Curtiss-Wright
Annual Report 2013

Plain-text annual report

Curtiss-Wright Corporation 2013 Business Overview 140081_L01.indd 1 3/6/14 9:13 AM Table of Contents 2 Letter to shareholders 5 Transition to new segment structure 18 segment information 19 Historical Financial Performance 20 report of independent registered Public Accounting Firm 21 Consolidated statements of earnings 22 Consolidated Balance sheets 23 Consolidated statements of Cash Flows 24 Board of Directors and Officers 25 shareholder information InnovaTIve. RelIable. Global. 140081_L01.indd 2 3/6/14 9:13 AM One Curtiss-Wright INTEGRATES OUR STRUCTURE PRIORITIZES THE CUSTOMER BUILDS UPON OUR CRITICAL MASS EMPHASIZES MARKET LEADERSHIP TARGETS TOP QUARTILE PERFORMANCE Defense Commercial Aerospace General Industrial Power Generation Oil and Gas A Unified Global Diversified Industrial Company 140081_L01.indd 1 3/6/14 9:14 AM 2013 Business Overview | 1 Dear Shareholders: Over the past dozen years, Curtiss-Wright’s people and technologies have propelled its annual revenues from $500 million to more than $2.5 billion. We are a leader in multiple markets and recognized for state-of-the-art reliable solutions, superior customer focus and our international footprint. We are now at a critical juncture in our history. Previously we looked to expand our portfolio of products and services through acquisitions supplemented by organic growth. Today we are concentrating on growing steadily by leveraging the critical mass and powerful suite of capabilities we built over the past decade, while driving operational excellence and financial discipline to achieve top quartile performance as compared to our peer group. These objectives will be tied to a much more balanced capital deployment strategy – all part of our effort to improve the competitiveness of Curtiss-Wright over the long term and generate stronger returns for shareholders.   David C. Adams President and Chief Executive Officer One Curtiss-Wright I’m excited about the future of Curtiss-Wright, which is now evolving into an integrated, market-facing business that is easier for our customers, employees, investors and business partners to understand. Prioritizes the Customer – We are creating an organization that is much simpler and easier for our customers to understand. We have the breadth of products, services and technologies necessary to continue to be a trusted partner with our customers and to address new market opportunities. Effectuating change is seldom easy, but continual change has always The One Curtiss-Wright vision presents one face to the characterized Curtiss-Wright. We have an exceptional leadership team customer, replacing the multiple points of interaction our in place across our enterprise, all of whom are fully committed to customers previously needed to access the full range of our driving operations to generate top quartile returns. We recognize that technological expertise. This change makes working with improved operating performance is vital to getting to the next level in us easier and enables us to be more efficient in meeting our our successful corporate journey. customers’ evolving needs more quickly. On the preceding page, we listed a few phrases that best capture our vision of One Curtiss-Wright: Integrates our Structure – We’ve realigned the Company. While our businesses previously were grouped by common technologies, as we grew, the lines between these units blurred with respect to markets and customers served. Our new structure has been organizationally flattened, driving the focus upon our end markets under three new segments – Commercial/Industrial, Defense and Energy. This new alignment, our pursuit of operational efficiencies through best practices, and our efforts to increase penetration in high-value end markets worldwide combine to support our overriding vision of one unified global diversified industrial company. Builds Upon our Critical Mass – We achieved critical mass over the past decade through solid organic growth and strategic acquisitions. Today we have a well-balanced end market structure serving three major segments. For the foreseeable future, our emphasis will shift primarily to organic revenue growth, though acquisitions will play a role if they meet our strategic objectives and investment return requirements. We will focus on protecting or expanding market share to ensure that we maintain appropriate mass and scale to realize the synergies and efficiencies necessary to achieve steady operating margin expansion. Emphasizes Market Leadership – We currently enjoy the #1 or #2 leading positions in several of our served key markets. 2 | Curtiss-Wright 140081_L01.indd 2 3/6/14 3:58 PM As our business has evolved, we have grown to become a Our free cash flow – defined as cash flow from operations less market leader rather than simply a market participant. It capital expenditures – was $166 million for the year, equating to speaks to the depth and breadth of what Curtiss-Wright a much improved 120% cash conversion (based on net earnings has to offer and the competitive drive of our employees. from continuing operations). Our balance sheet remains strong Our goal is to be #1 or #2 in all our key end markets, to be with a debt-to-capitalization of 38% and provides a solid base the trusted “go to” company in solving the most difficult of financial flexibility to continue the pursuit of our overall engineering problems within specific specialties or solutions. corporate growth strategies. We pride ourselves in maintaining long-standing customer relationships, which should continue to propel us further into leading positions. Speaking to the expansiveness of our served markets, we enjoy a strong global presence that is well balanced and continues to grow, with approximately 30% of our sales from international customers. Targets Top Quartile Performance – I have the utmost confidence that our new alignment and focus will succeed in driving the business and enabling Curtiss-Wright to reach top quartile performer heights in our key financial measures. It begins with clear and transparent operating metrics by which our management team will be judged. We’ve set clear and achievable long-term financial objectives: 5-6% organic sales growth, double-digit EPS growth, top quartile operating margins (at least 12.5%) with the ultimate objective of 14%, greater than 12% Return on Invested Capital (ROIC) and at least 100% free cash flow conversion. Top quartile performance metrics, combined with a balanced capital deployment strategy, will serve to significantly expand value. Commitment to a Balanced Capital Deployment Strategy We are consistently working to maximize value to our shareholders. We plan a better balance between capital expenditures, acquisitions and shareholder distributions. Looking ahead, while we remain committed to a disciplined strategy of reinvesting in our business and focusing on strategic bolt-on acquisitions, we are dedicated to increasing returns to shareholders in the form of dividends and share repurchases. During 2013, we increased our annual dividend 11%, reflecting the Board’s continued confidence in our ability to deliver strong revenue and profitable growth. In February 2014, we announced an additional 30% increase in the annual dividend, which marked the third straight year of dividend increases. We also announced our commitment to re-enter the market to repurchase shares. Together, we see these as key measures of annual investor returns, as they express the confidence we have in our strategy. Looking to the Future Finally, I would like to thank our approximately 10,000 global Together, these key elements of One Curtiss-Wright will drive our employees for their continued drive and commitment. business and enable us to deliver superior shareholder returns. 2013 Financial Performance Our financial results this past year were strong. Net sales of $2.5 billion increased 20% from the prior year, driven by solid demand for our highly engineered products and services, particularly in our commercial end markets. The majority of the growth was a result of the late 2012 acquisitions and their contributions to our overall revenues in 2013 – particularly for upstream products serving the oil and gas market, and for sensors and electronic control systems on specialty vehicles serving the industrial market. Similarly, our operating performance was strong, as we generated a 45% increase in operating income and 160 basis points in margin expansion to 9.3%, based on improvements in all three operating segments. Our net earnings from continuing operations rose 50% to $138 million, or $2.88 per diluted share. As we enter 2014 and celebrate our 85th anniversary, I am more confident than ever that Curtiss-Wright will make great strides toward our objective of top quartile performance, returning strong shareholder value and long-term success to this storied company. David C. Adams President and Chief Executive Officer 2013 Business Overview | 3 140081_L01.indd 3 3/11/14 1:23 PM 2013 Financial Performance NET SALES* Dollars in millions Dollars in millions OPERATING INCOME* NET EARNINGS* Dollars in millions $2,511 $234 $138 $2,017 $2,098 $1,782 $1,855 $187 $166 $167 $161 $119 $93 $98 $92 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 *Reported on a continuing operations basis. 2013 TOTAL CURTISS-WRIGHT END MARKETS ENERGY MARKET (36%) DEFENSE MARKET (30%) Power Generation (18%) Oil and Gas (18%) Commercial Aerospace (17%) General Industrial (17%) Naval Defense (15%) Aerospace Defense (11%) Ground Defense (3%) Other Defense and Government (1%) COMMERCIAL/INDUSTRIAL MARKET (34%) 4 | Curtiss-Wright 140081_L01.indd 4 3/6/14 9:14 AM Transition to New Segment Structure Old Structure Commercial Aerospace Naval Defense General Industrial Power Generation (AP1000) Flow Control Segment 52% Power Generation (Aftermarket) Oil and Gas General Industrial New Structure Flow: Commercial Aerospace Controls: All Commercial Aerospace & General Industrial All Surface Technologies Flow: Defense, Power Generation (AP1000) & General Industrial Commercial / Industrial Segment 39% Defense Segment 34% Commercial Aerospace Controls: All Defense Controls Segment 36% Defense Surface Technologies Segment 12% Commercial Aerospace General Industrial Defense Oil and Gas Power Generation Flow: Power Generation (Aftermarket) & Oil and Gas Energy Segment 27% Effective January 1, 2014, we transitioned to the new segment structure as pictured on the right to better align with our end markets. All figures represent segment sales guidance as of February 19, 2014, including all announced acquisitions. 2013 Business Overview | 5 140081_L01.indd 5 3/11/14 1:23 PM 6 | Curtiss-Wright 140081_L01.indd 6 3/6/14 9:14 AM Commercial/Industrial Curtiss-Wright’s Commercial/Industrial segment provides leading edge sensors, controls, sub-systems and mission critical components, as well as critical services, targeted at growing markets worldwide, including commercial aerospace, commercial and specialty vehicles, and a broad range of general industrial markets. We continually focus on maintaining solid relationships with our customers, building on our competitive positions and creating market leadership through our technology investments. In this new structure, we will better utilize our scale while also providing for enhanced customer interaction. These strategies will continue to support our growth and generate margin expansion opportunities. Leveraging our Scale in Commercial Aerospace 20-year deliveries in excess of 30,000 aircraft with a market Global demand for new commercial aircraft is in the middle stages of a projected long-term boom. Providing a broad range of critical components and services for modern aircraft, Curtiss-Wright is a key partner to the major original equipment manufacturers driving this growth, including Boeing and Airbus. Our products, found from the nose to the tail of the aircraft, include today’s most advanced, highly reliable control position sensors, market leading hot air valves used on advanced engine propulsion systems, and a gamut of other proprietary products and services. Our broad portfolio is an important competitive advantage that enables our customers to single-source multiple components from a trusted supplier. Our outlook for commercial aerospace is strong, not only because we have significant content on established core platforms, but also because we’ve captured important contracts on virtually every new major program with substantial backlogs, including the 787, A350, A320neo, 737 MAX, CFM LEAP-X and the Pratt &Whitney PurePower engine. Later in the decade, we anticipate supporting the 777X and other developing programs. In fact, aircraft manufacturers are forecasting value of over $4.5 trillion. Given our strong track record and proven OEM partnerships, it’s an extraordinary market opportunity for Curtiss-Wright. Our stature in the commercial aerospace market reflects our ongoing commitment to provide superior value to customers through innovation, best-in-class technology and excellent support. The aircraft manufacturers expect nothing less. Their demands for proven partnerships are driving consolidation in our industry that, together with sharply higher orders for new aircraft, presents an excellent opportunity for Curtiss-Wright. To fully exploit this market shift, we are leveraging our key accounts strategy by generating a maximum return on our resources through our deep customer relationships and exceptional knowledge of our customer needs. This should provide Curtiss-Wright with increased opportunities and a strong competitive position. We are also investing in new product development to help our aerospace customers meet their requirements for lower fuel burn, increased load factors and shortened downtimes. 2013 Business Overview | 7 140081_L01.indd 7 3/6/14 9:14 AM Meeting Industrial Demands with Proven Solutions leveraging of internally developed proprietary aircraft wing We provide industrial OEMs and their suppliers with a broad spectrum of technically advanced processing solutions for mission critical components that extend the life and increase the performance of important systems. At Curtiss-Wright’s Surface Technologies division, we’re meeting those needs at 74 sites worldwide by supplying proven capabilities together with superior service and rapid turn-around time. Customers have come to rely on Curtiss-Wright to extend equipment life cycles. They know our value-added surface technology applications are key to improving reliability and longevity by strengthening and protecting critical components. Recognized for many decades for our superior shot peening and shot peen forming technologies, we also are the undisputed market leader in laser peening, a computer-controlled process for precision strengthening of such parts as turbine blades and airplane wings. Through our engineered coatings group, we also apply a broad variety of high performance coatings that include corrosion resistant coatings for the aerospace and automotive industries, lubricity coatings for aerospace structural fasteners, high temperature insulating coatings for turbine engines, and forming software to capture a long term contract for forming the wings of a next generation business jet aircraft. Established customers appreciate that our technologies provide a range of value, primarily ensuring product integrity by protecting against aggressive environments encountered in service. Building on this foundation, we are expanding overseas by leveraging the proven capabilities and customer relationships of our international facility network to continually enhance our market position. In support of these initiatives, we are acquiring new high- technology and complementary services businesses at the right price and with the right strategic fit to penetrate new markets. Our recent acquisition of Component Coating and Repair Services Limited (CCRS) and its ultra-smooth and corrosion resistant coatings for aerospace turbine engines is a direct example of this market expansion. We can now offer customers a more bundled approach that packages these new leading edge technologies with those of our existing thermal spray and shot peening services. wear resistant and thermal spray coatings for the oil and gas Over the past few years, we have actively increased the type and and power generation markets. Additional facilities provide level of unique engineered services technologies that we can mechanical, chemical and metallurgical testing services to offer our customers, both organically and through acquisitions. ensure the design and manufacturing integrity of critical metal, We have increased the number and sophistication of robots ceramic and composite components. We continuously develop opportunities to build on and scale out our existing technology base to capture new business and expand our customer set by insertion of improved processing techniques and technologies. A recent example of this was the utilized in shot peening and engineered coatings, and advanced our proprietary laser peening to where we can now take a complete mobile laser system to a customer’s facility. A recent successful example of this was the insertion of a laser peening “shop-in-shop” production cell inside of Rolls-Royce’s wide chord fan blade manufacturing facility in Singapore, which decreased overall turn times and eliminated shipping costs. Commercial and Specialty Vehicles From industrial vehicles to intercity transportation, from John Deere tractors to sophisticated wheelchairs, Curtiss-Wright is a recognized leader in providing components, sub-systems and sensors that enable customer specific solutions for medium and heavy duty on-highway and off-highway vehicles, as well as specialty vehicles used around the world. Technology is changing the paradigm for commercial and specialty vehicles, just as it has for the general auto industry. Farmers, consumers and professional drivers demand leading edge capabilities to enhance their productivity and help ensure their safety. To meet this need, leading vehicle manufacturers are partnering with Curtiss-Wright and other proven suppliers. Rising fuel costs coupled with the need for reduced emissions are driving the need for advanced power management and Electro chemical finish grinding of a turbine engine honeycomb seal by CCRS. electronics to efficiently operate these complex systems. 8 | Curtiss-Wright 140081_L01.indd 8 3/11/14 1:23 PM THROUGH OUR ‘COVERING THE VEHICLE’ STRATEGY, CURTISS-WRIGHT PROVIDES COMPLEX SYSTEM SOLUTIONS FOR COMMERCIAL, OFF-ROAD AND SPECIALTY VEHICLES Our longer term goal is for our OEM partners to cover their vehicles with Curtiss-Wright capabilities as they launch new state-of-the-art products for their customers. We serve three primary markets within the commercial and specialty vehicle industries, specializing in highly-engineered, safety critical products: on-highway, where we focus on medium and heavy duty trucks (including Class 8); off- highway, where our products are found on a multitude of vehicles, from tractors to utility vehicles; and electric vehicles, including state- of-the-art wheelchairs and hybrid buses. The common link across our markets is technology that makes each of these vehicles more productive, safer and responsive by leveraging Curtiss-Wright’s proven expertise providing components and sub-systems which are specialty vehicles, while lowering the cost of manufacturing and enabled by distinctive technologies. developing ways to strengthen our competitive advantage. One example where we’re changing the paradigm is the modern Our significant opportunities for growth in industrial markets crop sprayer. Propelled by the rapid shift to precision farming, come from the acquisitions completed over the past two years, farm equipment manufacturers are installing sensors throughout which provided Curtiss-Wright new avenues to gain market crop sprayers to provide precision feedback to spray booms, share. Our acquisition of Arens Controls exemplifies our growth reducing overlap and gaps as fertilizer and other material is in the industrial market, as it further strengthened and grew our evenly distributed. Our sensors are also linked to the farmer’s industrial controls business and provided increased penetration GPS to ensure complete efficient coverage of the field, helping within the commercial and off-road vehicle markets. As a result, maximize crop yield and reducing waste. we are now a premier provider of electronic throttle controls Other vehicle manufacturers are similarly installing our sensors and instruments to enhance productivity and safety, including and electronic shifters to the leading medium and heavy duty truck OEMs. on scissor lifts and cranes. In other markets, we are the industry Longer term, we look for significant new product opportunities leader for electronic throttle controls to many of the leading to emerge as we evolve from marketing sensors, throttle medium and heavy duty truck manufacturers, including Paccar, controls, rugged joysticks and integrated electronics to providing Navistar and Volvo, and the principal provider of traction a multitude of sophisticated system offerings tied to a common inverters to hybrid bus manufacturers in North America. vehicle architecture for this $3 billion market. Through product innovation and superior customer partnering, we are maintaining our industry leadership in medium and heavy duty on-highway and off-highway vehicles, as well as 2013 Business Overview | 9 140081_L01.indd 9 3/6/14 9:15 AM 10 | Curtiss-Wright 140081_L01.indd 10 3/6/14 9:15 AM Defense At Curtiss-Wright, our Defense segment plays an important role in supporting our nation’s vital naval, aerospace and ground defense systems, as well as providing support for several international defense forces. We are well positioned with a strong presence on key platforms, ranging from managing the flow of liquids on nuclear-powered submarines, to controlling the lift, flight and landing of aircraft, and stabilizing the weapons systems on armored tanks. Over the last decade, Curtiss-Wright has proven to be an contractors are facing. As the single largest COTS embedded important resource for the Department of Defense (DoD) as it computing supplier, Curtiss-Wright is uniquely positioned to has shifted its investment and development strategy to fully benefit from the DoD’s ongoing commitment to C4ISR. support Net-Centric Warfare, a style of technology-enabled preparation and execution that provides a virtual real-time shared picture of an ongoing military situation. Properly executed, the Net-Centric approach enables increased combat power by integrating networked sensors, command and control systems, and modern weapons on the battlefield. As the recognized leader in embedded defense computer modules and systems, we are continuously strengthening our product portfolio to improve lifecycle management and customization services, with pricing matched to the current Defense Department acquisition strategy. By partnering with advanced technology providers and, in turn, combining our partners’ new Curtiss-Wright’s strategy in the defense market is to provide the technologies with our COTS products and applications, we are DoD the products and capabilities needed for today’s modern differentiating Curtiss-Wright as a high-value solution provider. warfare, focusing on Command and Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) applications. Our solutions for the C4ISR market, including high-performance radars, signal intelligence, electro- optical and infrared sensor data collection, and network and secured storage, demonstrate that Curtiss-Wright has the products and capabilities needed for today’s demanding C4ISR applications across all military services. Curtiss-Wright’s broad portfolio of capabilities is proving critical at a time when the DoD is carefully evaluating its investment opportunities in light of the Budget Control Act of 2011. Our continued investments in Commercial Off-The-Shelf (COTS) rugged embedded computing technology have partially insulated Curtiss-Wright from some of the program reductions all defense Two examples that highlight how our technology is proving invaluable for our nation’s defense include our processor systems that sit at the core of the Radar Airborne Signal Processor for the E-8C Joint Surveillance, Targeting and Attack Radar System (JSTARS), and our fire control and communications processors that provide position pointing and stabilization for the M1A2 Abrams tank, one of our nation’s most effective battlefield weapons. Curtiss-Wright also has significant mission critical content on every U.S. Navy submarine and aircraft carrier. We are a preferred supplier of generators, secondary propulsors, pumps and valves used in the nuclear propulsion system. We also are developing more advanced aircraft carrier systems and components that 2013 Business Overview | 11 140081_L01.indd 11 3/11/14 1:23 PM enable next generation fighter operations. Our expertise in An example of our groundbreaking EW technology is our newly electric motors and generators is integral to the Electro-Magnetic released Digital RF Memory (DRFM) product, providing the Aircraft Launch System (EMALS) and Advanced Arresting Gear industry’s highest performance wideband DRFM solution, which (AAG) systems used for launching and recovering aircraft from a we market through strategic partnerships. carrier deck. This technology is also critical in the development of systems to enable the safe use of unmanned aerial vehicles (UAVs) at sea. Curtiss-Wright also participates in the U.S. Navy’s next-generation Ohio Class replacement submarine program. Increased foreign military sales also hold significant promise at Curtiss-Wright. Half of the world’s defense commitments are outside the United States, where a number of budgets are expanding. We remain an active participant in international Selective bolt-on acquisitions have played an important role in markets and continue to win new contracts, recently expanding enhancing Curtiss-Wright’s defense market profile. In the fall of our presence in South Africa, the United Kingdom and the 2013, we purchased Parvus, a leading designer and manufacturer Middle East. of rugged small form-factor computers and communications subsystems for the aerospace, defense, homeland security, and industrial markets. Leveraging its unique expertise, we are now able to integrate technology from leading commercial companies, such as Cisco, into military applications as we continually expand our portfolio of C4ISR products and services, which in turn enhances our ability to meet our customers’ growing demand for increased miniaturization and size, weight, power and cost (SWaP-C)-optimized solutions. Growth through research and development will remain a priority at Curtiss-Wright, including investments in advanced electronic warfare (EW) technology, with the goal of becoming an industry leader in the electromagnetic spectrum on the battlefield. In today’s defense environment, we are meeting the challenge of providing high-value solutions to the military as our nation addresses difficult budget constraints. Our products and capabilities remain in demand as we look to outpace market growth through innovation and a dedication to meeting our customers’ needs. Advanced technology from Curtiss-Wright supports the Navy’s unmanned carrier aircraft strategy through the Unmanned Combat Air System Demonstrator (UCAS-D). 12 | Curtiss-Wright 140081_L01.indd 12 3/6/14 9:27 AM Our Parvus DuraCOR rugged military-grade processors are representative of Curtiss-Wright’s broad range and continued dedication to supplying high-performance, Commercial Off-The-Shelf (COTS) tactical computing subsystems. AP1000 One of the Company’s more exciting opportunities is in the development of cooling pumps that Curtiss-Wright provides for the Westinghouse third generation AP1000 nuclear reactor. The market response for this next-generation reactor has been strong and continues to grow. The pumps – which are among the most technically advanced in the world – are included in Curtiss-Wright’s Defense segment because these leading edge components are produced at the Company’s facility in Cheswick, Pennsylvania. This is the same Curtiss-Wright facility responsible for producing pumps for the naval defense industry. Our outlook for AP1000 pump demand is strong as the construction of new nuclear plants continues to increase, with over 60 reactors being built worldwide, including more than 30 reactors in China and four in the United States. Additional plants are on track to gain regulatory approval. Close to 500 new commercial reactors are proposed through 2030, with over 170 in China alone, as nations invest to meet expanding industrial and consumer demands for energy. Curtiss-Wright is well positioned to meet this expanding nuclear market opportunity because our pumps are critical components for the Westinghouse AP1000 nuclear plant design, viewed as significantly safer and simpler than competing plants and representing the only new generation plant to receive U.S. Nuclear Regulatory Commission (NRC) certification. Chinese authorities recently concluded after a lengthy study following Fukushima that the AP1000 is the world’s safest nuclear plant design. Each new AP1000 nuclear reactor uses four of our unique pumps to circulate coolant water through the reactor vessels, ensuring the plant’s safety. With a 60-year design life and virtually maintenance free, our pumps are vital to sustaining a plant’s safety system. Much of our opportunity for our reactor cooler pumps is in China, where we anticipate shipping several new units over the next few years. We are also negotiating other international opportunities with Westinghouse for future AP1000 plants. 2013 Business Overview | 13 140081_L01.indd 13 3/6/14 9:27 AM 14 | Curtiss-Wright 140081_L01.indd 14 3/6/14 9:27 AM Energy Curtiss-Wright has emerged as an important resource for the oil and gas industry. We provide highly customized and engineered energy production, processing and separation solutions to upstream and midstream customers, as well as innovative solutions for secondary processing techniques in downstream refining, such as delayed coking and catalytic cracking, which enable processing of heavier grades of crude oil and enhanced extraction. In the nuclear market, for over 50 years, we have worked closely with the power industry, currently operating an installed base of products at all nuclear plants operating in the U.S. and at many international facilities. Oil and Gas The American oil and gas industry is in the midst of a paradigm change, driven by the explosive growth in production from unconventional oil and gas shale resources. Where a decade ago, it was unimaginable to talk about the United States exporting energy resources, today the U.S. is on the cusp of becoming the world’s largest producer of oil and gas. In response to this dramatic market shift, Curtiss-Wright is launching new initiatives to provide enhanced value to the upstream customer as we build on our established profile in the oil and gas industry. Historically most of our revenues were generated in the downstream sector, where we improve the useful life and performance of operating refineries through our extensive portfolio of technologies. However, the refining industry is not growing, and in some cases is in decline, leading us to refocus our efforts in the growing upstream part of the energy market, which also offers higher margins. Our goal is to provide a broad range of leading technology products for critical wellhead applications to ensure the efficient, safe and environmentally friendly extraction of unconventional energy resources. We are investing internally to develop new capabilities while pursuing exceptional acquisitions with established products that lend themselves to our evolving energy strategy. One of our most important investments was the acquisition of Cimarron Energy, a leading manufacturer of highly customized and engineered energy production, processing and environmental solutions, which has proven to be very rewarding. With a track record of strong organic growth over the last five years, Cimarron designs, develops and manufactures energy production and processing equipment that links the wellhead with hydrocarbon transportation from the well site. Underscoring the strength of the market, approximately 42,000 new wells were drilled in North America alone in 2013. Cimarron is particularly well aligned to penetrate the rapidly growing shale extraction market, with a range of products focused on solving the environmental aspects of hydraulic fracturing or “fracking”. Underscoring the success of our new initiatives, including acquisitions and organic growth, our upstream product mix was approximately 35% of total oil and gas revenues in 2013 compared to only a limited exposure in 2012. 2013 Business Overview | 15 140081_L01.indd 15 3/6/14 9:27 AM We are also working diligently to improve operating margins in These changing market dynamics have provided steady our established downstream market, including implementing opportunities for Curtiss-Wright. While others have left the aggressive lean strategies at two of our Oklahoma facilities, market, in turn stranding customers with an abandoned supply which have achieved 25% throughput gains thus far. In chain – including millions of obsolete parts and a lack of subject Houston, where two large facilities were underutilized, we have matter experts – we’ve tapped into this opportunity by building experienced a jump in productivity as we shifted new Cimarron a powerful and versatile infrastructure to solve these problems production into these plants. Nuclear Power for plants throughout the world. Achieving success in this market is really synonymous with our ability to address specific market drivers – especially such key factors as obsolescence, safety An important partner for the nuclear industry since the 1950s, and reliability. Curtiss-Wright has a strong industry profile, currently providing products and services to every U.S. and Canadian nuclear plant and the majority of nuclear plants worldwide. Given the high financial and regulatory hurdles for new nuclear plant construction, major utilities are investing significant capital to extend the life and enhance the safety of their existing plants. Curtiss-Wright is an important supplier behind this effort, supporting many of the 432 nuclear reactors already operating in 31 countries that provide roughly 11% of the world’s power. Driven in part by high profile incidents such as Fukushima and a steady drumbeat of industry consolidation, nuclear plants are looking to a diminishing number of suppliers, including Curtiss- Wright, to provide the innovation and technology mandated by regulators and by plant operators. In direct response to the event at Fukushima and the regulatory changes which followed, our subject matter experts developed new cutting edge technologies like spent fuel pool level indication, hardened hydrogen vents, and FLEX valve packages to improve the safety of nuclear power plants. We have also saved utilities millions of dollars by providing replacement instrumentation and control modules with the exact fit, form and function of the original equipment, thereby improving reliability and avoiding expensive plant modifications. With the nuclear market driven by change, we are regularly exploring new opportunities as global utilities invest to meet demands for new energy while maintaining the industry’s Cimarron’s wide range of environmental solutions include Emission Control Devices (ECDs) designed to destroy environmentally harmful emissions created during the energy production process. 16 | Curtiss-Wright 140081_L01.indd 16 3/6/14 9:27 AM OvAlPAth mObilE APPlic AtiONs Digital survey maps equipped with annotation tools to record dose rate by type, highlight hot spots, outline boundaries and record notes Global positioning capabilities to track workers and/or equipment Use secure digital signatures on maps, surveys and other documents Real-time collaboration with chat, images and video Highly visible dashboards of all work activities Smart forms with data capture work in a connected or diconnected mode with automatic sync highest safety standards. We look to be at the leading edge of new developments through targeted investments and our disciplined strategic focus. An exciting addition to our portfolio of products was the recent acquisition of Ovalpath, through which we are now marketing a proprietary software platform used in mobile-device based applications that significantly reduces the amount of time and effort needed to efficiently operate a nuclear power plant. These platform solutions deliver real-time information to plant employees, aiding them in making safe, accurate and timely decisions. Looking ahead, operating reactors will continue to be a strong and sustainable growth platform as we deliver solutions to enhance the safety, reliability and performance of existing reactors by using our proven technology, vast experience and expertise to successfully partner with leading nuclear power generation companies. Beyond technology and expertise, one of the most important strengths we have at Curtiss-Wright is our steadfast tradition of continually adapting to the advanced technology needs of our long-standing customers. It is the only part of our Company that has never changed. Curtiss-Wright’s Electro-Hydraulic Operator (EHO) was successfully tested on a critical isolation gate valve during a high flow QME-1 testing. The critical isolation gate valve supplied for steam service requires both tremendous power and precise speed to work properly. The operator and valve had to successfully overcome more than 160 tons of thrust while the gate of the valve traveled 26” within 2 and 5 seconds. 2013 Business Overview | 17 140081_L01.indd 17 3/6/14 9:27 AM Segment Financial Information Year ended December 31 (In millions, except percentages; unaudited) 2013 2012 Change Sales Flow Control Controls Surface Technologies Total Sales Operating Income Flow Control Controls Surface Technologies Total Segments Corporate and Other Total Operating Income Operating Margins Flow Control Controls Surface Technologies Segment Margins Total Operating Margin Note: Amounts may not add to the total due to rounding. $1,299.7 $1,095.3 898.2 312.9 726.7 275.7 $2,510.8 $2,097.7 19% 24% 14% 20% 48% 25% 85% 43% (35%) 45% $78.8 86.5 27.5 $192.8 (31.3) $161.4 7.2% 11.9% 10.0% 9.2% 7.7% 180 bps 20 bps 630 bps 180 bps 160 bps $116.5 108.6 51.0 $276.1 (42.4) $233.6 9.0% 12.1% 16.3% 11.0% 9.3% FLOw CONTrOL SALES CONTrOLS SALES SurFACE TEChNOLOGIES SALES Power Generation (34%) Oil and Gas (32%) Commercial Aerospace (2%) General Industrial (7%) Naval Defense (25%) Commercial Aerospace (30%) General Industrial (26%) Naval Defense (5%) Aerospace Defense (28%) Ground Defense (10%) Power Generation (8%) Oil and Gas (8%) Commercial Aerospace (39%) General Industrial (34%) Aerospace Defense (10%) Other Defense and Government (1%) Other Defense and Government (1%) 18 | Curtiss-Wright 140081_L01.indd 18 3/11/14 1:23 PM historical Financial Performance Five-Year review For the years ended December 31 (In millions, except per share data; unaudited) Performance Net sales 2013 2012 2011 2010 2009 $2,510.8 $2,097.7 $2,016.7 $1,854.5 $1,782.0 Earnings before interest, taxes, depreciation, and amortization 356.5 Net earnings Cash flow from operations Earnings per share Basic Diluted Dividends per share Operating margin Return on invested capital(1) New orders Backlog at year end Year-end financial position Working capital Current ratio(2) Total assets Total debt Stockholders’ equity Stockholders’ equity per share Other year-end data Free cash flow Depreciation and amortization Capital expenditures Shares of stock outstanding at December 31 Number of registered shareholders(2) Number of employees(2) 138.0 237.8 $2.94 2.88 0.39 9.3% 7.4% 255.6 92.3 152.5 $1.98 1.95 0.35 7.7% 6.0% 276.0 118.6 201.9 $2.56 2.52 0.32 9.3% 8.7% 247.2 97.9 171.5 $2.14 2.12 0.32 9.0% 7.8% 243.7 93.2 196.6 $2.06 2.04 0.32 9.3% 8.0% $2,508.4 $1,715.6 $1,981.0 $1,653.9 $2,029.4 $1,694.7 $1,887.5 $1,670.0 $1,730.5 $1,626.9 $802.7 $536.1 2.5 $3,458.3 $959.9 $1,552.7 $32.59 $165.6 $121.5 $72.2 47.6 4,605 9,761 1.8 $3,114.6 $880.2 $1,312.6 $28.26 $69.5 $93.9 $83.0 46.5 4,796 9,328 $638.5 2.2 $2,635.5 $586.4 $1,205.0 $25.92 $117.5 $88.3 $84.3 46.5 5,347 8,883 $452.4 2.0 $313.2 1.6 $2,233.1 $2,138.0 $396.6 $465.1 $1,140.1 $1,011.1 $24.71 $22.16 $118.7 $121.0 $79.9 $52.8 46.1 5,470 7,588 $76.5 $75.6 45.6 5,797 7,572 Note: Amounts may not add due to rounding. (1) Return on invested capital is equal to net operating profit after-tax over two-year average net debt plus equity. (2) Actual number, not in millions. Stock Price range Dividends per Share Common 2013 2012 Common 2013 2012 high Low High Low First quarter $37.18 $33.46 $41.91 $35.35 Second quarter Third quarter Fourth quarter 37.48 48.40 62.92 30.64 36.46 44.71 37.39 33.11 33.41 29.07 28.55 28.95 First quarter Second quarter Third quarter Fourth quarter $0.09 $0.08 0.10 0.10 0.10 0.09 0.09 0.09 140081_L01.indd 19 3/11/14 1:23 PM 2013 Business Overview | 19 report of independent registered Public Accounting Firm to the board of Directors and stockholders of curtiss-wright corporation Charlotte, North Carolina We have audited the consolidated balance sheets of Curtiss-Wright Corporation and subsidiaries (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2013. Such consolidated financial statements and our report thereon dated February 21, 2014, expressing an unqualified opinion (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, 2013. 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, 2013 and 2012, and the related condensed consolidated statements of earnings and of cash flows for each of the three years in the period ended December 31, 2013, is fairly stated in all material respects in relation to the consolidated financial statements from which it has been derived. Parsippany, New Jersey February 21, 2014 20 | Curtiss-Wright 140081_L01.indd 20 3/6/14 9:27 AM Consolidated Statements of Earnings For the years ended December 31 (In thousands, except per share data) 2013 2012 2011 Net sales Product sales Service sales Total net sales Cost of sales Cost of product sales Cost of service sales Total cost of sales Gross profit $2,074,967 $1,710,759 $1,690,064 435,804 2,510,771 386,957 2,097,716 326,678 2,016,742 1,412,621 287,057 1,699,678 $811,093 Research and development expenses (68,874) Selling expenses General and administrative expenses Operating income Interest expense Other income, net Earnings before income taxes Provision for income taxes Earnings from continuing operations Discontinued operations, net of taxes Earnings from discontinued operations Gain on divestiture Earnings from discontinued operations Net earnings Basic earnings per share: Earnings from continuing operations Earnings from discontinued operations Total Diluted earnings per share: Earnings from continuing operations (153,336) (355,264) $233,619 (37,020) 1,354 $197,953 (59,972) $137,981 — — — $137,981 $2.94 — $2.94 $2.88 Earnings from discontinued operations — Total Dividends per share weighted average shares outstanding: Basic Diluted $2.88 $0.39 46,991 46,743 47,912 47,412 1,178,115 260,858 1,438,973 $658,743 (59,712) (125,201) (312,384) $161,446 (26,329) 245 $135,362 (43,073) $92,289 $3,043 18,512 $21,555 $113,844 $1.98 0.46 $2.44 $1.95 0.45 $2.40 $0.35 1,143,828 215,967 1,359,795 $656,947 (62,115) (119,438) (288,540) $186,854 (20,834) 862 $166,882 (48,262) $118,620 $7,769 — $7,769 $126,389 $2.56 0.17 $2.73 $2.52 0.17 $2.69 $0.32 46,372 47,013 140081_L01.indd 21 3/11/14 1:23 PM 2013 Business Overview | 21 Consolidated Balance Sheets At December 31 (In thousands, except share data) 2013 2012 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 Goodwill Other intangible assets, net Other assets Total assets Liabilities Current liabilities Current portion of long-term and 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 post-retirement 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, 2013 and 2012; 49,189,702 shares issued at December 31, 2013 and 2012; outstanding shares were 47,638,835 at December 31,2013 and 46,449,934 at December 31, 2012. Additional paid in capital retained earnings Accumulated other comprehensive income (loss) Less: Common treasury stock, at cost (1,550,867 shares at December 31, 2013 and 2,739,768 shares at December 31, 2012) Total stockholders’ equity Total liabilities and stockholders’ equity $175,294 $112,023 603,592 452,087 47,650 58,660 $1,337,283 $515,718 1,110,429 471,379 23,465 578,313 397,471 50,760 37,194 $1,175,761 $489,593 1,013,300 419,021 16,913 $3,458,274 $3,114,588 $1,334 186,941 142,935 789 164,343 38,251 $534,593 $958,604 123,644 138,904 15,498 134,326 $128,225 157,825 131,067 7,793 171,624 43,214 $639,748 $751,990 50,450 264,047 14,905 80,856 $1,905,569 $1,801,996 $49,190 150,618 1,380,981 25,259 (53,343) $1,552,705 $3,458,274 $49,190 151,883 1,261,377 (55,508) (94,350) $1,312,592 $3,114,588 22 | Curtiss-Wright 140081_L01.indd 22 3/11/14 1:23 PM 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 (Gain) loss on fixed asset disposals Gain on bargain purchase Gain on divestiture Deferred income taxes Share-based compensation Impairment of assets Changes in operating assets and liabilities, net of businesses acquired and disposed of: Accounts receivable, net Inventories, net Progress payments 2013 2012 2011 $137,981 $113,844 $126,389 $121,497 $93,896 $88,300 77 — — 5,928 7,349 887 6,599 (25,499) (6,131) (414) (910) (29,912) (3,871) 9,428 4,988 26,524 (30,100) (7,923) (7,290) (34,436) 15,211 (1,132) 4,571 (670) — (1,298) 3,345 9,621 — (78,850) (21,123) 11,264 15,628 51,724 3,917 (4,234) (2,160) Accounts payable and accrued expenses 8,567 Deferred revenue Income taxes Net pension and post-retirement liabilities (7,281) (16,811) (1,630) Other current and long-term assets and liabilities 6,294 Net cash provided by operating activities $237,827 $152,474 $201,853 Cash flows from investing activities Proceeds from sales and disposals of long-lived assets Proceeds from divestitures Acquisitions of intangible assets $1,348 — — Additions to property, plant, and equipment (72,242) Acquisition of businesses, net of cash acquired (236,135) Additional consideration paid on prior year acquisitions (6,663) $2,557 52,123 (1,761) (82,954) (460,439) (2,524) $2,497 8,100 (22) (84,322) (178,080) — Net cash used for investing activities $(313,692) $(492,998) $(251,827) Cash flows from financing activities Borrowings of revolving credit facility Borrowings of debt $983,109 500,000 $576,934 $1,002,600 — 300,000 Payment of revolving credit facility (1,229,148) (296,145) (1,112,814) Principal payments on debt repurchases of company stock Proceeds from share-based compensation plans Dividends paid Excess tax benefits from share-based compensation Net cash provided by financing activities (125,033) — 27,450 (18,377) 2,137 — (25,705) 15,492 (16,392) 57 $140,138 $254,241 Effect of exchange-rate changes on cash (1,002) 3,919 Net increase (decrease) 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 activities Capital expenditures incurred but not yet paid Recognition of asset retirement obligation Property and equipment acquired under build to suit transaction 63,271 112,023 $175,294 $4,546 — $6,225 (82,364) 194,387 $112,023 $1,478 $6,904 — — (8,178) 11,746 (14,893) 1,343 $179,804 (3,562) 126,268 68,119 $194,387 $3,600 — — 2013 Business Overview | 23 140081_L01.indd 23 3/11/14 1:23 PM Directors martin r. benante Executive Chairman David c. Adams President and Chief Executive Officer Dean m. Flatt Director, Ducommun, Inc.; Former President and Chief Operating Officer of Honeywell International’s Defense and Space Business s. marce Fuller Director, Earthlink, Inc.; Former President and Chief Executive Officer of Mirant Corporation, Inc. (formerly known as Southern Energy, Inc.) Dr. Allen A. Kozinski Former Vice President of Global Refining of British Petroleum PLC John r. myers Former Chairman and Chief Executive Officer of Tru-Circle Corporation; Management Consultant; Former Non-Executive Chairman of the Board of Garrett Aviation Services John b. Nathman Admiral, U.S. Navy (Ret.) robert J. rivet Former Executive Vice President, Chief Operations, and Administrative Officer of Advanced Micro Devices, Inc. Dr. william w. sihler Ronald E. Trzcinski Professor of Business Administration, Darden Graduate School of Business Administration, University of Virginia Albert E. smith Director, Tetra Tech, Inc.; Former Executive Vice President of Lockheed Martin Corporation stuart w. thorn President and Chief Operating Officer, Southwire Company Paul J. Ferdenzi Vice President, General Counsel, and Corporate Secretary harry s. Jakubowitz Vice President and Treasurer Glenn G. coleman Vice President and Corporate Controller Officers martin r. benante Executive Chairman David c. Adams President and Chief Executive Officer thomas P. Quinly Vice President and Chief Operating Officer Glenn E. tynan Vice President and Chief Financial Officer 24 | Curtiss-Wright 140081_L01.indd 24 3/6/14 9:27 AM shareholder information corporate headquarters 13925 Ballantyne Corporate Place, Suite 400 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, Broadridge Corporate Issuer Solutions, Inc., P.O. Box 1342, Brentwood, New York 11717, toll-free at (855) 449-0995. investor information Investors, stockbrokers, security analysts, and others seeking information about Curtiss-Wright Corporation should contact James M. Ryan, Director of Investor Relations, at (973) 541-3700 or investor@curtisswright.com 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 James M. Ryan, Director of Investor Relations, at the Corporate Headquarters or through the Investor Relations section of the Corporation’s website: www.curtisswright.com. Charlotte, NC 28277 www.curtisswright.com Tel: (973) 541-3700 Annual meeting The 2014 annual meeting of stockholders will be held on May 2, 2014 at 10:00 a.m. at the Parsippany Sheraton Hotel, 199 Smith Road, Parsippany, New Jersey 07054. stock Exchange listing The Corporation’s common stock is listed and traded on the New York Stock Exchange under the symbol CW. common shareholders As of December 31, 2013, the approximate number of registered holders of record of common stock, par value of $1.00 per share of the Corporation, was 4,605. Forward-looking statements This brochure contains not only historical information, but also forward-looking statements regarding expectations of future performance of the Corporation. Forward-looking statements involve risk and uncertainty. Please refer to the Corporation’s 2013 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. 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 Broadridge Corporate Issuer Solutions, Inc., P.O. Box 1342, Brentwood, New York 11717 or overnight to 1155 Long Island Avenue, Brentwood, New York 11717. Please include your name, address, and telephone number with all correspondence. Telephone inquiries may be made toll-free to (855) 449-0995 or (720) 864-4772 internationally. Internet inquiries should be directed to http://shareholder.broadridge.com/curtisswright and by email at shareholder@broadridge.com. Hearing- impaired shareholders are invited to log on to the website and select the Live Chat option. Design: Eisenman Associates. Printing: Earth Thebault, Inc. Photo on page 12 courtesy of the Naval Air Systems Command (NAVAIR) 2013 Business Overview | 25 140081_L01.indd 25 3/6/14 9:27 AM Curtiss-Wright Corporation 13925 Ballantyne Corporate Place, Suite 400 Charlotte, NC 28277 www.curtisswright.com 140081_L01.indd 26 3/6/14 9:27 AM 

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