segment
businesses rose 2% over 2002. The organic growth was mainly driven
by higher volume mentioned above, favorable sales mix, and improved
productivity gained from the relocation of the electronics unit, offset by
slightly lower margins related to start-up costs on the new product
launches and cost overruns on a safety relief valve project. In addition,
unanticipated shipping delays and a delay in launching strategic plans
for improved operating cost efﬁciencies at our international unit
resulted in an operating loss for the year. However, in late 2003, a new
enterprise resource planning system was installed and various process
improvements were implemented. Foreign currency translation had a
$0.2 million positive impact on 2003 operating income as compared
to 2002.

Backlog at December 31, 2004 is $396.3 million compared with $317.8
million at December 31, 2003 and $304.3 million at December 31,
2002. New orders received in 2004 totaled $436.7 million, which rep-
resents a 24% increase over 2003 new orders of $353.7 million and a
160% increase over new orders received in 2002. Approximately 50%
of the increase in new orders for 2004 is due to the 2004 acquisitions.
The remaining improvement is due to record orders for our coker valves
to the oil and gas industry and higher overall commercial orders.

MOTION CONTROL

The Corporation’s Motion Control segment reported sales of $388.6
million for 2004, a 46% increase over 2003 sales of $265.9 million.
The higher sales largely reﬂect the contributions of the 2004 acquisi-
tions of Dy 4, Primagraphics, and Synergy, and the full year contribu-
tions of the December 2003 acquisitions of Systran, Novatronics, and
Pickering. The 2004 incremental sales associated with these acquisi-
tions amounted to $110.8 million. Sales from the remaining base busi-
nesses grew 4% organically. Improvement in commercial aerospace
aftermarket sales contributed $5.9 million to the growth, $2.8 million
of which came from the Corporation’s repair and overhaul business,
with the remainder attributable mainly to increased sensors and con-
trols sales. Drive system sales to the European ground defense market
declined by $2.9 million as expedited customer delivery requirements
shifted production from the beginning of 2004 into 2003. Domestic
electro-mechanical systems production experienced a slight increase
in domestic military aerospace sales, with F/A-22 production and
spares revenue replacing F-16 spares sales, which had ramped up at

2 6

the end of 2003. The base embedded computing businesses were
essentially ﬂat, with increased sales to the domestic military aero-
space market of $10.1 million driven by new contract wins including the
start of full scale production of radar warning systems for the U.S.
Army’s helicopter programs and the design, development, and inte-
gration of the actuators for the 767 refueling program. These wins were
offset by declines to the domestic ground defense market of $10.6 mil-
lion mainly from scheduled production declines on the Abrams tank
and the Bradley Fighting Vehicle, while Bradley spares revenue
remained strong through 2004 due to the support of the Iraqi war
effort. Additionally, foreign currency translation favorably impacted
sales in 2004 by $7.7 million as compared to 2003.

Operating income for 2004 increased 48% over the prior year. Acquisi-
tions made in 2003 and 2004 generated incremental operating
income of $8.9 million, while the base businesses increased 22%. The
improvement was driven by the higher sales volume, favorable sales
mix from commercial aerospace aftermarket services and spares, and
implemented cost control initiatives, offset by lower margin develop-
ment work performed in anticipation of follow on production orders.
The segment beneﬁted from reductions in reserve requirements at its
European sensors business totaling $1.7 million during 2004, result-
ing in a $2.5 million variance in a year over year comparison, since the
majority of the reserves were recorded in 2003. Foreign currency trans-
lation had a $1.2 million positive impact on 2004 operating income as
compared to 2003.

Motion Control segment sales in 2003 were 14% higher than 2002
sales of $233.4 million. The higher sales largely reﬂect the full year con-
tributions of the April 2002 acquisitions of Penny & Giles (“P&G”) and
Autronics and the contributions of the 2003 acquisitions of Collins
Technologies, Peritek, Systran, and Novatronics. The 2003 incremen-
tal sales associated with these acquisitions amounted to $28.0 mil-
lion. Sales from the remaining base businesses were essentially ﬂat.
Strong domestic ground defense sales, primarily related to the expe-
dited deliveries of spare parts for the Bradley Fighting Vehicle to sup-
port the Iraqi war effort, an increase in sales of military aerospace
products, primarily resulting from new orders for F-16 spare parts and
the Joint Strike Fighter development, and higher sales of military elec-
tronics for the Global Hawk unmanned aerial reconnaissance system
were offset by lower volume associated with the overhaul and repair
services provided to the global commercial airline industry and lower
OEM commercial aircraft production. The softening in the demand for
the commercial aerospace business and related services, which began
in 2001, continued through 2003. In addition, foreign currency trans-
lation favorably impacted sales in 2003 by $6.4 million as compared
to 2002.

Operating income for 2003 increased 3% over the prior year. Acquisi-
tions made in 2002 and 2003 generated incremental operating
income of $2.3 million, while the balance of the segment businesses
was essentially ﬂat as compared to 2002. Slightly lower operating
income from the base businesses was mainly due to the lower volume,
lower overhead absorption, and the write-off of obsolete inventory at
our overhaul and repair services business unit. Operating income of
our commercial aerospace OEM business also declined due to lower
volume. This decline was offset by higher operating income for our mil-
itary aerospace products, which rose due to volume and cost improve-
ments. Higher operating
land-based defense
businesses was due to higher volume and more favorable sales mix

income for our

from the spare parts for the Bradley Fighting Vehicle. Foreign currency
translation had a $0.9 million favorable impact on operating income in
2003 as compared to 2002.

Backlog at December 31, 2004 was $229.6 million compared with
$186.3 million at December 31, 2003 and $173.2 million at Decem-
ber 31, 2002. Acquisitions made during 2004 represents $37.5 million
of the backlog at December 31, 2004. New orders received in 2004
totaled $383.5 million, which represents a 53% increase over 2003
new orders of $250.1 million and an 89% increase over new orders
received in 2002. The increase is mainly due to the segment’s 2003
and 2004 acquisitions, which accounted for $105.5 million in incre-
mental new orders in 2004 versus 2003.

METAL TREATMENT

The Corporation’s Metal Treatment segment reported sales of $178.3
million in 2004, an increase of 28% over 2003 sales of $138.9 million.
Organic sales growth of 21% contributed $24.7 million to the increase.
The organic growth was due to strong sales growth from our new laser
peening technology, which contributed $4.8 million in incremental
sales, as well as solid growth in our global shot peening services, which
contributed $14.2 million of incremental sales mainly in the German
automotive, European commercial aerospace, and North American
commercial and military aerospace markets. Sales from the heat treat-
ing division were up $2.8 million over the prior year period mainly due
to overﬂow from a competitor and new aluminum treatment capabilities
for the aerospace industry. The remaining sales increase was due to
contributions from 2003 and 2004 acquisitions, which contributed
$12.7 million of incremental sales during 2004. The main contributor to
this increase was the E/M Engineered Coatings Solutions businesses,
which were acquired in April 2003. In addition, foreign currency trans-
lation favorably impacted sales by $5.8 million as compared to 2003.

Operating income for 2004 increased 48% to $28.3 million from $19.1
million during 2003. Margin improvement was due to higher sales vol-
ume, favorable sales mix due to higher laser peening sales, and imple-
mented cost reduction initiatives. Offsetting the margin improvements
were increased medical costs and higher energy costs as compared to
the prior year period. Foreign currency translation had a $1.5 million
positive impact on 2004 operating income as compared to the prior
year period.

Metal Treatment sales for 2003 were 29% higher than 2002 sales of
$107.4 million. The higher sales largely reﬂect the contributions from
the acquisition of the assets of Advanced Material Process (“AMP”) in
March 2003 and E/M Engineered Coatings Solutions in April 2003 and
the full year contributions of the 2002 acquisitions of the assets of
Brenner Tool & Die, Inc. and Ytstruktur Arboga AB. The 2003 incre-
mental sales associated with these acquisitions amounted to $23.5
million. Sales from the remaining base businesses grew 7% mainly due
to domestic and international sales from our new laser peening tech-
nology. Our core shot peening sales were down slightly in our North
American divisions due mainly to slow downs in the commercial aero-
space and automotive markets. The improvement in core shot peening
sales from our European divisions was mainly driven by favorable for-
eign currency translation. Sales from our heat treating services were
essentially ﬂat year over year, whereas the sales from our reed valve
product line declined due to the softness in the automotive industry.
Foreign currency translation had a $5.2 million positive impact on
2003 sales as compared to 2002.

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

Operating income for 2003 increased 32% from the prior year. Acquisi-
tions made in 2002 and 2003 generated incremental operating income
of $1.6 million. This incremental income is net of a loss associated with
our ﬁnishing division, which was negatively impacted by a customer
bankruptcy. The base businesses rose 22% over 2002. The organic
operating income growth is due to favorable sales mix from our laser
peening services, higher volume overall, and the beneﬁt from cost
reduction initiatives. In 2002, this segment incurred higher start-up
costs at new facilities and nonrecurring costs associated with the relo-
cation of a shot peening facility. Foreign currency translation favorably
impacted 2003 operating income by $1.6 million as compared to 2002.

Backlog at December 31, 2004 was $1.9 million compared with $1.4
million at December 31, 2003 and $1.0 million at December 31, 2002.
New orders received in 2004 totaled $178.7 million, which represents
a 28% increase from 2003 new orders of $139.4 million and a 67%
increase over new orders received in 2002. The increase is mainly due
to the improvement in the global economy, which positively impacted
the core shot peening business and the segment’s recent acquisitions.

CORPORATE AND OTHER EXPENSES

The Corporation had non-segment operating costs of $6.6 million in
2004. The operating costs consisted mainly of environmental remedi-
ation and administrative expenses, consulting fees associated with
Sarbanes-Oxley Section 404 compliance, incremental compensation
cost, debt ﬁnancing expenses, and other administrative expenses.

The Corporation had non-segment operating costs of $1.7 million in
2003. The operating costs consisted mainly of environmental reme-
diation and administrative expenses, incremental compensation cost,
additional workers compensation insurance cost, director fees associ-
ated with additional Board of Directors’ meetings and a stock award,
debt ﬁnancing expenses, and other administrative expenses. These
expenses were partially offset by the collection of interest on a 2002
net legal settlement.

Non-segment operating costs for 2002 were $2.8 million, which con-
sisted mainly of net environmental remediation and administrative
expenses, post-employment expenses, professional consulting costs
associated with the integration of the recent acquisitions, debt com-
mitment fee expenses associated with the Corporation’s prior credit
agreements, insurance costs, charitable contributions, and other
administrative expenses. These expenses were partially offset by a net
legal settlement.

NON-OPERATING INCOME/EXPENSES

The Corporation recorded non-operating other income (excluding inter-
est expense) in 2004, 2003 and 2002, of $0.1 million, $0.4 million,
and $4.5 million, respectively. In 2002, the Corporation recorded non-
recurring items, the net effect of which had a favorable pre-tax impact
in 2002 of $3.6 million.

INTEREST EXPENSE

Interest expense increased $6.4 million in 2004 as compared to 2003.
Higher debt levels associated with the funding of acquisitions
accounted for approximately 60% of the increase, and the remaining
increase was due to higher interest rates. Similarly, 2003 increased
$3.9 million from 2002.

2 7

PROVISION FOR INCOME TAXES

The effective tax rates for 2004, 2003, and 2002 are 34.1%, 37.8%,
and 37.1%, respectively. The 2004 effective tax rate included nonre-
curring beneﬁts totaling $3.4 million resulting primarily from the
change in legal structure of one of our subsidiaries and a favorable IRS
appeals settlement relating to the 1993 tax year.

The 2003 effective tax rate included the beneﬁt of the restructuring of
some of our European operations. The 2002 effective rate included a
one-time beneﬁt of 1.3% associated with the recovery of research and
development tax credits related to earlier years.

Liquidity and Capital Resources

SOURCES AND USES OF CASH

The Corporation derives the majority of its operating cash inﬂow from
receipts on the sale of goods and services and cash outﬂow for the pro-
curement of materials and labor and is therefore subject to market ﬂuc-
tuations and conditions. A substantial portion of the Corporation’s
business is in the defense sector, which is characterized by long-term
contracts. Most of our long-term contracts allow for several billing points
(progress or milestones) that provide the Corporation with cash receipts
as costs are incurred throughout the project rather than upon contract
completion, thereby reducing working capital requirements. In some
cases, these payments can exceed the costs incurred on a project.

OPERATING ACTIVITIES

The Corporation’s working capital was $212.2 million at December 31,
2004, a decrease of $26.4 million from the working capital at Decem-
ber 31, 2003 of $238.6 million. The ratio of current assets to current lia-
bilities was 2.1 to 1 at December 31, 2004, compared with a ratio of 2.8
to 1 at December 31, 2003. Cash and cash equivalents totaled $41.0
in the aggregate at December 31, 2004, down from $98.7 million at
December 31, 2003. The decrease is primarily due to the use of avail-
able cash to fund the acquisition of Dy 4 Systems, Inc. on January 31,
2004. Excluding the impact on cash, working capital increased $33.1
million due to the acquisition of eleven businesses in 2004. In addition
to the impact of these acquisitions, working capital changes were high-
lighted by an increase in receivables of $39.9 million and an increase in
accounts payable and accrued expenses of $19.8 million. Unbilled
receivables increased substantially due to funding and other opera-
tional delays by certain customers as well as increased contracts for
which progress billings do not apply. The increase in accounts payable
and accrued expenses is due to the timing of year-end payments and
higher accrued compensation.

Short-term debt was $1.6 million at December 31, 2004 and $1.0 mil-
lion at December 31, 2003. Long-term debt was $340.9 million at
December 31, 2004, an increase of $116.7 million from the balance
at December 31, 2003. The increase in long-term debt is due to addi-
tional funds borrowed to purchase eleven businesses during 2004.
Days sales outstanding at December 31, 2004 decreased to 47 days
from 56 days at December 31, 2003 while inventory turnover
increased to 5.8 turns at December 31, 2004 as compared to 5.5 turns
at December 31, 2003.

The Corporation’s balance of cash and cash equivalents totaled
$98.7 million at December 31, 2003, an increase of $51.0 million from
the balance at December 31, 2002. Excluding the impact on cash,
working capital increased $9.2 million due to the acquisition of seven

2 8

businesses in 2003. In addition to the impact of these acquisitions,
working capital changes were also highlighted by a decrease in
deferred revenue due to a reduction in those contracts whose billings
were in excess of incurred costs. Accrued expenses increased mainly
due to higher accrued interest on the Senior Notes. Short-term debt
was $1.0 million at December 31, 2003, a decrease of $31.8 million
from the balance at December 31, 2002. The decrease in short-term
debt was due to repayment of the majority of outstanding indebted-
ness under the existing revolving credit facilities. Days sales outstand-
ing at December 31, 2003 increased to 56 days from 51 days at
December 31, 2002, while inventory turnover increased to 5.5 turns at
December 31, 2003 as compared to 4.8 turns at December 31, 2002.

INVESTING ACTIVITIES

The Corporation has acquired twenty-four businesses since 2001 and
expects to continue to seek acquisitions that are consistent with our
long-term growth strategy. A combination of cash resources, funds
available under the Corporation’s credit agreement, and proceeds
from the Corporation’s Senior Notes issue were utilized to fund these
acquisitions, which totaled $247.4 million and $69.8 million in 2004
and 2003, respectively. As noted in Note 2 to the Consolidated Finan-
cial Statements, certain acquisition agreements contain contingent
purchase price adjustments, such as potential earn-out payments.
During 2004, the Corporation made approximately $3.0 million in such
payments relative to prior period acquisitions. Additional acquisitions
will depend, in part, on the availability of ﬁnancial resources at a cost
of capital that meets our stringent criteria. As such, future acquisitions,
if any, may be funded through the use of the Corporation’s cash and
cash equivalents, through additional ﬁnancing available under the
credit agreements, or through new ﬁnancing alternatives.

Capital expenditures were $32.5 million in 2004, $33.3 million in 2003,
and $35.0 million in 2002. In 2004 principal capital expenditures
included new and replacement machinery and equipment within the
business segments and for the expansion of new product lines and facil-
ities. Capital expenditures in 2003 included building expansions, a new
laser peening facility and associated laser machinery, and various other
machinery and equipment. Capital expenditures in 2002 included the
construction of a new facility, additional machinery and equipment for
start-up operations, and new Enterprise Resource Planning computer
systems at two facilities.

FINANCING ACTIVITIES

On July 23, 2004, the Corporation amended its existing credit facility,
increasing the available line of credit from $225 million to $400 mil-
lion. The Corporation plans to use the credit line for working capital pur-
poses, internal growth initiatives, funding of future acquisitions, and
other general corporate purposes. The agreement expires in 2009.

At December 31, 2004, the Corporation had a $400 million revolving
credit agreement (the “Agreement”) with a group of ten banks. Bor-
rowings under the Agreement bear interest at a ﬂoating rate based on
market conditions. In addition, the Corporation’s interest rate and level
of facility fees are dependent on certain ﬁnancial ratio levels, as
deﬁned in the Agreement. The Corporation is subject to annual facility
fees on the commitments under the Agreement. In connection with the
Agreement, the Corporation paid customary transaction fees that have
been deferred and are being amortized over the term of the Agreement.
The Corporation is required under the Agreement to maintain certain

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

ﬁnancial ratios and meet certain ﬁnancial tests, the most restrictive of
which is a debt to capitalization limit of 55%. The Agreement does not
contain any subjective acceleration clauses. At December 31, 2004,
the Corporation is in compliance with these covenants and had the ﬂex-
ibility to issue additional debt of $365 million without exceeding the
covenant limit deﬁned in the Agreement. The Corporation would con-
sider other ﬁnancing alternatives to maintain capital structure balance
and ensure compliance with all debt covenants. Cash borrowings
(excluding letters of credit) under the Agreement at December 31, 2004
were $124.5 million as compared to $8.9 million at December 31,
2003. The unused credit available under the agreement at December
31, 2004 was $256.7.

On September 25, 2003 the Corporation issued $200.0 million of
Senior Notes (the “Notes”). The Notes consist of $75.0 million of 5.13%
Senior Notes that mature on September 25, 2010 and $125.0 million
of 5.74% Senior Notes that mature on September 25, 2013. The Notes
are senior unsecured obligations and are equal in right of payment to
the Corporation’s existing senior indebtedness. The Corporation, at its
option, can prepay at any time all or from time to time any part of, the
Notes, subject to a make-whole amount in accordance with the terms of
the Note Purchase Agreement. In connection with the Notes, the Cor-
poration paid customary fees that have been deferred and will be amor-
tized over the terms of the Notes. The Corporation is required under the
Note Purchase Agreement to maintain certain ﬁnancial ratios, the most
restrictive of which is a debt to capitalization limit of 60%. At December
31, 2004, the Corporation is in compliance with these covenants.

On November 6, 2003 the Corporation entered into two interest rate
swap agreements with notional amounts of $20 million and $60 mil-
lion effectively to convert the ﬁxed interest on the $75 million 5.13%
Senior Notes and $125 million 5.74% Senior Notes, respectively, to vari-
able rates based on speciﬁed spreads over six-month LIBOR. In the
short-term, the swaps are expected to provide the Corporation with a
lower level of interest expense related to the Notes.

Industrial revenue bonds, which are collateralized by real estate, were
$14.3 million at December 31, 2004 and $14.4 million at December 31,
2003. The loans outstanding under the Senior Notes, Interest Rate
Swaps, Revolving Credit Agreement, and Industrial Revenue Bonds had
variable interest rates averaging 3.65% for 2004 and 2.88% for 2003.

FUTURE COMMITMENTS

Cash generated from operations are considered adequate to meet the
Corporation’s operating cash requirements for the upcoming year,
including planned capital expenditures of approximately $50 million,
interest payments of approximately $14 million to $16 million, esti-
mated income tax payments of approximately $40 million to $50 mil-
lion, dividends of approximately $8 million, pension funding of
approximately $10 million, and additional working capital require-
ments. The Corporation has approximately $2 million in short-term
environmental liabilities, which is management’s estimation of cash
requirements for 2005. Additionally, the Corporation is committed to
potential earn-out payments on seven of its acquisitions dating back to
2001, which are estimated to be approximately $4 million to $6 million
in 2005. There can be no assurance, however, that the Corporation will
continue to generate cash ﬂow at the current level. If cash generated
from operations is not sufﬁcient to support these requirements and
investing activities, the Corporation may be required to reduce capital

expenditures, reﬁnance a portion of its existing debt, or obtain addi-
tional ﬁnancing.

In 2005, capital expenditures are expected to be approximately $50
million due to the full-year effect of the 2004 acquisitions and the con-
tinued expansion of the segments. These expenditures will include
construction of new facilities, expansion of facilities to accommodate
new product lines, and new machinery and equipment, such as addi-
tional investment in our laser peening technology.

The following table quantiﬁes our signiﬁcant future contractual obliga-
tions and commercial commitments as of December 31, 2004:

(In thousands)

2005
2006
2007
2008
2009
Thereafter

Total

Debt Principal

Repayments(1)

Operating
Leases

$ 1,630
59
5,060
62
124,564
208,994

$15,846
12,933
11,074
9,141
6,016
17,727

Total

$ 17,476
12,992
16,134
9,203
130,580
226,721

$340,369

$72,737

$413,106

(1) Amounts exclude a $2.1 million adjustment to the fair value of long-term
debt relating to the Corporation’s interest rate swap agreements that will not
be settled in cash.

The Corporation does not have material purchase obligations. Most of
our raw material purchase commitments are made directly pursuant to
speciﬁc contract requirements.

Undistributed earnings of $23.3 million from the Corporation’s foreign
subsidiaries are considered permanently reinvested. The American
Jobs Creation Act of 2004 provides a one-time dividends received
deduction on the repatriation of certain foreign earnings to a U.S. tax-
payer, of which the Corporation is considering for possible repatriation
a range of zero to $23 million, which would result in additional income
tax expense of zero to $3 million. Additional information regarding the
repatriation of foreign earnings is presented in Note 9.

On March 3, 2005, the Corporation completed the acquisition of Indal
Technologies, Inc. The purchase price of 78 million Canadian dollars
(approximately $63 million) was funded from the revolving credit facil-
ity. See Recent Development for more information on this acquisition.

Critical Accounting Policies
Our consolidated ﬁnancial statements and accompanying notes are
prepared in accordance with generally accepted accounting principles
in the United States of America. Preparing consolidated ﬁnancial state-
ments requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues, and expenses. These
estimates and assumptions are affected by the application of our
accounting policies. Critical accounting policies are those that require
application of management’s most difﬁcult, subjective, or complex
judgments, often as a result of the need to make estimates about the
effects of matters that are inherently uncertain and may change in sub-
sequent periods. We believe that the following are some of the more
critical judgment areas in the application of our accounting policies
that affect our ﬁnancial condition and results of operations:

2 9

REVENUE RECOGNITION

INVENTORY

The realization of revenue refers to the timing of its recognition in the
accounts of the Corporation and is generally considered realized or
realizable and earned when the earnings process is substantially
complete and all of the following criteria are met: 1) persuasive evi-
dence of an arrangement exists; 2) delivery has occurred or services
have been rendered; 3) the Corporation’s price to its customer is ﬁxed
or determinable; and 4) collectibility is reasonably assured.

The Corporation records sales and related proﬁts on production and ser-
vice type contracts as units are shipped and title and risk of loss has
transferred or as services are rendered. This method is used in our Metal
Treatment segment and in some of the business units within the Motion
Control and Flow Control segments that serve non-military markets.

For certain contracts in our Flow Control and Motion Control segments
that require performance over an extended period before deliveries
begin, sales and estimated proﬁts are recorded by applying the per-
centage-of-completion method of accounting. The percentage-of-com-
pletion method of accounting is used primarily for the Corporation’s
defense contracts and certain long-term commercial contracts. This
method recognizes revenue and proﬁt as the contracts progress
towards completion. For certain contracts that contain a signiﬁcant
number of performance milestones, as deﬁned by the customer, sales
are recorded based upon achievement of these performance mile-
stones. The performance milestone method is an output measure of
progress towards completion made in terms of results achieved. For
certain ﬁxed price contracts, where none or a limited number of mile-
stones exist, the cost-to-cost method is used, which is an input mea-
sure of progress towards completion. Under the cost-to-cost input
method, sales and proﬁts are recorded based on the ratio of costs
incurred to an estimate of costs at completion.

Application of percentage-of-completion methods of revenue recogni-
tion requires the use of reasonable and dependable estimates of the
future material, labor, and overhead costs that will be incurred. The per-
centage-of-completion method of accounting for long-term contracts
requires a disciplined cost estimating system in which all functions of
the business are integrally involved. These estimates are determined
based upon industry knowledge and experience of the Corporation’s
engineers, project managers, and ﬁnancial staff. These estimates are
signiﬁcant and reﬂect changes in cost and operating performance
throughout the contract and could have a signiﬁcant impact on operat-
ing performance. Adjustments to original estimates for contract rev-
enue, estimated costs at completion, and the estimated total proﬁt are
often required as work progresses throughout the contract and as expe-
rience and more information is obtained, even though the scope of work
under the contract may not change. These changes are recorded on a
cumulative basis in the period they are determined to be necessary.

Under the percentage-of-completion method of accounting, provisions
for estimated losses on uncompleted contracts are recognized in the
period in which the likelihood of such losses is determined. Certain
contracts contain provisions for the redetermination of price and, as
such, management defers a portion of the revenue from those con-
tracts until such time as the price has been ﬁnalized.

Some of the Corporation’s customers withhold certain amounts from
the billings they receive. These retainages are generally not due until
the project has been completed and accepted by the customer.

3 0

Inventory costs include materials, direct labor, and manufacturing
overhead costs, which are stated at the lower of cost or market, where
market is limited to the net realizable value. The Corporation estimates
the net realizable value of its inventories and establishes reserves to
reduce the carrying amount of these inventories to net realizable value,
as necessary. We continually evaluate the adequacy of the inventory
reserves by reviewing historical scrap rates, on-hand quantities, as
compared with historical and projected usage levels and other antici-
pated contractual requirements. The stated inventory costs are also
reﬂective of the estimates used in applying the percentage-of-comple-
tion revenue recognition method.

The Corporation purchases materials for the manufacture of compo-
nents for sale. The decision to purchase a set quantity of a particular
item is inﬂuenced by several factors including: current and projected
price, future estimated availability, existing and projected contracts to
produce certain items, and the estimated needs for its businesses.

For certain of its long-term contracts, the Corporation utilizes progress
billings, which represent amounts billed to customers prior to the deliv-
ery of goods and services and are recorded as a reduction to inventory
and receivables. Progress billings are generally based on costs incurred,
including direct costs, overhead, and general and administrative costs.

PENSION AND OTHER POSTRETIREMENT BENEFITS

The Corporation, in consultation with its actuaries, determines the
appropriate assumptions for use in determining the liability for future
pension and other postretirement beneﬁts. The most signiﬁcant of
these assumptions include the number of employees who will receive
beneﬁts along with the tenure and salary level of those employees, the
expected return on plan assets, the discount rates used to determine
plan obligations, and the trends in the costs of medical and other
health care beneﬁts in the case of the postretirement beneﬁt obliga-
tions. Changes in these assumptions, if signiﬁcant in future years, will
have an effect on the Corporation’s pension and postretirement
expense, associated pension and postretirement assets and liabilities,
and our annual cash requirements to fund these plans.

The discount rate used to determine the beneﬁt obligations of the
plans as of December 31, 2004 and the annual periodic costs for 2005
were lowered in 2004 for the EMD Pension Plan and EMD Postretire-
ment Beneﬁt Plan to better reﬂect current economic conditions. The
reduction in the discount rate increased the beneﬁt obligation on the
plans. The Corporation also increased the rate of future compensation
costs for the EMD Pension Plan to better reﬂect current conditions. This
rate increase caused an additional increase to the beneﬁt obligation.
The change in these two assumptions was based upon current and
future economic indicators. A quarter of one percentage point
decrease in the discount rate would have the effect of increasing the
annual pension expense by $0.4 million and the pension beneﬁt oblig-
ation by $7.7 million.

The overall expected return on assets assumption is based on a com-
bination of historical performance of the pension fund and expecta-
tions of future performance. The historical returns are determined
using the market-related value of assets, which is the same value used
in the calculation of annual net periodic beneﬁt cost. The market-
related value of assets includes the recognition of realized and unre-
alized gains and losses over a ﬁve-year period, which effectively

averages the volatility associated with the actual performance of the
plan’s assets from year to year. Although over the last ten years the mar-
ket related value of assets had an average annual yield of 10.9%, the
actual returns averaged 9.4% during the same period. The Corporation
has consistently used the 8.5% rate as a long-term overall average
return. Given the uncertainties of the current economic and geopoliti-
cal landscapes, we consider the 8.5% to be a reasonable assumption
of the future long-term investment returns.

The long-term medical trend assumptions starts with a current rate that
is in line with expectations for the near future, and then grades the rates
down over time until it reaches an ultimate rate that is close to expec-
tations for growth in GDP. The reasoning is that medical trends cannot
continue to be higher than the rate of GDP growth in the long term. Any
change in the expectation of these rates to return to a normal level will
have an impact on the Corporation.

The timing and amount of future pension income or expense to be rec-
ognized each year is dependent on the demographics and expected
earnings of the plan participants, the expected interest rates in effect
in future years, and the actual and expected investment returns of the
assets in the pension trust.

See Note 14 for further information on the Corporation’s pension and
postretirement plans, including an estimate of future cash contributions.

ENVIRONMENTAL RESERVES

The Corporation provides for environmental reserves on a site by site
basis when, in conjunction with internal and external legal counsel, it
is determined that a liability is both probable and estimable. In many
cases, the liability is not ﬁxed or capped when the Corporation ﬁrst
records a liability for a particular site. If only a range of potential liabil-
ity can be estimated and no amount within the range is more probable
than another, a reserve will be established at the low end of that range.
At sites involving multiple parties, the Corporation accrues environ-
mental liabilities based upon its expected share of the liability, taking
into account the ﬁnancial viability of other jointly liable partners. Judg-
ment is required when we make assumptions and estimate costs
expected to be incurred for environmental remediation activities due
to, among other factors, difﬁculties in assessing the extent and type of
environmental remediation to be performed, the impact of complex
environmental regulations and remediation technologies, and agree-
ments between potentially responsible parties to share in the cost of
remediation. In estimating the future liability and continually evaluat-
ing the sufﬁciency of such liabilities, the Corporation weighs certain
factors including the Corporation’s participation percentage due to a
settlement by or bankruptcy of other potentially responsible parties, a
change in the environmental laws requiring more stringent require-
ments, an increase or decrease in the estimated time required to reme-
diate, a change in the estimate of future costs that will be incurred to
remediate the site, and changes in technology related to environmen-
tal remediation. The Corporation does not believe that continued com-
pliance with environmental laws applicable to its operations will have
a material adverse effect on its ﬁnancial condition or results of opera-
tion. However, given the level of judgment and estimation used in the
recording of environmental reserves, it is reasonably possible that
materially different amounts could be recorded if different assump-
tions were used or if circumstances were to change, such as environ-
mental regulations or remediation solution remedies.

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

As of December 31, 2004, the Corporation’s environmental reserves
totaled $25.2 million, the majority of which is long-term. Approximately
80% of the environmental reserves represent the current value of
anticipated remediation costs and are not discounted primarily due to
the uncertainty of timing of expenditures. The remaining environmen-
tal reserves are discounted to reﬂect the time value of money since the
amount and timing of cash payments for the liability are reliably deter-
minable. The discount rate used was 4%, which produces an amount
at which the environmental liability could be settled in an arm’s length
transaction with a third party. All environmental reserves exclude any
potential recovery from insurance carriers or third-party legal actions.

PURCHASE ACCOUNTING

The Corporation applies the purchase method of accounting to its
acquisitions. Under this method, the purchase price, including any cap-
italized acquisition costs, is allocated to the underlying tangible and
intangible assets acquired and liabilities assumed based on their
respective fair market values, with any excess recorded as goodwill.
The Corporation, generally in consultation with third-party valuation
advisors, determines the fair values of such assets and liabilities. Dur-
ing 2004, the fair value of assets acquired, net of cash, and liabilities
assumed through acquisitions were estimated to be $303.0 million
and $42.3 million, respectively. The assigned initial fair value to these
acquisitions are tentative and may be revised prior to ﬁnalization,
which is to be completed within a reasonable period, generally within
one year of acquisition.

GOODWILL

The Corporation has $364.3 million in goodwill as of December 31,
2004. The recoverability of goodwill is subject to an annual impairment
test based on the estimated fair value of the underlying businesses.
Additionally, goodwill is tested for impairment when an event occurs or
if circumstances change that would more likely than not reduce the fair
value of a reporting unit below its carrying amount. These estimated
fair values are based on estimates of future cash ﬂows of the busi-
nesses. Factors affecting these future cash ﬂows include the contin-
ued market acceptance of the products and services offered by the
businesses, the development of new products and services by the busi-
nesses and the underlying cost of development, the future cost
structure of the businesses, and future technological changes. Man-
agement estimates are also used for the Corporation’s cost of capital
in discounting the projected future cash ﬂows and the Corporation uti-
lizes an independent third party cost of capital analysis in determina-
tion of its estimates. If it has been determined that impairment has
occurred, the Corporation may be required to recognize an impairment
of its asset, which would be limited to the difference between the book
value of the asset and its fair value. Any such impairment would be rec-
ognized in full in the reporting period in which it has been identiﬁed.

OTHER INTANGIBLE ASSETS

Other intangible assets are generally the result of acquisitions and con-
sist primarily of purchased technology, customer related intangibles,
trademarks and service marks, and technology licenses. Intangible
assets are recorded at their fair values as determined through pur-
chase accounting and are amortized ratably to match their cash ﬂow
streams over their estimated useful lives, which range from 1 to 20
years. The Corporation reviews the recoverability of intangible assets,
including the related useful lives, whenever events or changes in cir-

3 1

cumstances indicate that the carrying amount might not be recover-
able. Any impairment would be recorded in the reporting period in
which it has been identiﬁed.

Recently Issued Accounting Standards
In May 2004, the FASB issued FASB Staff Position (“FSP”) 106-2,
“Accounting and Disclosure Requirements Related to the Medicare Pre-
scription Drug, Improvement and Modernization Act of 2003.” This guid-
ance supersedes FSP 106-1 issued in January 2004 and clariﬁes the
accounting and disclosure requirements for employers with postretire-
ment beneﬁt plans that have been or will be affected by the passage of
the Medicare Prescription Drug Improvement and Modernization Act of
2003 (“the Act”). The Act introduces two new features to Medicare that
an employer needs to consider in measuring its obligation and net peri-
odic postretirement beneﬁt costs. The effective date for the new require-
ments is the ﬁrst interim or annual period beginning after June 15, 2004.
Additional information regarding the impact of the Act is presented in
Note 14.

In November 2004, the FASB issued SFAS No. 151, (“Inventory Costs —
an amendment of ARB No. 43, Chapter 4”). This Statement amends the
guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the
accounting for abnormal amounts of idle facility expense, freight, han-
dling costs, and wasted material (spoilage), requiring that these items
be recognized as current-period charges regardless of whether they
meet the criterion of “so abnormal.” In addition, this Statement requires
that allocation of ﬁxed production overheads to the costs of conversion
be based on the normal capacity of the production facilities. This State-
ment is effective for annual reporting periods beginning after June 15,
2005. The Corporation does not anticipate that the adoption of this
statement will have a material impact on the Corporation’s results of
operation or ﬁnancial condition.

In December 2004, the FASB issued SFAS No. 123 (revised 2004),
“Accounting for Stock-Based Compensation.” This Statement requires
a public entity to measure the cost of employee services received in
exchange for an award of equity instruments based on the grant-date
fair value of the award (with limited exceptions). That cost will be rec-
ognized over the period during which an employee is required to pro-
vide service in exchange for the award — the requisite service period
(usually the vesting period). No compensation cost is recognized for
equity instruments for which employees do not render the requisite ser-
vice. Employee share purchase plans will not result in recognition of
compensation cost if certain conditions are met; those conditions are
much the same as the related conditions in Statement 123. This State-
ment is effective as of the beginning of the ﬁrst interim or annual
reporting period that begins after June 15, 2005. The Corporation has
not yet determined the impact of this pronouncement.

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Non-
monetary Assets and Amendment of APB Opinion No. 29.” This state-
ment eliminates the exception from fair value measurement for
nonmonetary exchanges of similar productive assets in paragraph 21
(b) of APB Opinion No. 29 and replaces it with an exception for
exchanges that do not have commercial substance. This Statement
speciﬁes that a nonmonetary exchange has commercial substance if
the future cash ﬂows of the entity are expected to change signiﬁcantly
as a result of the exchange. This Statement is effective for annual
reporting periods beginning after June 15, 2005. The Corporation does
not anticipate that the adoption of this statement will have a material
impact on the Corporation’s results of operation or ﬁnancial condition.

In December 2004, the FASB issued FSP 109-1, “Accounting for
Income Taxes, to the Tax Deduction on Qualiﬁed Production Activities
Provided by the American Jobs Creation Act of 2004.” The FASB staff
believes that the deduction should be accounted for as a special
deduction in accordance with Statement 109. The staff also believes
that the special deduction should be considered by an enterprise in
measuring deferred taxes when graduated tax rates are a signiﬁcant
factor and when assessing whether an evaluation allowance is
required. This FSP became effective upon issuance. The adoption of
this FSP did not have a material impact on the Corporation’s results of
operation or ﬁnancial position.

In December 2004, the FASB issued FSP 109-2, “Accounting and Dis-
closure Guidance for the Foreign Earnings Repatriation Provision
within the American Jobs Creation Act of 2004.” The American Jobs
Creation Act of 2004 provides for a special one-time tax deduction of
85 percent of certain foreign earnings that are repatriated. FASB 109
left intact the provisions of APB Opinion No. 23 “Accounting for Income
Taxes — Special Areas,” which provides an exception related to foreign
earnings that will not be repatriated. Under this exception, income
taxes were not required to be accrued. This FSP became effective upon
issuance; however the FASB staff is allowing additional time to evalu-
ate its effect. The Corporation does not anticipate that the adoption of
this FSP will have a material impact on the Corporation’s results of
operation or ﬁnancial condition. Additional information regarding this
FSP is presented in Note 9.

Recent Development
On March 3, 2005, the Corporation acquired the outstanding shares of
Indal Technologies, Inc (“Indal”). The purchase price of the acquisition,
subject to customary adjustments as provided for in the Stock Pur-
chase Agreement, was 78.0 million Canadian dollars (approximately
$63 million). Management funded the purchase from the Corpora-
tion’s revolving credit facility. Revenues of the purchased business
were 49.4 million Canadian dollars (approximately $38.2 million) for
the year ended December 31, 2004. Indal’s operations are located in
Toronto, Canada. Management intends to incorporate the operations
of Indal into the Corporation’s Motion Control segment.

3 2

QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

The Corporation is exposed to certain market risks from changes in
interest rates and foreign currency exchange rates as a result of its
global operating and ﬁnancing activities. Although foreign currency
translation had a favorable impact on sales and operating income in
2004, the Corporation seeks to minimize any material risks from for-
eign currency exchange rate ﬂuctuations through its normal operating
and ﬁnancing activities and, when deemed appropriate, through the
use of derivative ﬁnancial instruments. The Corporation did not use
such instruments for trading or other speculative purposes. The Cor-
poration used interest rate swaps and forward foreign currency con-
tracts to manage interest rate and currency rate exposures during the
year ended December 31, 2004. Information regarding the Corpora-
tion’s accounting policy on ﬁnancial instruments is contained in Note
1-K to the Consolidated Financial Statements.

The Corporation’s market risk for a change in interest rates relates pri-
marily to the debt obligations. The Corporation shifted its interest rate
exposure from 46% variable at December 31, 2003 to 65% variable at
December 31, 2004. The variable rates on the revolving credit agree-
ment and the interest rate swap agreements are based on market
rates. The increase in variable interest rate exposure is due to the Cor-
poration funding its 2004 acquisition activity through its revolving
credit facility. A change in interest rates of 1% would have an impact on
consolidated interest expense of approximately $2 million. Information
regarding the Corporation’s Senior Notes, Revolving Credit Agreement,
and Interest Rates Swaps is contained in Note 10 to the Consolidated
Financial Statements.

Financial instruments expose the Corporation to counter-party credit
risk for non-performance and to market risk for changes in interest and
foreign currency rates. The Corporation manages exposure to counter-

party credit risk through speciﬁc minimum credit standards, diversiﬁ-
cation of counter-parties, and procedures to monitor concentrations of
credit risk. The Corporation monitors the impact of market risk on the
fair value and cash ﬂows of its investments by investing primarily in
investment grade interest bearing securities, which have short-term
maturities. The Corporation attempts to minimize possible changes in
interest and currency rates to amounts that are not material to the Cor-
poration’s consolidated results of operations and cash ﬂows.

The acquisitions of Dy 4 and Primagraphics have increased the Corpo-
ration’s exposure to foreign currency exchange rate ﬂuctuations
related primarily to the Canadian dollar. The Corporation currently has
a hedging program in place to mitigate the Canadian dollar foreign cur-
rency risk. Although the majority of the Corporation’s sales, expenses,
and cash ﬂows are transacted in U.S. dollars, the Corporation does
have some market risk exposure to changes in foreign currency
exchange rates, primarily as it relates to the value of the U.S. dollar ver-
sus the Canadian dollar, the British pound, the euro, and the Swiss
franc. Any signiﬁcant change in the value of the currencies of those
countries in which the Corporation does business against the U.S. dol-
lar could have an adverse effect on the Corporation’s business, ﬁnan-
cial condition, and results of operations. Management seeks to
minimize the risk from these foreign currency ﬂuctuations principally
through invoicing the Corporation’s customers in the same currency as
that of the manufacturer of the products. However, the Corporation’s
efforts to minimize these risks may not be successful. If foreign
exchange rates were to collectively weaken or strengthen against the
dollar by 10%, net earnings would have been reduced or increased,
respectively, by approximately $3 million as it relates exclusively to
foreign currency exchange rate exposures.

3 3

REPORT OF THE CORPORATION

The consolidated ﬁnancial statements appearing on pages 38 through
41 of this Annual Report have been prepared by the Corporation in con-
formity with accounting principles generally accepted in the United
States of America. 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 con-
sistent with that in the ﬁnancial statements.

The Corporation maintains accounting systems, procedures, and inter-
nal 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 prop-
erly recorded. The accounting systems and internal accounting con-
trols are augmented by written policies and procedures; organizational
structure providing for a division of responsibilities; selection and train-
ing 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 rela-
tive cost and expected beneﬁts of speciﬁc control measures. Manage-
ment of the Corporation has completed an assessment of the
Corporation’s internal controls over ﬁnancial reporting and has
included “Managements’ Annual Report On Internal Control Over
Financial Reporting” on page 35 of this Annual Report.

Deloitte & Touche LLP, independent auditors, performed an audit of the
Corporation’s ﬁnancial statements that also included forming an opinion

on management’s assessment of internal controls over ﬁnancial report-
ing as well as the effectiveness of such controls for the year ended
December 31, 2004. An audit includes examining, on a test basis, evi-
dence supporting the amounts and disclosures in the ﬁnancial state-
ments. An audit also includes assessing the accounting principles used
and signiﬁcant estimates made by management, as well as evaluating
the overall ﬁnancial statement presentation. The objective of their audit
is the expression of an opinion on the fairness of the presentation of the
Corporation’s ﬁnancial statements in conformity with accounting prin-
ciples generally accepted in the United States of America, in all mater-
ial respects, on management’s assessment of the effectiveness of
internal controls over ﬁnancial reporting, and on the effectiveness of
internal controls over ﬁnancial reporting as of December 31, 2004.

The Audit Committee of the Board of Directors, composed entirely of
directors who are independent of the Corporation, appoints the inde-
pendent auditors for ratiﬁcation by stockholders and, among other
things, considers the scope of the independent auditors’ examination,
the audit results and the adequacy of internal accounting controls of
the Corporation. The independent auditors and the internal auditor
have direct access to the Audit Committee, and they meet with the com-
mittee from time to time, with and without management present, to dis-
cuss accounting, auditing, non-audit consulting services, internal
control, and ﬁnancial reporting matters.

CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT

On March 21, 2003, Curtiss-Wright Corporation replaced Pricewater-
houseCoopers LLP (“PwC”) as the Corporation’s principal accountants.
The decision to change principal accountants was approved by the
Audit Committee of the Board of Directors.

In connection with the audits of the ﬁscal year ended December 31,
2002 and to the date of change, there were no disagreements with
PwC on any matter of accounting principles or practices, ﬁnancial
statement disclosure, or auditing scope or procedure, which disagree-
ment, if not resolved to PwC’s satisfaction, would have caused PwC to
make reference to the subject matter of the disagreement in connec-
tion with its reports.

The audit report of PwC on the ﬁnancial statements of the Corporation
as of and for the year ended December 31, 2002 did not contain an
adverse opinion or disclaimer of opinion, nor was the report qualiﬁed
or modiﬁed as to audit scope or accounting principles.

During the most recent ﬁscal year and through date of change,
there were no reportable events (as deﬁned in Regulation S-K Item
304 (a)(1)(v)).

The Corporation requested that PwC furnish it with a letter addressed
to the United States Securities and Exchange Commission stating
whether or not it agreed with the above statements. A copy of such let-
ter, dated March 25, 2003 is ﬁled as Exhibit 16.1 to the Corporation’s
Form 8-K ﬁled with the SEC on March 26, 2003.

On March 21, 2003, the Corporation appointed Deloitte & Touche, LLP
as the Corporation’s new principal accountants for the ﬁscal year 2003
subject to their normal new client acceptance procedures. Prior to its
appointment, the Corporation did not consult with Deloitte & Touche,
LLP regarding any matters or events set forth in Items 304 (a)(2)(i) and
(ii) of Regulation S-K of the Securities Exchange Act of 1934.

3 4

MANAGEMENT’S ANNUAL REPORT ON INTERNAL
CONTROL OVER FINANCIAL REPORTING

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

The Corporation’s management is responsible for establishing and
maintaining adequate internal control over ﬁnancial reporting, as
deﬁned in Rules 13a-15 (f) and 15d-15 (f) under the U.S. Securities
Exchange Act of 1934, amended.

Because of its inherent limitations, internal control over ﬁnancial
reporting may not prevent or detect misstatements. Also, projections
of the future effectiveness of controls currently deemed effective are
subject to the risk that controls may become inadequate because of
changes in conditions or deterioration in the degree of compliance with
the policies or procedures.

As discussed in Note 2 to the consolidated ﬁnancial statements, the
Corporation acquired Synergy Microsystems, Inc., Primagraphics Hold-
ings Limited, Groth Equipment Corporation of Louisiana, Nova
Machine Products Corporation, Trentec, Inc., the Everlube Products
and Evesham divisions of Morgan Advanced Ceramics, Inc., and the
Government Marine Business Unit of Flowserve Corporation during the
year ended December 31, 2004. These acquisitions with combined
assets and current year revenues at December 31, 2004 represent

13.6 and 5.2 percent, respectively, of the Corporation’s consolidated
amounts, and have been excluded from management’s assessment of
internal control over ﬁnancial reporting.

The Corporation’s management assessed the effectiveness of the Cor-
poration’s internal control over ﬁnancial reporting as of December 31,
2004. In making this assessment, the Corporation’s management
used the criteria established by the Committee of Sponsoring Organi-
zations of the Treadway Commission in Internal Control-Integrated
Framework.

Based on management’s assessment, excluding the acquired compa-
nies referred to in the third paragraph, management believes that, as
of December 31, 2004, the Corporation’s internal control over ﬁnancial
reporting is effective based on the established criteria.

The Corporation’s assessment of the effectiveness of internal controls
over ﬁnancial reporting as of December 31, 2004 has been audited by
Deloitte & Touche LLP, an independent registered public accounting ﬁrm,
and their report thereon is included on page 36 of this Annual Report.

3 5

REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Curtiss-Wright Corporation, Roseland, New Jersey
We have audited management’s assessment, included in the accom-
panying Management’s Annual Report On Internal Control Over Finan-
cial Reporting, that Curtiss-Wright Corporation and subsidiaries (the
“Company”) maintained effective internal control over ﬁnancial report-
ing as of December 31, 2004, based on the criteria established in Inter-
nal Control — Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. As described
in Management’s Annual Report On Internal Control Over Financial
Reporting, management excluded from their assessment the internal
control over ﬁnancial reporting at Synergy Microsystems, Inc., Prima-
graphics Holdings Limited, Groth Equipment Corporation of Louisiana,
Nova Machine Products Corporation, Trentec, Inc., the Everlube Prod-
ucts and Evesham divisions of Morgan Advanced Ceramics, Inc., and
the Government Marine Business Unit of Flowserve Corporation (col-
lectively the “Acquired Subsidiaries”), which were acquired during the
year ended December 31, 2004 and whose ﬁnancial statements
reﬂect total assets and revenues constituting 13.6 and 5.2 percent,
respectively, of the related consolidated ﬁnancial statement amounts
as of and for the year ended December 31, 2004. Accordingly, our audit
did not include the internal control over ﬁnancial reporting at the
Acquired Subsidiaries. The Company’s management is responsible for
maintaining effective internal control over ﬁnancial reporting and for
its assessment of the effectiveness of internal control over ﬁnancial
reporting. Our responsibility is to express an opinion on management’s
assessment and an opinion on the effectiveness of the Company’s
internal control over ﬁnancial reporting based on our audit.

We conducted our audit in accordance with the standards of the Pub-
lic Company Accounting Oversight Board (United States). Those stan-
dards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over ﬁnancial
reporting was maintained in all material respects. Our audit included
obtaining an understanding of internal control over ﬁnancial reporting,
evaluating management’s assessment, testing and evaluating the
design and operating effectiveness of internal control, and performing
such other procedures as we considered necessary in the circum-
stances. We believe that our audit provides a reasonable basis for our
opinions.

A company’s internal control over ﬁnancial reporting is a process
designed by, or under the supervision of, the company’s principal exec-
utive and principal ﬁnancial ofﬁcers, or persons performing similar
functions, and effected by the company’s board of directors, manage-
ment, and other personnel to provide reasonable assurance regarding

the reliability of ﬁnancial reporting and the preparation of ﬁnancial
statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over
ﬁnancial reporting includes those policies and procedures that (1) per-
tain to the maintenance of records that, in reasonable detail, accu-
rately and fairly reﬂect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of ﬁnancial state-
ments in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors
of the company; and (3) provide reasonable assurance regarding pre-
vention or timely detection of unauthorized acquisition, use, or dispo-
sition of the company’s assets that could have a material effect on the
ﬁnancial statements.

Because of the inherent limitations of internal control over ﬁnancial
reporting, including the possibility of collusion or improper manage-
ment override of controls, material misstatements due to error or fraud
may not be prevented or detected on a timely basis. Also, projections
of any evaluation of the effectiveness of the internal control over ﬁnan-
cial reporting to future periods are subject to the risk that the controls
may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that the Company main-
tained effective internal control over ﬁnancial reporting as of Decem-
ber 31, 2004, is fairly stated, in all material respects, based on the
criteria established in Internal Control — Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Com-
mission. Also in our opinion, the Company maintained, in all material
respects, effective internal control over ﬁnancial reporting as of
December 31, 2004, based on the criteria established in Internal Con-
trol — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consoli-
dated ﬁnancial statements as of and for the year ended December 31,
2004 of the Company and our report dated March 15, 2005 expressed
an unqualiﬁed opinion on those ﬁnancial statements.

Deloitte & Touche LLP
Parsippany, New Jersey
March 15, 2005

3 6

REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Curtiss-Wright Corporation, Roseland, New Jersey
We have audited the accompanying consolidated balance sheets of
Curtiss-Wright Corporation and subsidiaries (the “Company”) as of
December 31, 2004 and 2003, and the related consolidated state-
ments of earnings, stockholders’ equity, and cash ﬂows for the years
then ended. 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. The ﬁnancial state-
ments of the Company for the year ended December 31, 2002 were
audited by other auditors whose report, dated March 12, 2003,
expressed an unqualiﬁed opinion on those statements.

We conducted our audits in accordance with the standards of the Pub-
lic Company Accounting Oversight Board (United States). Those stan-
dards 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.
An audit also includes assessing the accounting principles used and
signiﬁcant estimates made by management, as well as evaluating the
overall ﬁnancial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Curtiss-Wright Corporation
In our opinion, the consolidated statements of earnings, stockholders’
equity and of cash ﬂows for the year ended December 31, 2002, pre-
sent fairly, in all material respects, the results of operations and cash
ﬂows of Curtiss-Wright Corporation and its subsidiaries for the year
ended December 31, 2002, in conformity with accounting principles
generally accepted in the United States of America. 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 audit. We conducted our audit of these statements in
accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

In our opinion, such consolidated 2004 and 2003 ﬁnancial statements
present fairly, in all material respects, the ﬁnancial position of the Com-
pany at December 31, 2004 and 2003, and the results of its operations
and its cash ﬂows for the years then ended in conformity with account-
ing principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the effective-
ness of the Company’s internal control over ﬁnancial reporting as of
December 31, 2004, based on the criteria established in Internal Con-
trol — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated
March 15, 2005 expressed an unqualiﬁed opinion on management’s
assessment of the effectiveness of the Company’s internal control over
ﬁnancial reporting and an unqualiﬁed opinion on the effectiveness of
the Company’s internal control over ﬁnancial reporting.

Deloitte & Touche LLP
Parsippany, New Jersey
March 15, 2005

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 audit provides a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Florham Park, New Jersey
March 12, 2003

3 7

CONSOLIDATED STATEMENTS OF EARNINGS

For the years ended December 31, (In thousands, except per share data)

Net sales
Cost of sales

Gross proﬁt
Research and development costs
Selling expenses
General and administrative expenses
Pension (expense) income, net
Environmental remediation and administrative expenses

Operating income
Interest expense
Other income, net

Earnings before income taxes
Provision for income taxes

Net earnings

N E T E A R N I N G S P E R S H A R E :

Basic earnings per share

Diluted earnings per share

See notes to consolidated ﬁnancial statements.

2004

2003

2002

$ 955,039
624,536

$746,071
505,153

$513,278
337,192

330,503
(33,825)
(61,648)
(118,526)
(500)
(5,285)

110,719
(12,031)
65

98,753
(33,687)

240,918
(22,111)
(38,816)
(90,849)
1,611
(1,423)

89,330
(5,663)
389

84,056
(31,788)

176,086
(11,624)
(29,553)
(71,843)
7,208
(1,237)

69,037
(1,810)
4,508

71,735
(26,599)

$ 65,066

$ 52,268

$ 45,136

3.07

3.02

2.53

2.50

2.21

2.16

3 8

CONSOLIDATED BALANCE SHEETS

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

At December 31, (In thousands)

A S S E T S :
Current assets:

Cash and cash equivalents
Receivables, net
Inventories, net
Deferred tax assets, net
Other current assets

Total current assets

Property, plant, and equipment, net
Prepaid pension costs
Goodwill
Other intangible assets, net
Other assets

Total assets

L I A B I L I T I E S :
Current liabilities:

Short-term debt
Accounts payable
Accrued expenses
Income taxes payable
Other current liabilities

Total current liabilities

Long-term debt
Deferred tax liabilities, net
Accrued pension and other postretirement beneﬁt costs
Long-term portion of environmental reserves
Other liabilities

Total liabilities

C O N T I N G E N C I E S A N D C O M M I T M E N T S (Notes 10, 13, 15 & 17)
S T O C K H O L D E R S ’ E Q U I T Y :
Preferred stock, $1 par value, 650,000 shares authorized, none issued
Common stock, $1 par value, 33,750,000 shares authorized at December 31, 2004

and 2003, 16,646,359 and 16,611,464 shares issued at December 31, 2004 and 2003,
respectively; outstanding shares were 12,673,912 at December 31, 2004 and 12,021,610 at
December 31, 2003

Class B common stock, $1 par value, 11,250,000 shares authorized and 8,764,800 shares

issued at December 31, 2004 and 2003; outstanding shares were 8,764,246
at December 31, 2004 and December 31, 2003

Additional paid-in capital
Retained earnings
Unearned portion of restricted stock
Accumulated other comprehensive income

Less: Common treasury stock, at cost (3,973,001 shares at December 31, 2004 and 4,590,408 shares

at December 31, 2003)

Total stockholders’ equity

Total liabilities and stockholders’ equity

See notes to consolidated ﬁnancial statements.

2004

2003

41,038
214,084
115,979
25,693
12,460

$ 98,672
143,362
97,880
23,630
10,979

409,254

374,523

265,243
77,802
364,313
140,369
21,459

238,139
77,877
220,058
48,268
14,800

$1,278,440

$973,665

1,630
65,364
63,413
13,895
52,793

997
43,776
44,938
6,748
39,424

197,095

135,883

340,860
40,043
80,612
23,356
20,860

224,151
21,798
75,633
21,083
16,236

702,826

494,784

—

16,646

16,611

8,765
55,885
601,070
(34)
36,797

8,765
52,998
543,670
(55)
22,634

719,129

644,623

(143,515)

(165,742)

575,614

478,881

$1,278,440

$973,665

3 9

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, (In thousands)

2004

2003

2002

C A S H F L O W S F R O M O P E R AT I N G AC T I V I T I E S :
Net earnings

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization
Non-cash pension expense (income)
Net loss (gain) on sales and disposals of real estate and equipment
Deferred income taxes
Changes in operating assets and liabilities, net of businesses acquired:

Proceeds from sales of short-term investments
Purchases of short-term investments
(Increase) decrease in receivables
Decrease in inventories
(Decrease) increase in progress payments
Increase (decrease) in accounts payable and accrued expenses
Increase (decrease) in deferred revenue
Increase (decrease) in income taxes payable
Pension contributions
Increase in other current and long-term assets
Increase in other current and long-term liabilities
Other, net

Total adjustments

Net cash provided by operating activities

C A S H F L O W S F R O M I N V E S T I N G AC T I V I T I E S :
Proceeds from sales and disposals of real estate and equipment
Acquisition of intangible assets
Additions to property, plant, and equipment
Acquisition of new businesses, net of cash acquired

$ 65,066

$ 52,268

$ 45,136

40,742
500
1,134
(3,500)

—
—
(39,875)
7,578
(4,338)
19,785
4,849
8,403
—
(1,830)
6,833
—

40,281

105,347

1,192
(2,100)
(32,452)
(247,402)

31,327
(1,611)
359
6,035

—
—
(5,958)
1,893
1,967
9,343
(10,070)
3,240
(5,729)
(963)
995
428

31,256

83,524

1,132
(1,575)
(33,329)
(69,793)

18,693
(7,208)
(681)
4,011

77,050
(35,600)
31
197
3,464
(61)
(2,820)
(11,101)
—
(3,254)
2,156
(228)

44,649

89,785

2,447
—
(34,954)
(164,661)

Net cash used for investing activities

(280,762)

(103,565)

(197,168)

C A S H F L O W S F R O M F I N A N C I N G AC T I V I T I E S :
Borrowings of debt
Principal payments on debt
Proceeds from exercise of stock options
Dividends paid

Net cash provided by ﬁnancing activities

Effect of foreign currency

Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Supplemental disclosure of non-cash investing activities:

Fair value of assets acquired from current year acquisitions
Additional consideration on prior year acquisitions
Fair value of Common Stock issued as consideration for acquisitions
Liabilities assumed from current year acquisitions
Cash acquired

Acquisition of new businesses, net of cash acquired

See notes to consolidated ﬁnancial statements.

4 0

624,106
(508,025)
7,458
(7,666)

384,712
(314,204)
3,868
(6,520)

220,400
(92,795)
6,226
(6,141)

115,873

67,856

127,690

1,908

(57,634)
98,672

3,140

50,955
47,717

1,915

22,222
25,495

$ 41,038

$ 98,672

$ 47,717

$ 303,041
3,027
(14,000)
(42,331)
(2,335)

$ 78,231
3,147
—
(10,750)
(835)

$ 317,003
928
—
(152,104)
(1,166)

$ 247,402

$ 69,793

$ 164,661

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUIT Y

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

(In thousands)

Common
Stock

Class B
Common
Stock

Additional
Paid in
Capital

Retained
Earnings

Unearned
Portion of
Restricted
Stock Awards

Accumulated
Other
Comprehensive
Income (Loss)

Comprehensive
Income

Treasury
Stock

J A N U A R Y 1 , 2 0 0 2

$10,618

$4,382

$52,532

$469,303

$(78)

$ (6,831)

$(179,972)

Comprehensive income:

Net earnings
Translation adjustments, net

Total comprehensive income

Dividends paid
Stock options exercised, net
Other

—
—

—
—
—

—
—

—
—
—

—
—

45,136
—

—
(332)
—

(6,141)
—
—

D E C E M B E R 3 1 , 2 0 0 2

10,618

4,382

52,200

508,298

Comprehensive income:

Net earnings
Translation adjustments, net

Total comprehensive income

Dividends paid
Stock options exercised, net
Other
Two-for-one common stock split

effected in the form of a 100%
stock dividend

—
—

—
—
—

—
—

—
—
—

—
—

52,268
—

—
741
57

(6,520)
—
—

5,993

4,383

—

(10,376)

$45,136
13,313

$58,449

$52,268
16,152

$68,420

—
—

—
—
18

(60)

—
—

—
—
5

—

—
13,313

—
—
—

6,482

—
16,152

—
—
—

—

D E C E M B E R 3 1 , 2 0 0 3

16,611

8,765

52,998

543,670

(55)

22,634

Comprehensive income:

Net earnings
Translation adjustments, net

Total comprehensive income

Dividends paid
Stock options exercised, net
Stock issued under employee
stock purchase plan, net
Equity issued in connection

with acquisitions

Other

—
—

—

—
—

65,066
—

—
(1,748)

(7,666)
—

1,358

3,259
18

—

—
—

—

—
21

—
14,163

$65,066
14,163

$79,229

—
—

—

—
—

—
9,280
—

(170,692)

—
—

—
4,812
138

—

(165,742)

—
—

—
11,345

—

10,741
141

D E C E M B E R 3 1 , 2 0 0 4

$16,646

$8,765

$55,885

$601,070

$(34)

$36,797

$(143,515)

See notes to consolidated ﬁnancial statements.

4 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies
Curtiss-Wright Corporation and its subsidiaries (the “Corporation”) is a
diversiﬁed multinational manufacturing and service company that
designs, manufactures, and overhauls precision components and sys-
tems and provides highly engineered products and services to the
aerospace, defense, automotive, shipbuilding, processing, oil, petro-
chemical, agricultural equipment, railroad, power generation, security,
and metalworking industries. Operations are conducted through 33
manufacturing facilities, 56 metal treatment service facilities, and 2
aerospace component overhaul and repair locations.

A. Principles of Consolidation
The consolidated ﬁnancial statements include the accounts of Curtiss-
Wright and its majority-owned subsidiaries. All material intercompany
transactions and accounts have been eliminated. Certain prior year
information has been reclassiﬁed to conform to current presentation.

B. Use of Estimates
The ﬁnancial statements of the Corporation have been prepared in con-
formity with accounting principles generally accepted in the United
States of America, which requires management to make estimates and
judgments that affect the reported amount of assets, liabilities, rev-
enue, and expenses and disclosure of contingent assets and liabilities
in the accompanying ﬁnancial statements. The most signiﬁcant of
these estimates include the estimate of costs to complete long-term
contracts under the percentage-of-completion accounting methods,
the estimate of useful lives for property, plant, and equipment, cash
ﬂow estimates used for testing the recoverability of assets, pension
plan and postretirement obligation assumptions, estimates for inven-
tory obsolescence, estimates for the valuation and useful lives of intan-
gible assets, warranty reserves, and the estimate of future
environmental costs. Actual results may differ from these estimates.

C. Revenue Recognition
The realization of revenue refers to the timing of its recognition in the
accounts of the Corporation and is generally considered realized or
realizable and earned when the earnings process is substantially com-
plete and all of the following criteria are met: 1) persuasive evidence of
an arrangement exists; 2) delivery has occurred or services have been
rendered; 3) the Corporation’s price to its customer is ﬁxed or deter-
minable; and 4) collectibility is reasonably assured.

The Corporation records sales and related proﬁts on production and
service type contracts as units are shipped and title and risk of loss
have transferred or as services are rendered, net of estimated returns
and allowances. Sales and estimated proﬁts under certain long-term
contracts are recognized under the percentage-of-completion meth-
ods of accounting, whereby proﬁts are recorded pro rata, based upon
current estimates of direct and indirect costs to complete such con-
tracts. In addition, the Corporation also records sales under certain
long-term government ﬁxed price contracts upon achievement of per-
formance milestones as speciﬁed in the related contracts. Losses on
contracts are provided for in the period in which the losses become
determinable. Revisions in proﬁt estimates are reﬂected on a cumula-
tive basis in the period in which the basis for such revision becomes

4 2

known. Deferred revenue represents the excess of the billings over cost
and estimated earnings on long-term contracts.

D. Cash and 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.

E. Inventory
Inventories are stated at lower of production cost (principally average
cost) or market. Production costs are comprised of direct material and
labor and applicable manufacturing overhead.

F. Progress Payments
Certain long-term contracts provide for the interim billings as costs are
incurred on the respective contracts. Pursuant to contract provisions,
agencies of the U.S. government and other customers are granted title
or a secured interest in the unbilled costs included in unbilled receiv-
ables and materials and work-in-process included in inventory to the
extent of progress payments. Accordingly, these progress payments
received have been reported as a reduction of unbilled receivables and
inventories, as presented in Notes 3 and 4.

G. Property, Plant, and Equipment
Property, plant, and equipment are carried at cost less accumulated
depreciation. Major renewals and betterments are capitalized, while
maintenance and repairs that do not improve or extend the life of the
asset are expensed in the period they are incurred. Depreciation is
computed using the straight-line method based upon the estimated
useful lives of the respective assets.

Average useful lives for property, plant and equipment are as follows:

Buildings and improvements
Machinery, equipment, and other

5 to 40 years
3 to 15 years

H. Intangible Assets
Intangible assets are generally the result of acquisitions and consist
primarily of purchased technology, customer related intangibles, trade-
marks and service marks, and technology licenses. The Corporation
amortizes such assets ratably, to match their cash ﬂow streams, over
their estimated useful lives. Useful lives range from 1 to 20 years. See
Note 7 for further information on other intangible assets.

I. Impairment of Long-Lived Assets
The Corporation reviews the recoverability of all long-term assets,
including the related useful lives, whenever events or changes in cir-
cumstances indicate that the carrying amount of a long-lived asset
might not be recoverable. If required, the Corporation compares the
estimated undiscounted future net cash ﬂows to the related asset’s
carrying value to determine whether there has been an impairment. If
an asset is considered impaired, the asset is written down to fair value,
which is based either on discounted cash ﬂows or appraised values in
the period the impairment becomes known. There were no such write-
downs in 2004, 2003, or 2002.

J. Goodwill
Goodwill results from business acquisitions. The Corporation accounts
for business acquisitions by allocating the purchase price to tangible
and intangible assets and liabilities. Assets acquired and liabilities
assumed are recorded at their fair values, and the excess of the pur-
chase price over the amounts allocated is recorded as goodwill. The
recoverability of goodwill is subject to an annual impairment test, or
whenever an event occurs or circumstances change that would more
likely than not result in an impairment. The impairment test is based
on the estimated fair value of the underlying businesses. See Note 6
for further information on goodwill.

K. Fair Value of Financial Instruments
SFAS No. 107, “Disclosure About Fair Value of Financial Instruments,”
requires certain disclosures regarding the fair value of ﬁnancial instru-
ments. Due to the short maturities of cash and cash equivalents,
accounts receivable, accounts payable, and accrued expenses, the net
book value of these ﬁnancial instruments are deemed to approximate
fair value.

The estimated fair values of the Corporation’s debt instruments at
December 31, 2004 aggregated $345.7 million compared to a carry-
ing value of $342.5 million. The carrying amount of the variable inter-
est rate debt approximates fair value because the interest rates are
reset periodically to reﬂect current market conditions. Fair values for
the Corporation’s ﬁxed rate debt were estimated by management,
utilizing valuations provided by third parties in accordance with their
proprietary models.

The carrying amount of the interest rate swaps reﬂects their fair value as
determined by management, utilizing third parties in accordance with
their proprietary models.

The fair values described above may not be indicative of net realizable
value or reﬂective of future fair values. Furthermore, the use of differ-
ent methodologies to determine the fair value of certain ﬁnancial
instruments could result in a different estimate of fair value at the
reporting date.

L. Research and Development
The Corporation funds research and development programs for com-
mercial products and independent research and development and bid
and proposal work related to government contracts. Development
costs include engineering and ﬁeld support for new customer require-
ments. Corporation-sponsored research and development costs are
expensed as incurred.

Research and development costs associated with customer-sponsored
programs are charged to inventory and are recorded in cost of sales
when products are delivered or services performed.

M. Environmental Costs
The Corporation establishes a reserve for a potential environmental
remediation liability on a site by site basis when it concludes that a
determination of legal liability is probable, and the amount of the lia-
bility can be reasonably estimated based on current law and existing
technologies. Such amounts, if quantiﬁable, reﬂect the Corporation’s
estimate of the amount of that liability. If only a range of potential lia-
bility can be estimated and no amount within the range is more proba-

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

ble than another, a reserve will be established at the low end of that
range. At sites involving multiple parties, the Corporation accrues envi-
ronmental liabilities based upon its expected share of the liability, tak-
ing into account the ﬁnancial viability of other jointly liable partners.
Such reserves, which are reviewed quarterly, are adjusted as assess-
ment and remediation efforts progress or as additional information
become available. Approximately 80% of the Corporation’s environ-
mental reserves as of December 31, 2004 represent the current value
of anticipated remediation costs and are not discounted primarily due
to the uncertainty of timing of expenditures. The remaining environ-
mental reserves are discounted to reﬂect the time value of money
since the amount and timing of cash payments for the liability are reli-
ably determinable. All environmental reserves exclude any potential
recovery from insurance carriers or third-party legal actions.

N. Accounting for Stock-Based Compensation
In accordance with SFAS No. 123, “Accounting for Stock-Based Com-
pensation”, the Corporation elected to account for its stock-based
compensation using the intrinsic value method under Accounting Prin-
ciples Board Opinion No. 25, “Accounting for Stock Issued to Employ-
ees”. As such, the Corporation does not recognize compensation
expense on non-qualiﬁed stock options granted to employees under
the Corporation’s 1995 Long-Term Incentive Plan (“LTI Plan”), when
the exercise price of the options is equal to the market price of the
underlying stock on the date of the grant, or on non-qualiﬁed stock
options granted under the Corporation’s Employee Stock Purchase
Plan (“ESPP”).

Pro forma information regarding net earnings and earnings per share
is required by SFAS No. 123 and has been determined as if the Corpo-
ration had accounted for its employee stock option grants under the
fair value method prescribed by that Statement. Information with
regard 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 Note 12. The fair value of the LTI Plan options
was estimated at the date of grant using a Black-Scholes option pric-
ing model with the following weighted average assumptions:

Risk-free interest rate
Expected volatility
Expected dividend yield
Weighted-average option life
Weighted-average grant-date
fair value of options

2004

2003

2002

3.89%
31.37%
0.64%
7 years

3.68%
31.68%
0.94%
7 years

3.61%
31.33%
0.92%
7 years

$21.43

$13.97

$11.81

The fair value of the ESPP options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted
average assumptions:

Risk-free interest rate
Expected volatility
Expected dividend yield
Weighted-average option life
Weighted-average grant-date fair value of options

2004

1.33%
23.99%
0.35%
0.5 years
$11.21

4 3

The Corporation’s pro forma information for the years ended Decem-
ber 31, 2004, 2003, and 2002 is as follows:

the Corporation had repurchased 210,930 shares under this program.
There was no stock repurchased during 2004, 2003, and 2002.

(In thousands, except per share data)

2004

2003

2002

N E T E A R N I N G S :
A S R E P O R T E D

Deduct:

Total stock-based
employee compensation
expense determined
under fair value based
method for all awards,
net of related tax effects

Pro forma
N E T E A R N I N G S
P E R S H A R E :

As reported:
Basic
Diluted
Pro forma:
Basic
Diluted

$65,066

$52,268

$45,136

(1,862)
$63,204

(1,261)
$51,007

(1,524)
$43,612

$
$

3.07
3.02

2.98
2.93

$
$

2.53
2.50

2.47
2.44

$ 2.21
$ 2.16

$ 2.14
$ 2.09

The Corporation receives tax deductions related to the exercise of non-
qualiﬁed LTI Plan options and disqualifying dispositions of stock
granted under the ESPP, the offset of which is recorded in equity. The
tax beneﬁt of these deductions totaled $3.5 million, $1.7 million, and
$2.7 million in 2004, 2003, and 2002, respectively.

O. Capital Stock
On May 23, 2003, the stockholders approved an increase in the num-
ber of authorized shares of the Corporation’s Common Stock from
11,250,000 to 33,750,000. On November 18, 2003, the Board of
Directors declared a 2-for-1 stock split in the form of a 100% stock div-
idend. The split, in the form of 1 share of Common Stock for each share
of Common Stock outstanding and 1 share of Class B Common Stock
for each share of Class B Common Stock outstanding, was payable on
December 17, 2003. To effectuate the stock split, the Corporation
issued 5,993,864 original shares of Common Stock and 4,382,400
original shares of Class B Common Stock, at $1.00 par value from cap-
ital surplus, with a corresponding reduction in retained earnings of
$10.4 million. Accordingly, all references throughout this annual report
to number of shares, per share amounts, stock options data and mar-
ket prices of the Corporation’s two classes of common stock have been
adjusted to reﬂect the effect of the stock split for all periods presented,
where applicable.

In February 2001, the Corporation increased the authorized number of
shares for repurchase under its existing stock repurchase program by
600,000 shares. This increase was an addition to the previous autho-
rization of 300,000 shares. Purchases were authorized to be made from
time to time in the open market or privately negotiated transactions,
depending on market and other conditions, whenever management
believes that the market price of the stock does not adequately reﬂect
the true value of the Corporation and, therefore, represented an attrac-
tive investment opportunity. The shares are held at cost and reissuance
is recorded at the weighted average cost. Through December 31, 2004,

4 4

P. Earnings Per Share
The Corporation is required to report both basic earnings per share
(“EPS”), based on the weighted average number of Common and Class
B shares outstanding, and diluted earnings per share, based on the
basic EPS adjusted for all potentially dilutive shares issuable. The cal-
culation of EPS is disclosed in Note 11.

Q. Income Taxes
The Corporation applies SFAS No. 109, “Accounting for Income Taxes.”
Under the asset and liability method of SFAS No. 109, deferred tax
assets and liabilities are recognized for future tax consequences attrib-
utable to differences between the ﬁnancial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. The effect on deferred tax assets and liabilities of a change in
tax laws is recognized in the results of operations in the period the new
laws are enacted. A valuation allowance is recorded to reduce the car-
rying amounts of deferred tax assets unless it is more likely than not
that such assets will be realized.

R. Foreign Currency Translation
For operations outside the United States of America that prepare ﬁnan-
cial statements in currencies other than the U.S. dollar, the Corporation
translates assets and liabilities at period-end exchange rates and
income statement amounts using weighted average exchange rates for
the period. The cumulative effect of translation adjustments is pre-
sented as a component of accumulated other comprehensive income
within stockholders’ equity. This balance is affected by foreign currency
exchange rate ﬂuctuations and by the acquisition of foreign entities.
Gains and losses from foreign currency transactions are included in
results of operations.

S. Derivatives
The Corporation uses interest rate swaps and forward foreign currency
contracts to manage its exposure to ﬂuctuations in interest rates on a
portion of its ﬁxed rate debt instruments and foreign currency rates at its
foreign subsidiaries. The foreign currency contracts are marked to mar-
ket with changes in the fair value reported in income in the period of
change. The interest rate swap agreements are accounted for as fair
value hedges. The interest rate swaps have been recorded at fair value
on the balance sheet within other non-current assets with changes in fair
value recorded currently in earnings. Additionally, the carrying amount of
the associated debt is adjusted through earnings for changes in fair value
due to change in interest rates. Ineffectiveness is recognized to the
extent that these two adjustments do not offset. The interest rate swap
agreements were assumed to be perfectly effective under the “short cut
method” of SFAS 133. The differential to be paid or received based on
changes in interest rates is recorded as an adjustment to interest
expense in the statement of earnings. Additional information on these
swap agreements is presented in Note 10.

T. Recently Issued Accounting Standards
In May 2004, the FASB issued FASB Staff Position (“FSP”) 106-2,
“Accounting and Disclosure Requirements Related to the Medicare
Prescription Drug, Improvement and Modernization Act of 2003.” This
guidance supersedes FSP 106-1 issued in January 2004 and clariﬁes
the accounting and disclosure requirements for employers with postre-
tirement beneﬁt plans that have been or will be affected by the passage
of the Medicare Prescription Drug Improvement and Modernization Act
of 2003 (“the Act”). The Act introduces two new features to Medicare
that an employer needs to consider in measuring its obligation and net
periodic postretirement beneﬁt costs. The effective date for the new
requirements is the ﬁrst interim or annual period beginning after June
15, 2004. Additional information regarding the impact of the Act is pre-
sented in Note 14.

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs —
an Amendment of ARB No. 43, Chapter 4”. This Statement amends the
guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the
accounting for abnormal amounts of idle facility expense, freight, han-
dling costs, and wasted material (spoilage), requiring that these items
be recognized as current-period charges regardless of whether they
meet the criterion of “so abnormal.” In addition, this Statement
requires that allocation of ﬁxed production overheads to the costs of
conversion be based on the normal capacity of the production facili-
ties. This Statement is effective for annual reporting periods beginning
after June 15, 2005. The Corporation does not anticipate that the
adoption of this statement will have a material impact on the Corpora-
tion’s results of operation or ﬁnancial condition.

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

not anticipate that the adoption of this statement will have a material
impact on the Corporation’s results of operation or ﬁnancial condition.

In December 2004, the FASB issued FSP 109-1, “Accounting for
Income Taxes, to the Tax Deduction on Qualiﬁed Production Activities
Provided by the American Jobs Creation Act of 2004.” The FASB staff
believes that the deduction should be accounted for as a special
deduction in accordance with Statement 109. The staff also believes
that the special deduction should be considered by an enterprise in
measuring deferred taxes when graduated tax rates are a signiﬁcant
factor, and when assessing whether an evaluation allowance is
required. This FSP became effective upon issuance. The adoption of
this FSP did not have a material impact on the Corporations’ results of
operation or ﬁnancial position.

2. Acquisitions
The Corporation acquired eleven businesses in 2004, nine of which are
described in more detail below, seven businesses in 2003, and six
businesses in 2002 as described below. The remaining two businesses
acquired in 2004 had an aggregate purchase price of $1.1 million and
are not considered material. All acquisitions have been accounted for
as purchases with the excess of the purchase price over the estimated
fair value of the net tangible and intangible assets acquired recorded
as goodwill. The Corporation makes preliminary estimates of the pur-
chase price allocations, including the value of identiﬁable intangibles
with a ﬁnite life and records amortization based upon the estimated
useful life of those intangible assets identiﬁed. The Corporation will
adjust these estimates based upon analysis of third party appraisals,
when deemed appropriate, and the determination of fair value when
ﬁnalized, within twelve months from acquisition.

The following unaudited pro forma ﬁnancial information shows the
results of operations for the years ended December 31, 2004 and
2003, as though the 2003 and 2004 acquisitions had occurred on Jan-
uary 1, 2003. The unaudited pro forma presentation reﬂects adjust-
ments for (i) the amortization of acquired intangible assets, (ii)
depreciation of ﬁxed assets at their acquired fair values, (iii) additional
interest expense on acquisition-related borrowings, (iv) the issuance of
stock as consideration, and (v) the income tax effect on the pro forma
adjustments, using local statutory rates. The pro forma adjustments
related to certain acquisitions are based on preliminary purchase price
allocations. Differences between the preliminary and ﬁnal purchase

4 5

price allocations could have a signiﬁcant impact on the unaudited pro
forma ﬁnancial information presented. The unaudited pro forma ﬁnan-
cial information below is presented for illustrative purposes only and is
not necessarily indicative of the operating results that would have been
achieved had the acquisition been completed as of the date indicated
above or the results that may be obtained in the future.

Unaudited (In thousands)

Revenue
Net earnings
Diluted earnings per share

2004

2003

$1,021,634
66,046
$
$
3.05

$956,454
$ 60,091
$
2.84

The results of each acquired business have been included in the con-
solidated ﬁnancial results of the Corporation from the date of acquisi-
tion in the segment indicated as follows:

FLOW CONTROL

GOVERNMENT MARINE BUSINESS UNIT

On November 10, 2004, the Corporation acquired certain assets of the
Government Marine Business Unit (“GMBU”) division of Flowserve Cor-
poration. The effective date of the acquisition was November 1, 2004.
The purchase price, subject to customary adjustments provided for in
the Asset Purchase Agreement, was $28.1 million in cash and the
assumption of certain liabilities. The purchase price was funded from
credit available under the Corporation’s revolving credit facilities. The
excess of the purchase price over the fair value of the net assets
acquired is $7.0 million at December 31, 2004. Revenues of the
purchased business were $26.4 million for the year ended December
31, 2003.

GMBU is a leading designer and manufacturer of highly engineered, crit-
ical function pumps for the U.S. Navy nuclear submarine and aircraft
carrier programs and non-nuclear surface ships. GMBU is the sole
source supplier of main and auxiliary seawater, fresh water, and cooling
pumps, coolant puriﬁcation pumps, injection, chilled water and other
critical pumps. Approximately 85% of this business supports nuclear
programs and 15% supports non-nuclear naval surface programs.
GMBU has a strong and growing aftermarket business for repairs, refur-
bishments, and parts, which constitutes approximately 45% of total
sales. GMBU’s operations are located in Phillipsburg, New Jersey.

GROQUIP

On July 12, 2004, the Corporation acquired the outstanding stock of
Groth Equipment Corporation of Louisiana (“Groquip”). The purchase
price, subject to customary adjustments provided for in the Stock Pur-
chase Agreement, was $4.5 million payable in approximately 18,000
shares of the Corporation’s restricted Common Stock valued at $1.0
million and cash of $3.5 million, and the assumption of certain liabili-
ties. The cash portion of the purchase price was funded from credit
available under the Corporation’s revolving credit facilities. The Corpo-
ration is holding $0.3 million as security for potential indemniﬁcation
claims. Any amount of holdback remaining after claims for indemniﬁ-
cation have been settled will be paid to the seller within 12 months of
the acquisition date. The purchase price approximated the fair value of
the net assets acquired as of December 31, 2004.

Groquip is a market leader in the hydrocarbon and chemical process-
ing industries. Groquip provides products and services for various

4 6

pressure-related processes that ensure safe operation and regulatory
compliance. Groquip is a manufacturer’s sales representative for rup-
ture discs, conservation vents, ﬁre and gas detectors, and pressure
relief valves. They also provide ﬁeld and in-shop service and repairs for
pressure relief valves and a variety of specialty valves. Groquip is head-
quartered in Geismar, Louisiana and has a sales and service center
located in Sulphur, Louisiana. Revenues of the acquired business were
$10.1 million for the twelve months ended June 30, 2004.

NOVA

On May 24, 2004, the Corporation acquired certain assets of NOVA
Machine Products Corporation (“NOVA”). The purchase price was
$20.0 million in cash and the assumption of certain liabilities. The pur-
chase price was funded from credit available under the Corporation’s
revolving credit facilities. As of December 31, 2004, the Corporation
has $0.6 million included in other current liabilities as a result of the
settlement of customary adjustments provided in the Asset Purchase
Agreement. There are provisions in the agreement for additional pay-
ments upon the achievement of certain ﬁnancial performance criteria
through 2009 up to a maximum additional payment of $9.2 million.
Through December 31, 2004, the Corporation has made no payments
of additional consideration under these provisions. The excess of the
purchase price over the fair value of the net assets acquired is $4.5 mil-
lion at December 31, 2004.

NOVA is one of the largest suppliers of safety-related fasteners to the
U.S. nuclear power industry and the Department of Energy, and also
provides a wide range of manufactured and distributed products and
related services. NOVA is headquartered in Middleburg Heights, OH,
with distribution centers in Glendale Heights, IL, and Decatur, AL,
and ﬁve sales ofﬁces throughout the U.S. Revenues of the acquired
business were $17.1 million for the year ended December 31, 2003.

TRENTEC

On May 24, 2004, the Corporation acquired certain assets of Trentec,
Inc. (“Trentec”). The purchase price, subject to customary adjustments
provided for in the Asset Purchase Agreement, was $13.8 million,
payable in approximately 280,000 shares of the Corporation’s
restricted Common Stock valued at $13.0 million, cash of $0.8 million,
and the assumption of certain liabilities. The cash portion of the pur-
chase price is being held by the Corporation as security for potential
indemniﬁcation claims. Any amount of holdback remaining after
claims for indemniﬁcation have been settled will be paid to the seller
within 18 months of the acquisition date. The excess of the purchase
price over the fair value of the net assets acquired is $5.3 million at
December 31, 2004.

Trentec’s services include specialty equipment fabrication, diamond
wiresaw cutting, nuclear power plant equipment qualiﬁcation, and
third-party dedication and supply of nuclear components. Trentec’s
operations are located in Cincinnati, Ohio. Revenues of the acquired
business were $13.5 million for the year ended December 31, 2003.

TAPCO INTERNATIONAL

On December 3, 2002, the Corporation acquired the assets of TAPCO
International, Inc., (“TAPCO”) for $12.0 million in cash and the assump-
tion of certain liabilities and was funded from the Corporation’s revolv-
ing credit facilities. The excess of the purchase price over the fair value

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

of the net assets acquired as of December 31, 2004 is $6.4 million,
including foreign currency translation adjustment gains of $0.2 million.

TAPCO designs, engineers, and manufactures high-performance metal
seated industrial gate valves, butterﬂy valves, ﬂapper valves, actua-
tors, and internal components used in high-temperature, highly abra-
sive, and highly corrosive environments in the petrochemical reﬁning
industry. Operations are located in Houston, Texas with a minor opera-
tion in the UK to serve the European market.

ELECTRO-MECHANICAL DIVISION

On October 28, 2002, the Corporation acquired the net assets of the
Electro Mechanical Division (“EMD”) of Westinghouse Government
Services Company LLC, a wholly-owned subsidiary of Washington
Group International. The purchase price of the acquisition was $84.9
million in cash and the assumption of certain liabilities and was funded
from the Corporation’s revolving credit facilities. The purchase price
has been allocated to the net tangible and intangible assets acquired,
with the remainder recorded as goodwill, on the basis of fair values,
as follows:

(In thousands)

Net working capital
Property, plant, and equipment
Deferred tax assets
Other noncurrent assets
Postretirement beneﬁt obligation
Pension beneﬁt obligation
Other noncurrent liabilities
Intangible assets

Net tangible and intangible assets
Purchase price

Goodwill

455
70,474
36,097
6,511
(36,344)
(38,626)
(13,881)
6,970

$ 31,656
84,915

$ 53,259

The purchase price includes $5.1 million, which will be paid in early
2005 and has been recorded on the Corporation’s balance sheet in
other current liabilities as of December 31, 2004. The additional pay-
ment represents the ﬁnal settlement of the working capital adjustment
included in the Asset Purchase Agreement.

EMD is a designer and manufacturer of highly engineered critical func-
tion electro-mechanical solutions for the U.S. Navy, commercial nuclear
power utilities, petrochemical, and hazardous waste industries. The
addition of EMD further strengthens the Corporation’s relationship with
and broadens the product base that we currently provide to the U.S.
Navy. The EMD product offerings complement the Corporation’s prod-
uct lines of control valves and electronic instrumentation and control
technology. Operations are located in Cheswick, Pennsylvania.

MOTION CONTROL

SYNERGY

On August 31, 2004, the Corporation acquired the outstanding stock
of Synergy Microsystems, Inc (“Synergy”). The purchase price was
$49.3 million in cash and was funded from credit available under the
Corporation’s revolving credit facilities. Under the terms of the agree-
ment, the Corporation deposited $2.5 million into escrow as security
for potential indemniﬁcation claims against the seller. Any escrow

remaining after claims for indemniﬁcation have been settled will be
paid to the seller 18 months from the acquisition date by the escrow
agent. The excess of the purchase price over the fair value of the net
assets acquired is $31.8 million at December 31, 2004.

Synergy specializes in the design, manufacture and integration of
single- and multi-processor, single-board computers for VME and Com-
pactPCI systems to meet the needs of demanding real-time applica-
tions in military, aerospace, industrial and commercial markets.
Synergy is headquartered in San Diego, CA and has a facility in Tucson,
AZ. Revenues of the acquired business were $17.5 million for the year
ended December 31, 2003.

PRIMAGRAPHICS

On May 28, 2004, the Corporation acquired the outstanding stock of
Primagraphics Holdings Limited (“Primagraphics”). The purchase price,
subject to customary adjustments provided for in the Stock Purchase
Agreement, was £12.5 million ($22.4 million) in cash. The purchase price
was funded from credit available under the Corporation’s revolving credit
facilities. The estimated excess of the purchase price over the fair value
of the net assets acquired is $15.2 million at December 31, 2004, includ-
ing foreign currency translation adjustment gains of $1.0 million. The fair
value of the net assets acquired was based on current estimates. The
Corporation may adjust these estimates based upon analysis of third
party appraisals and the ﬁnal determination of fair value.

Primagraphics is a market leader in the development of radar pro-
cessing and graphic display systems used throughout the world for mil-
itary and commercial applications, such as ship and airborne
command and control consoles, vessel tracking, air trafﬁc control and
air defense systems. Primagraphics’ products include graphics and
imaging technologies, video and sensor processing hardware, and
software that can be readily engineered to provide vital components for
a wide variety of systems. Primagraphics is headquartered near Cam-
bridge in the United Kingdom, with an additional facility in Char-
lottesville, VA, and a worldwide network of dealers and distributors.
Revenues of the acquired business were £6.8 million ($10.9 million) for
the ﬁscal year ended June 30, 2003.

Dy 4

On January 31, 2004, the Corporation acquired the outstanding stock
of Dy 4 Systems, Inc. and Dy 4 (U.S.) Inc. (collectively “Dy 4”). The pur-
chase price was $110.4 million in cash and the assumption of certain
liabilities. Management funded the purchase price with cash on hand
and from the Corporation’s revolving credit facilities. The purchase
price has been allocated to the net tangible and intangible assets
acquired, with the remainder recorded as goodwill, on the basis of fair
values as of December 31, 2004, as follows:

(In thousands)

Net working capital
Property, plant, and equipment
Deferred tax liabilities
Intangible assets

Net tangible and intangible assets
Purchase price, including capitalized acquisition costs

Goodwill

$ 11,087
6,238
(10,256)
40,549

$ 47,618
110,360

$ 62,742

4 7

Dy 4 is considered a market leader in ruggedized embedded comput-
ing solutions for the defense and aerospace industries. Using stan-
dard, commercially available computing technologies, referred to as
commercial-off-the-shelf or “COTS”, Dy 4 customizes the products to
perform reliably in rugged conditions, such as extreme temperature,
terrain, and speed. The acquisition was made primarily to compliment
the Corporation’s existing businesses that serve the embedded com-
puting market. Based in Ottawa, Canada, Dy 4 also has a facility in Vir-
ginia and a sales ofﬁce in the United Kingdom. Revenues of the
purchased business for the ﬁscal year ending August 29, 2003 were
$72.4 million.

NOVATRONICS/PICKERING

On December 4, 2003, the Corporation acquired all of the outstanding
stock of Novatronics Inc. (“Novatronics”) and Pickering Controls Inc.
(“Pickering”). The purchase price was $13.6 million in cash and the
assumption of certain liabilities and was funded with proceeds from
the Senior Notes issued in September 2003. There are provisions in
the agreement for an additional payment in 2006 upon the achieve-
ment of certain ﬁnancial performance criteria up to a maximum of $2.3
million. The excess of the purchase price over the fair value of the net
assets acquired as of December 31, 2004 is $6.3 million, including for-
eign currency translation adjustment gains of $0.2 million.

Novatronics and Pickering design and manufacture electric motors
and position sensors (both linear and rotary) for the commercial aero-
space, military aerospace, and industrial markets. Novatronics has
operating facilities located in Stratford, Ontario, Canada, while Picker-
ing is located in Plainview, NY. Revenues of the purchased business
were $12.0 million for the year ended December 31, 2002.

SYSTRAN CORPORATION

On December 1, 2003, the Corporation acquired all of the outstanding
shares of Systran Corporation (“Systran”). The purchase price was
$18.3 million in cash and the assumption of certain liabilities and was
funded with proceeds from the Senior Notes issued in September
2003. The excess of the purchase price over the fair value of the net
assets acquired as of December 31, 2004 is $9.1 million.

Systran is a leading supplier of highly specialized, high performance
data communications products for real-time systems, primarily for the
aerospace and defense, industrial automation, and medical imaging
markets. Key applications include simulation, process control,
advanced digital signal processing, data acquisition, image process-
ing, and test and measurement. Systran’s operations are located in
Dayton, Ohio. Revenues of the purchased business were $15.1 million
for the year ended September 30, 2003.

PERITEK CORPORATION

On August 1, 2003, the Corporation acquired the assets and certain
liabilities of Peritek Corporation (“Peritek”). The purchase price was
$3.2 million in cash and the assumption of certain liabilities. As of

December 31, 2004, the Corporation has paid $2.4 million in cash and
has a promissory note of $0.5 million payable in 2005. The remaining
$0.3 million is being held as security for potential indemniﬁcation
claims. Any amount of holdback remaining after claims for indemniﬁ-
cation have been settled will be paid nineteen months after the acqui-
sition date. The purchase price of the acquisition approximates the fair
value of the net assets acquired as of December 31, 2004, which
includes developed technology of approximately $2.6 million.

Peritek is a leading supplier of video and graphic display boards for
the embedded computing industry and supplies a variety of indus-
tries including aviation, defense, and medical. In addition, Peritek
supplies products for bomb detection, industrial automation, and
medical imaging applications. Peritek’s operations are located in
Oakland, California. Revenues of the purchased business for the ﬁscal
year ending March 31, 2003 were $2.7 million.

COLLINS TECHNOLOGIES

On February 28, 2003, the Corporation acquired the assets of Collins
Technologies (“Collins”). The purchase price was $11.8 million in cash
and the assumption of certain liabilities. Management funded the pur-
chase price from credit available under the Corporation’s Short-Term
Credit Agreement. The excess of the purchase price over the fair value
of the net assets acquired as of December 31, 2004 is $6.2 million.

Collins designs and manufactures Linear Variable Displacement
Transducers (“LVDTs”) primarily for aerospace ﬂight and engine con-
trol applications. Industrial LVDTs are used mostly in industrial automa-
tion and test applications. Collins’ operations are located in Long
Beach, California. Revenues of the purchased business were $8.3 mil-
lion for the year ended March 31, 2002.

PENNY & GILES/AUTRONICS

On April 1, 2002, the Corporation acquired all of the outstanding
shares of Penny & Giles Controls Ltd., Penny & Giles Controls Inc.,
Penny & Giles Aerospace Ltd., the assets of Penny & Giles International
Plc. devoted to its aerospace component business (collectively “Penny
& Giles”), and substantially all of the assets of Autronics Corporation
(“Autronics”). The purchase price was $59.5 million in cash and the
assumption of certain liabilities. Approximately $40 million of the pur-
chase price was funded from the Corporation’s Revolving Credit facil-
ity. The excess of the purchase price over the fair value of the net assets
acquired as of December 31, 2004 is $34.2 million, including foreign
currency translation adjustment gains of $6.5 million.

Penny & Giles is a designer and manufacturer of proprietary posi-
tion sensors and control hardware for both military and commercial
aerospace applications and industrial markets. Autronics is a leading
provider of aerospace ﬁre detection and suppression control systems,
power conversion products, and control electronics. The acquired busi-
ness units are located in Wales, England, Germany, and the United
States of America.

4 8

METAL TREATMENT

EVERLUBE

On April 2, 2004, the Corporation purchased the assets of the Everlube
Products division (“Everlube”) of Morgan Advanced Ceramics, Inc. The
purchase price was $6.5 million in cash and the assumption of certain
liabilities. The purchase price was funded from credit available under
the Corporation’s revolving credit facilities. The estimated excess of the
purchase price over the fair value of the net assets acquired is $3.3 mil-
lion at December 31, 2004. The fair value of the net assets acquired
was based on current estimates. The Corporation may adjust these
estimates based upon analysis of third party appraisals and the ﬁnal
determination of fair value.

Everlube is a pioneer and leader in manufacturing solid ﬁlm lubricant
(SFL) and other specialty engineered coatings with more than 180 for-
mulations available. Everlube’s engineered coatings improve the func-
tional performance of metal components in lubrication, temperature,
and corrosion resistance. Everlube is located in Peachtree City, Geor-
gia. Revenues of the acquired business were $3.9 million for the year
ended December 31, 2003.

EVESHAM

On February 24, 2004, the Corporation purchased the assets of the
Evesham coatings business located in the United Kingdom (“Eve-
sham”) from Morgan Advanced Ceramics, Ltd. The purchase price was
£3.5 million ($6.5 million) in cash and the assumption of certain lia-
bilities. The purchase price was funded from credit available under the
Corporation’s revolving credit facilities. The excess of the purchase
price over the fair value of the net assets acquired is $2.2 million
at December 31, 2004,
including foreign currency translation
adjustment gains of $0.1 million.

Evesham manufactures and applies an extensive range of solid ﬁlm
lubricant (SFL) coatings, which provide lubrication, corrosion resis-
tance and enhanced engineering performance. Revenues of the
acquired business were £2.6 million ($4.2 million) for the year ended
December 31, 2003.

E/M ENGINEERED COATINGS SOLUTIONS

On April 2, 2003, the Corporation purchased selected assets of E/M
Engineered Coatings Solutions (“E/M Coatings”). The purchase price
was $16.8 million in cash and the assumption of certain liabilities. The
purchase price was funded from credit available under the Corpora-
tion’s Short-Term Credit Agreement. The excess of the purchase price
over the fair value of the net assets acquired as of December 31, 2004
is $6.4 million.

The Corporation acquired six E/M Coatings facilities operating in
Chicago, IL; Detroit, MI; Minneapolis, MN; Hartford, CT; and North Hol-
lywood and Chatsworth, CA. Combined, these facilities are one of the
leading providers of solid ﬁlm lubricant coatings in the United States.
The E/M Coatings facilities have the capability of applying over 1,100
different coatings to impart lubrication, corrosion resistance, and cer-
tain cosmetic and dielectric properties to selected components. Rev-
enues of the purchased business were approximately $26 million for
the year ended December 31, 2002.

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

ADVANCED MATERIAL PROCESS

On March 11, 2003, the Corporation acquired selected net assets of
Advanced Material Process Corp. (“AMP”), a private company with oper-
ations located in Wayne, Michigan. The purchase price was $6.0 mil-
lion in cash and the assumption of certain liabilities. There are
provisions in the agreement for additional payments upon the achieve-
ment of certain ﬁnancial performance criteria through 2008 up to a
maximum additional payment of $1.0 million. As of December 31,
2004, the Corporation has paid $0.1 million in such additional consid-
eration. Management funded the purchase from credit available under
the Corporation’s Short-Term Credit Agreement. The excess of the pur-
chase price over the fair value of the net assets acquired as of Decem-
ber 31, 2004 is $1.4 million.

AMP is a supplier of commercial shot peening services primarily to the
automotive market in the Detroit area. Revenues of the purchased
business were $5.1 million for the year ended December 31, 2002.

BRENNER TOOL & DIE

On November 14, 2002, the Corporation acquired selected assets and
liabilities of Brenner Tool and Die, Inc. (“Brenner”) relating to Brenner’s
metal ﬁnishing operations in Bensalem, Pennsylvania. Brenner pro-
vides non-destructive testing, chemical milling, chromic and phos-
phoric anodizing, and painting services.

The purchase price was $10.0 million in cash, which approximated the
fair value of the net assets acquired as of December 31, 2004. There
are provisions in the agreement for additional payments upon the
achievement of certain ﬁnancial performance criteria through 2007 up
to a maximum additional payment of $10.0 million. Through December
31, 2004, the Corporation has made no payments of additional con-
sideration under these provisions.

YTSTRUKTUR ARBOGA AB

On April 11, 2002, the Corporation acquired 100% of the stock of
Ytstruktur Arboga AB, a metal treatment business located in Arboga,
Sweden. This business, specializing in controlled shot peening, non-
destructive testing, and other metal ﬁnishing processes, services the
Scandinavian market.

The purchase price was $1.2 million. The excess of the purchase price
over the fair value of the net assets acquired as of December 31,
2004 is $1.6 million, including $0.6 million of foreign currency trans-
lation gains.

4 9

3. Receivables
Receivables include current notes, amounts billed to customers,
claims and other receivables, and unbilled revenue on long-term con-
tracts, consisting of amounts recognized as sales but not billed. Sub-
stantially all amounts of unbilled receivables are expected to be billed
and collected in the subsequent year.

Credit risk is generally diversiﬁed due to the large number of entities
comprising the Corporation’s customer base and their geographic dis-
persion. The Corporation is either a prime contractor or subcontractor
of various agencies of the U.S. Government. Revenues derived directly
and indirectly from government sources (primarily the U.S. Govern-
ment) were 47%, 46%, and 41% of consolidated revenues in 2004,
2003, and 2002, respectively. As of December 31, 2004 and 2003,
accounts receivable due directly or indirectly from these government
sources represented 42% and 34% of net receivables, respectively.
Sales to one customer through which the Corporation is a subcontrac-
tor to the U.S. Government were 13% of consolidated revenues in
2004, 16% in 2003, and 10% in 2002. Accounts receivables due from
this same customer were 14% of net receivables at December 31,
2003. No single customer accounted for more than 10% of the Corpo-
ration’s net receivables as of December 31, 2004.

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, histori-
cal trends, and other information.

The composition of receivables is as follows:

(In thousands) December 31,

2004

2003

B I L L E D R E C E I VA B L E S :
Trade and other receivables
Less: Allowance for

doubtful accounts

Net billed receivables

U N B I L L E D R E C E I VA B L E S :
Recoverable costs and estimated

earnings not billed
Less: Progress payments applied

Net unbilled receivables

$156,891

$111,068

(4,011)

(3,449)

152,880

107,619

79,156
(17,952)

56,070
(20,327)

61,204

35,743

Receivables, net

$214,084

$143,362

The net receivable balance at December 31, 2004 included $34.7 mil-
lion related to the Corporation’s 2004 acquisitions.

4. Inventories
In accordance with industry practice, inventoried costs contain
amounts relating to long-term contracts and programs with long pro-
duction cycles, a portion of which will not be realized within one year.
Inventories are valued at the lower of cost (principally average cost) or
market. The composition of inventories is as follows:

(In thousands) December 31,

Raw material
Work-in-process
Finished goods and component parts
Inventoried costs related to

U.S. Government and other
long-term contracts

Gross inventories

2004

2003

$ 49,616
35,157
50,117

$ 40,624
26,409
46,575

19,396

20,544

154,286

134,152

Less: Inventory reserves

(26,276)

(22,278)

Progress payments applied,
principally related to
long-term contracts

Inventories, net

(12,031)

(13,994)

$115,979

$ 97,880

The net inventory balance at December 31, 2004 included $21.1 mil-
lion related to the Corporation’s 2004 acquisitions.

5. Property, Plant, and Equipment
The composition of property, plant, and equipment is as follows:

(In thousands) December 31,

2004

2003

Land
Buildings and improvements
Machinery, equipment, and other

$ 12,563 $ 12,206
93,058
294,744

101,476
340,363

Property, plant, and equipment, at cost
Less: Accumulated depreciation

454,402
(189,159)

400,008
(161,869)

Property, plant, and equipment, net

$ 265,243 $ 238,139

Depreciation expense for the years ended December 31, 2004,
2003, and 2002 was $32.4 million, $27.7 million, and $16.7 mil-
lion, respectively. The net property, plant, and equipment balance at
December 31, 2004 included $23.7 million related to the Corpora-
tion’s 2004 acquisitions.

5 0

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

6. Goodwill
Goodwill consists primarily of the excess purchase price of acquisitions over the fair value of the net assets acquired.

The changes in the carrying amount of goodwill for 2004 and 2003 are as follows:

(In thousands)

December 31, 2002
Goodwill from 2003 acquisitions
Change in estimate to fair value of net assets acquired in prior years
Additional consideration of prior years’ acquisitions
Foreign currency translation adjustment

December 31, 2003

Goodwill from 2004 acquisitions
Change in estimate to fair value of net assets acquired in prior years
Additional consideration of prior years’ acquisitions
Foreign currency translation adjustment

December 31, 2004

Additional consideration of prior years’ acquisitions includes accruals
of $8.5 million and $1.2 million as of December 31, 2004 and 2003,
respectively, related to earn out and other required contractual pay-
ments. These amounts are classiﬁed in other current liabilities as
additional amounts due to sellers.

During 2004, the Corporation ﬁnalized the allocation of the purchase
price for the seven businesses acquired in 2003 and nine of the acquired
businesses in 2004. The purchase price allocations relating to two of the
businesses acquired in 2004 are based on estimates and have not yet
been ﬁnalized. Approximately $28 million and $14 million of the goodwill
on acquisitions made during 2004 and 2003, respectively, is deductible
for tax purposes.

In accordance with SFAS No. 142, the Corporation completed its
annual impairment test of goodwill during the third quarter of 2004
and concluded there was no impairment of goodwill.

7. Other Intangible Assets, net
Intangible assets are generally the result of acquisitions and consist
primarily of purchased technology, customer related intangibles, trade-
marks and service marks, and technology licenses. Intangible assets
are amortized over useful lives that range between 1 and 20 years.

The following table summarizes the intangible assets acquired (includ-
ing their weighted average useful lives) by the Corporation during 2004
and 2003. The 2004 amounts include certain estimates that are sub-
ject to adjustment, while the 2003 amounts have been adjusted to
reﬂect the changes in estimates of fair value made in 2004. Excluded

Flow
Control

$ 95,409
—
(6,458)
2,481
1,986

Motion
Control

$ 78,727
21,369
5,003
1,078
4,673

Metal
Treatment

$ 6,965
8,581
13
—
231

Consolidated

$181,101
29,950
(1,442)
3,559
6,890

$ 93,418

$110,850

$15,790

$220,058

17,070
(2,260)
5,777
1,197

109,207
34
4,024
4,464

5,411
(871)
20
182

131,688
(3,097)
9,821
5,843

$115,202

$228,579

$20,532

$364,313

from Other intangible assets are indeﬁnite lived intangibles of $8.0 mil-
lion and $0.9 million in 2004 and 2003, respectively.

(In thousands, except years data)

2004

2003

Developed technology
Customer related
intangibles

Other intangible assets

Amount

Years

Amount

Years

$46,858

17.6

$ 7,338

13.2

39,961
1,391

18.7
8.2

14,977
2,229

15.9
11.1

Total

$88,210

17.9

$24,544

14.7

The following tables present the cumulative composition of the Corpo-
ration’s acquired intangible assets as of December 31:

(In thousands)
2004

Gross

Accumulated
Amortization

Net

Developed technology
Customer related
intangibles

Other intangible assets

Total

2003

Developed technology
Customer related
intangibles

Other intangible assets

$ 75,970

$ (7,436)

$ 68,534

62,049
15,952

(4,282)
(1,884)

57,767
14,068

$153,971

$(13,602)

$140,369

Gross

Accumulated
Amortization

Net

$ 32,892

$ (2,966)

$ 29,926

14,469
5,902

(863)
(1,166)

13,606
4,736

Total

$ 53,263

$ (4,995)

$ 48,268

5 1

The following table presents the changes in the net balance of other
intangibles assets during 2004:

Other current liabilities consist of the following:

Developed
Technology Intangibles

Customer

Other
Related Intangible
Assets

Total

Deferred revenue
Additional amounts due to sellers

(In thousands) December 31,

2004

2003

$26,575

$21,726

on acquisitions
Warranty reserves
Current portion of environmental reserves
Other

10,899
9,667
1,843
3,809

2,154
10,011
2,178
3,355

Total other current liabilities

$52,793

$39,424

The accrued expenses and other current liabilities at December 31,
2004 included $7.6 million and $3.9 million, respectively, related to the
Corporation’s 2004 acquisitions.

The Corporation provides its customers with warranties on certain
commercial and governmental products. Estimated warranty costs are
charged to expense in the period the related revenue is recognized
based on the terms of the product warranty, the related estimated
costs, and quantitative historical claims experience. These estimates
are adjusted in the period in which actual results are ﬁnalized or addi-
tional information is obtained. The following table presents the
changes in the Corporation’s warranty reserves:

(In thousands) December 31,

Warranty reserves at January 1,
Provision for current year sales
Current year claims
Change in estimates to

2004

2003

$10,011
3,275
(2,334)

$ 9,504
1,650
(1,930)

pre-existing warranties
Increase due to acquisitions
Foreign currency translation adjustment

(2,856)
1,135
436

(389)
612
564

Warranty reserves at December 31,

$ 9,667

$10,011

9. Income Taxes
Earnings before income taxes for the years ended December 31
consist of:

(In thousands)

2004

2003

2002

Domestic
Foreign

Total

$65,963
32,790

$67,429
16,627

$55,314
16,421

$98,753

$84,056

$71,735

(In thousands)

December 31, 2003
Acquired during 2004
Amortization expense
Change in estimate of
fair value related
to purchase price
allocations

Net foreign currency

translation
adjustment

$29,926 $13,606 $ 4,736 $ 48,268
96,183
(8,348)

39,961
(3,413)

46,858
(4,307)

9,364
(628)

(5,146)

7,514

610

2,978

1,203

(14)

1,288

Total

$68,534 $57,767 $14,068 $140,369

During 2003, the Corporation removed $1.5 million of fully amortized
intangible assets from the gross and accumulated amortization of cus-
tomer related intangibles, respectively. Included in other intangible
assets at December 31, 2004 and 2003 are $9.9 million and $1.0 mil-
lion, respectively, of intangible assets not subject to amortization.

Amortization expense for the years ended December 31, 2003
and 2002 was $3.6 million and $1.9 million, respectively. The esti-
mated future amortization expense of purchased intangible assets
is as follows:

(In thousands)

2005
2006
2007
2008
2009
2010 and thereafter

Total amortization expense

$ 10,055
9,177
9,177
9,125
8,389
94,446

$140,369

8. Accrued Expenses and Other Current Liabilities
Accrued expenses consist of the following:

(In thousands) December 31,

2004

2003

Accrued compensation
Accrued commissions
Accrued taxes other than income taxes
Accrued insurance
Accrued interest
Other

$36,520
3,857
3,642
3,179
3,170
13,045

$26,331
1,593
3,050
3,957
3,264
6,743

Total accrued expenses

$63,413

$44,938

5 2

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

The provision for income taxes for the years ended December 31
consist of:

The components of the Corporation’s deferred tax assets and liabilities
at December 31 are as follows:

2004

2003

2002

(In thousands)

2004

2003

(In thousands)

Current:

Federal
State
Foreign

Deferred:

Federal
State
Foreign

U.S. Federal statutory tax rate
Add (deduct):

State and local taxes,

net of federal beneﬁt
Recovery of research &
development credits
from prior years
Dividends received

deduction and tax
exempt income

All other, net

$21,158
5,481
10,548

$17,018
4,103
5,050

$13,582
3,648
5,255

37,187

26,171

22,485

(878)
(1,969)
(653)

(3,500)

5,032
426
159

5,617

3,664
296
154

4,114

2004

2003

2002

35.0%

1.6

3.5

3.6

Deferred tax assets:

Environmental reserves
Inventories
Postretirement/postemployment

beneﬁts

Incentive compensation
Accrued vacation pay
Warranty reserve
Other

$ 9,141
10,730

$ 9,318
8,992

16,204
7,086
4,229
1,950
5,164

15,601
5,383
3,806
1,686
4,446

Total deferred tax assets

54,504

49,232

Deferred tax liabilities:
Retirement plans
Depreciation
Goodwill amortization
Other intangible amortization
Other

9,447
17,607
20,974
19,078
1,748

13,692
16,416
4,936
9,285
3,071

Total deferred tax liabilities

68,854

47,400

Net deferred tax (liabilities) assets

$(14,350)

$ 1,832

Deferred tax assets and liabilities are reﬂected on the Corporation’s
consolidated balance sheet at December 31 as follows:

—

(1.3)

(In thousands)

—
(2.5)

—
(0.7)

(0.1)
(0.1)

Current deferred tax assets
Noncurrent deferred tax liabilities

Net deferred tax assets

2004

2003

$ 25,693
(40,043)

$ 23,630
(21,798)

$(14,350)

$ 1,832

Provision for income taxes

$33,687

$31,788

$26,599

The effective tax rate varies from the U.S. federal statutory tax rate for
the years ended December 31, principally due to the following:

Effective tax rate

34.1%

37.8%

37.1%

The 2004 effective tax rate included nonrecurring beneﬁts totaling
$3.4 million, primarily resulting from the change in legal structure
of one of our subsidiaries, and a favorable IRS appeals settlement
relating to the 1993 tax year.

As of December 31, 2004, the Corporation had state and foreign net
operating loss carryforwards of $0.4 million, after tax. The state net
operating loss carryforwards expire through the year 2023. The foreign
net operating loss carryforwards have no expiration date.

Income tax payments of $28.8 million were made in 2004, $22.8 mil-
lion in 2003, and $34.6 million in 2002.

No provision has been made for U.S. federal or foreign taxes on that
portion of certain foreign subsidiaries’ undistributed earnings consid-
ered to be permanently reinvested, which at December 31, 2004 was
$23.3 million. It is not practicable to estimate the amount of tax that
would be payable if these amounts were repatriated to the U.S.; how-
ever, it is expected there would be minimal or no additional tax because
of the availability of foreign tax credits.

5 3

In December 2004, the Financial Accounting Standards Board
(“FASB”) issued FASB Staff Position No. FAS 109-2, “Accounting and
Disclosure Guidance for the Foreign Earnings Repatriation Provision
within the American Jobs Creation Act of 2004” (“FSP No. 109-2”). The
American Jobs Creation Act of 2004 (the “Act”), which became effec-
tive October 22, 2004, provides a one-time dividends received deduc-
tion on the repatriation of certain foreign earnings to a U.S. taxpayer,
provided certain criteria are met. The Corporation may apply the provi-
sion of the Act to qualifying earnings repatriations through December
31, 2005. FSP No. 109-2 provides accounting and disclosure guidance
for the repatriation provision. As permitted by FSP No. 109-2, the Cor-
poration will not complete its evaluation of the repatriation provisions
until a reasonable duration following the publication of clarifying lan-
guage on key elements of the Act by Congress or the Treasury Depart-
ment. Accordingly, the Corporation has not recorded any income tax
expense or beneﬁt for amounts that may be repatriated under the Act.
The range of unremitted earnings the Corporation is considering for
possible repatriation under the Act is zero to $23 million, which would
result in additional income tax expense of zero to $3 million. Currently,
the Corporation does not record deferred tax liabilities on unremitted
earnings of its foreign subsidiaries, as such subsidiaries invest such
undistributed earnings indeﬁnitely.

10. Debt
Debt at December 31 consists of the following:

(In thousands)

2004

2003

Industrial Revenue Bonds, due from 2007
to 2028. Weighted average interest
rate per annum is 1.39% and 1.24%
for 2004 and 2003, respectively
Revolving Credit Agreement, due 2009.
Weighted average interest rate per
annum is 2.56% for 2004 and 1.97%
for 2003

5.13% Senior Notes due 2010
Weighted average interest rate per annum
is 4.39% for 2004 and 4.71% for 2003

5.74% Senior Notes due 2013
Weighted average interest rate per annum
is 4.24% for 2004 and 4.84% for 2003

Other debt

Total debt

Less: Short-term debt
Total Long-term debt

$ 14,296

$ 14,351

124,500
75,329

8,868
75,217

126,793

125,747

1,572

965

342,490

225,148

1,630
$340,860

997
$224,151

The estimated fair values of the Corporation’s total debt instruments at
December 31, 2004 aggregated $345.7 million compared to a carrying
value of $342.5 million. The carrying amount of the variable interest
rate long-term debt approximates fair value because the interest rates
are reset periodically to reﬂect current market conditions. Fair values for
the Corporation’s ﬁxed rate debt were estimated by management, uti-
lizing valuations provided by third parties in accordance with their
proprietary models.

The carrying amount of the interest rate swaps reﬂects their fair value
as provided by third parties in accordance with their proprietary models.

Aggregate maturities of debt are as follows (1):

(In thousands)

2005
2006
2007
2008
2009
Thereafter

Total

$ 1,630
59
5,060
62
124,564
208,994

$340,369

(1) Amounts exclude a $2.1 million adjustment to the fair value of long-term
debt relating to the Corporation’s interest rate swap agreements that will not
be settled in cash.

Interest payments of $12.1 million, $2.6 million, and $1.6 million were
made in 2004, 2003, and 2002, respectively.

On July 23, 2004, the Corporation amended its existing credit facility,
increasing the available line of credit from $225 million to $400 million
with a group of ten banks. The Corporation plans to use the credit line for
working capital purposes, internal growth initiatives, funding of future
acquisitions, and other general corporate purposes. The credit agree-
ment expires in 2009. Borrowings under the agreement bear interest at
a ﬂoating rate based on market conditions. In addition, the Corporation’s
interest rate and level of facility fees depend on maintaining certain
ﬁnancial ratios deﬁned in the agreement. The Corporation is subject to
annual facility fees on the commitments under the Revolving Credit
Agreement. In connection with the Revolving Credit Agreement, the Cor-
poration paid customary transaction fees that have been deferred and
are being amortized over the term of the agreement. The Corporation is
required under the agreement to maintain certain ﬁnancial ratios and
meet certain ﬁnancial tests as detailed in the agreement, of which the
Corporation is in compliance at December 31, 2004. The unused credit
available under the Revolving Credit Agreement at December 31, 2004
and 2003 was $256.7 and $107.1 million, respectively.

5 4

On September 25, 2003, the Corporation issued $200.0 million of
Senior Notes (the “Notes”). The Notes consist of $75.0 million of 5.13%
Senior Notes that mature on September 25, 2010 and $125.0 million
of 5.74% Senior Notes that mature on September 25, 2013. The Notes
are senior unsecured obligations and are equal in right of payment to
the Corporation’s existing senior indebtedness. The Corporation, at its
option, can prepay at any time, all or from time to time any part of, the
Notes, subject to a make-whole amount in accordance with the Note
Purchase Agreement. The Corporation paid customary fees that have
been deferred and will be amortized over the terms of the Notes. The
Corporation is required under the Note Purchase Agreement to main-
tain certain ﬁnancial ratios and meet certain net worth and indebted-
ness tests, of which the Corporation is in compliance.

In the fourth quarter of 2003, the Corporation entered into two interest
rate swap agreements, designated as fair value hedges, which effec-
tively convert $80 million of the Corporation’s $200 million Senior Note
ﬁxed rate debt to ﬂoating rate debt. Under the terms of these agree-
ments, the Corporation makes payments based on speciﬁed spreads
over six-month LIBOR and receives payments equal to the interest pay-
ments due on the ﬁxed rate debt. The differential between the pay-
ments is recognized as interest expense. The interest rate swap
agreements qualify for the “shortcut method” under SFAS No. 133,
which allows for an assumption of no ineffectiveness in the hedging
relationship. As such, there is no income statement impact from
changes in the fair value of the hedging instruments. Instead, the fair
value of the instruments is recorded as an asset or liability on the Cor-
poration’s balance sheet, with an offsetting adjustment to the carrying
value of the related debt. Other long-term assets of $2.1 million in the
accompanying December 31, 2004 consolidated balance sheet rep-
resents the fair value of the interest rate swap agreements at that date,
with a corresponding aggregate increase in the carrying value of the
Corporation’s long-term debt.

At December 31, 2004, 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
$13.7 million. The Corporation had various other letters of credit total-
ing $5.1 million. All letters of credit are included under the Revolving
Credit Agreement.

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

11. Earnings Per Share
The Corporation is required to report both basic earnings per share
(“EPS”), based on the weighted average number of Common and Class
B common shares outstanding, and diluted earnings per share, based
on the basic EPS adjusted for all potentially dilutive shares issuable.
Share and per share amounts presented below have been adjusted on
a pro forma basis for the December 17, 2003 stock split. See Note 1-O
for further information regarding the stock split.

At December 31, 2003 and 2002, the Corporation had stock options
outstanding of 148,052 and 162,530 shares, respectively, that were
not included in the computation of diluted EPS for 2004, because to
do so would have been antidilutive. The Corporation had no antidilutive
options outstanding at December 31, 2004. Earnings per share calcu-
lations for the years ended December 31, 2004, 2003, and 2002 are
as follows:

(In thousands, except
per share data)

2 0 0 4 :
Basic earnings per share
Effect of dilutive securities:

Stock options
Deferred stock

compensation

Weighted-
Average
Shares
Outstanding

Net
Income

Earnings
Per Share

$65,066

21,196

$3.07

324

Diluted earnings per share

$65,066

21,547

$3.02

2 0 0 3 :
Basic earnings per share
Effect of dilutive securities:

Stock options
Deferred stock

compensation

$52,268

20,640

$2.53

222

Diluted earnings per share

$52,268

20,887

$2.50

2 0 0 2 :
Basic earnings per share
Effect of dilutive securities:

Stock options
Deferred stock

compensation

$45,136

20,398

$2.21

446

Diluted earnings per share

$45,136

20,868

$2.16

5 5

In May 2003, the Corporation’s Board of Directors and stockholders
approved an amendment to the 1995 Long-Term Incentive Plan to
authorize non-employee directors to participate under the plan. The
amendment provided that each non-employee director could receive
the equivalent of $15,000 of the Corporation’s Common Stock per
year. The Board of Directors approved and issued stock grants of 268
shares in 2004 and 480 shares in 2003, adjusted for the 2003 stock
split, of the Corporation’s Common Stock to each of the eight non-
employee directors. The stock grants were valued at $15,000 based
on the market price of the Corporation’s Common Stock on the grant
date and were expensed at the time of issuance.

The remaining allowable shares for issuance under the 1995 LTI Plan
as of December 31, 2004 is 2,124,243.

Stock option activity during the periods for both plans is indicated
as follows:

Weighted-
Average
Exercise
Price

Options
Exercisable

Outstanding at
January 1,
2002
Granted
Exercised
Forfeited

Outstanding at

936,148

$16.41

1,589,914
162,530
(392,160)
(19,980)

$18.83
32.56
15.79
21.95

December 31,
2002
Granted
Exercised
Forfeited

1,340,304
148,052
(233,708)
(16,926)

Outstanding at

December 31,
2003
Granted
Exercised
Forfeited

Outstanding at

December 31,
2004

1,237,722
126,336
(315,517)
(50,385)

837,024

18.48

855,676

20.83

21.16
38.16
16.57
24.39

24.01
55.91
19.37
25.68

998,156

$29.43

729,690

$23.51

12. Stock Compensation Plans
Employee Stock Purchase Plan: In May 2003, the Corporation’s Board
of Directors and stockholders approved the 2003 Employee Stock Pur-
chase Plan (the “ESPP”) under which eligible employees may purchase
the Corporation’s Common stock at a price per share equal to 85% of
the lower of the fair market value of the Common stock at the begin-
ning or end of each offering period. Each offering period of the ESPP
lasts six months, with the ﬁrst offering period commencing on January
1, 2004. Participation in the offering is limited to 10% of an employee’s
base salary (not to exceed amounts allowed under Section 423 of the
Internal Revenue Code), and may be terminated at any time by the
employee, and automatically ends on termination of employment with
the Corporation. A total of 1,000,000 shares of Common stock have
been reserved for issuance under the ESPP. The Common stock to sat-
isfy the stock purchases under the ESPP will be newly issued shares of
Common stock. During 2004, 35,000 shares were purchased under
the ESPP. As of December 31, 2004, there were 965,000 shares avail-
able for future offerings, and the corporation had withheld $1.7 million
from employees, the equivalent of 36,100 shares.

1995 Long-Term Incentive Plan: Under the LTI Plan approved by stock-
holders in 1995 and as amended in 2002 and 2003, an aggregate total
of 3,000,000 shares of common stock were reserved for issuance. The
Common stock to satisfy employee exercises will be from the Corpora-
tion’s treasury stock. The Corporation does not expect to repurchase
any shares in 2005. No more than 50,000 shares of common stock
may be awarded in any year to any one participant in the LTI Plan.
Awards under the LTI Plan currently consist of three components — per-
formance units (cash), non-qualiﬁed stock options, and non-employee
director grants.

Under the LTI Plan, the Corporation awarded performance units of
6,334,074 in 2004, 4,805,783 in 2003, and 4,519,906 in 2002 to cer-
tain key employees. The performance units are denominated in dollars
and are contingent upon the satisfaction of performance objectives
keyed to achieving proﬁtable growth over a period of three ﬁscal years
commencing with the ﬁscal year following such awards. The antici-
pated cost of such awards is expensed over the three-year perfor-
mance period, which amounted to $4.3 million, $3.3 million, and
$1.8 million in 2004, 2003, and 2002, respectively. The actual cost
of the performance units may vary from the total value of the awards
depending upon the degree to which the key performance objectives
are met.

Under the LTI Plan, the Corporation has granted non-qualiﬁed stock
options in 2004, 2003, and 2002 to key employees. Stock options
granted under this LTI Plan expire ten years after the date of the grant
and are generally exercisable as follows: up to one-third of the grant
after one year, up to two-thirds of the grant after two years, and in full
three years from the date of grant.

5 6

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

The following table summarizes information about stock options outstanding at December 31, 2004:

Range of Exercise Prices

Less than $20.00
$20.00 – $29.99
$30.00 – $40.00
Greater than $40.00

Options Outstanding

Weighted-Average
Remaining
Contractual
Life in Years

Weighted-
Average
Exercise Price

3.9
6.6
8.4
9.9

7.0

$17.91
22.52
35.43
55.91

$29.43

187,396
410,009
274,415
126,336

998,156

Options Exercisable

Weighted-Average
Remaining
Contractual
Life in Years

Weighted-
Average
Exercise Price

3.9
6.6
8.2
—

6.2

$17.91
22.52
34.48
—

$23.51

187,396
410,009
132,285
—

729,690

Stock Plan for Non-Employee Directors: The Stock Plan for Non-
Employee Directors (“Stock Plan”), approved by the stockholders in
1996, authorized the grant of restricted stock awards and, at the
option of the Directors, the deferred payment of regular stipulated com-
pensation and meeting fees in equivalent shares. Pursuant to the
terms of the Stock Plan, non-employee directors received an initial
restricted stock grant of 3,612 shares in 1996, which became unre-
stricted in 2001. Additionally, on the ﬁfth anniversary of the initial
grant, those non-employee directors who remained a non-employee
director, received an additional restricted stock grant equal to the prod-
uct of increasing $13,300 at an annual rate of 2.96%, compounded
monthly from the effective date of the Stock Plan. In 2001, the amount
per director was calculated to be $15,419, representing a total addi-
tional grant of 1,555 restricted shares. The cost of the restricted stock
awards is being amortized over the ﬁve-year restriction period from the
date of grant. Newly elected non-employee directors receive similar
compensation under the terms of the Stock Plan upon their election to
the Board.

Pursuant to election by non-employee directors to receive shares in lieu
of payment for earned and deferred compensation under the Stock
Plan, the Corporation had provided for an aggregate additional 27,487
shares, at an average price of $27.59 as of December 31, 2004. Dur-
ing 2004, the Corporation issued 1,770 shares in deferred compensa-
tion pursuant to such elections.

Depending on the extent to which the non-employee directors elect to
receive future compensation in shares, total awards issued under this
Stock Plan could exceed the 32,000 registered shares by April 12,
2006, the termination date of the Stock Plan.

13. Environmental Costs
The Corporation has continued the operation of the ground water and
soil remediation activities at the Wood-Ridge, New Jersey site through
2004. The cost of constructing and operating this site was provided for
in 1990 when the Corporation established a reserve to remediate the
property. Costs for operating and maintaining this site totaled $1.5 mil-
lion in 2004, $0.6 million in 2003 and $0.5 million in 2002, all of which
have been charged against the previously established reserve. The Cor-
poration increased the remediation reserve by $0.3 million and $1.0
million in 2004 and 2002, respectively, based upon revised operating
projections. The reserve balance as of December 31, 2004 was $7.0
million. Even though this property was sold in December 2001, the Cor-
poration retained the responsibility for this remediation in accordance
with the sale agreement.

The Corporation has been named as a potentially responsible party
(“PRP”), as have many other corporations and municipalities, in a num-
ber of environmental clean-up sites. The Corporation continues to make
progress in resolving these claims through settlement discussions and
payments from established reserves. Signiﬁcant sites remaining open
at the end of the year are: Caldwell Trucking landﬁll superfund site, Fair-
ﬁeld, New Jersey; Sharkey landﬁll superfund site, Parsippany, New Jersey;
Amenia landﬁll site, Amenia, New York; and Chemsol, Inc. superfund site,
Piscataway, New Jersey. The Corporation believes that the outcome for
any of these remaining sites will not have a materially adverse effect on
the Corporation’s results of operations or ﬁnancial condition.

In the ﬁrst quarter of 2004, the Corporation signed a PRP agreement
joining a number of other companies to respond to a U.S.E.P.A. Request
For Information concerning the Lower Passaic River site. As of Decem-
ber 31, 2004, the Corporation estimates the costs associated with this
study will not have a materially adverse effect on the Corporation’s
results of operation or ﬁnancial condition.

5 7

The Curtiss-Wright Plans
The Corporation maintains a non-contributory deﬁned beneﬁt pension
plan covering substantially all employees other than those employees
covered by the EMD Pension Plan described below. The Curtiss-Wright
Retirement Plan (the “CW Pension Plan”) formula for non-union
employees 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 the CW Pension Plan are entitled to a beneﬁt based on
years of service multiplied by a monthly pension rate. Employees
become participants under the CW Pension Plan after one year of ser-
vice and are vested after ﬁve years of service. At December 31, 2004
and December 31, 2003, the Corporation had prepaid pension costs
of $77.8 million and $77.9 million, respectively, under the CW Pension
Plan. Due to the funded status, the Corporation does not expect to con-
tribute funds to the CW Pension Plan in 2005.

The Corporation also maintains a non-qualiﬁed restoration plan
(the “CW Restoration Plan”) covering those employees whose com-
pensation or beneﬁts exceed the IRS limitation for pension beneﬁts.
Beneﬁts under the CW Restoration Plan are not funded, and, as such,
the Corporation had an accrued pension liability of $0.7 million and
$0.8 million at December 31, 2004 and 2003, respectively. The Cor-
poration’s contributions to the CW Restoration Plan are not expected
to be material in 2005.

The Corporation provides postretirement health beneﬁts to certain
employees (the “CW Retirement Plan”). In 2002, the Corporation
restructured the postretirement medical beneﬁts for certain active
employees, effectively freezing the plan. The obligation associated with
these active employees was transferred to the CW Pension Plan. The
plan continues to be maintained for retired employees. As of Decem-
ber 31, 2004 and 2003, the Corporation had an accrued postretire-
ment beneﬁt liability of $1.2 million and $1.3 million, respectively, as
beneﬁts under the plan are not funded. The Corporation’s contributions
to the CW Retirement Plan are not expected to be material in 2005.

In the fourth quarter of 2004, the Corporation increased the remediation
reserve related to the Caldwell Trucking landﬁll superfund site by $4.4
million. The increase related to the estimated groundwater remediation
for this site, which could span over 30 years. Through 2004, the majority
of the costs for this site have been for the soil remediation. The Corpora-
tion has recorded a portion of this amount in the fourth quarter of 2004
to correct the understatement of this accrual related to a prior period, but
has determined the amount to be immaterial to prior period and current
year results, considering both quantitative and qualitative factors.

In October 2002 the Corporation acquired the Electro-Mechanical Divi-
sion (“EMD”) facility from Westinghouse Government Services LLC
(“Seller”). Included in the purchase was the assumption of several
Nuclear Regulatory Commission (“NRC”) licenses, necessary for the
continued operation of the business. In connection with these
licenses, the NRC required ﬁnancial assurance from the Corporation (in
the form of a parent company guarantee) representing estimated envi-
ronmental decommissioning and remediation costs associated with
the commercial operations covered by the licenses. In addition, the
Corporation has assumed obligations for additional environmental
remediation costs. Remediation and investigation of the EMD facility
are ongoing. As of December 31, 2004 the balance in this reserve is
$12.6 million. The Corporation obtained partial environmental insur-
ance coverage speciﬁcally for the EMD facility. The policy provides cov-
erage for losses due to on or off-site pollution conditions, which are
pre-existing and unknown.

The environmental obligation at December 31, 2004 was $25.2 mil-
lion compared to $23.3 million at December 31, 2003. Approximately
80% of the Corporation’s environmental reserves as of December 31,
2004 represent the current value of anticipated remediation costs and
are not discounted primarily due to the uncertainty of timing of expen-
ditures. The remaining environmental reserves are discounted using a
rate of 4% to reﬂect the time value of money since the amount and tim-
ing of cash payments for the liability are reliably determinable. All envi-
ronmental reserves exclude any potential recovery from insurance
carriers or third-party legal actions.

14. Pension and Other Postretirement Benefit Plans
The Corporation maintains six separate and distinct pension and other
postretirement beneﬁt plans, as described in further detail below. Prior
to the acquisition of EMD in October 2002, the Corporation maintained
a qualiﬁed pension plan, a non-qualiﬁed pension plan, and a postretire-
ment health beneﬁts plan (the “Curtiss-Wright Plans”). As a result of
the acquisition, the Corporation obtained three unfunded pension and
post-retirement beneﬁt plans (the “EMD Plans”), similar in nature to
those listed above. The unfunded status of the acquired EMD Plans was
recorded as a liability at the date of acquisition. During 2003, the funds
associated with the qualiﬁed pension plans of both the Curtiss-Wright
Plans and EMD Plans were placed under a master trust fund, from which
the Corporation directs the investment strategy for both plans.

5 8

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

The Curtiss-Wright Plans

Pension Beneﬁts

Postretirement Beneﬁts

2004

2003

2004

2003

(In thousands)

C H A N G E I N B E N E F I T O B L I G AT I O N :
Beneﬁt obligation at beginning of year
Service cost
Interest cost
Plan participants’ contributions
Amendments
Actuarial loss (gain)
Beneﬁts paid

$126,523
9,838
7,540
—
303
(5,575)
(13,845)

$111,827
8,899
7,982
—
328
16,652
(19,165)

Beneﬁt obligation at end of year

124,784

126,523

C H A N G E I N P L A N A S S E T S :
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contribution
Plan participants’ contribution
Beneﬁts paid

199,013
25,832
593
—
(13,845)

187,969
29,834
375
—
(19,165)

Fair value of plan assets at end of year

211,593

199,013

Funded status
Unrecognized net actuarial gain
Unrecognized transition obligation
Unrecognized prior service costs

Prepaid (accrued) beneﬁt costs

86,809
(11,238)
(7)
1,554

72,490
3,184
(11)
1,426

$ 628
—
29
—
—
19
(96)

580

—
—
96
—
(96)

—

(580)
(570)
—
—

$ 512
—
39
19
—
144
(86)

628

—
—
67
19
(86)

—

(628)
(662)
—
—

$ 77,118

$ 77,089

$(1,150)

$(1,290)

AC C U M U L AT E D B E N E F I T O B L I G AT I O N

$110,112

$114,740

N/A

W E I G H T E D - AV E R AG E A S S U M P T I O N S

I N D E T E R M I N AT I O N O F
B E N E F I T O B L I G AT I O N :
Discount rate
Rate of compensation increase
Health care cost trends:

6.00%
3.50%

5.00%
—

5.30%
—

Rate assumed for subsequent year
Ultimate rate reached in 2010 and 2007, respectively

Measurement date

—
—
September 30

10.50%
5.50%
October 31

9.40%
5.50%
October 31

5 9

The following table details the components of net periodic pension
expense (income) for the CW Pension Plan and CW Restoration Plan:

The effect on the CW Retirement Plan of a 1% change in the health care
cost trend is as follows:

(In thousands)

2004

2003

2002

$ 9,838
7,540

$ 8,899
7,982

$ 6,015
7,650

(In thousands)

Total service and interest
cost components

(17,276)

(18,081)

(18,705)

Postretirement

beneﬁt obligation

1%
Increase

1%
Decrease

$ 2

$39

$ (2)

$(35)

Service cost
Interest cost
Expected return on
plan assets

Amortization of prior
service cost

Amortization of transition

obligation

Recognized net actuarial

(gain) loss
Cost of settlement

Net periodic beneﬁt
expense (income)

Weighted-average
assumptions in
determination of net
periodic beneﬁt cost:
Discount rate
Expected return on
plan assets

112

(4)

33
257

(3)

(4)

(587)
121

(2,191)
1,911

500

$ (1,611)

$ (5,298)

6.00%

6.75%

7.00%

8.50%

Rate of compensation

increase

3.50%

4.25%

The following table details the components of net periodic pension
income for the CW Retirement Plan:

(In thousands)

Service cost
Interest cost
Amortization of prior
service cost

Recognized net actuarial gain
Beneﬁt of settlement

2004

$ —
29

—
(73)
—

2003

$ —
39

2002

$ 129
148

—
(73)
—

(123)
(179)
(3,849)

Net periodic beneﬁt income

$(44)

$(34)

$(3,874)

Weighted-average

assumptions in
determination of net
periodic beneﬁt cost:
Discount rate
Health care

cost trends:
Current year rate
Ultimate rate

5.30%

6.75%

7.00%

9.40%

10.70%

12.00%

reached in 2007

5.50%

6 0

The EMD Plans
The Corporation maintains the Curtiss-Wright Electro-Mechanical Cor-
poration Pension Plan (the “EMD Pension Plan”), a qualiﬁed contribu-
tory deﬁned beneﬁt pension plan, which covers all Curtiss-Wright
Electro-Mechanical Corporation employees. The EMD Pension Plan
covers both union and non-union employees and is designed to satisfy
the requirements of relevant collective bargaining agreements.
Employee contributions are withheld each pay period and are equal to
1.5% of salary. The beneﬁts under the EMD Pension Plan are based on
years of service and compensation. At December 31, 2004 and 2003,
the Corporation had an accrued pension liability of $37.1 million and
$33.5 million, respectively, related to the EMD Pension Plan. The Cor-
poration expects to contribute $10.1 million, the estimated minimum
required amount, to the EMD Pension Plan in 2005.

The Corporation maintains the Curtiss-Wright Electro-Mechanical Cor-
poration Non-Qualiﬁed Plan (the “EMD Supplemental Plan”), a non-
qualiﬁed non-contributory non-funded supplemental retirement plan for
eligible EMD key executives. The EMD Supplemental Plan provides for
periodic payments upon retirement that are based on total compensa-
tion (including amounts in excess of qualiﬁed plan limits) and years of
service, and are reduced by beneﬁts earned from certain other pension
plans in which the executives participate. At December 31, 2004
and 2003, the Corporation had an accrued pension liability of $2.5 and
$2.4 million, respectively, related to the EMD Supplemental Plan. The
Corporation’s contributions to the EMD Supplemental Plan are not
expected to be material in 2005.

The Corporation, through an administration agreement with Westing-
house, maintains the Westinghouse Government Services Group Wel-
fare Beneﬁts Plan (the “EMD Retirement Plan”), a retiree health and life
insurance plan for substantially all of the Curtiss-Wright Electro-
Mechanical Corporation employees. The EMD Retirement Plan pro-
vides basic health and welfare coverage on a non-contributory basis.
Beneﬁts are based on years of service and are subject to certain caps.
The Corporation had an accrued postretirement beneﬁt liability of
$39.1 million and $37.5 million related to the EMD Retirement Plan at
December 31, 2004 and 2003, respectively. Pursuant to the Asset Pur-
chase Agreement, the Corporation has a discounted receivable from
Washington Group International to reimburse the Corporation for a por-
tion of these postretirement beneﬁt costs. At December 31, 2004 and
2003, the discounted receivable included in other assets was $5.5 mil-
lion and $5.9 million, respectively. The Corporation expects to
contribute $1.7 million to the EMD Retirement Plan during 2005.

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

(In thousands)

C H A N G E I N B E N E F I T O B L I G AT I O N :
Beneﬁt obligation at beginning of year
Service cost
Interest cost
Plan participants’ contributions
Actuarial loss (gain)
Beneﬁts paid

The EMD Plans

Pension Beneﬁts

Postretirement Beneﬁts

2004

2003

2004

2003

$128,287
3,249
8,080
804
3,503
(6,300)

$112,442
2,032
5,890
597
11,137
(3,811)

$ 41,106
789
2,366
—
(4,918)
(1,603)

$ 36,344
705
2,388
—
3,593
(1,924)

Beneﬁt obligation at end of year

137,623

128,287

37,740

41,106

C H A N G E I N P L A N A S S E T S :
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contribution
Plan participants’ contribution
Beneﬁts paid

Fair value of plan assets at end of year

Funded status
Unrecognized net actuarial gain

Prepaid (accrued) beneﬁt costs

83,737
10,052
143
804
(6,300)

88,436

(49,187)
9,700

74,335
8,009
4,607
597
(3,811)

83,737

(44,550)
8,635

—
—
1,603
—
(1,603)

—

—
—
1,924
—
(1,924)

—

(37,740)
(1,326)

(41,106)
3,592

$ (39,487)

$ (35,915)

$(39,066)

$(37,514)

AC C U M U L AT E D B E N E F I T O B L I G AT I O N

$124,793

$115,527

N/A

W E I G H T E D - AV E R AG E A S S U M P T I O N S

I N D E T E R M I N AT I O N O F
B E N E F I T O B L I G AT I O N :
Discount rate
Rate of compensation increase
Health care cost trends:

Rate assumed for subsequent year — Pre-65
Rate assumed for subsequent year — Post-65
Ultimate rate reached in 2010 and 2007,

respectively — Pre-65

Ultimate rate reached in 2010 and 2007,

respectively — Post-65

Measurement date

6.00%
3.50%

6.25%
3.25%

—
—

—

—
—

—

6.00%
—

10.50%
13.00%

6.25%
—

9.70%
15.70%

5.50%

—
September 30

5.50%
October 31

6.50%
October 31

The following table details the components of net periodic pension expense for the EMD Pension Plan and EMD Supplemental Plan:

(In thousands)

Service cost
Interest cost
Expected return on plan assets
Recognized net actuarial (gain) loss

Net periodic beneﬁt expense

Weighted-average assumptions in determination of net periodic beneﬁt cost:

Discount rate
Expected return on plan assets
Rate of compensation increase

2004

2003

2002

$ 3,248
8,080
(7,613)
—

$ 2,709
7,854
(7,618)
(394)

$ 424
1,278
(1,092)
—

$ 3,715

$ 2,551

$ 610

6.25%
8.50%
3.25%

7.00%
8.50%
4.00%

7.00%
8.88%
4.00%

6 1

The following table details the components of net periodic pension
expense for the EMD Retirement Plan:

The effect on the EMD Retirement Plan of a 1% change in the health
care cost trend is as follows:

(In thousands)

Service cost
Interest cost

2004

2003

2002

$ 789
2,366

$ 705
2,388

—
—

—

(In thousands)

Total service and interest
cost components

Postretirement

beneﬁt obligation

1%
Increase

1%
Decrease

$ 558

$ (440)

$5,306

$(4,354)

Net periodic beneﬁt expense

$3,155

$3,093

Weighted-average
assumptions in
determination of net
periodic beneﬁt cost:
Discount rate
Health care cost trends:
Current year rate —

6.25%

6.75%

Pre--65

9.70%

11.10%

Current year rate —

Post--65

15.70%

18.00%

Ultimate rate reached
in 2007 — Pre--65
Ultimate rate reached
in 2007 — Post--65

5.50%

6.50%

The Medicare Prescription Drug, Improvement and Modernization Act
of 2003 was signed into law on December 8, 2003. In accordance with
FASB Staff Position FAS 106-1, the Corporation made a one-time elec-
tion to defer recognition of the effects of the law in the accounting for
its plan under FAS 106 and in providing disclosures related to the plan
until authoritative guidance on the accounting for the federal prescrip-
tion drug subsidy is issued. Proposed regulations regarding the imple-
mentation of the Act were issued in July of 2004; however, many
questions cannot be answered until ﬁnal regulations are issued in
2005. Until the ﬁnal regulations are issued the Corporation cannot con-
clude whether the prescription drug beneﬁts offered under this plan
are actuarially equivalent to Medicare Part D under the Act. Therefore,
in accordance with FASB Staff Position FAS 106-2, any measures of the
Accumulated Postretirement Beneﬁt Obligation or Net Periodic Postre-
tirement Beneﬁt Cost do not reﬂect the effects of the Act on the plan.

The following beneﬁt payments, which reﬂect expected future service, as appropriate, are expected to be paid from the plans:

(In thousands)

2005
2006
2007
2008
2009
2010–2014

Pension Plan Assets
The Corporation maintains the funds of the CW Pension Plan and
the EMD Pension Plan under one master trust. The Corporation’s Retire-
ment Plans are diversiﬁed across investment classes and among invest-
ment managers in order to achieve an optimal balance between risk
and return. In accordance with this policy, the Corporation has estab-
lished target allocations for each asset class and ranges of expected
exposure. The Corporation’s retirement assets are invested within this
allocation structure in three major categories; these include domestic

CW
Pension
Plans

$ 9,976
10,266
9,914
9,962
10,150
51,435

CW
Retirement
Plan

$ 75
76
70
65
59
224

EMD
Pension
Plans

$ 7,918
8,501
8,852
9,261
9,630
53,863

EMD
Retirement
Plan

$ 1,712
1,937
2,163
2,339
2,439
13,508

Total

$ 19,681
20,780
20,999
21,627
22,278
119,030

equity securities, international equity securities and debt securities.
Below are the Corporation’s actual and established target allocations:

Asset class

Domestic Equities
International Equities

Total Equity
Fixed Income
Cash

As of December 31,
2003
2004

Target
Exposure

Expected
Range

54%
15%

69%
31%
0%

51%
15%

66%
34%
0%

50% 40% – 60%
15% 10% – 20%

65% 55% – 75%
35% 25% – 45%
0% – 10%

6 2

The Corporation may from time to time require the reallocation of assets
in order to bring the retirement plans into conformity with these ranges.
The Corporation may also authorize alterations or deviations from these
ranges where appropriate for achieving the objectives of the retirement
plans. The Corporation’s investment policy does not permit its invest-
ment manager to invest plan funds in the Corporation’s stock.

The long-term investment objective of the Retirement Plans is to
achieve a total rate of return, net of fees, which exceeds the actuarial
overall expected return on assets assumption of 8.50% used for fund-
ing purposes and which provides an appropriate premium over inﬂa-
tion. The intermediate-term objective of the Retirement Plans, deﬁned
as three to ﬁve years, is to outperform each of the capital markets in
which assets are invested, net of fees. During periods of extreme mar-
ket volatility, preservation of capital takes a higher precedence than
out performing the capital markets.

The overall expected return on assets assumption used in the calcula-
tion of annual net periodic beneﬁt cost is based on a combination of
the historical performance of the pension fund and expectations of
future performance. The historical returns are determined using the
market-related value of assets, includes the recognition of realized and
unrealized gains and losses over a ﬁve-year period. Although over the
last ten years the market-related value of assets had an average
annual yield of 10.9%, the actual returns averaged 9.4% during the
same period. Given the uncertainties of the current economic and
geopolitical landscape, the Corporation considers 8.5% to be a rea-
sonable assumption of future long-term investment returns. While the
Corporation takes into account historical performance, its assump-
tions also consider the forward-looking long-term outlook for the capi-
tal markets.

Other Pension and Postretirement Plans
The Corporation offers all of its domestic employees the opportunity to
participate in a deﬁned contribution plan. Costs incurred by the Corpo-
ration in the administration and record keeping of the deﬁned contribu-
tion plan are paid for by the Corporation and are not considered material.

In addition, the Corporation had foreign pension costs under various
retirement plans of $3.5 million, $1.9 million, and $1.6 million in 2004,
2003, and 2002, respectively.

15. Leases
The Corporation conducts a portion of its operations from leased facil-
ities, which include manufacturing and service facilities, administra-
tive ofﬁces, and warehouses. In addition, the Corporation leases
automobiles, machinery, and ofﬁce equipment under operating leases.
The leases expire at various dates and may include renewals and esca-
lations. Rental expenses for all operating leases amounted to $18.5
million in 2004, $10.5 million in 2003, and $8.2 million in 2002.

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

At December 31, 2004, the approximate future minimum rental com-
mitments under operating leases that have initial or remaining non-
cancelable lease terms in excess of one year are as follows:

(In thousands)

2005
2006
2007
2008
2009
Thereafter

Total

Rental
Commitment

$15,846
12,933
11,074
9,141
6,016
17,727

$72,737

16. Industry Segments
The Corporation manages and evaluates its operations based on the
products and services it offers and the different markets it serves.
Based on this approach, the Corporation has three reportable seg-
ments: Flow Control, Motion Control, and Metal Treatment. The Flow
Control segment primarily designs, manufactures, distributes, and ser-
vices a broad range of highly engineered ﬂow control products for
severe service military and commercial applications. The Motion Con-
trol segment primarily designs, develops, and manufactures mechani-
cal systems, drive systems, and electronic controls and sensors for the
aerospace and defense industries. Metal Treatment provides various
metallurgical services, principally “shot peening” and “heat treating.”
The segment provides these services to a broad spectrum of cus-
tomers in various industries, including aerospace, automotive, con-
struction equipment, oil and gas, petrochemical, and metal working.

The accounting policies of the operating segments are the same as
those described in the summary of signiﬁcant accounting policies.
Interest expense and income taxes are not reported on an operating
segment basis because they are not considered in the performance
evaluation by the Corporation’s chief operating decision-maker, its
Chairman and CEO.

Sales to one customer of the Flow Control segment through which the
Corporation is a subcontractor to the U.S. Government were 13% of
consolidated revenues in 2004, 16% in 2003, and 10% in 2002. Dur-
ing 2004, 2003, and 2002, the Corporation had no commercial
customer representing more than 10% of consolidated revenue.

6 3

Consolidated Industry Segment Information:

(In thousands)

Y E A R E N D E D D E C E M B E R 3 1 , 2 0 0 4 :
Revenue from external customers
Intersegment revenues
Operating income (expense)
Depreciation and amortization expense
Segment assets
Capital expenditures

Y E A R E N D E D D E C E M B E R 3 1 , 2 0 0 3 :
Revenue from external customers
Intersegment revenues
Operating income (expense)
Depreciation and amortization expense
Segment assets
Capital expenditures

Y E A R E N D E D D E C E M B E R 3 1 , 2 0 0 2 :
Revenue from external customers
Intersegment revenues
Operating income (expense)
Depreciation and amortization expense
Segment assets
Capital expenditures

Flow
Control

Motion
Control

Metal

Treatment(1)

Segment
Total

Corporate

& Other(2)

Consolidated
Total

$388,139
—
44,651
15,884
415,504
10,420

$341,271
—
39,991
14,458
323,689
12,417

$172,455
—
20,693
5,059
328,221
10,787

$388,576
144
44,903
14,214
576,275
10,171

$265,905
—
30,350
7,983
317,631
4,791

$233,437
—
29,579
7,394
267,244
8,243

$178,324
555
28,279
10,381
194,783
11,728

$138,895
544
19,055
8,685
170,547
15,727

$107,386
491
14,403
6,063
127,125
15,873

$ 955,039
699
117,833
40,479
1,186,562
32,319

$ 746,071
544
89,396
31,126
811,867
32,935

$ 513,278
491
64,675
18,516
722,590
34,903

—
(699)
(7,114)
263
91,878
133

$ 955,039
—
110,719
40,742
1,278,440
32,452

—
—
(66)
201
161,798
394

$ 746,071
544
89,330
31,327
973,665
33,329

—
—
4,362
177
87,512
51

$ 513,278
491
69,037
18,693
810,102
34,954

(1) Operating income for the Metal Treatment segment includes nonrecurring costs of $0.5 million associated with the relocation of a shot peening facility in 2002.
(2) Operating income (expense) for Corporate and Other includes pension (expense) income, environmental remediation and administrative expenses, and other

expenses.

Reconciliations:

For the years ended December 31, (In thousands)

2004

2003

2002

R E V E N U E S :
Total segment revenue
Intersegment revenue
Elimination of intersegment revenue

Total consolidated revenues

E A R N I N G S B E F O R E TA X E S :
Total segment operating income
Corporate and administrative
Pension (expense) income, net
Other income, net
Interest expense

Total consolidated earnings before tax

A S S E T S :
Total assets for reportable segments
Pension assets
Non-segment cash
Other assets
Elimination of intersegment receivables

Total consolidated assets

6 4

$ 955,039
699
(699)

$746,071
544
(544)

$513,278
491
(491)

$ 955,039

$746,071

$513,278

$ 117,833
(6,614)
(500)
65
(12,031)

$ 89,396
(1,677)
1,611
389
(5,663)

$ 64,675
(2,846)
7,208
4,508
(1,810)

98,753

$ 84,056

$ 71,735

$1,186,562
77,802
545
13,608
(77)

$811,867
77,877
72,582
11,384
(45)

$722,590
76,072
4,875
6,609
(44)

$1,278,440

$973,665

$810,102

C U R T I S S - W R I G H T A N D S U B S I D I A R I E S

The following table presents geographical information of the Corporation’s revenues and property, plant, and equipment based on the location of
the customer and the assets, respectively:

December 31, (In thousands)

2004

2003

2002

Geographic Information:
United States of America
United Kingdom
Canada
Other foreign countries

Consolidated total

Revenues

Long-Lived
Assets

Revenues

Long-Lived
Assets

Revenues

Long-Lived
Assets

$735,356
92,541
20,675
106,467

$181,708
52,568
14,136
16,831

$574,427
66,210
17,052
88,382

$176,273
40,614
6,528
14,724

$387,939
49,519
13,527
62,293

$163,531
38,235
4,674
12,609

$955,039

$265,243

$746,071

$238,139

$513,278

$219,049

18. Subsequent Event
On March 3, 2005, the Corporation acquired the outstanding shares of
Indal Technologies, Inc (“Indal”). The purchase price of the acquisition,
subject to customary adjustments as provided for in the Stock Pur-
chase Agreement, was 78.0 million Canadian dollars (approximately
$63 million). Management funded the purchase from the Corpora-
tion’s revolving credit facility. Revenues of the purchased business
were 49.4 million Canadian dollars (approximately $38 million) for the
year ended December 31, 2004. Indal’s operations are located in
Toronto, Canada. Management intends to incorporate the operations
of Indal into the Corporation’s Motion Control segment.

17. Contingencies and Commitments
The Corporation, through its subsidiary located in Switzerland, entered
into a credit agreement with UBS AG (“UBS”) for a credit facility in the
amount of 6.0 million Swiss francs ($5.3 million) for the issue of per-
formance guarantees related to long-term contracts. The Corporation
received prepayments on these contracts, which are being used as col-
lateral against the credit facility. The customers can draw down on the
line of credit for nonperformance up to the amount of pledged collat-
eral, which is released from restriction over time as the Corporation
meets its obligations under the long-term contracts. Under the terms
of this credit facility agreement, the Corporation is not permitted to bor-
row against the line of credit. The Corporation is charged a commit-
ment fee on the outstanding balance of the collateralized cash. As of
December 31, 2004, the amount of restricted cash under this facility
was $2.8 million, all of which is expected to be released from restric-
tion after one year.

In October 2002, the Corporation acquired EMD. Included in the pur-
chase was the assumption of several NRC licenses, necessary for the
continued operation of the business. In connection with these
licenses, the NRC required ﬁnancial assurance from the Corporation (in
the form of a parent company guarantee) representing estimated envi-
ronmental decommissioning and remediation costs associated with
the commercial operations covered by the licenses. The guarantee for
the decommissioning costs of the refurbishment facility, which is esti-
mated for 2017, is $3.1 million. See Note 13 for further information.

Consistent with other entities its size, the Corporation is party to a num-
ber of legal actions and claims, none of which individually or in the
aggregate, in the opinion of management, are expected to have a mate-
rial adverse effect on the Corporation’s results of operations or ﬁnan-
cial position.

6 5

Corporate Information

Corporate Headquarters
4 Becker Farm Road, 3rd Floor
Roseland, NJ 07068
(973) 597-4700

www.curtisswright.com

Annual Meeting
The 2005 annual meeting of stockholders will be held on
May 19, 2005, at 2:00 pm at the Wilshire Grand Hotel,
350 Pleasant Valley Way, West Orange, NJ 07052.

Stock Exchange Listing
The Corporation’s Common and Class B common stock are listed
and traded on the New York Stock Exchange under the symbols
CW and CW.B.

Common Shareholders
As of December 31, 2004, the approximate number of holders
of record of Common stock, par value of $1.00 per share,
and Class B common stock, par value $1.00 per share, of the
Corporation was 2,873 and 4,587, respectively.

Stock Transfer Agent and Registrar
For services such as changes of address, replacement of lost
certiﬁ cates or dividend checks, and changes in registered
ownership, or for inquiries as to account status, write to
American Stock Transfer & Trust Company at 59 Maiden Lane,
New York, NY 10038.

Please include your name, address and telephone number
with all correspondence. Telephone inquiries may be made to
(800) 937-5449. Foreign (212) 936-5100. Internet inquiries
should be addressed to http://www.amstock.com. Hearing-
impaired shareholders are invited to log on to the website and
select the Live Chat option.

Direct Stock Purchase Plan/Dividend
Reinvestment Plan
A plan is available to purchase or sell shares of Curtiss-Wright
Common stock and Class B common stock. The plan 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, American Stock Transfer
& Trust Company toll-free at (877) 854-0844.

Investor Information
Investors, stockbrokers, security analysts and others seeking
information about Curtiss-Wright Corporation should contact
Alexandra Deignan, Director of Investor Relations, at the
Corporate Headquarters listed above.

Stockholder Communications
Any stockholder wishing to communicate directly with our
Board of Directors should write to Dr. William W. Sihler at
Southeastern Consultants Group, LTD, P.O. Box 5645,
Charlottesville, VA 22905.

Financial Reports
This Annual Report includes most of the periodic ﬁ nancial
information required to be on ﬁ le with the Securities and Exchange
Commission. The Corporation also ﬁ les an Annual Report on
Form 10-K, a copy of which may be obtained free of charge.
These reports, as well as additional ﬁ nancial documents such as
quarterly shareholder reports, proxy statements, and quarterly
reports on Form 10-Q, may be obtained by written request to
Alexandra Deignan, Director of Investor Relations, at the
Corporate Headquarters.

Stock Price Range

2004

2003

Common

First Quarter

High

Low

High

Low

$48.70 $44.20 $33.54 $26.04

Second Quarter

56.19 45.74

33.13 26.97

Third Quarter

Fourth Quarter

58.28 51.10

35.94 30.42

60.00 52.65

47.25 35.03

2004

2003

Class B

First Quarter

High

Low

High

Low

$47.50 $43.00 $32.50 $25.20

Second Quarter

53.77 43.50

32.68 26.00

Third Quarter

Fourth Quarter

54.99 49.29

35.90 30.56

58.32 50.00

46.71 34.88

Note: All prices adjusted for the 2-for-1 stock split
on December 17, 2003.

Dividends

Common

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Class B

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

2004 2003

$0.09 $0.08

0.09

0.08

0.09

2004 2003

$0.09 $0.08

0.09

0.08

Note: All dividends adjusted for the 2-for-1 stock split
on December 17, 2003.

High Performance.
The same can be said
of our operating results.
Strong, sustainable
growth and profitability.
Unlimited opportunity
for the future.

Consolidated Historical Performance

Net Sales ($000s)
Sales per Employee ($)
1,000,000

800,000

600,000

400,000

200,000

180,000

160,000

140,000

120,000

100,000

Operating Income ($000s)
Reported
Normalized

Net Earnings ($000s)
Reported
Normalized

120,000

100,000

80,000

60,000

40,000

20,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

‘99 ‘00 ‘01 ‘02 ‘03 ‘04

relief valves

• Nuclear/non-nuclear pumps, motors and

instrumentation and controls

$388 million

$389 million

$178 million

Products and Services
• Shot peening
• Shot peen forming
• Laser peening
• Heat treating
• Specialty coatings
• Reed valve manufacturing

Major Markets
• U.S. Navy nuclear and non-nuclear
programs
• Commercial power generation

(nuclear and fossil)

treatment facilities

C
Y
N

n
g
s
e
D

l
l

e
s
s
u
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n
g
s
e
D

C
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r
t
i
s
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i
g
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t
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a
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A
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n
u
a

R
e
p
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r
t
2
0
0
4

High Performance.

High performance.
One trait that is common
to all our products
is high performance.
Highly engineered.
Formidable quality.
Absolute reliability.

Curtiss-Wright Corporation
4 Becker Farm Road
Roseland, New Jersey 07068

www.curtisswright.com

Curtiss-Wright Corporation
Annual Report 2004