Curtiss-Wright Corporation
2013 Business Overview
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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.
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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
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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.
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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
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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%)
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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.
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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.
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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.
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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
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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
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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).
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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.
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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.
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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.
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Curtiss-Wright Corporation
13925 Ballantyne Corporate Place, Suite 400
Charlotte, NC 28277
www.curtisswright.com
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