A clear vision of tomorrow
C U R T I S S -W R I G H T C O R P O R AT I O N 2 0 0 7 A N N U A L R E P O R T
Table of Contents
Power Generation
Oil & Gas
Other Commercial Markets
Defense
Letter to Shareholders
At a Glance
Auditor’s Opinion
Income Statement
Balance Sheet
Cash Flow
Directors and Officers
02
04
06
08
10
14
16
17
18
19
20
Forward-Looking
Statements
This brochure contains not only historical
information but also forward-looking
statements regarding expectations for
future performance of the Corporation.
Forward-looking statements involve
risk and uncertainty. Please refer to the
Corporation’s 2007 Annual Report on
Form 10-K for a discussion relating to
forward-looking statements contained
in this brochure and risk factors that
could cause future results to differ from
current expectations.
Historical Financial Performance
(In thousands, except per share data; unaudited)
Performance
Net sales
Earnings before interest, taxes, depreciation
and amortization
Net earnings
Cash flow from operations
Diluted earnings per share (1)
Return on sales
Return on invested 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 shareholders
Number of employees
2007
2006
2005
$1,592,124
$1,282,155
$1,130,928
244,252
104,328
139,136
2.32
7%
10%
191,307
80,569
143,871
1.82
6%
10%
186,132
75,280
105,178
1.72
7%
10%
1,870,402
1,303,758
1,332,982
875,507
1,261,193
805,631
$ 359,566
1.9 to 1
1,985,560
914,785
20.51
$ 62,699
54,433
44,593
6,331
7,471
$ 330,520 $ 268,963
2.2 to 1
1,400,285
638,220
14.68
2.1 to 1
1,592,156
762,074
17.31
$ 50,791
40,202
44,023
6,762
6,233
$ 47,851
42,444
43,492
7,069
5,892
Dividends per share (1)
$ 0.28
$ 0.24
$ 0.20
(1) Per share data for all years have been adjusted to reflect a 2-for-1 stock split on April 21, 2006.
(2) Return on invested capital is net operating profit after-tax over average net debt plus equity.
Superior performance in global markets
Curtiss-Wright is a global provider of highly engineered technologies for
critical applications. From the nuclear propulsion system of a naval ship to
the safe landing of nearly every commercial aircraft in operation, we engineer
the most vital operations, down to the most meticulous detail. Our long-
standing performance is evident through a portfolio of innovative products
and services that support our customers’ next-generation designs as well
as their current programs. When performance and reliability are critical,
Curtiss-Wright delivers results with uncompromising quality.
Sales increased 24%
led by strong commercial
market and solid defense
spending.
Operating income
increased 27%
driven by significant
organic growth.
Net income
increased 30%
and quarterly dividends
increased 33%.
1.59
1.28
1.13
0.96
0.75
179.2
104.3
138.0
140.6
110.3
89.0
80.6
75.3
65.1
52.3
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’05
’04
Net Sales
Dollars in billions
’06
’07
’03
’04
’05
Operating Income
Dollars in millions
’06
’07
’03
’06
’05
’04
Net Income
Dollars in millions
’07
Our clear vision of tomorrow:
• Advanced technologies for critical applications
• Enhanced operational and environmental safety
• Globally competitive, cost-effective solutions
• Superior financial performance through
market diversification
Naval Defense • Aerospace Defense • Ground Defense
Commercial Aerospace • Power Generation • Oil & Gas Processing • General Industry
Global nuclear power partnerships
2007 marked the first applications for new nuclear power plants to be
built in the U.S. in nearly 30 years. Indeed, the challenge of providing a
secure domestic energy supply to meet growing demand and the focus on
environmental protection have produced a compelling argument for nuclear
power generation. Superior safety performance and cost-effective electricity
production, combined with growing public support, are strong signals that
nuclear power will play an important role in meeting future demand.
Curtiss-Wright has been an active participant in the global
nuclear market—from the first U.S. Navy nuclear-powered
submarine to the first domestic nuclear power plant. Our
heritage in nuclear power generation is demonstrated by more
than 50 years of engineering expertise and our commitment to
excellence is proudly represented in thousands of critical service
components installed in nuclear plants worldwide.
Operating Reactors
Our customers require support for their installed base equipment,
in particular, dealing with obsolescence and supplier exodus,
and more efficient technologies for production. Much of the
equipment we provide is used to control flow, such as valves,
pumps, instrumentation, heat exchangers, containment bolting
and sealing technologies, all of which are extremely critical to plant
performance and safety. It takes impeccable credentials to be a
nuclear supplier, and Curtiss-Wright has invested in state-of-the-art
equipment, highly skilled employees, strategic teaming partnerships
and quality assurance certifications that support the nuclear market.
In the U.S. nearly half of the nuclear power plants currently
operating have received 20-year extensions to their 40-year
operating licenses, with most of the others expected to follow.
Curtiss-Wright has participated every step of the way, from the
first plant life extension at Calvert Cliffs, supplying over $4 million
of rotary shut-off valves, to ongoing analysis with those customers
expecting to apply. In addition to extending licenses, operators have
employed Curtiss-Wright’s newer, more efficient technologies to
increase power output by 4,845 MWe, equating to almost five new
reactors. An additional 2,500 MWe is expected to be added to the
grid during the next five years from power uprates.
Plant life extensions, power uprates and other performance
initiatives are a cost-effective means of creating new generation
capacity, which is not unique to U.S. plants. Globally there are
439 nuclear reactors operating in approximately 30 countries.
While the U.S. has the most operating reactors, other countries
with mature nuclear power programs include Canada, France,
Germany, India, Japan, Russia, South Korea and the U.K.
New Construction
In the global market, Curtiss-Wright has enjoyed success in
countries such as China, Finland, Russia, South Korea and Taiwan
where new plant construction has been active.
In 2007, we announced our first order from China for Curtiss-Wright
equipment used in the Westinghouse AP1000 design. The AP1000,
the first Generation III+ nuclear power plant to receive design
certification by the Nuclear Regulatory Commission, is based on 50
years of design and support experience with existing pressurized
water reactors. The advanced passive reactor design features natural
circulation, gravity, convection and compressed gas to address
accident conditions, rather than relying on operator actions and
independent power. Because of the simplification of the plant design,
it has fewer valves, pumps and piping, which contributes to improved
reliability and reduced plant construction/operating costs.
Curtiss-Wright designs and manufactures major components
that are at the heart of the AP1000 nuclear power plant design,
namely, the reactor coolant pumps that circulate the coolant
fluid for the reactor and the control rod drive mechanisms which
are used to control the reactor core activity. These critical
components have operating lives in excess of 40 years with
virtually no maintenance requirements.
Global Partnerships
The nuclear accord between China and the U.S. represents the
beginning of a dramatic shift in the global approach to supplying
clean energy worldwide. With concerns about global warming
and energy security on the rise, nuclear energy technology is
fostering global partnerships that will expand the safe use of
nuclear energy in the near term. We are very proud of our
leadership in this critical market. Curtiss-Wright’s expansive
installed base at every nuclear power plant in the U.S. and
throughout the global industry, combined with our numerous
advanced technologies, will enable us to remain at the forefront
of this vital, growing market.
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[1] Tennessee Valley Authority applied for a construction and operating license for two AP1000 power plants in 2007. [2] The first control rod drive
mechanisms integrated into a reactor vessel head replacement project. [3] HydraNut bolting solution technology significantly reduces maintenance time
and improves worker safety. [4] Nuclear power generation supplies approximately 20% of U.S. electricity with minimal impact to the environment.
Advancing oil and gas technologies
1929 was a historic year for Curtiss-Wright as we listed on the New York
Stock Exchange. It was also the year the first delayed coking process went into
operation, quite a historic event in the oil refining industry. The two events
were unrelated until 2000 when Curtiss-Wright embarked on a diversification
strategy for highly engineered, critical process technologies that led to our
expansion in the oil and gas market. Aerospace, defense and energy have a
common thread of innovation, critical operations and proven performance.
Refining industry spending for expansion of existing facilities and
new international capacity is at the highest level in over 40 years,
providing a robust market for Curtiss-Wright products and systems.
Today, our oil and gas business is focused on secondary refining
processes such as delayed coking, catalytic cracking and hydro-
treating. Products suited for these complex operations require
significant engineering expertise and advanced technologies
to withstand harsh environments, including extreme heat,
abrasive chemical catalysts and pressure. As the refining industry
increases processing of heavy crude oils, it generates greater
demand for our equipment. While our primary concern is to
reduce personnel exposure to hazardous conditions, our designs
also minimize environmental emissions, significantly reduce
maintenance costs and increase process efficiency, all of which
maximize profitability for our customers.
Delayed Coking
In the delayed coking process, crude oil is pumped into 100-foot drums
and heated to over 900 degrees Fahrenheit. The process vaporizes
the lighter hydrocarbons which flow out of the top of the drum while a
solid, coal-like product called coke remains. Unheading, or opening the
drum to remove the coke, is one of the most dangerous processes in
a refinery due to the traditional manually operated valve at the bottom
of the drum. Curtiss-Wright revolutionized the operation by providing
an inherently safe, fully automated and remotely operated system. So
safe that our customers have recorded zero incidents in over six years
of operation.
By combining critical service hardware with our integrated controls,
we provide refinery operators with a fully automated coke unheading
system, uniquely designed to deliver unmatched safety, performance,
and value. The addition of isolation valves for overhead vapor lines,
coke cutting tools to remove coke from inside the drums, and ancillary
equipment differentiates Curtiss-Wright’s systems portfolio and
establishes a clear growth platform for delayed coking system solutions.
Catalytic Cracking
Catalytic cracking uses a chemical catalyst to physically break
down heavy crude into lighter refined products. One of the most
critical operations in the refinery, the process requires a network
of highly engineered vessels, valves, actuators, feed nozzles,
separators, piping and power recovery systems. The enormous
size of the equipment and the severe operating conditions require
superior engineering and manufacturing expertise. By integrating
our critical service valve and vessel technology with our process
control technology, Curtiss-Wright has engineered a systems
solution to substantially improve the operating reliability and
efficiency of the catalytic cracking process.
Critical Path Solutions
Customers value our integrated solutions because they safeguard
people and equipment while simultaneously enhancing production.
In addition to our secondary processing systems, we have
developed numerous products to electronically integrate multiple
critical path functions. Our safety relief valves provide critical
over-pressure protection throughout the entire refinery, as well
as in petrochemical and power plants. Our large, fast-acting
emergency shut-down butterfly valves close in less than a ½ second
to isolate and protect employees and multi-million dollar power
recovery equipment. Our digital valve controllers offer state-
of-the-art control, monitoring, process protection and remote
diagnostic technology. Predicting equipment failure is another key
advancement in maximizing safety and process reliability while
reducing unscheduled downtime and minimizing costs.
Extending Our Technologies
Improving refining capacity is only one solution to meet the growing
energy demand. Oil and gas supply is also limited by existing
production technologies. Our vision for tomorrow extends
beyond the refinery into critical path opportunities in exploration,
production, and transmission. From ultra-deep water production to
more efficient and environmentally friendly transportation methods,
Curtiss-Wright has the ingenuity to advance oil and gas technologies.
By applying our expertise in subsea pumps and high-speed, compact
motor designs, Curtiss-Wright is well positioned to extend its
superior technologies in support of this high-demand market.
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[1] Leveraging our subsea expertise in the defense market, we are developing the most advanced subsea pump technology. [2] Our proprietary
control electronics provide critical monitoring systems. [3] Partnering with industry leaders, we are providing power-dense motors for compact,
integrated compression systems. [4] Worldwide refinery and processing operations rely on our safety relief valves. [5] DeltaValve introduced its auto-
switch coke cutting tool in 2007.
Driving performance for commercial markets
Inspired by more than 100 years of innovation, Curtiss-Wright remains
at the forefront of mission-critical aerospace technologies, and we have
selectively extended our reach into complementary high-performance
markets. When performance, safety and reliability are essential,
Curtiss-Wright has the proven engineering talent and manufacturing
precision to provide the most advanced solution.
Commercial Aerospace
From integrated flight computers that allow single-pilot jets to
operate like the most sophisticated airliner, to safety-critical ice
detection systems that enable all-weather flight for helicopters,
Curtiss-Wright continues to lead the way in flight system
innovation while maintaining an installed base on nearly every
commercial jet in production and in development.
Curtiss-Wright provides the sensing, processing, control and
actuation systems that operate aircraft flight control surfaces,
doors and utility systems, and communicate vital data on operating
conditions. From mechanical actuation, which enables smooth flight
take-off and landing operations, to electronic monitoring and data
processing, which analyze conditions within and surrounding the
aircraft in flight, Curtiss-Wright’s sophisticated technologies ensure
safety, reliability, and operational ease. In addition, our subsystem
solutions synchronize complex component operations for
maximum performance and efficiency.
We provide a number of metal treatment services including
shot peening, laser peening, specialty coatings and heat treating
that optimize metallurgical properties in demanding aerospace
applications to resist the effects of temperature, fatigue, wear and
corrosion. Precision surface treatments enhance the performance
and extend the life of critical metal components such as wings,
landing gear, structural supports, critical fasteners, and turbine
engine fan blades. In addition, our shot peening provides precision
forming of a wing’s aerodynamic shape. Curtiss-Wright’s metal
treatment processes are primarily applied to exacting specifications
and requirements of new production aerospace components.
Our reputation for performance and reliability is firmly rooted
in more than a century of design, engineering and manufacturing
expertise. In addition, our operations provide local support for
nearly every program and service we provide, which is essential
to winning key program awards in this globally competitive
landscape. In 2007, we expanded our operations by opening
new facilities in Köping, Sweden and Seville, Spain, and acquiring
a low-cost manufacturing facility in Nogales, Mexico, as part of
our acquisition of IMC Magnetics. Customer proximity and low-
cost manufacturing are key differentiators in a price-conscious
environment, and our measured development plans have been
highly successful in building new business.
Competitive Racing
With the increase in demand for high-performance vehicles
and thriving competitive racing markets, Curtiss-Wright’s
products and services support customers’ needs from
production assembly to vehicle performance, including steering,
suspension, transmission gears, brakes and accelerator controls.
Customization is a key benefit in motorsport and recreational
marine markets where high-response, cost-effective solutions
enhance efficiency, maneuverability, performance and emissions.
Industrial Strength
Curtiss-Wright’s highly engineered, advanced technologies are often
extended to niche industrial markets. Our engineering and design
expertise support countless non-military government and commercial
development programs with specialized simulation and test equipment,
mechanical actuation and power systems. In 2007, we expanded our
laser peening technology beyond commercial and military aerospace
turbine engines to include advanced steam turbines used in the power
generation market. We anticipate additional demand for this advanced
service in our existing markets as well as medical, oil and gas and other
high-performance industrial applications.
Additionally, our acquisition of Benshaw expanded our leadership in
electronic motor controls and protection technology for industrial
customers. Incrementally, this is an excellent fit with our industrial,
processing and transportation markets. The long-term, strategic
value to Curtiss-Wright will be its contribution to our high-speed
motor technology and systems capabilities, which is applicable to all
of our defense and commercial markets.
Meeting Tomorrow’s Challenges Today
Technical innovation, superior product quality and customer satisfaction
are the bedrock of our business, and we will leverage these strengths
as we address the challenges of the future. As Curtiss-Wright has
diversified its business in recent years to better weather the peaks
and troughs of any one business cycle, we have remained committed
to our core competencies—mission-critical technologies, innovative
design engineering and precision manufacturing.
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[1] Motorsport sensors are used for data logging and support improved performance. [2] Aircraft computer systems and throttle quadrants support
the Eclipse very light jets. [3] From flight control actuation to integrated monitoring sensors, our advanced technologies support the most critical
operations on commercial jets. [4] Laser peening strengthens titanium steam turbine blades. [5] Shot peen forming provides superior performance for
aerospace structural components.
Engineering the future of defense
In the skies, on land or at sea, Curtiss-Wright’s critical performance,
advanced technologies have helped to sustain our nation’s defense
superiority for more than a century. From the world’s first flying machine
to nuclear propulsion for the U.S. Navy fleet, we test the boundaries of
possibility, and our successes continue to set the standard of technical
innovation with uncompromising reliability.
Today, Curtiss-Wright is a global leader in naval propulsion
technologies. Our pumps, valves, generators, motors and control
systems power every nuclear submarine and aircraft carrier launched
by the U.S. Navy, ensuring safe, reliable operations. Currently, the
Navy is undertaking a fleet-wide modernization that has provided
substantial demand for our engineering expertise. To meet the
mandated efficiency targets for the Virginia class submarine, we have
enhanced our nuclear propulsion technologies with more power-
dense motor designs and introduced more durable, cost-effective
composite material designs for our pumps. In addition, we are
providing advanced electro-magnetic launching and arresting systems
for the CVN next-generation aircraft carrier. Our technology enables
more efficient control systems, reducing manpower and increasing
flight profile flexibility. In addition to the Navy, we are utilizing our
electro-magnetic expertise to create an advanced power technology
for the Army’s next-generation weapons development program.
On the next-generation destroyer, DDG-1000, we have been
awarded contracts to supply propulsion motors, main turbine
generators for the electric drive system and the helicopter
landing and storage system. And, as the requirements for power
and maneuverability increase, we are supporting the Navy’s
concept studies for all-electric drive systems.
In aerospace, our flight actuation, electronic systems and
embedded computers support nearly every U.S. fighter jet in
operation and on the drawing board. From take-off to landing,
Curtiss-Wright’s technologies operate, monitor and control the
flight surfaces, weapons deployment and data analysis that ensure
peak performance. When an F-22 Raptor’s weapons bay doors
open and close undetected, a V-22 Osprey pilot achieves in-air
transition from vertical to horizontal flight, or the Global Hawk
successfully completes an unmanned mission, Curtiss-Wright’s
integrated subsystems ensure superior performance and steadfast
operational execution. Recently, we extended our aerospace
expertise in the rotorcraft market, enhancing the performance and
flight capabilities of Black Hawk, Apache and Chinook helicopters,
which are in high demand by our troops overseas.
On the ground, we are a leading designer of turret aiming
and stabilization, suspension and weapons handling systems.
Achieving swift but controlled positioning of the vehicle weapon
and rapid reloading of ammunition, all while covering rugged
terrain, require a high degree of synchronization to maximize
performance. As part of Lockheed Martin’s bid for the Warrior
Fightability & Lethality Improvement Program, Curtiss-Wright
assisted in the design of an innovative weapons system that
provides crews more space, commanders better situational
awareness and gunners a wider choice of ammunition. The
advanced technology can be integrated into the hull of the
existing Warrior design, significantly enhancing the program life
cycle. From individual components to subsystems, Curtiss-Wright
has the engineering and manufacturing expertise to combine
outstanding power with precise movement.
Since 2001, we have successfully augmented all of our defense
markets with fully interoperable, ruggedized embedded
computing systems, including state-of-the-art radar and graphics
solutions, high-speed processing and custom software design
based on commercial-off-the-shelf (COTS) technology. The
use of COTS components maximizes system compatibility and
minimizes overall program costs. From the most advanced
designs in development to the current fleet in the air, on
the ground and at sea, we provide modernization through
integration of advanced electronics. By maintaining flexibility
in systems designs, we are able to solve the most difficult
legacy subsystem upgrades, garnering Curtiss-Wright a rapidly
expanding market share.
Envisioning The Future of Defense
With 38% of our sales in the defense market, the U.S.
Government remains essentially our largest customer. In many
respects, defense programs offer a significant amount of stability
and visibility, but more importantly, our defense work provides
the foundation for our pioneering research and development.
Since its founding, Curtiss-Wright has thrived on innovation
and unrelenting quality. With each success we achieve, we
seek multiple markets in which to employ our advances in
technology. As a result, our diversification is not a consequence
of our growth but rather an inevitable extension of our focus on
engineering, performance and reliability.
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[1] Mission-critical weapons handling systems on the F-22 Raptor ensure stealth operations. [2] Integrated sensor systems enhance helicopter
operations and enable shipboard helicopter recovery systems. [3] Embedded computing technology insertions upgrade current forces and reduce
future program development and operational costs. [4] Nuclear propulsion technologies power nearly every submarine and aircraft carrier in the U.S.
Navy fleet. [5] Extending actuation technologies, embedded computing and integrated sensors expand our military market reach.
Dear Shareholders:
2007 was a banner year for Curtiss-Wright as
measured by many different achievements.
We proudly posted another record-
breaking year of growth and higher
profitability due to the dedication and
commitment of our approximately 7,500
employees. Our strategic diversification
produced superb results with our core
markets firing on all cylinders. In addition,
we made several material investments
to our ongoing operations, including
four acquisitions that expand our existing
portfolio of technologies and provide
strategic opportunities for future growth.
Looking forward, we feel the horizon of
opportunity is vast and we have a clear
vision for tomorrow.
Martin R. Benante
Chairman and Chief Executive Officer
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Clear Focus on Financial Performance
Our two-pronged strategy of organic growth and strategic
acquisitions delivered $1.6 billion in sales in 2007, representing
24% consolidated revenue growth over 2006. Operating
income increased 27% to $179 million and our net earnings rose
30% to $104 million, or $2.32 per diluted share.
Finally, we booked new orders of $1.9 billion in 2007, an
increase of 40% over the prior year, and our year-end backlog
had record growth of nearly 50%, achieving $1.3 billion, which
is indicative of robust markets ahead. Our backlog indicates a
strong commercial market, in particular in our energy markets.
Our defense markets continue to be solid as well. The U.S.
Navy, our largest defense customer, procures through multi-year
orders; we are currently nearing the end of the prior multi-year
order for the Virginia class submarine and have nearly completed
our work on the CVN-78 aircraft carrier. Our defense backlog
will replenish as new multi-year orders are authorized through
the Department of Defense budget.
As a result of our strong performance and solid outlook, we
increased our dividend 33% in September which is the fourth
double-digit increase in our dividend since 2000. This dividend
increase reflects our confidence in the company’s ability to
continue to produce strong revenue and profitable growth while
simultaneously returning tangible value to our shareholders.
Vision for Market Diversification
In 2000, we set out to create a balanced portfolio of businesses
that could weather shifts in the global marketplace. Today, our
three business segments operate in four core markets: defense,
commercial aerospace, power generation and oil and gas. These
markets provide us with a high degree of diversification and
stability, as well as significant avenues for growth. Not only do
we have multiple markets in which to direct our resources, we
have considerable scope within each of those markets. Let me
take a moment to discuss each of our end markets.
In the defense market, we have broad exposure to the naval,
aerospace and ground platforms. In the naval defense market,
we are dedicated to providing superior engineering and
manufacturing for the nuclear aircraft carrier and submarine
programs, as we have done since the inception of the U.S.
Nuclear Navy. In the fiscal year 2008 defense budget, Congress
increased the rate of production of Virginia class nuclear
submarines from one to two per year commencing in fiscal
0.16
0.18
year 2011, a remarkable advance
to the Navy program. We eagerly
anticipate the opportunity to
provide state-of-the-art shipboard
launching and arresting technologies
for the new Ford class aircraft
carrier. In addition, we have
expanded our content on non-
nuclear platforms such as the
Zumwalt class destroyer program
and we have similar opportunities
on the littoral combat ship and
CG(X) cruiser programs. As these
programs continue to evolve, we
feel we have additional areas in
which to compete for content on
both conventional and nuclear powered designs.
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0.28
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Dividends per share
In military aerospace, we have a stable of critical technologies
that support nearly every U.S. fighter jet platform, including the
F-22 Raptor, F-16 Falcon, F-35 Joint Strike Fighter, V-22 Osprey
and F-18 Hornet, as well as the Global Hawk unmanned aerial
vehicle. On new programs, we have been awarded significant
content on the P-8A Poseidon. We have already started shipping
our products on this program, although initial aircraft deliveries
are not anticipated until the beginning of 2009.
While our legacy aerospace business concentrated on aircraft,
helicopter programs were a driving force in our aerospace growth
during 2007. The Black Hawk UH-60 has become a significant
program for us and the U.S. Army is procuring this helicopter
in significant quantities. In addition, we received a contract
from Sikorsky Aircraft Corporation for the supply of helicopter
shipboard landing systems to be fitted on H-92 helicopters
destined for the Canadian Maritime Helicopter Program.
In ground defense, strong demand for the Bradley Fighting Vehicle,
Abrams Tank and Future Combat System technology in 2007 is
expected to continue in 2008. In addition to the domestic market,
we received an order from Patria of Finland for our hydrop
suspension system with the Slovenian armed module vehicle. This
award is indicative of our technology leadership and worldwide
presence in the ground defense markets.
As a final comment on the defense market, I would like to
note that despite the headline pressure typical of an upcoming
election, we feel there is a bipartisan consensus for strong
defense spending in the next few years. The debate on a U.S.
withdrawal from Iraq will continue to dominate the budget
discussions, but it is unlikely to impact our operations materially.
There is a need to replenish our armed forces’ infrastructure
and provide adequate resources to the local forces in Iraq and
Afghanistan, significant opportunities to upgrade current program
technology, and a global environment that requires a dedicated
long-term strategy.
In our commercial markets, oil and gas continues to produce
record-breaking growth due to significant demand for our
technologies and robust spending in the market. As we described
in detail during our investor day in September, we are focused on
providing superior solutions that enable automation of traditionally
manual operations, thus enhancing the safety of the entire
operation. In particular, demand for our DeltaValve products
continues to be strong in the U.S., while international orders
increased significantly in 2007. In addition to the unsurpassed
safety record of the DeltaValve system, it also provides significant
economic advantages by reducing cycle times, thus increasing
throughput, minimizing maintenance costs, and enabling refineries
to process less expensive, heavier grades of crude oil. At the price
of crude oil today, these savings can be substantial.
In 2007, we invested in a next-generation DeltaGuard® design
that will enable us to work with fewer suppliers to provide our
customers turnkey products. We also developed new products
such as cutting tools, isolation valves and control systems that
will enable us to offer a fully automated coke deheading system
solution. Finally, we completed the acquisition of Valve Systems
and Controls in June which firmly established Curtiss-Wright as a
leader in turnkey coker systems solutions.
Additionally, we achieved the operational efficiency goals that we
targeted through consolidation of our Tapco and Enpro businesses
in 2007 and we are well positioned to further penetrate the robust
fluidic catalytic cracker unit (FCCU) market. As part of the EPA’s
National Petroleum Refinery Initiative, many of our customers
will be making capital expenditures to lower emissions as well
as increase production capacity, improve reliability and increase
efficiency. The combination of mandatory compliance plus market
economics should drive demand for our technology for the next
several years.
In the commercial power market, operating reactors in the
U.S. generated solid organic growth and we expanded our
product portfolio with the acquisition of Scientech in May
Curtiss-Wright: 27% Annualized Five-Year Total Return
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Curtiss-Wright
S&P 500 Aerospace & Defense
Russell 2000
S&P SmallCap
2007. In addition, we announced a $293 million award for our
participation in the new construction of four Westinghouse
AP1000 nuclear power plants to be built in China. The nuclear
accord between China and the U.S. represents the beginning
of a dramatic shift in the global approach to supplying clean
energy worldwide and we are very proud of our leadership in
this critical technology. To satisfy demand for our technologies
in the nuclear new construction market, we announced a $62
million expansion of our Cheswick, PA, facility, which is currently
underway and due to be completed in 2009.
In the commercial aerospace market, we are meeting the
challenge of Boeing 737 production ramp up, which impacts our
inventory and cash flow early on but contributes significantly
to our long-term growth and profitability. We also began initial
shipments on the 787 program which promises to be a steady
contributor with solid bookings going forward. And, we have
significantly increased our content on regional jets and the new
Eclipse Very Light Jet, which positions us nicely in a market that
continues to enjoy robust growth. Surging traffic demand and
improved airline financial stability create a favorable outlook over
the next several years.
12 | 13
In the general industrial market, we were pleased to announce
two contracts for our laser peening technology. We will be
shaping wing sections for The Boeing Company’s 747-8 program
and enhancing the performance of Siemens Power Generation’s
advanced steam turbine blades. These contracts are a testament
to the significant benefit that this advanced technology can offer
for critical applications beyond our traditional shot peening
techniques. We anticipate additional demand for this advanced
service in our existing markets as well as other markets, such as
medical, oil and gas drilling and performance racing.
Investing for Tomorrow
Organically, we continue to make notable strides in the energy
markets with our oil and gas and nuclear power businesses,
which continue to grow faster than the market. We are
expanding our production facilities and investing in next-
generation designs to support these high-growth markets. At
the same time, we’ve made four acquisitions this year with
a total purchase price of $280 million that will significantly
enhance our product offerings and systems capabilities. These
businesses are offsetting somewhat slower defense growth
primarily related to the ongoing war in Iraq and its drain on funds
for new programs in research and development. The need for
replenishment and more sophisticated technologies has not
waned, however, and we see strong indications for growth in our
defense markets going forward.
We expanded our Board of Directors in February 2008 with the
addition of Admiral (Ret.) John B. Nathman. During his 37-year
career with the U.S. Navy, Admiral Nathman held a variety of
positions in naval air- and sea-based operations, finishing his
service as Commander, U.S. Fleet Forces Command. His long and
distinguished U.S. Navy career will provide a wealth of experience
in the procurement and operations of one of our most important
customers. We welcome his seasoned perspective and look
forward to his contributions to our company.
It is with sincere regret that we say farewell to our colleague
and close friend Admiral (Ret.) James B. Busey IV in 2008 due
to the mandatory retirement requirements of our Board of
Directors. Jim has been an integral member of our Board for
13 years, shepherding our strategy through tremendous change
and successful growth. During his tenure, Jim served on all four
Board committees and most recently served as Chairman of the
Directors and Governance committee. Awarded his Navy wings
2007 Acquisition Snapshot
Scientech
Commercial nuclear power instrumentation and
control systems
Valve Systems and Controls
Valve automation and controls solutions for oil
and gas applications
Benshaw
Electronic control integration and protection
solutions for industrial markets
IMC Magnetics
Aerospace defense controls and sensors
of gold in 1954, Jim’s extensive combat and naval operations
experience and personal commitment provided a wealth of
astute insight and judicious counsel for which we will be forever
grateful. Thank you Jim, it has been an honor working with you.
Curtiss-Wright’s horizon is vast and we have a clear vision
for tomorrow. With critical positions on key programs and a
growing portfolio of highly engineered technologies, we are a
competitive force in the global market. Our core markets are
robust and we continue to pursue complementary acquisitions
that will provide additional avenues for strategic growth.
Sincerely,
Martin R. Benante
Chairman and Chief Executive Officer
At a Glance
Flow Control
In 2007, our market leadership continued to
generate strong orders that provided very
profitable returns in all areas of our business.
Additionally, our balanced defense/commercial
markets and broad platform exposure
provided stability for investors, as well as
numerous opportunities for growth. The
results we saw in 2007 reinforced our belief
that our focus on engineering excellence,
performance, and reliability is desirable on any
high-performance platform.
Revenue
General
Industrial
Other
Aerospace
Defense
Automotive
Power
Generation
Ground
Defense
Naval
Defense
Oil & Gas
Commerical
Aerospace
Global Profile
Electro-Mechanical Systems
Highly engineered pumps, motors, generators, and
power conditioning electronics for the defense, power
generation, oil and gas, and general industrial markets.
Valve Systems
High-performance specialized valve solutions and web-
enabled software that control the flow of liquids and gases
and prevent over-pressurization of vessels, pipelines, and
equipment for the defense, power generation, oil and gas,
and general industrial markets.
Control Systems
Specialized electronic instrumentation and control
equipment, including custom and commercial-off-the-
shelf (COTS) electronic circuit boards and systems for the
defense and processing markets.
Commercial Power & Services
Design, manufacture, distribution, and qualification of flow
control products for nuclear power plants, hydroelectric
energy producers and the Department of Energy.
Oil & Gas Systems
Design and manufacture of valves and vessel products for
the oil and gas refining market. Primary products include
coke deheading systems and fluidic catalytic cracking unit
(FCCU) components.
2007 Milestones
»
Awarded $293 million nuclear power contract in China
»
Achieved organic sales growth of 13%
»
Acquisitions of Benshaw, Scientech and Valve
Systems & Controls
All Other
U.S.
U.K.
Canada
Revenue
Other
Power
Generation
Global Profile
Naval
Defense
All Other
U.K.
Canada
U.S.
Oil & Gas
14 | 15
Motion Control
Metal Treatment
Engineered Systems
Actuation components and systems for flight control,
weapons handling systems, utility actuation, turret aiming
and stabilization; suspension systems for military vehicles and
high-speed trains; and shipboard helicopter handling systems.
Embedded Computing
Ruggedized custom and commercial-off-the-shelf (COTS)
electronic boards and subsystems for high-density data
processing, including radar and graphics, custom software
design and hardware manufacturing services for the
military aerospace, ground and naval markets.
Integrated Systems
Position, pressure, temperature, smoke and ice detection
sensors, solenoids and solenoid valves, air data computers,
flight data recorders and joysticks for military and
commercial aerospace and industrial markets.
2007 Milestones
»
Awarded contract to supply actuation systems on 747-8
»
Awarded contracts to supply shipboard landing systems
for Sikorsky helicopter
»
Achieved organic sales growth of 14%
»
Acquisition of IMC Magnetics
Shot Peening
Enhances the durability and reliability of critical metal
components such as aircraft landing gear, turbine engine
airfoils, automotive suspension and transmission parts,
critical fasteners and welded structural supports. In
addition, it is also used to shape the aerodynamic
curvatures of the wing skins of numerous commercial,
military and business aircraft.
Laser Peening
Provides a beneficial layer of compressive stress that
is four times deeper than can be achieved by shot
peening, extending the service life of high-value critical
components, and it is proving to be a complementary
service to shot peening.
Specialty Coatings
The application of solid film lubricant and zinc rich coatings
for sliding wear, anti-seizing and corrosion resistance in
the automotive/transportation, commercial aerospace and
defense markets.
Heat Treating
A precision thermal process that subjects metal objects to
extreme heat and/or cold temperatures to improve their
overall strength, ductility and hardness. Primary markets
include automotive/transportation, commercial aerospace,
oil and gas, power generation and defense.
2007 Milestones
»
Laser peening awards for aircraft wing shaping and
steam turbine blades
»
Achieved organic sales growth of 12%
»
Opened new facilities in Köping, Sweden and
Seville, Spain
Revenue
Global Profile
Revenue
Global Profile
General
Industrial
Other
Aerospace
Defense
All Other
General
Industrial
Defense
Commercial
Aerospace
All Other
U.S.
U.S.
U.K.
Canada
Commercial
Aerospace
Ground
Defense
Naval Defense
Automotive
Power
Generation
Oil & Gas
U.K.
Canada
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 consolidated balance sheets of Curtiss-Wright
Corporation and subsidiaries (the “Company”) as of December
31, 2007 and 2006, and the related consolidated statements of
earnings, stockholders’ equity, and cash flows for each of the
three years in the period ended December 31, 2007. Such
consolidated financial statements and our report thereon dated
February 26, 2008, expressing an unqualified opinion and
includes an explanatory paragraph regarding the Company’s
adoption of Statement of Financial Accounting Standard (SFAS)
No. 123(R), Share-Based Payment on January 1, 2006 and SFAS
No. 158, Employers’ Accounting for Defined Benefit Pension
and Other Postretirement Plans—an Amendment of FASB
Statements No. 87, 88, 106 and 132(R) as of December 31, 2006
and FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes—An Interpretation of FASB Statement No. 109
on January 1, 2007 (which are not included herein) appear under
Item 8 of the Company’s Annual Report on Form 10-K for the
year ended December 31, 2007. The accompanying condensed
consolidated financial statements are the responsibility of the
Company’s management. Our responsibility is to express an
opinion on such condensed consolidated financial statements in
relation to the complete consolidated financial statements.
In our opinion, the information set forth in the accompanying
condensed consolidated balance sheets as of December 31, 2007
and 2006, and the related condensed consolidated statements
of earnings and of cash flows for each of the three years in the
period ended December 31, 2007, is fairly stated in all material
respects in relation to the consolidated financial statements from
which it has been derived.
Parsippany, New Jersey
February 26, 2008
16 | 17
Condensed Consolidated Statements of Earnings
For the years ended December 31, (In thousands, except per share data)
2007
2006
2005
Net sales
Cost of sales
Gross profit
Research and development costs
Selling expenses
General and administrative expenses
Operating income
Interest expense
Other income (expense), net
Earnings before income taxes
Provision for income taxes
Net earnings
Net earnings per share:
Basic earnings per share
Diluted earnings per share
Weighted average shares outstanding:
Basic
Diluted
Shares and per share amounts have been adjusted for the April 21, 2006 2-for-1 stock split.
$ 1,592,124
1,068,500
$ 1,282,155
851,076
$ 1,130,928
740,416
523,624
(47,929)
(92,129)
(204,382)
179,184
(27,382)
2,369
431,079
(38,841)
(76,547)
(175,063)
140,628
(22,894)
(112)
390,512
(39,681)
(69,687)
(143,162)
137,982
(19,983)
299
154,171
(49,843)
$ 104,328
117,622
(37,053)
80,569
$
118,298
(43,018)
75,280
$
$
$
2.35
2.32
$
$
1.84
1.82
$
$
1.74
1.72
44,313
44,979
43,826
44,334
43,270
43,828
Condensed Consolidated Balance Sheets
At December 31, (In thousands)
Assets:
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
Liabilities:
Current liabilities:
Short-term debt
Accounts payable
Accrued expenses
Income taxes payable
Deferred revenue
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
Contingencies and Commitments
Stockholders’ Equity:
Common stock, $1 par value, 100,000,000 shares authorized at December 31, 2007
and 2006; 47,714,719 and 47,533,294 shares issued at December 31, 2007 and
2006, respectively; outstanding shares were 44,593,011 at December 31, 2007
and 44,023,410 at December 31, 2006
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income
Less: Common treasury stock, at cost (3,121,708 shares at December 31,
2007 and 3,509,884 shares at December 31, 2006)
Total stockholders’ equity
Total liabilities and stockholders’ equity
18 | 19
2007
2006
$
66,520
392,918
241,728
30,208
26,807
758,181
329,657
73,947
570,419
240,842
12,514
$ 1,985,560
$
923
137,401
103,207
13,260
105,421
38,403
398,615
510,981
62,416
39,501
20,856
38,406
1,070,775
$ 124,517
284,774
161,528
32,485
19,341
622,645
296,652
92,262
411,101
158,080
11,416
$ 1,592,156
$
5,874
96,023
81,532
23,003
57,305
28,388
292,125
359,000
57,055
71,006
21,220
29,676
830,082
47,715
79,550
807,413
93,327
1,028,005
47,533
69,887
716,030
55,806
889,256
(113,220)
914,785
$ 1,985,560
(127,182)
762,074
$ 1,592,156
Condensed Consolidated Statements of Cash Flows
For the years ended December 31, (In thousands)
Cash flows from operating activities:
Net earnings
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
Net loss (gain) on sales and disposals of real estate and equipment
Deferred income taxes
Share-based compensation
Changes in operating assets and liabilities, net of businesses acquired:
Increase in receivables
Increase in inventories
(Decrease) increase in progress payments
Increase in accounts payable and accrued expenses
Increase (decrease) in deferred revenue
(Decrease) increase in income taxes payable
Decrease (increase) in net pension and postretirement assets
Increase in other current and long-term assets
Increase in other current and long-term liabilities
Total adjustments
Net cash provided by operating activities
Cash flows from investing activities:
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
Net cash used for investing activities
Cash flows from financing activities:
Borrowings of debt
Principal payments on debt
Proceeds from exercise of stock options
Dividends paid
Excess tax benefits from share-based compensation
Net cash provided by (used for) financing activities
Effect of exchange-rate changes on cash
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 investing activities:
Fair value of assets acquired from current year acquisitions
Additional consideration on prior year acquisitions
Liabilities assumed from current year acquisitions
Cash acquired
Acquisition of new businesses, net of cash acquired
2007
2006
2005
$ 104,328
$ 80,569
$ 75,280
62,699
388
(8,144)
10,912
(63,998)
(50,290)
(2,274)
31,078
53,065
(6,020)
5,540
(2,668)
4,520
34,808
139,136
174
(3,722)
(54,433)
(289,348)
(347,329)
751,500
(604,560)
9,661
(12,440)
2,590
146,751
3,445
(57,997)
124,517
$ 66,520
$ 315,842
9,433
(35,706)
(221)
$ 289,348
50,791
486
(11,419)
6,621
(20,489)
(11,245)
(7,024)
15,643
32,647
1,207
2,982
(2,667)
5,769
63,302
143,871
776
(1,664)
(40,202)
(39,522)
(80,612)
240,000
(240,058)
8,616
(10,538)
1,885
(95)
2,332
65,496
59,021
$ 124,517
$ 42,417
4,546
(7,424)
(17)
$ 39,522
47,851
(2,638)
141
–
(21,558)
(26,908)
9,815
22,976
(8,049)
11,266
(3,813)
(912)
1,727
29,898
105,178
11,268
(5,086)
(42,444)
(73,111)
(109,373)
655,000
(630,327)
8,492
(8,458)
–
24,707
(2,529)
17,983
41,038
$ 59,021
$ 88,578
8,618
(23,863)
(222)
$ 73,111
Directors and Officers
Directors
Martin R. Benante
Chairman of the Board of Directors
James B. Busey IV*
Admiral, U.S. Navy (Ret.)
Former Director, Mitre Corporation
Former Trustee, Texas Instruments Inc.
Former President and Chief
Executive Officer of AFCEA
International Aviation Safety and
Security Consultant
S. Marce Fuller
Former President and Chief
Executive Officer of Mirant
Corporation, Inc.
(formerly known as Southern
Energy, Inc.)
Director, Earthlink, Inc.
Dr. Allen A. Kozinski
Former Vice President, Global
Refining of British Petroleum PLC
Carl G. Miller
Former Chief Financial Officer of
TRW, Inc.
William B. Mitchell
Trustee, Mitre Corporation
Former Vice Chairman of Texas
Instruments Inc.
John R. Myers
Former Chairman and Chief
Executive Officer of Tru-Circle
Corporation
Management Consultant
Former Chairman of the Board of
Garrett Aviation Services
*Retiring as of May 2, 2008
Officers
Martin R. Benante
Chairman and
Chief Executive Officer
David C. Adams
Vice President
Edward Bloom
Vice President
David J. Linton
Vice President
Glenn E. Tynan
Vice President and
Chief Financial Officer
Michael J. Denton
Vice President,
General Counsel and
Corporate Secretary
B. Parker Miller III
Sr. Vice President,
Government Relations
20
John B. Nathman
Admiral, U.S. Navy (Ret.)
Dr. William W. Sihler
Ronald E. Trzcinski Professor of
Business Administration
Darden Graduate School of
Business Administration
University of Virginia
Albert E. Smith
Chairman of Tetra Tech., Inc.
Former Executive Vice President
and Officer of Lockheed Martin
Corporation
Harry Jakubowitz
Vice President and
Treasurer
Kevin M. McClurg
Vice President and
Corporate Controller
Shareholder Information
Corporate Headquarters
4 Becker Farm Road, 3rd Floor
Roseland, New Jersey 07068
www.curtisswright.com
Annual Meeting
The 2008 annual meeting of stockholders will be held on May
2, 2008, at 2:00 p.m. at the Wilshire Grand Hotel, 350 Pleasant
Valley Way, West Orange, New Jersey 07052.
Stock Exchange Listing
The Corporation’s Common stock is listed and traded on the
New York Stock Exchange under the symbol CW.
Stock Price Range
Common
First quarter
Second quarter
Third quarter
Fourth quarter
Dividends
Common
First quarter
Second quarter
Third quarter
Fourth quarter
2007
High
$ 40.44
48.46
50.26
56.79
Low
$ 32.79
37.77
42.55
47.15
2006
High
Low
$ 33.65 $ 26.82
30.52
35.07
26.61
31.74
29.99
38.40
2007
$ 0.06
0.06
0.08
0.08
2006
$ 0.06
0.06
0.06
0.06
Common Shareholders
As of December 31, 2007, the approximate number of holders
of record of Common stock, par value of $1.00 per share of the
Corporation was 6,331.
Investor Information
Investors, stockbrokers, security analysts, and others seeking
information about Curtiss-Wright Corporation should contact
Alexandra M. Deignan, Director of Investor Relations, at the
Corporate Headquarters listed above.
Stock Transfer Agent and Registrar
For services such as changes of address, replacement of lost
certificates or dividend checks, and changes in registered
ownership, or for inquiries as to account status, write to American
Stock Transfer & Trust Company at 59 Maiden Lane, New
York, New York 10038. Please include your name, address, and
telephone number with all correspondence. Telephone inquiries
may be made to (800) 937-5449 or (212) 936-5100 internationally.
Internet inquiries should be directed to 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. 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.
Shareholder 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, Virginia 22905.
Financial Reports
This brochure includes some of the periodic financial information
required to be on file with the Securities and Exchange
Commission. The Corporation also files an Annual Report on
Form 10-K, a copy of which may be obtained free of charge.
These reports, as well as additional financial documents such as
quarterly shareholder reports, proxy statements, and quarterly
reports on Form 10-Q, may be obtained by written request to
Alexandra M. Deignan, Director of Investor Relations, at the
Corporate Headquarters, or at the Corporation’s website
www.curtisswright.com.
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Curtiss-Wright Corporation
4 Becker Farm Road
Roseland, New Jersey 07068
www.curtisswright.com
®