Curtiss-Wright
Annual Report 2018

Plain-text annual report

Delivering on All Fronts 2018 Annual Report Five years ago we launched the One Curtiss-Wright Vision. Today, we’ve transformed those goals into accomplishments. Curtiss-Wright Corporation is a global diversified industrial company built on long-standing customer relationships, leading market positions and innovative technologies. Our legacy dates back to 1929 with the merger of companies founded by aviation pioneers Glenn Curtiss and the Wright Brothers. Headquartered in Davidson, N.C., our team of approximately 9,000 employees is dedicated to providing highly-engineered, advanced solutions that uniquely meet the complex needs of today’s commercial, industrial, defense and power markets. We encourage you to read the on-line annual report at www.curtisswright.com/investors/annual-report-and-proxy Goal Greater than 12.5% Operating Margins1 Goal Working Capital as % of Sales Below 20% Goal Double-digit EPS Growth1 Goal Goal Greater than 12% Return on Invested Capital FCF Conversion Greater than 100%2 2018 15.8% 2013 9.3% Growth +650 bps 2013 32.0% 2018 19.4% Reduction 1,260 bps 2018 $6.37 2013 $2.88 Growth 17% CAGR 2018 14.9% 2013 7.4% Growth +750 bps 2014-18 155% 2011-13 91% Growth +640 bps 1 2018 Adjusted financials are defined as Reported Operating Income, Operating Margin and Diluted Earnings Per Share (EPS) under GAAP, and exclude the impact of first year purchase accounting costs associated with acquisitions, specifically one-time inventory step-up, backlog amortization and transaction costs. 2 2018 Adjusted free cash flow (FCF) is defined as cash flow from operations less capital expenditures, and excludes voluntary contributions to the Company’s corporate defined benefit pension plan. Adjusted FCF conversion is defined as adjusted free cash flow divided by net earnings from continuing operations. Goal Greater than 12.5% Operating Margins1 Goal Working Capital as % of Sales Below 20% Goal Double-digit EPS Growth1 Goal Greater than 12% Return on Invested Capital Goal FCF Conversion Greater than 100%2 2018 15.8% 2013 9.3% Growth +650 bps 2018 19.4% 2018 19.4%2013 32.0% Reduction 1,260 bps 2018 $6.37 2013 $2.88 Growth 17% CAGR 2018 14.9% 2013 7.4% Growth +750 bps 2014-18 155% 2011-13 91% Growth +640 bps 1 2018 ANNUAL REPORTDear Fellow Shareholders: Over the past five years, our company has steadily evolved under the One Curtiss-Wright vision into an integrated, market- facing business that is easier for our customers, employees, investors and other stakeholders to understand. We continue to leverage our critical mass and market leadership positions with our broad and highly diversified portfolio of products and services across the commercial aerospace, defense, general industrial and power generation markets. $6.37 Diluted Earnings Per Share $333M Free Cash Flow $2,412M Net Sales $382M Operating Income 15.8% Operating Margin 2 CURTISS-WRIGHT CORPORATION2018 ANNUAL REPORT“ We continue to take the steps necessary to improve the competitiveness of Curtiss-Wright and generate strong returns for our shareholders over the long-term.” This performance included strong growth in the naval defense market, including the contribution from the DRG acquisition, as well as the general industrial market. We generated a 14% increase in adjusted operating income (excluding first year purchase accounting costs associated with acquisitions), and strong margin expansion of 110 basis points to achieve an adjusted operating margin of 15.8%. This performance reflects solid execution in all three segments and the benefits of our ongoing margin improvement initiatives. Our adjusted diluted earnings per share increased 28% to $6.37, led by the strong operational performance, and the benefits of a lower tax rate and steady share buyback activity, as we repurchased approximately $200 million in shares this past year, including nearly $120 million in the fourth quarter alone. In addition, we generated $333 million in adjusted free cash flow (excluding a $50 million pension contribution), driving an adjusted free cash flow conversion of 121%, led by the strong operational performance and our continued efforts to reduce working capital. We maintain a healthy balance sheet, providing a strong base of financial flexibility enabling us to pursue our long-term growth strategies. We are Delivering Top Quartile Performance Next, I’d like to reflect on our collective performance over the past five years. In 2013, we established a five-year goal to achieve top quartile performance versus our peer group across a range of financial metrics, including: Operating Margin, Earnings per Share, Return on Invested Capital (ROIC), Working Capital as a percentage of Sales, Capital Expenditures as a percentage of Sales and Free Cash Flow Conversion. I am pleased to report that we achieved or exceeded all of the original targets and reached top quartile for every metric. Some notable achievements include the very strong results for operating margin and ROIC, which expanded 650 and 750 basis points, respectively, and a tremendous reduction in our working capital as a percentage of sales from 32% to less than 20%. 3 David C. Adams Chairman and Chief Executive Officer We drive a continuous improvement culture at Curtiss-Wright. Our ongoing pursuit of operational excellence with financial discipline has led us to successfully achieve top quartile performance compared with our peer group across a range of critical financial metrics established at our 2013 Investor Day (and as highlighted on the inside front cover). Our disciplined capital deployment strategy has been driven by continued operational performance, robust free cash flow generation and a strong balance sheet to generate solid returns to our shareholders, reinvestments back into the business and more recently, strategic acquisitions. Following a self-imposed hiatus on acquisitions—implemented in 2013—in order to focus on improving our operating metrics, we successfully completed two very solid and strategic acquisitions in the past two years, exemplified by our more recent acquisition of the Dresser-Rand government business (DRG) completed in 2018. We continue to take the steps necessary to improve the competitiveness of Curtiss-Wright and generate strong returns for our shareholders over the long-term. To that end, We are Delivering on All Fronts. 2018 Financial Performance Curtiss-Wright achieved impressive results and delivered a highly successful performance in 2018, led by solid sales growth, continued operating margin expansion and strong free cash flow generation. Net sales of $2.4 billion increased 6%, led by synchronized sales growth in all of our commercial and defense end markets. CURTISS-WRIGHT CORPORATIONReliable and Sophisticated Electronic Solutions Curtiss-Wright teams with off-highway vehicle OEMs to provide safety-critical solutions that offer optimal ergonomics to reduce fatigue and increase productivity in extreme environments. Key technologies include human machine interface consoles, shifters, joysticks, electronic throttles, power electronics and vibration-tolerant tilt sensors. It has been an exciting journey to reach top quartile performance and I am very proud of the entire team’s accomplishments. We will remain focused on relentlessly driving operational improvement, leveraging the critical mass of One Curtiss-Wright across the enterprise, and maintaining our position in the top quartile of our peer group. Disciplined Capital Allocation Strategy Over the past five years, Curtiss-Wright’s commitment to a balanced capital allocation strategy consisting of a disciplined pace of acquisitions, reinvesting in our business, and providing steady distributions to our shareholders has created tremendous value. Since 2013, I’m proud to say that we have accomplished the following: • Returned nearly $850 million to shareholders through steady share repurchases and dividends • Completed two significant acquisitions for nearly $500 million • Spent $500 million on operational investments, including capital expenditures, voluntary pension contributions and debt prepayments We have maintained an active share buyback program, as we repurchased approximately $715 million in shares and reduced our share count by 8.7 million shares over the past five years. We expect to repurchase at least $50 million in shares in 2019. We have also maintained a steady pace of dividend payouts in the past five years. Our strong financial position and continued ability to deliver solid earnings growth and free cash flow have enabled us to consistently provide a steady and solid return to our shareholders. In early 2018, we completed the acquisition of DRG (from Siemens) for $210 million in cash. DRG is the preferred supplier of steam turbines and main engine guard valves on aircraft carriers, and has significant content on submarines and other surface ships. This acquisition significantly increased our shipset content and our footprint on new U.S. Navy Nuclear vessels, and also expanded our naval aftermarket business through its prominent presence at U.S. Navy shipyards. DRG has been a great addition to our defense portfolio, particularly during a period of increasing naval defense budgets, and the integration has been going very well. 4 CURTISS-WRIGHT CORPORATION2018 ANNUAL REPORT Commercial / Industrial 2018 Segment Sales by End Market 6% Power Generation 7% Naval Defense 47%General Industrial 10% Aerospace Defense 30% Commercial Aerospace 5 CURTISS-WRIGHT CORPORATION2018 ANNUAL REPORTDefense 2018 Segment Sales by End Market 48%Aerospace Defense 3% General Industrial 9% Commercial Aerospace 17% Ground Defense 23% Naval Defense 6 2018 ANNUAL REPORTNext-Gen “Black Boxes” Deliver 25 Hours of Cockpit Recording Curtiss-Wright was selected as exclusive supplier for Honeywell’s next-generation recorders supporting the commercial and business jet markets. The lightweight Fortress™ “black boxes” are the first to support 25 hours of cockpit voice recording and real-time aircraft connectivity. Cockpit Voice Recorder New 3-Year Targets Now that we successfully achieved those five-year targets set in 2013, we are moving forward with the next phase of our evolution, driven by a renewed focus on delivering top-line growth. We have issued the following long-term targets for the period ending in 2021: • 5–7% Total Sales CAGR • 17% Adjusted Operating Margin • 10% Adjusted diluted EPS CAGR (goal to deliver $8.50 in diluted EPS) • $1 Billion in cumulative Free Cash Flow (with 110% average free cash flow conversion) We expect to accomplish this accelerated sales growth target both organically—aided by increased research and development and other growth investments—and through acquisitions— utilizing our strong balance sheet. Within the defense markets, we expect to continue to benefit from the favorable trends in U.S. military spending and rising defense budgets, particularly as they relate to our content on critical fighter jet, ground vehicle, submarine and aircraft carrier programs. In the commercial markets, we expect to leverage the continued production ramp up in commercial aerospace, ongoing support for operating and new build reactors in the commercial nuclear power industry and favorable trends across our numerous industrial businesses. Beginning in 2019, we are shifting our capital allocation strategy slightly via two critical areas – internal growth investments and acquisitions. We are investing the necessary capital and resources to position us to deliver long-term growth and margin expansion, and our 2019 forecast includes increased research and development spending across all three segments. We have had considerable success with our R&D investments in recent years leading to significant awards and long term sustainable growth for Curtiss-Wright. Regarding capital investments, we committed to a $20 million investment in the DRG business in 2019 to drive improved operating efficiencies and long-term margin expansion. We also intend to increase our allocation of capital to high- quality, profitable acquisitions to supplement our organic growth, building on our success with the acquisitions of TTC in 2017 and DRG in 2018. We seek acquisitions that support our long-term strategic and financial objectives, while also remaining both diligent and disciplined in our approach. Our confidence comes from a long track record of M&A, and a team that is very good at integration. 7 CURTISS-WRIGHT CORPORATION Getting Closer to Our End Users: DRG Acquisition Significantly Expands Naval Defense Capabilities Our new Fleet Solutions business performs vital maintenance, repair and overhaul services at U.S. Navy shipyards worldwide. Along with those investments, we will continue to focus on returns to shareholders through steady buybacks and dividends, and at a minimum, repurchase sufficient shares to cover annual dilution from stock compensation. We remain focused on driving long-term profitability, while also maintaining top-quartile status compared with our peer group. We expect to generate more than $1 billion in cumulative free cash flow over the next three years, and have raised our minimal annual free cash flow target base from $250 million to at least $300 million. Our continued focus on working capital and improved operational performance will help us reach this goal. In Recognition It is with sincere best wishes that we announce the retirement of our colleague Dr. Allen A. Kozinski from our Board of Directors. Allen has been an integral member of our Board since 2007, serving as a member and Chairperson of the Committee on Directors and Governance, and member of the Executive Compensation and Finance Committees, and from 2017–2018, as Lead Independent Director of the Board. I would like to personally thank Allen for his enduring dedication and many years of service to Curtiss-Wright and wish him well in his future endeavors. Finally, I would like to thank our approximately 9,000 global employees for their steadfast drive and determination for making this past year a strong success. As we enter 2019 and look ahead to celebrating our 90th anniversary listing on the New York Stock Exchange this August, I remain confident that our long-term commitment to delivering strong operational performance will enhance Curtiss-Wright’s shareholder value for years to come. David C. Adams Chairman and Chief Executive Officer 8 CURTISS-WRIGHT CORPORATION2018 ANNUAL REPORTPower 2018 Segment Sales by End Market 58%Power Generation 42% Naval Defense 9 CURTISS-WRIGHT CORPORATIONSegment Financial Information Years ended December 31 (Dollars in millions, except percentages; unaudited) 2018 2017 Change 4% (0%) 17% 6% 9% 17% 22% 14% (9%) 15% $ 1,209.2 $ 1,162.7 554.4 648.3 555.5 552.9 $ 2,411.8 $ 2,271.0 $ $ $ 182.7 $ 128.4 98.9 410.0 (36.3) 373.6 $ $ 168.1 109.3 81.1 358.6 (33.5) 325.1 15.1% 23.2% 15.2% 17.0% 15.5% 14.5% 19.7% 14.7% 15.8% 14.3% 25% General Industrial 18% Power Generation 17% Commercial Aerospace Sales Commercial/Industrial Defense Power Total Sales Operating Income (Expense) Commercial/Industrial Defense Power Total Segments Corporate & Other Total Operating Income Operating Margins Commercial/Industrial Defense Power Segment Margins Total Operating Margins Note: Amounts may not add to the total due to rounding. End Market Sales 40% Defense 10 CURTISS-WRIGHT CORPORATION2018 ANNUAL REPORTHistorical Financial Performance (Three-Year Review) Years ended December 31 (Dollars in millions, except per share data; unaudited) Performance 1 Net Sales Operating Income Operating Margin Net Earnings Earnings Per Share 1 Basic Diluted Dividends Per Share Year-end Financial Position Return on Invested Capital 2 New Orders Backlog Working Capital as % of Sales 3 Total Assets Total Debt Stockholders’ Equity Other Year-end Data Cash Flow from Operations Capital Expenditures Free Cash Flow 4 EBITDA Depreciation & Amortization Shares of Stock Outstanding at December 31 Number of Registered Shareholders 5 Number of Employees 5 Note: Amounts may not add due to rounding. 1 Reported on a continuing operations basis. $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 2018 2,411.8 373.6 15.5% 275.7 6.28 6.22 0.60 14.9% 2,426.7 2,032.5 19.4% 3,255.4 762.6 1,530.8 336.3 53.4 282.9 476.6 102.9 42.8 3,220 9,002 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 2017 2,271.0 325.1 14.3% 214.9 4.86 4.80 0.56 13.6% 2,290.2 2,011.1 18.5% 3,236.3 814.1 1,527.8 388.7 52.7 336.0 425.1 100.0 44.1 3,532 8,626 2016 2,108.9 296.5 14.1% 189.4 4.27 4.20 0.52 12.0% 2,149.2 1,950.8 21.0% 3,037.8 966.3 1,291.2 423.2 46.8 376.4 392.5 96.0 44.2 3,770 7,946 2 Return on invested capital is equal to net operating profit after-tax over two-year average net debt plus equity and excludes equity from discontinued operations. 3 Working capital is equal to accounts receivable plus inventory minus accounts payable, deferred income and deferred development costs, and excludes first year impact from acquisitions. 4 Free cash flow is defined as cash flow from operations less capital expenditures. 5 Actual number, not in millions. 11 CURTISS-WRIGHT CORPORATIONOfficers David C. Adams Chairman and Chief Executive Officer Glenn E. Tynan Vice President and Chief Financial Officer Thomas P. Quinly Vice President and Chief Operating Officer Paul J. Ferdenzi Vice President, General Counsel, and Corporate Secretary Harry S. Jakubowitz Vice President and Treasurer K. Christopher Farkas Vice President of Finance and Corporate Controller Directors David C. Adams Chairman and Chief Executive Officer Director, Snap-On Incorporated Dean M. Flatt Director, Ducommun, Inc. and National Technical Systems, Inc. Former President and Chief Operating Officer of Honeywell International’s Defense and Space Business S. Marce Fuller Former President and Chief Executive Officer of Mirant Corporation, Inc. (formerly known as Southern Energy, Inc.) Rita J. Heise Director, Fastenal Company; Former Corporate Vice President and Chief Information Officer of Cargill, Incorporated Bruce D. Hoechner President and Chief Executive Officer, and a Director, of Rogers Corporation Dr. Allen A. Kozinski Former Vice President of Global Refining of British Petroleum PLC 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. Albert E. Smith Director, Tetra Tech, Inc.; Former Executive Vice President of Lockheed Martin Corporation Peter C. Wallace Director, Applied Industrial Technologies, Inc. and Rogers Corporation Former Chief Executive Officer and Director of Gardner Denver Inc. Former President, Chief Executive Officer and Director of Robbins & Myers, Inc. 12 CURTISS-WRIGHT CORPORATION2018 ANNUAL REPORTDelivering on All Fronts Form 10-K JOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 1 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-134 CURTISS-WRIGHT CORPORATION (Exact name of Registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 130 Harbour Place Drive, Suite 300, Davidson, North Carolina (Address of principal executive offices) 13-0612970 (I.R.S. Employer Identification No.) 28036 (Zip Code) Registrant’s telephone number, including area code: (704) 869-4600 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common stock, par value $1 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No  Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  No  Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No  Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer  Non-accelerated filer  (Do not check if a smaller reporting company) Smaller reporting company  Emerging growth company  Accelerated filer  If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No The aggregate market value of the voting and non-voting Common stock held by non-affiliates of the Registrant as of June 30, 2018 was approximately $4.5 billion. The number of shares outstanding of the Registrant’s Common stock as of January 31, 2019: Class Common stock, par value $1 per share Number of shares 42,789,265 DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement of the Registrant with respect to the 2019 Annual Meeting of Stockholders to be held on May 9, 2019 are incorporated by reference into Part III of this Form 10-K. <12345678>Clean JOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. i DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB INDEX TO FORM 10-K PART I 1 5 14 14 14 15 16 19 20 38 39 83 83 83 84 84 84 84 84 85 89 90 Business Item 1. Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Item 3. Item 4. Properties Legal Proceedings Mine Safety Disclosures Item 5. Item 6. Item 7. PART II Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Selected Financial Data Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Item 8. Changes in and Disagreements with Accountants on Accounting and Item 9. Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information PART III Item 10. Directors, Executive Officers and Corporate Governance Item 11. Item 12. Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions, and Director Independence Item 14. Principal Accounting Fees and Services Item 15. Exhibits, Financial Statement Schedule Schedule II – Valuation and Qualifying Accounts Signatures PART IV i <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. ii DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB PART I FORWARD-LOOKING STATEMENTS Except for historical information, this Annual Report on Form 10-K may be deemed to contain “forward-looking statements” within the meaning of the Private Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not limited to: (a) projections of or statements regarding return on investment, future earnings, interest income, sales, volume, other income, earnings or loss per share, growth prospects, capital structure, liquidity requirements, and other financial terms, (b) statements of plans and objectives of management, (c) statements of future economic performance, (d) the effect of laws, rules, regulations, new accounting pronouncements, and outstanding litigation on our business and future performance, and (e) statements of assumptions, such as economic conditions underlying other statements. Such forward-looking statements can be identified by the use of forward-looking terminology such as “anticipates,” “believes,” “continue,” “could,” “estimate,” “expects,” “intend,” “may,” “might,” “outlook,” “potential,” “predict,” “should,” “will,” as well as the negative of any of the foregoing or variations of such terms or comparable terminology, or by discussion of strategy. No assurance may be given that the future results described by the forward-looking statements will be achieved. While we believe these forward- looking statements are reasonable, they are only predictions and are subject to known and unknown risks, uncertainties, and other factors, many of which are beyond our control, which could cause actual results, performance or achievement to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements. In addition, other risks, uncertainties, assumptions, and factors that could affect our results and prospects are described in this report, including under the heading “Item 1A. Risk Factors” and elsewhere, and may further be described in our prior and future filings with the Securities and Exchange Commission and other written and oral statements made or released by us. Such forward-looking statements in this Annual Report on Form 10-K include, without limitation, those contained in Item 1. Business, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 8. Financial Statements and Supplementary Data, including, without limitation, the Notes to Consolidated Financial Statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date they were made, and we assume no obligation to update forward-looking statements to reflect actual results or changes in or additions to the factors affecting such forward-looking statements. ii <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 1 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB Item 1. Business. BUSINESS DESCRIPTION Curtiss-Wright Corporation and its subsidiaries (we, the Corporation, or the Company) is a global, diversified manufacturing and service company that designs, manufactures, and overhauls precision components and provides highly engineered products and services to the aerospace, defense, general industrial, and power generation markets. We were formed in 1929 by the merger of companies founded by the Wright brothers and Glenn Curtiss, who were aviation pioneers. We are incorporated under the laws of the State of Delaware and headquartered in Davidson, North Carolina. We list our common stock on the New York Stock Exchange (NYSE) and trade under the symbol CW. We expect that the diversification and breadth of our portfolio should mitigate the impact of business cycle volatility and allow us to drive growth in new products and markets. We seek to leverage and build upon our critical mass to expand our global manufacturing capabilities, sales channels, and customer relationships. We strive for consistent organic sales growth, operating margin expansion, and free cash flow generation, while maintaining a disciplined capital deployment strategy in order to drive long-term shareholder value. We are well positioned on high-performance platforms and critical applications that require our technical sophistication and benefit from decades of engineering expertise. Our technologies are relied upon to improve safety, operating efficiency, and reliability, while meeting demanding performance requirements. Our ability to provide these advanced technologies on a cost-effective basis is fundamental to our strategy to drive increased value to our customers. We compete globally, primarily based on technology and pricing. Business Segments We manage and evaluate our operations based on the products and services we offer and the different markets we serve. Based on this approach, we operate through three segments: Commercial/Industrial, Defense, and Power. Our principal domestic manufacturing facilities are located in Arizona, New York, North Carolina, Ohio, and Pennsylvania, and internationally in Canada, Mexico, and the United Kingdom. Commercial / Industrial Sales in the Commercial/Industrial segment are primarily to the general industrial and commercial aerospace markets and, to a lesser extent, the defense and power generation markets. The businesses in this segment provide a diversified offering of highly engineered products and services including: industrial vehicle products such as electronic throttle control devices, joysticks and transmission shifters; sensors, controls and electro-mechanical actuation components and utility systems used on commercial aircraft; valves to both the industrial and naval defense markets; and surface technology services such as shot peening, laser peening, coatings, and advanced analytical testing. The industrial businesses within our Commercial/Industrial segment are impacted primarily by general economic conditions which may include consumer consumption or commercial construction rates, as the nature of their products and services primarily support global industrial, oil and gas, commercial vehicles, medical, and transportation industries. The commercial aerospace business, in particular, is impacted by OEM production rates of new aircraft, while the defense business is impacted by government funding and spending on shipbuilding programs, primarily driven by the U.S. Government. As commercial industrial businesses, production and service processes rest primarily within material modification, machining, assembly, and testing and inspection at commercial grade specifications. The businesses distribute products through commercial sales and marketing channels. Defense Sales in the Defense segment are primarily to the defense markets and, to a lesser extent, to the commercial aerospace market. The businesses in this segment provide a diversified offering of products including: Commercial Off-the-Shelf (COTS) embedded computing board-level modules, data acquisition and flight test instrumentation equipment, integrated subsystems, instrumentation and control systems, 1 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 2 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB turret aiming and stabilization products, and weapons handling systems. The businesses within our Defense segment are impacted primarily by government funding and spending, driven primarily by the U.S. Government. Our products typically support government entities in the aerospace defense, ground defense, and naval defense industries. As a result, we have varying degrees of content on most fighter jets, unmanned aerial vehicles (UAVs), helicopters, ground vehicle platforms, and naval vessels. Additionally, we provide avionics and electronics, flight test equipment, and aircraft data management solutions to the commercial aerospace market. Our defense businesses supporting government contractors typically utilize more advanced and ruggedized production and service processes compared to our commercial businesses and have more stringent specifications and performance requirements. The businesses in this segment typically market and distribute products through regulated government contracting channels. Power Sales in the Power segment are primarily to the commercial nuclear power generation and naval defense markets. For the commercial markets, we provide a diversified offering of products for commercial nuclear power plants and nuclear equipment manufacturers, including hardware, pumps, valves, fastening systems, specialized containment doors, airlock hatches, and spent fuel management products. We also provide Reactor Coolant Pumps (RCPs) and control rod drive mechanisms for commercial nuclear power plants, most notably to support the Westinghouse AP1000 reactor design. The businesses are dependent upon the need for ongoing maintenance, repair and overhaul of existing operating power plants, typically to U.S. customers, as well as the construction of new power plants globally. The businesses distribute products through commercial sales and marketing channels and are impacted by pricing and demand for various forms of energy (e.g. coal, natural gas, oil, and nuclear) and also subject to changes in regulation which may impact demand, consumption, and underlying supply. For the defense markets, our products principally support the naval defense market, where we specifically provide naval propulsion and auxiliary equipment, including main coolant pumps, power-dense compact motors, generators, steam turbines, valves and secondary propulsion systems, primarily to the U.S. Navy. We also provide ship repair and maintenance for the U.S. Navy’s Atlantic and Pacific fleets through three service centers. The defense businesses in this segment are impacted by government funding and spending on shipbuilding programs, primarily driven by the U.S. Government. OTHER INFORMATION Certain Financial Information For information regarding sales by geographic region, see Note 18 to the Consolidated Financial Statements contained in Part II, Item 8, of this Annual Report on Form 10-K. In 2018, 2017, and 2016, our foreign operations as a percentage of pre-tax earnings were 39%, 40%, and 42%, respectively. Government Sales Our sales to the U.S. Government and foreign government end use represented 40%, 39%, and 38% of total net sales during 2018, 2017, and 2016, respectively. In accordance with normal U.S. Government business practices, contracts and orders are subject to partial or complete termination at any time at the option of the customer. In the event of a termination for convenience by the government, there generally are provisions for recovery of our allowable incurred costs and a proportionate share of the profit or fee on the work completed, consistent with regulations of the U.S. Government. Fixed-price redeterminable contracts usually provide that we absorb the majority of any cost overrun. In the event that there is a cost underrun, the customer recoups a portion of the underrun based upon a formula in which the customer’s portion increases as the underrun exceeds certain established levels. Generally, long-term contracts with the U.S. Government require us to invest in and carry significant levels of inventory. However, where allowable, we utilize progress payments and other interim billing practices on nearly all of these contracts, thus reducing working capital requirements. It is our policy to seek customary 2 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 3 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB progress payments on certain contracts. Where we obtain such payments under U.S. Government prime contracts or subcontracts, the U.S. Government generally has control of the materials and work in process allocable or chargeable to the respective contracts. (See Notes 1, 5, and 6 to the Consolidated Financial Statements, contained in Part II, Item 8, of this Annual Report on Form 10-K). Customers We have hundreds of customers in the various industries we serve. No commercial customer accounted for more than 10% of our total sales during 2018, 2017, or 2016. Approximately 34% of our total net sales for 2018, 33% for 2017, and 32% for 2016 were derived from contracts with agencies of, and prime contractors to, the U.S. Government. Information on our sales to the U.S. Government, including both direct sales as a prime contractor and indirect sales as a subcontractor, is as follows: (In thousands) Commercial/Industrial Defense Power Total U.S. Government sales Patents Year Ended December 31, 2018 $191,036 362,776 261,188 $815,000 2017 $178,202 369,977 191,733 $739,912 2016 $187,498 305,459 181,851 $674,808 We own and license a number of United States and foreign patents and patent applications, which have been obtained or filed over a period of years. We also license intellectual property to and from third parties. Specifically, the U.S. Government receives licenses to our patents that are developed in performance of government contracts, and it may use or authorize others to use the technology covered by such patents for government purposes. Additionally, trade secrets, unpatented research and development, and engineering, some of which have been acquired by the company through business acquisitions, make an important contribution to our business. While our intellectual property rights in the aggregate are important to the operation of our business, we do not consider the success of our business or business segments to be materially dependent upon the timing of expiration or protection of any one or group of patents, patent applications, or patent license agreements under which we now operate. Research and Development Company-sponsored research and development costs are expensed when incurred. Total research and development expenses amounted to $65 million, $61 million, and $59 million in 2018, 2017, and 2016, respectively. 3 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 4 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB Executive Officers Name David C. Adams Current Position Chairman and Chief Executive Officer Thomas P. Quinly Vice President and Chief Operating Officer Business Experience Chairman and Chief Executive Officer of the Corporation since January 2015. Prior to this, he served as President and Chief Executive Officer of the Corporation from August 2013. He also served as President and Chief Operating Officer of the Corporation from October 2012 and as Co-Chief Operating Officer of the Corporation from November 2008. He has been a Director of the Corporation since August 2013. Vice President of the Corporation since November 2010 and Chief Operating Officer of the Corporation since October 2013. He also served as President of Curtiss-Wright Controls, Inc. from November 2008. Glenn E. Tynan Paul J. Ferdenzi Vice President and Chief Financial Officer Vice President and Chief Financial Officer of the Corporation since June 2002. Vice President, General Counsel, and Corporate Secretary K. Christopher Farkas Vice President of Finance and Corporate Controller Harry S. Jakubowitz Vice President and Treasurer Vice President, General Counsel, and Corporate Secretary of the Corporation since March 2014. Prior to this, he served as Vice President-Human Resources of the Corporation from November 2011 and also served as Associate General Counsel and Assistant Secretary of the Corporation from June 1999 and May 2001, respectively. Vice President of Finance since December 2017. Prior to this, he served as Vice President and Corporate Controller of the Corporation from September 2014 and also served as Assistant Corporate Controller from May 2009. Vice President of the Corporation since May 2007 and Treasurer of the Corporation since September 2005. 4 Age 64 Executive Officer Since 2005 60 2010 60 2000 51 2011 50 2014 66 2007 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 5 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB Employees At the end of 2018, we had approximately 9,000 employees, 7% of which are represented by labor unions and covered by collective bargaining agreements. Available information We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and proxy statements for our annual stockholders’ meetings, as well as any amendments to those reports, with the Securities and Exchange Commission (SEC). The public may read and copy any of our materials filed with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including our filings. These reports are also available free of charge through the Investor Relations section of our web site at www.curtisswright.com as soon as reasonably practicable after we electronically file. Item 1A. Risk Factors. We have summarized the known, material risks to our business below. Our business, financial condition, and results of operations and cash flows could be materially and adversely impacted if any of these risks materialize. Additional risk factors not currently known to us or that we believe are immaterial may also impair our business, financial condition, and results of operations and cash flows. The risk factors below should be considered together with information included elsewhere in this Annual Report on Form 10-K as well as other required filings by us to the Securities Exchange Commission, such as our Form 10-Q’s, Form 8-K’s, proxy statements for our annual shareholder meetings, and subsequent amendments, if any. Intrusion on our systems could damage our business. We store sensitive data, including intellectual property, proprietary business information, and confidential employee information on our servers and databases. Despite our implementation of firewalls, switchgear, and other network security measures, our servers, databases, and other systems may be vulnerable to computer hackers, physical or electronic break-ins, sabotage, computer viruses, worms, and similar disruptions from unauthorized tampering with our computer systems. We continue to review and enhance our computer systems as well as provide training to our employees in an attempt to prevent unauthorized and unlawful intrusions, but in the future it is possible that we may not be able to prevent all intrusions. Such intrusions could result in our network security or computer systems being compromised and possibly result in the misappropriation or corruption of sensitive information or cause disruptions in our services. We might be required to expend significant capital and resources to protect against, remediate, or alleviate problems caused by such intrusions. Any such intrusion could cause us to be non-compliant with applicable laws or regulations, subject us to legal claims or proceedings, disrupt our operations, damage our reputation, and cause a loss of confidence in our products and services, any of which could have a material adverse effect on our business, financial condition, and results of operations. A substantial portion of our revenues and earnings depends upon the continued willingness of the U.S. Government and other customers in the defense industry to buy our products and services. In 2018, approximately 34% of our total net sales were derived from or related to U.S. defense programs. U.S. defense spending has historically been cyclical, and defense budgets tend to rise when perceived threats to national security increase the level of concern over the country’s safety. At other times, spending by the military can decrease. In August 2011, Congress enacted the Budget Control Act of 2011 (BCA), which imposed spending caps and certain reductions in defense spending over a ten-year period through 2021. These spending caps and reductions, referred to as sequestration, went into effect in March 2013. Through a series of bipartisan agreements, Congress has been able to temporarily lift discretionary spending limits every year through 2019. However, unless a new agreement is enacted, the BCA will again become effective beginning in 2020. As a result of this uncertainty, a decrease in U.S. Government defense spending or changes in spending allocation could result in one or more of our programs being reduced, delayed, or terminated. In the event one or more of our programs are reduced, delayed, or terminated for which we provide products and services and are not offset by revenues from foreign sales, 5 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 6 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB new programs, or products or services that we currently manufacture or provide, we may experience a reduction in our revenues and earnings and a material adverse effect on our business, financial condition, and results of operations and cash flows. As a U.S. Government contractor, we are subject to a number of procurement rules and regulations. We must comply with and are affected by laws and regulations relating to the award, administration, and performance of U.S. Government contracts. Government contract laws and regulations affect how we do business with our customers and, in some instances, impose added costs on our business. A violation of specific laws and regulations could result in the imposition of fines and penalties, the termination of our contracts, or debarment from bidding on contracts. These fines and penalties could be imposed for failing to follow procurement integrity and bidding rules, employing improper billing practices or otherwise failing to follow cost accounting standards, receiving or paying kickbacks, or filing false claims. We have been, and expect to continue to be, subjected to audits and investigations by government agencies. The failure to comply with the terms of our government contracts could harm our business reputation. It could also result in our progress payments being withheld. In some instances, these laws and regulations impose terms or rights that are more favorable to the government than those typically available to commercial parties in negotiated transactions. For example, the U.S. Government may terminate any of our government contracts and, in general, subcontracts, at its convenience as well as for default based on performance. Upon termination for convenience of a fixed-price type contract, we normally are entitled to receive the purchase price for delivered items, reimbursement for allowable costs for work-in-process, and an allowance for profit on work actually completed on the contract or adjustment for loss if completion of performance would have resulted in a loss. Upon termination for convenience of a cost reimbursement contract, we normally are entitled to reimbursement of allowable costs plus a portion of the fee. Such allowable costs would normally include our cost to terminate agreements with our suppliers and subcontractors. The amount of the fee recovered, if any, is related to the portion of the work accomplished prior to termination and is determined by negotiation. A termination arising out of our default could have a material adverse effect on our ability to compete for future contracts and orders. In addition, on those contracts for which we are teamed with others and are not the prime contractor, the U.S. Government could terminate a prime contract under which we are a subcontractor, irrespective of the quality of our services as a subcontractor. Our U.S. Government contracts typically span one or more base years and multiple option years. The U.S. Government generally has the right to not exercise option periods and may not exercise an option period if the agency is not satisfied with our performance on the contract or does not receive funding to continue the program. U.S. Government procurement may adversely affect our cash flow or program profitability. Furthermore, we are subject to other risks in connection with government contracts, including without limitation: • • the frequent need to bid on programs prior to completing the necessary design, which may result in unforeseen technological difficulties and/or cost overruns; the difficulty in forecasting long-term costs and schedules and the potential obsolescence of products related to long-term, fixed price contracts; • contracts with varying fixed terms that may not be renewed or followed by follow-on contracts upon expiration; • cancellation of the follow-on production phase of contracts if program requirements are not met in the development phase; and • the fact that government contract wins can be contested by other contractors. Our operations are subject to numerous domestic and international laws, regulations, and restrictions. Noncompliance with these laws, regulations, and restrictions could expose us to fines, penalties, suspension, or debarment, which could have a material adverse effect on our profitability and overall financial condition. We have contracts and operations in many parts of the world subject to United States and foreign laws and regulations, including the False Claims Act, regulations relating to import-export control (including the International Traffic in Arms Regulation promulgated under the Arms Export Control Act), technology transfer restrictions, repatriation of earnings, exchange controls, the Foreign Corrupt Practices Act, the 6 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 7 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB U.K. Anti-Bribery Act, and the anti-boycott provisions of the U.S. Export Administration Act. Although we have implemented policies and procedures and provided training that we believe are sufficient to address these risks, we cannot guarantee that our operations will always comply with these laws and regulations. From time to time, we may file voluntary disclosure reports with the U.S. Department of State, the Department of Energy, and the Department of Commerce regarding certain violations of U.S. export control laws and regulations discovered by us in the course of our business activities, employee training, or internal reviews and audits. To date, our voluntary disclosures have not resulted in a fine, penalty, or export privilege denial or restriction that has had a material adverse impact on our financial condition or ability to export. Our failure, or failure by our sales representatives or consultants to comply with these laws and regulations could result in administrative, civil, or criminal liabilities and could, in the extreme case, result in suspension or debarment from government contracts or suspension of our export privileges, which could have a material adverse effect on our business. Our business, financial condition, and results of operations could be materially adversely affected if the United States were to withdraw from or materially modify certain international trade agreements, or if tariffs or other restrictions on the foreign-sourced goods that we sell were to increase. A significant portion of our business activities are conducted in foreign countries, including Mexico and Canada. Our business benefits from free trade agreements such as the North American Free Trade Agreement (NAFTA) and we also rely on various U.S. corporate tax provisions related to international commerce as we build, market, and sell our products globally. On November 30, 2018, President Trump signed the United States-Mexico-Canada Agreement (USMCA) to replace NAFTA. The USMCA maintains duty-free access for most products and leaves most key provisions of the NAFTA agreement largely intact. The USMCA still requires approval by the U.S. Congress, Mexico’s National Assembly, and Canada’s Parliament before it enters into force. Additionally, President Trump recently announced his intention for the United States to withdraw from NAFTA. The outcome of the Congressional approval process is uncertain, but it is possible that withdrawal or revisions to NATFA or failure to secure Congressional approval of the USMCA could cause an increase in customs duties which in turn could adversely affect intercompany transactions among our operating subsidiaries in Canada, Mexico, and the U.S., as well as increase transaction costs with third party suppliers and customers. Furthermore, the current administration has threatened tougher trade terms with China and other countries, leading to the imposition of substantially higher U.S. tariffs on $250 billion of imports from China as well as higher Chinese tariffs on a large amount of U.S. exports to China. All of this could lead to increased costs and diminished sales opportunities in the U.S. and Chinese markets. Media and political reactions in the affected countries could potentially exacerbate the impact on our operations in those countries. The U.S. Administration’s assertive trade policies could result in further conflicts with U.S. trading partners, affecting our supply chains, sourcing, and markets. Foreign countries may impose additional burdens on us through the use of local regulations, tariffs or other requirements, which could increase our operating costs in those foreign jurisdictions. At this time, it remains unclear what actions, if any, President Trump will take with respect to other international trade agreements and U.S. tax provisions related to international commerce. If Congress does not pass the USMCA and if the United States were to withdraw from or materially modify NAFTA or other international trade agreements to which it is a party, or change corporate tax policy related to international commerce, or if tariffs were raised on the foreign-sourced goods that we sell, such goods may no longer be available at a commercially attractive price or at all. This in turn could have a material adverse effect on our business, financial condition, and results of operations. Unanticipated changes in our tax provisions or exposure to additional income tax liabilities could affect our profitability. Our business operates in many locations under government jurisdictions that impose income taxes. Changes in domestic or foreign income tax laws and regulations, or their interpretation, could result in higher or lower income tax rates assessed or changes in the taxability of certain revenues or the deductibility of certain expenses, thereby affecting our income tax expense and profitability. In addition, the amount of income taxes paid by us is subject to ongoing audits by U.S. federal, state, and local tax authorities and by non-U.S. tax authorities. If these audits result in assessments different from amounts reserved, future financial results may include unfavorable adjustments to our tax liabilities, which could have a material adverse effect on our results of operations. 7 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 8 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB Global economic conditions may adversely affect our business, operating results and financial condition. Although we currently generate significant operating cash flows, which combined with access to the credit markets provides us with significant discretionary funding capacity, global economic and financial disruptions and tightening of the credit markets could affect our ability to fund our operations. In addition, certain of our customers and suppliers could be affected directly by an economic downturn and could face credit issues or cash flow problems that could give rise to payment delays, increased credit risk, bankruptcies, and other financial hardships, which could impact customer demand for our products as well as our ability to manage normal commercial relationships with our customers and suppliers. Depending on their severity and duration, the effects and consequences of a global economic downturn could have an adverse impact on our results of operations and financial condition. Political and economic changes in foreign countries and markets, including foreign currency fluctuations, may have a material effect on our operating results. During 2018, approximately 33% of our total net sales were to customers outside of the United States. Additionally, we also have operating facilities located in foreign countries. Doing business in foreign countries is subject to numerous risks, including without limitation: political and economic instability, the uncertainty of the ability of non-U.S. customers to finance purchases, restrictive trade policies, changes in the local labor-relations climate, economic conditions in local markets, health concerns, and complying with foreign regulatory and tax requirements that are subject to change. While these factors or the impact of these factors are difficult to predict, any one or more of these factors could adversely affect our operations. To the extent that foreign sales are transacted in foreign currencies and we do not enter into currency hedge transactions, we are exposed to risk of losses due to fluctuations in foreign currency exchange rates, particularly for the British Pound, Euro, and Canadian dollar. Significant fluctuations in the value of the currencies of the countries in which we do business could have an adverse effect on our results of operations. We operate in highly competitive markets. Many of our products and services are sold in highly competitive markets and are affected by varying degrees of competition. We compete against companies that often have higher sales volumes and greater financial, technological, research and development, human, and marketing resources than we have. As a result, they may be better able to withstand the effects of periodic economic downturns. In addition, some of our largest customers could develop the capability to manufacture products or provide services similar to products that we manufacture or services that we provide. This would result in these customers supplying their own products or services and competing directly with us for sales of these products or services, all of which could significantly reduce our revenues. Furthermore, we are facing increased international competition and cross-border consolidation of competition. Our management believes that the principal points of competition in our markets are technology, product quality, product performance, price, technical expertise, timeliness of delivery, superior customer service and support, and continued certification under customer quality requirements and assurance programs. If we are unable to compete successfully with existing or new competitors in these areas, we may experience a material adverse effect on our business, financial condition, and results of operations. Potential product liability risks exist from the products that we sell. We may be exposed to liabilities for personal injury, death, or property damage due to the failure of a product that we have sold. We typically agree to indemnify our customers against certain liabilities resulting from the products we sell, and any third-party indemnification we seek from our suppliers and our liability insurance may not fully cover our indemnification obligations to customers. We may also not be able to maintain insurance coverage in the future at an acceptable cost. Any liability for which third-party indemnification is not available that is not covered by insurance could have a material adverse effect on our business, financial condition, and results of operations. In addition, an accident caused by one of our products could damage our reputation for selling quality products. We believe that our customers consider safety and reliability as key criteria in selecting our products and believe that our reputation for quality assurance is a significant competitive strength. If an accident were to be caused by one of our products, or if we were to otherwise fail to maintain a satisfactory record of safety and reliability, our ability to retain and attract customers may be materially adversely affected. 8 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 9 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB We are subject to liability under warranty obligations. The majority of our contracts contain provisions which expose us to potential liability for warranty claims made by customers or third parties with respect to products that have been designed, manufactured, or serviced by us or our suppliers. Material product warranty obligations could have a material adverse effect on our business, financial condition, and results of operations. Further, our reputation may be adversely affected by such defective product claims, whether or not successful, including potential negative publicity about our products. A downturn in the aircraft market could adversely affect our business. Our sales to large commercial aircraft manufacturers are cyclical in nature and can be adversely affected by a number of factors, including current and future traffic levels, increasing fuel and labor costs, intense price competition, the retirement of older aircraft, regulatory changes, outbreak of infectious disease, terrorist attacks, general economic conditions, worldwide airline profits, and backlog levels, all of which can be unpredictable and are outside our control. Any decrease in demand resulting from a downturn in the aerospace market could adversely affect our business, financial condition, and results of operations. The airline industry is heavily regulated, and if we fail to comply with applicable requirements, our results of operations could suffer. Governmental agencies throughout the world, including the U.S. Federal Aviation Administration (FAA) and the European Aviation Safety Agency, prescribe standards and qualification requirements for aircraft components, including virtually all commercial airline and general aviation products. Specific regulations vary from country to country, although compliance with FAA requirements generally satisfies regulatory requirements in other countries. We include documentation with our products sold to aircraft manufacturing customers certifying that each part complies with applicable regulatory requirements and meets applicable standards of airworthiness established by the FAA or the equivalent regulatory agencies in other countries. In order to sell our products, the Corporation as well as the products we manufacture must also be certified by our individual original equipment manufacturers (OEM) customers. If any of the material authorizations or approvals qualifying us to supply our products is revoked or suspended, then the sale of such product would be prohibited by law, which would have an adverse effect on our business, financial condition, and results of operations. From time to time, the FAA or equivalent regulatory agencies in other countries propose new regulations or changes to existing regulations, which are usually more stringent than existing regulations. If these proposed regulations are adopted and enacted, we may incur significant additional costs to achieve compliance, which could have a material adverse effect on our business, financial condition, and results of operations. If we fail to satisfy our contractual obligations, our contracts may be terminated and we may incur significant costs or liabilities, including liquidated damages and penalties. In general, our contracts may be terminated for our failure to satisfy our contractual obligations. In addition, some of our contracts contain substantial liquidated damages provisions and financial penalties related to our failure to satisfy our contractual obligations. For example, the terms of the Electro-Mechanical Division's AP1000 China and AP1000 U.S. contracts with Westinghouse Electric Company (WEC) include liquidated damage penalty provisions for failure to meet contractual delivery dates if we caused the delay and the delay was not excusable. On October 10, 2013, we received a letter from WEC stating entitlements to the maximum amount of liquidated damages allowable under the AP1000 China contract of approximately $25 million. To date, we have not met certain contractual delivery dates under the AP 1000 China and U.S. contracts; however there are significant uncertainties as to which parties are responsible for the delays, and we believe we have adequate legal defenses. Consequently, as a result of the above matters, we may incur significant costs or liabilities, including penalties, which could have a material adverse effect on our financial position, results of operations, or cash flows. As of December 31, 2018, the range of possible loss for liquidated damages on the WEC U.S. and China contracts is $0 to $55.5 million. 9 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 10 OPERATOR ALFREDOB We are subject to liability under environmental laws. Our business and facilities are subject to numerous federal, state, local, and foreign laws and regulations relating to the use, manufacture, storage, handling, and disposal of hazardous materials and other waste products. Environmental laws generally impose liability for investigation, remediation, and removal of hazardous materials and other waste products on property owners and those who dispose of materials at waste sites, whether or not the waste was disposed of legally at the time in question. We are currently addressing environmental remediation at certain current and former facilities, and we have been named as a potentially responsible party along with other organizations in a number of environmental clean-up sites and may be named in connection with future sites. We are required to contribute to the costs of the investigation and remediation and to establish reserves in our financial statements for future costs deemed probable and estimable. Although we have estimated and reserved for future environmental remediation costs, the final resolution of these liabilities may significantly vary from our estimates and could potentially have an adverse effect on our results of operations and financial position. Our future growth and continued success is dependent upon our key personnel. Our success is dependent upon the efforts of our senior management personnel and our ability to attract and retain other highly qualified management and technical personnel. We face competition for management and qualified technical personnel from other companies and organizations. Therefore, we may not be able to retain our existing management and technical personnel or fill new management or technical positions or vacancies created by expansion or turnover at our existing compensation levels. Although we have entered into change of control agreements with some members of senior management, we do not have employment contracts with our key executives. As some of our key executives approach retirement age, we have made a concerted effort to reduce the effect of the loss of our senior management personnel through management succession planning. However, we may be required to devote significant time and resources to identify and integrate key new personnel should key management losses occur earlier than anticipated. The loss of members of our senior management and qualified technical personnel could have a material adverse effect on our business. We use estimates when accounting for long-term contracts. Changes in estimates could affect our profitability and overall financial position. Long-term contract accounting requires judgment relative to assessing risks, estimating contract revenues and costs, and making assumptions for schedule and technical issues. Due to the size and nature of many of our contracts, the estimation of total revenues and costs at completion is complicated and subject to many variables. For example, assumptions have to be made regarding the length of time to complete the contract as costs also include expected increases in wages and prices for materials. Similarly, assumptions have to be made regarding the future impact of efficiency initiatives and cost reduction efforts. Incentives, awards, price escalations, liquidated damages, or penalties related to performance on contracts are considered in estimating revenue and profit rates and are recorded when there is sufficient information to assess anticipated performance. It is possible that materially different amounts could be obtained, because of the significance of the judgments and estimation processes described above, if different assumptions were used or if the underlying circumstances were to change. Changes in underlying assumptions, circumstances, or estimates may have a material adverse effect upon future period financial reporting and performance. See “Critical Accounting Estimates and Policies” in Part II, Item 7 of this Form 10-K. Our backlog is subject to reduction and cancellation, which could negatively impact our revenues and results of operations. Backlog represents products or services that our customers have contractually committed to purchase from us. Total backlog includes both funded (unfilled orders for which funding is authorized, appropriated, and contractually obligated by the customer) and unfunded backlog (firm orders for which funding has not been appropriated and/or contractually obligated by the customer). We are a subcontractor to prime contractors for the vast majority of our government business; as such, substantially all amounts in backlog are funded. Backlog excludes unexercised contract options and potential orders under ordering type contracts (e.g. Indefinite Delivery / Indefinite Quantity). Backlog is adjusted for changes in foreign exchange rates and is reduced for contract cancellations and terminations in the period in which they 10 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 11 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB occur. Backlog as of December 31, 2018 was $2.0 billion. Backlog is subject to fluctuations and is not necessarily indicative of future sales. The U.S. Government may unilaterally modify or cancel its contracts. In addition, under certain of our commercial contracts, our customers may unilaterally modify or terminate their orders at any time for their convenience. Accordingly, certain portions of our backlog can be cancelled or reduced at the option of the U.S. Government and commercial customers. Our failure to replace cancelled or reduced backlog could negatively impact our revenues and results of operations. We may be unable to protect the value of our intellectual property. Obtaining, maintaining, and enforcing our intellectual property rights and avoiding infringing on the intellectual property rights of others are important factors to the operation of our business. While we take precautionary steps to protect our technological advantages and intellectual property and rely in part on patent, trademark, trade secret, and copyright laws, we cannot assure that the precautionary steps we have taken will completely protect our intellectual property rights. Because patent applications in the United States are maintained in secrecy until either the patent application is published or a patent is issued, we may not be aware of third-party patents, patent applications, and other intellectual property relevant to our products that may block our use of our intellectual property or may be used in third-party products that compete with our products and processes. When others infringe on our intellectual property rights, the value of our products is diminished, and we may incur substantial litigation costs to enforce our rights. Similarly, we may incur substantial litigation costs and the obligation to pay royalties if others claim we infringed on their intellectual property rights. When we develop intellectual property and technologies with funding from U.S. Government contracts, the government has the royalty-free right to use that property. In addition to our patent rights, we also rely on unpatented technology, trade secrets, and confidential information. Others may independently develop substantially equivalent information and techniques or otherwise gain access to or disclose our technology. We may not be able to protect our rights in unpatented technology, trade secrets, and confidential information effectively. We require each of our employees and consultants to execute a confidentiality agreement at the commencement of an employment or consulting relationship with us. There is no guarantee that we will succeed in obtaining and retaining executed agreements from all employees or consultants. Moreover, these agreements may not provide effective protection of our information or, in the event of unauthorized use or disclosure, they may not provide adequate remedies. Our future financial results could be adversely impacted by asset impairment charges. As of December 31, 2018, we had goodwill and other intangible assets, net of accumulated amortization, of approximately $1,518 million, which represented approximately 47% of our total assets. Our goodwill is subject to an impairment test on an annual basis and is also tested whenever events and circumstances indicate that goodwill may be impaired. Intangible assets (other than goodwill) are generally amortized over the useful life of such assets. In addition, from time to time, we may acquire or make an investment in a business that will require us to record goodwill based on the purchase price and the value of the acquired assets. We may subsequently experience unforeseen issues with such business that adversely affect the anticipated returns of the business or value of the intangible assets and trigger an evaluation of the recoverability of the recorded goodwill and intangible assets for such business. Future determinations of significant write-offs of goodwill or intangible assets as a result of an impairment test or any accelerated amortization of other intangible assets could have a material adverse impact on our financial condition and results of operations. Our current debt, and debt we may incur in the future, could adversely affect our business and financial position. As of December 31, 2018, we had $763 million of debt outstanding. Our level of debt could have significant consequences for our business including: requiring us to use our cash flow to pay the principal and interest on our debt, reducing funds available for acquisitions and other investments in our business, making us vulnerable to economic downturns and increases in interest rates, limiting us from obtaining additional debt, and impacting our ability to pay dividends. 11 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 12 OPERATOR ALFREDOB A percentage of our workforce is employed under collective bargaining agreements. Approximately 7% of our workforce is employed under collective bargaining agreements, which from time to time are subject to renewal and negotiation. We cannot ensure that we will be successful in negotiating new collective bargaining agreements, that such negotiations will not result in significant increases in the cost of labor, or that a breakdown in such negotiations will not result in the disruption of our operations. Although we have generally enjoyed good relations with both our unionized and non-unionized employees, we may experience an adverse impact on our operating results if we are subject to labor actions. Our earnings and margins depend in part on subcontractor performance, as well as raw material and component availability and pricing. Our businesses depend on suppliers and subcontractors for raw materials and components. At times subcontractors perform services that we provide to our customers. We depend on these subcontractors and vendors to meet their contractual obligations in full compliance with customer requirements. Nonperformance or underperformance by subcontractors and vendors could materially impact our ability to perform obligations to our customers, which could result in a customer terminating our contract for default, expose us to liability, and substantially impair our ability to compete for future contracts and orders. Generally, raw materials and purchased components are available from a number of different suppliers, though several suppliers are our sole source of certain components. If a sole-source supplier should cease or otherwise be unable to deliver such components, our operating results could be adversely impacted. In addition, our supply networks can sometimes experience price fluctuations. Our ability to perform our obligations as a prime contractor may be adversely affected if one or more of these suppliers are unable to provide the agreed-upon supplies or perform the agreed-upon services in a timely and cost-effective manner. While we have attempted to mitigate the effects of increased costs through price increases, there are no assurances that higher prices can effectively be passed through to our customers or that we will be able to fully offset the effects of higher raw materials costs through price increases on a timely basis. Our business involves risks associated with complex manufacturing processes. Our manufacturing processes depend on certain sophisticated and high-value equipment. Unexpected failures of this equipment may result in production delays, revenue loss, and significant repair costs. In addition, equipment failures could result in injuries to our employees. Moreover, the competitive nature of our businesses requires us to continuously implement process changes intended to achieve product improvements and manufacturing efficiencies. These process changes may at times result in production delays, quality concerns, and increased costs. Any disruption of operations at our facilities due to equipment failures or process interruptions could have a material adverse effect on our business. Our future success will depend, in part, on our ability to develop new technologies. Virtually all of the products produced and sold by us are highly engineered and require sophisticated manufacturing and system-integration techniques and capabilities. The commercial and government markets in which we operate are characterized by rapidly changing technologies. The product and program needs of our government and commercial customers change and evolve regularly. Accordingly, our future performance depends in part on our ability to: identify emerging technological trends in our current and target markets, develop and manufacture competitive products, systems, and services, enhance our offerings by adding technological innovations that differentiate our products, systems, and services from those of our competitors, and develop, manufacture, and bring those products, systems, and service to market quickly at cost-effective prices. We self-insure health benefits and may be adversely impacted by unfavorable claims experience. We are self-insured for our health benefits. If the number or severity of claims increases, or we are required to accrue or pay additional amounts because the claims prove to be more severe than our original assessment, our operating results would be adversely affected. Our future claims expense might exceed historical levels, which could reduce our earnings. We expect to periodically assess our self-insurance strategy. We are required to periodically evaluate and adjust our claims reserves to reflect our experience. 12 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 13 OPERATOR ALFREDOB However, ultimate results may differ from our estimates, which could result in losses over our reserved amounts. In addition, because we do not carry “stop loss” insurance, a significant increase in the number of claims that we must cover under our self-insurance retainage could adversely affect our profitability. Increasing costs of certain employee and retiree benefits could adversely affect our financial position, results of operations, or cash flows. Our earnings may be positively or negatively impacted by the amount of income or expense we record for our pension and other postretirement benefit plans. U.S. GAAP requires that we calculate income or expense for the plans using actuarial valuations. These valuations reflect assumptions relating to financial markets and other economic conditions. Changes in key economic indicators can change the assumptions. The most significant year-end assumptions used to estimate pension or other postretirement benefit expense for the following year are the discount rate, the expected long-term rate of return on plan assets, expected future medical cost inflation, and expected compensation increases. In addition, we are required to make an annual measurement of plan assets and liabilities, which may result in a significant change to equity through a reduction or increase to other comprehensive income. For a discussion regarding how our financial statements can be affected by pension and other postretirement benefit plans accounting policies, see “Management’s Discussion and Analysis—Critical Accounting Estimates and Policies—Pension and Other Postretirement Benefits” in Part II, Item 7 of this Form 10-K. Although U.S. GAAP expense and pension or other postretirement contributions are not directly related, the key economic factors that affect U.S. GAAP expense would also likely affect the amount of cash we would contribute to the pension or other postretirement plans. Potential pension contributions include both mandatory amounts required under federal law, Employee Retirement Income Security Act, and discretionary contributions to improve the plans’ funded status. An obligation to make contributions to pension plans could reduce the cash available for working capital and other corporate uses. Implementing our acquisition strategy involves risks, and our failure to successfully implement this strategy could have a material adverse effect on our business. As part of our capital allocation strategy, we aim to grow our business by selectively pursuing acquisitions to supplement our organic growth. We are continuing to actively pursue additional acquisition opportunities, some of which may be material to our business and financial performance. Although we have been successful with this strategy in the past, we may not be able to grow our business in the future through acquisitions for a number of reasons, including: • Encountering difficulties identifying and executing acquisitions; • Increased competition for targets, which may increase acquisition costs; • Consolidation in our industry, reducing the number of acquisition targets; • Competition laws and regulations preventing us from making certain acquisitions; and • Acquisition financing not being available on acceptable terms or at all. In addition, there are potential risks associated with growing our business through acquisitions, including the failure to successfully integrate and realize the expected benefits of an acquisition. For example, with any past or future acquisition, there is the possibility that: • The business culture of the acquired business may not match well with our culture; • Technological and product synergies, economies of scale, or cost reductions may not occur as expected; • Management may be distracted from overseeing existing operations by the need to integrate acquired businesses; • We may acquire or assume unexpected liabilities; • We may experience unforeseen difficulties in integrating operations and systems; • We may fail to retain or assimilate employees of the acquired business; • We may experience problems in retaining customers or integrating customer bases; and • We may encounter difficulties in entering new markets in which we may have little or no experience. 13 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 14 OPERATOR ALFREDOB Failure to successfully implement our acquisition strategy, including successfully integrating acquired businesses, could have a material adverse effect on our business, financial condition, and results of operations. Future terror attacks, war, natural disasters, or other events beyond our control could adversely impact our businesses. Despite our concerted effort to minimize risk to our production capabilities and corporate information systems and to reduce the effect of unforeseen interruptions through business continuity planning and disaster recovery plans, we could be adversely impacted by terror attacks, war, natural disasters such as hurricanes, floods, tornadoes, pandemic diseases, or other events such as strikes by the workforce of a significant customer or supplier. These risks could negatively impact demand for or supply of our products and could also cause disruption to our facilities or systems, which could also interrupt operational processes and adversely impact our ability to manufacture our products and provide services and support to our customers. We operate facilities in areas of the world that are exposed to natural disasters. Financial difficulties of our customers, delays by our customers in production of their products, high fuel prices, the concern of another major terrorist attack, and the overall decreased demand for our products could adversely affect our operating results and financial condition. Item 1B. Unresolved Staff Comments. None. Item 2. Properties. Our corporate headquarters is located at a leased facility in Davidson, North Carolina. As of December 31, 2018, we had 169 facilities worldwide, including five corporate and shared-services facilities. Approximately 85% of our facilities operate as manufacturing and engineering, metal treatment, or aerospace overhaul plants, while the remaining 15% operate as selling and administrative office facilities. The number and type of facilities utilized by each of our reportable segments are summarized below: Owned Facilities Location North America Europe Total Leased Facilities Location North America Europe Asia Total Commercial/ Industrial 15 11 26 Commercial/ Industrial 50 25 16 91 Defense 1 — 1 Defense 12 5 — 17 Power 3 — 3 Power 25 — 1 26 Total 19 11 30 Total 87 30 17 134 The buildings on the properties referred to in this Item are well maintained, in good condition, and are suitable and adequate for current needs. Management believes that the productive capacity of our properties is adequate to meet our anticipated volume for the foreseeable future. Item 3. Legal Proceedings. In the ordinary course of business, the Corporation and its subsidiaries are subject to various pending claims, lawsuits, and contingent liabilities. We do not believe that the disposition of any of these matters, individually or in the aggregate, will have a material adverse effect on our consolidated financial condition, results of operations, and cash flows. In December 2013, the Corporation, along with other unaffiliated parties, received a claim from Canadian Natural Resources Limited (CNRL), which was filed in the Court of Queen's Bench of Alberta, Judicial District of Calgary. The claim pertains to a January 2011 fire and explosion at a delayed coker unit at its Fort McMurray refinery that resulted in the injury of five CNRL employees, damage to property and 14 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 15 OPERATOR ALFREDOB equipment, and various forms of consequential loss such as loss of profit, lost opportunities, and business interruption. The fire and explosion occurred when a CNRL employee bypassed certain safety controls and opened an operating coker unit. The total quantum of alleged damages arising from the incident has not been finalized, but is estimated to meet or exceed $1 billion. We maintain various forms of commercial, property and casualty, product liability, and other forms of insurance; however, such insurance may not be adequate to cover the costs associated with a judgment against us. All parties have agreed in principle to participate in a formal mediation in 2019 with the intention of settling this claim. In an effort to induce the parties to participate in the formal mediation, CNRL agreed to reduce its claim to approximately $400 million, which reflects the monetary amount of property damage incurred as result of the fire and explosion. We are currently unable to estimate an amount, or range of potential losses, if any, from this matter. We believe that we have adequate legal defenses and intend to defend this matter vigorously. Our financial condition, results of operations, and cash flows could be materially affected during a future fiscal quarter or fiscal year by unfavorable developments or outcome regarding this claim. We have been named in pending lawsuits that allege injury from exposure to asbestos. To date, we have not been found liable or paid any material sum of money in settlement in any case. We believe that the minimal use of asbestos in our past operations and the relatively non-friable condition of asbestos in our products make it unlikely that we will face material liability in any asbestos litigation, whether individually or in the aggregate. We maintain insurance coverage for these potential liabilities and we believe adequate coverage exists to cover any unanticipated asbestos liability. On March 29, 2017, WEC filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York, Case No. 17-10751. The Bankruptcy Court overseeing the Bankruptcy Case approved, on an interim basis, an $800 million Debtor-in-Possession Financing Facility to help WEC finance its business operations during the reorganization process. On January 4, 2018, WEC announced that it had agreed to be acquired by Brookfield Business Partners L.P (Brookfield) for approximately $4.6 billion. The acquisition, which was completed on August 1, 2018, is not expected to have a material impact on our financial condition or results of operations as WEC plans to continue operating in the ordinary course of business under existing senior management. On January 18, 2019, we executed an agreement to settle substantially all of our general unsecured claims with WEC, including pre-petition billings. As it relates to post-petition work, we will continue to honor our executory contracts and expect to collect all amounts due. We will continue to monitor and evaluate the status of the WEC bankruptcy for potential impacts on our business. Item 4. Mine Safety Disclosures. Not applicable. 15 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 16 OPERATOR ALFREDOB PART II Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. MARKET INFORMATION Our common stock is listed and traded on the New York Stock Exchange (NYSE) under the symbol CW. Stock Price Range 2018 2017 Common Stock First Quarter Second Quarter Third Quarter Fourth Quarter High Low High Low $140.07 143.38 141.29 138.90 $115.06 115.08 117.53 95.23 $100.74 95.21 106.63 125.00 $ 89.00 82.77 91.18 104.12 As of January 1, 2019, we had approximately 3,220 registered shareholders of our common stock, $1.00 par value. DIVIDENDS During 2018 and 2017, the Company paid quarterly dividends as follows: Common Stock First Quarter Second Quarter Third Quarter Fourth Quarter 2018 2017 $0.15 0.15 0.15 0.15 $0.13 0.13 0.15 0.15 SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS The following table sets forth information regarding our equity compensation plans as of December 31, 2018, the end of our most recently completed fiscal year: Number of securities to be issued upon exercise of outstanding options, warrants, and rights Weighted average exercise price of outstanding options, warrants, and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) 518,986(a) $65.73 1,834,153(b) None Not applicable Not applicable Plan category Equity compensation plans approved by security holders Equity compensation plans not approved by security holders (a) Consists of 467,055 shares issuable upon exercise of outstanding options and vesting of performance share units, restricted shares, restricted stock units, and shares to non-employee directors under the 2005 and 2014 Omnibus Incentive Plan, and 51,931 shares issuable under the Employee Stock Purchase Plans. (b) Consists of 1,663,542 shares available for future option grants under the 2014 Omnibus Incentive Plan, and 170,611 shares remaining available for issuance under the Employee Stock Purchase Plan. 16 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 17 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB Issuer Purchases of Equity Securities The following table provides information about our repurchases of equity securities that are registered by us pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, during the quarter ended December 31, 2018. Total Number of shares purchased 96,562 256,384 764,775 1,117,721 Average Price Paid per Share $123.95 108.22 104.58 $107.09 Total Number of Shares Purchased as Part of a Publicly Announced Program 705,013 961,397 1,726,172 1,726,172 Maximum Dollar amount of shares that may yet be Purchased Under the Program $58,524,603 30,778,525 50,798,843 $50,798,843 October 1 – October 31 November 1 – November 30 December 1 – December 31 For the quarter ended December 31 On December 12, 2018, the Corporation authorized $100 million of share repurchases through a 10b5-1 program. Of this authorization, the Company used $50 million for additional opportunistic share repurchases in December 2018. Beginning in January 2019, the Company expects to repurchase $50 million of additional shares via a 10b5-1 program. The following performance graph does not constitute soliciting material and should not be deemed filed or incorporated by reference into any of our other filings under the Securities Act or the Securities Exchange Act of 1934, except to the extent we specifically incorporate this information by reference therein. 17 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 18 OPERATOR ALFREDOB PERFORMANCE GRAPH The following graph compares the annual change in the cumulative total return on our common stock during the last five fiscal years with the annual change in the cumulative total return of the Russell 2000 Index, the S&P MidCap 400 Index, and our self-constructed proxy peer group. The proxy peer group companies are as follows: AAR Corp Crane Co. Cubic Corp EnPro Industries Inc. Esterline Technologies Corp Hexcel Corp IDEX Corporation ITT Inc. Kaman Corp Moog Inc. Spirit Aerosystems Holdings Inc. Teledyne Technologies Inc. TransDigm Group Inc. Triumph Group Inc. Woodward Inc. The graph assumes an investment of $100 on December 31, 2013 and the reinvestment of all dividends paid during the following five fiscal years. COMPARISON OF CUMULATIVE FIVE YEAR TOTAL RETURN 250 200 150 100 50 0 2013 2014 2015 2016 2017 2018 Curtiss-Wright Corp S&P MidCap 400 Index Russell 2000 Peer group Company / Index Curtiss-Wright Corp S&P MidCap 400 Index Russell 2000 Peer group 2013 100 100 100 100 2014 114.33 109.77 104.89 109.16 2015 111.77 107.38 100.26 105.99 2016 161.45 129.65 121.63 126.59 2017 201.11 150.71 139.44 163.26 2018 169.36 134.01 124.09 162.90 18 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 19 OPERATOR ALFREDOB Item 6. Selected Financial Data. The following table presents our selected financial data from continuing operations. The table should be read in conjunction with Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Five-Year Financial Highlights (In thousands, except per share data) Net sales Earnings from continuing operations Total assets Total debt, net Earnings per share from continuing operations: Basic Diluted Cash dividends per share CONSOLIDATED SELECTED FINANCIAL DATA 2017 2018 2016 $ 2,411,835 $2,271,026 $ 2,108,931 $2,205,683 $ 2,243,126 169,949 3,382,448 954,348 214,891 3,236,321 814,139 275,749 3,255,385 762,556 189,382 3,037,781 966,298 192,248 2,989,611 953,205 2015 2014 $ $ $ 6.28 $ 6.22 $ 0.60 $ 4.86 $ 4.80 $ 0.56 $ 4.27 $ 4.20 $ 0.52 $ 4.12 $ 4.04 $ 0.52 $ 3.54 3.46 0.52 19 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 20 OPERATOR ALFREDOB Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations begins with an overview of our company, followed by economic and industry-wide factors impacting our company and the markets we serve, a discussion of the overall results of continuing operations, and finally a more detailed discussion of those results within each of our reportable operating segments. COMPANY ORGANIZATION Curtiss-Wright Corporation and its subsidiaries is a global, diversified, industrial provider of highly engineered, technologically advanced, products and services to a broad range of industries which are reported through our Commercial/Industrial, Defense, and Power segments. We are positioned as a market leader across a diversified array of niche markets through engineering and technological leadership, precision manufacturing, and strong relationships with our customers. We provide products and services to a number of global markets, including the commercial aerospace, defense, general industrial, and power generation markets. Our overall strategy is to be a balanced and diversified company, less vulnerable to cycles or downturns in any one market, with a focus on establishing and expanding strong technological breadth, market positions, and financial performance. Impacts of inflation, pricing, and volume We have not historically been and do not expect to be significantly impacted by inflation. Increases in payroll costs and any increases in raw material costs that we have encountered are generally offset through lean manufacturing activities. We have consistently made annual investments in capital that deliver efficiencies and cost savings. The benefits of these efforts generally offset the margin impact of competitive pricing conditions in all of the markets we serve. Analytical Definitions Throughout management’s discussion and analysis of financial condition and results of operations, the terms “incremental” and “organic” are used to explain changes from period to period. The term “incremental” is used to highlight the impact acquisitions had on the current year results for which there was no comparable prior-year period. Therefore, the results of operations for acquisitions are incremental for the first twelve months from the date of acquisition. The remaining businesses are referred to as the “organic”. The definition of “organic” excludes the effect of foreign currency translation. Market Analysis and Economic Factors Economic Factors Impacting Our Markets Curtiss-Wright Corporation is a global, diversified manufacturing and service company that designs, manufactures, and overhauls precision components and provides highly engineered products and services to the aerospace, defense, general industrial, and power generation markets. Many of Curtiss-Wright’s industrial businesses are driven in large part by global economic growth, primarily led by operations in the U.S., Canada, Europe, and China. The U.S. economy, as measured by real gross domestic product (GDP), has slowly improved since 2009, aided by decreased levels of unemployment, improvements in the housing market, and a low interest rate environment. In 2018, U.S. GDP is expected to show solid growth of 3.0%, according to the most recent estimate, led by tax cuts and corporate spending increases which drove an acceleration in growth through mid-2018, ahead of GDP growth of 2.2% in 2017 and 1.6% in 2016. Looking ahead to 2019, economists have mixed views on the broader U.S. economy, with current estimates for U.S. real GDP growth indicating a rate of growth between 2% and 3%, despite the administration’s goal to raise the pace of expansion to 4% per year through increased fiscal stimulus. Meanwhile, the global environment’s rebound in economic activity that began in mid-2016 is expected to moderate somewhat from recent peak levels, influenced by international trade tensions, tightening financial conditions, and rising geopolitical uncertainty. As a result, 2019 GDP growth in world economies is expected to grow by approximately 3.5%, below the 2018 growth rate of 3.7%, according to the International Monetary Fund. This outlook is expected to be driven by a moderation in U.S. and European 20 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 21 OPERATOR ALFREDOB economic growth rates, as well as a flattening of growth in emerging market and developing economies. Looking ahead to the next few years, we remain cautiously optimistic that our economically-sensitive commercial and industrial markets will improve based on normalized global conditions. Defense We have a well-diversified portfolio of products and services that supply all branches of the U.S. military, with content on many high performance programs and platforms, as well as a growing international defense business. A significant portion of our defense business operations is attributed to the United States market, and characterized by long-term programs and contracts driven primarily by the Department of Defense (DoD) budgets and funding levels. The U.S. Defense budget serves as a leading indicator of our growth in the defense market. Following across-the-board sequestration mandated by the BCA, defense spending and related supplemental budgets bottomed in 2015. However, growth has stabilized in recent years, and in early 2018, Congress signed a bill to provide relief against the spending caps associated with the BCA. Further, a two-year budget agreement, signed in 2018, paved the way for lawmakers to fund defense at $700 billion in Fiscal Year 2018 and $716 billion in Fiscal Year 2019, both significant increases from the Fiscal Year 2017 budget. These growth rates are expected to provide the DoD with additional stability and flexibility to enter into multi-year contracts without the impact of sequestration. In addition, the Fiscal Year 2019 Defense Appropriations Bill, signed by the President in September 2018, was the first to be signed into law on time in over a decade. Looking ahead, the Fiscal Year 2020 budget is expected to range from $700 to $750 billion, with most reports indicating the likelihood of a $733 billion budget and continued growth in defense. We derive revenue from the naval defense, aerospace defense, and ground defense markets. In the naval defense market, we expect continued solid funding for the U.S. shipbuilding program, particularly as it relates to production on the Ford class aircraft carrier, as well as the Columbia class and Virginia class submarine programs. We have a long legacy of providing products that support nuclear propulsion systems on naval vessels. In addition, through our service centers, we are a critical provider of ship repair and maintenance for the U.S. Navy’s Atlantic and Pacific fleets. In the aerospace defense market, we expect to benefit from increased funding levels on Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR), electronic warfare, unmanned systems, and communications programs. As a leading supplier of COTS and COTS+ solutions, we continue to demonstrate that electronics technology will enhance our ability to design and develop future generations of advanced systems and products for high performance applications, while also meeting the military’s Size, Weight, and Power considerations. We are also a leading designer and manufacturer of high- technology data acquisition and comprehensive flight test instrumentation systems. In the ground defense market, the modernization of the existing U.S. ground vehicle fleet is expected to recover slowly, while international demand should remain solid, particularly for our turret drive stabilization systems (TDSS). While we monitor the budget process as it relates to programs in which we participate, we cannot predict the ultimate impact of future DoD budgets, which tend to fluctuate year-by-year and program-by-program. Commercial Aerospace Curtiss-Wright derives revenue from the global commercial aerospace market, principally to the commercial jet market, and to a lesser extent the regional jet and commercial helicopter markets. Our primary focus in this market is OEM products and services for commercial jets, which is highly dependent on new aircraft production from our primary customers - Boeing and Airbus. We provide a combination of flight control and utility actuation systems, sensors, and other sophisticated electronics, as well as shot and laser peening services utilized on highly stressed components of turbine engine fan blades, landing gear, and aircraft structures. 21 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 22 OPERATOR ALFREDOB Steady growth in airline travel, along with the demand for and delivery of new aircraft to replace an aging fleet, continue to be key drivers in the commercial aerospace market. Fiscal 2011 marked the beginning of a multi-year production up-cycle for the commercial aerospace market. This up-cycle is expected to continue based on planned increases in production by Boeing and Airbus on both legacy and new aircraft, particularly narrow-body aircraft, and is further supported by their strong backlogs. Additionally, the steady decline in oil prices during the past few years has been a key contributor to increased passenger growth, as declining fuel prices have led to cheaper airfares for consumers. According to the International Air Transport Association, air travel continues to be strong and is likely to display passenger growth of approximately 6.0% in 2019, which is growing faster than the 20-year trend. Industry data supports a continued, steady increase in commercial aircraft deliveries to meet this growing demand. While we closely monitor these industry metrics, our success and future growth in the commercial aerospace market is primarily tied to the growth in aircraft production rates, the timing of our order placement, and continued partnering with aerospace original equipment manufacturers. Power Generation We derive revenue from the commercial nuclear power generation market, where we supply a variety of highly engineered products and services, including reactor coolant pumps, control rod drive mechanisms, valves, motors, spent fuel management, containment doors, bolting solutions, enterprise resource planning, plant process controls, and coating services. We provide equipment and services to both the aftermarket and new build markets and have content on every reactor operating in the U.S. today. According to the Nuclear Regulatory Commission (NRC), nuclear power comprises approximately 20% of all the electric power produced in the United States, with 98 reactors operating across 59 nuclear power plants in 30 states. Our growth opportunities for aftermarket products and services are driven by plant aging, plant closures, requirements for planned outages, plant life extensions (from the end of their original 40-year operating lives to 60-year and now 80-year lives), the levying of regulatory requirements, suppliers abandoning the commercial nuclear market, and plants seeking technology and innovation advances. One of the industry’s most significant challenges is electricity market competitiveness, primarily driven by sustained low natural gas prices. As a result, the industry has been tasked with reassessing operating practices, improving efficiency, and reducing costs to help keep nuclear power competitive in a changing electricity market, which are collectively referred to as “Delivering the Nuclear Promise.” Additionally, U.S. reactor operators were faced with increased security and post-Fukushima regulatory requirements over the past few years. All of these factors contributed to plant operators diverting and deferring their typical plant capital expenditure budgets significantly away from planned maintenance. However, in late 2017, as those necessary requirements abated and plant operators resumed a more normalized maintenance schedule, the industry began to turn the corner. As a result, we expect increased opportunities for our vast portfolio of advanced nuclear technologies moving forward. Longer term, there are several factors that are expected to drive global commercial nuclear power demand. The Energy Information Administration forecasts that worldwide total energy consumption is expected to increase at an average annual rate of 1.0% through 2050. Continued growth in global demand for electricity, especially in developing countries with limited supply such as China and India, will require increased capacity. In addition, the continued supply constraints and environmental concerns attributed to the current dependence on fossil fuels have led to a greater appreciation of the value of nuclear technology as the most efficient and environmentally friendly source of energy available today. As a result, we expect growth opportunities in this market both domestically and internationally, although the timing of orders remains uncertain. We also play an important role in the new build market for the Westinghouse AP1000 reactor design, for which we are a supplier of RCPs and also expect to supply a variety of ancillary plant products and services. Domestically, two new build reactors remain under construction in Georgia utilizing the AP1000 design. On a global basis, nuclear plant construction is active. Currently, there are approximately 57 new reactors under construction across 17 countries, with approximately 132 planned and 376 proposed over the next several decades. In particular, China intends to expand its nuclear power capabilities significantly through the construction of new nuclear power plants over the next few decades, led by the successful 22 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 23 OPERATOR ALFREDOB start-up and operation of the first two AP1000 plants (four reactors) in late 2018 and early 2019, which are the first Generation III+ reactors in operation worldwide. We continue to expect to play a role in new build nuclear plant construction with our largest opportunities in China and India. Our future success in this industry will be led by new order activity for our vast array of nuclear technologies due to ongoing maintenance and upgrade requirements on operating nuclear plants, a renewed interest in products to aid safety and extend the reliability of existing reactors, and the continued emphasis on global nuclear power construction. General Industrial Revenue derived from our widely diversified offering to the general industrial market consists of industrial sensors and control systems, critical-function valves and valve systems, as well as surface treatment services. We supply our products and services to OEMs and aftermarket industrial customers, including the transportation, commercial trucking, off-road equipment, agriculture, construction, automotive, chemical, and oil and gas industries. Our performance in these markets is typically sensitive to the performance of the U.S. and global economies, with changes in global GDP rates and industrial production driving our sales, particularly for our surface treatment services. One of the key drivers within our general industrial market is our sensors and controls systems products, most notably for electronic throttle controls, shift controls, joysticks, power management systems, traction control systems, serving on-and-off highway, medical mobility and specialty vehicles markets. Increased industry demand for electronic control systems and sensors has been driven by the need for improved operational efficiency, safety, repeatability, reduced emissions, enhanced functionality, and greater fuel efficiencies to customers worldwide. Key to our future growth is expanding the human-machine interface technology portfolio and providing a complete system solution to our customers. Existing and emerging trends in commercial vehicle safety, emissions control, and improved driver efficiency are propelling commercial vehicle OEMs toward higher performance subsystems. These trends are accelerating the evolution from discrete human machine interface components towards a more integrated vehicle interface architecture. Meanwhile, our surface treatment services, including shot and laser peening, engineered coatings, and analytical testing services, which are used to increase the safety, reliability, and longevity of components, are primarily driven by demand from general industrial customers. We also service the oil and gas, chemical, and petrochemical industries through numerous industrial valve products, where nearly all of our industrial valve sales are to the downstream markets. We maintain a global maintenance, repair, and overhaul (MRO) business for our pressure-relief valve technologies as refineries opportunistically service or upgrade equipment that has been operating at or near full capacity. We also produce severe service, operation-critical valves for the power and process industries. Earlier in the decade through mid-2014, the industry had experienced solid performance driven by new exploration and expansion of sub-segments, including offshore drilling and shale gas, which boosted end- user demand. As a result of these market initiatives and reduced global economic growth, the industry experienced an excess of oil supply globally, driving a steady decline in crude oil prices throughout 2014 and 2015, as well as reducing capital expenditures. Though oil prices rebounded in late 2016 and throughout the past two years, they remain well below the recent 2014 peak. Despite the challenges in the oil and gas market, we have seen an industrial renaissance in the U.S. chemical industry due to plentiful, affordable natural gas, which has led to further adoption of severe service valve technology. Over the long run, we believe improved economic conditions and continued global expansion will be key drivers for future growth of our severe service and operation-critical valves serving the process industry. 23 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 24 OPERATOR ALFREDOB RESULTS OF OPERATIONS (In thousands, except percentages) Sales: Commercial/Industrial Defense Power Total sales Operating income: Commercial/Industrial Defense Power Corporate and eliminations Total operating income Interest expense Other income, net Earnings before income taxes Provision for income taxes Earnings from continuing operations New orders Backlog Year Ended December 31, 2018 2017 2016 Percent changes 2018 vs. 2017 2017 vs. 2016 $1,209,178 554,374 648,283 $ 2,411,835 $1,162,689 555,479 552,858 $2,271,026 $ 1,118,768 466,654 523,509 $2,108,931 $ 182,669 128,446 98,858 (36,347) $ 373,626 33,983 16,596 356,239 (80,490) $ 275,749 $2,426,682 $2,032,451 $ 168,146 109,338 81,119 (33,483) $ 325,120 41,471 15,970 299,619 (84,728) $ 214,891 $2,290,155 $ 2,011,092 $ 156,084 98,182 74,360 (32,107) $ 296,519 41,248 12,690 267,961 (78,579) $ 189,382 $2,149,191 $1,950,750 4% —% 17% 6% 9% 17% 22% (9%) 15% (18%) 4% 19% (5%) 28% 4% 19% 6% 8% 8% 11% 9% (4%) 10% 1% 26% 12% 8% 13% Components of sales and operating income growth (decrease): Organic Acquisitions Foreign currency Total 2018 vs. 2017 2017 vs. 2016 Sales 3% 3% —% 6% Operating Income 14% —% 1% 15% Sales 5% 3% —% 8% Operating Income 7% 3% —% 10% Year ended December 31, 2018 compared to year ended December 31, 2017 Sales for the year increased $141 million, or 6%, to $2,412 million, compared with the prior year period. On a segment basis, sales from the Commercial/Industrial and Power segments increased $46 million and $95 million, respectively, with sales from the Defense segment essentially flat. Changes in sales by segment are discussed in further detail in the “Results by Business Segment” section below. Operating income for the year increased $49 million, or 15%, to $374 million, and operating margin increased 120 basis points compared with 2017. In the Commercial/Industrial segment, operating income and operating margin increased primarily due to higher sales volumes and favorable overhead absorption for industrial vehicle and industrial valve products. Operating income and operating margin in the Defense segment benefited from higher sales and favorable overhead absorption, improved profitability due to the absence of first year purchase accounting costs from our acquisition of Teletronics Technology Corporation (TTC), and favorable contract adjustments. In the Power segment, operating income and operating margin increased primarily due to higher profitability on the AP1000 China Direct program, partially offset by first year purchase accounting costs from our Dresser-Rand Government Business (DRG) acquisition. Additionally, the benefits of our ongoing margin improvement initiatives were recognized across all segments. Non-segment operating expense for the year increased $3 million, or 9%, to $36 million, primarily due to higher environmental costs. 24 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 25 OPERATOR ALFREDOB Interest expense for the year decreased $7 million, or 18%, to $34 million, primarily due to maturation of the $150 million 5.51% Senior Notes, which were repaid in full on December 1, 2017. The effective tax rates from continuing operations for 2018 and 2017 were 22.6% and 28.3%, respectively. The decrease in the effective tax rate in 2018, as compared to 2017, was primarily due to the U.S. corporate income tax rate reduction under the 2017 Tax Cuts and Jobs Act (the Tax Act) as well as a deduction for foreign derived intangible income (FDII) recognized during the current period. This decrease was partially offset by additional tax expense associated with the Tax Act for foreign withholding taxes as well as the elimination of the Section 199 manufacturers’ deduction. Refer to Note 12 to the Consolidated Financial Statements for more information. New orders increased $137 million, or 6%, from the prior year period to $2,427 million, primarily due to the DRG acquisition and the timing of customer funding in the Power segment, which contributed higher new orders of $121 million and $49 million, respectively. This increase was partially offset by a decrease of $9 million in the Commercial/Industrial segment as higher demand for aerospace defense products and surface treatment services was more than offset by the timing of commercial aerospace and naval defense orders. New orders in the Defense segment decreased $16 million primarily due to the timing of naval defense orders. Changes in new orders by segment are discussed in further detail in the “Results by Business Segment” section below. Comprehensive income (loss) Pension and postretirement adjustments within comprehensive income during the year ended December 31, 2018 were a $19 million loss, compared with a $3 million loss for the prior year period. The loss during the current period was primarily due to lower asset returns, partially offset by a discount rate gain. The loss in the prior period was primarily due to a discount rate loss, partially offset by higher asset returns. Foreign currency translation adjustments during the year ended December 31, 2018 resulted in a $52 million loss, compared to a foreign currency translation gain of $78 million in the comparable prior period. The comprehensive loss during the current period was primarily attributed to decreases in the British Pound and Canadian dollar with the prior period comprehensive gain primarily impacted by increases in the British Pound, Canadian dollar, and Euro. Year ended December 31, 2017 compared to year ended December 31, 2016 Sales for the year increased $162 million, or 8%, to $2,271 million, compared with the prior year period. On a segment basis, sales from the Commercial/Industrial, Defense, and Power segments increased $44 million, $89 million, and $29 million, respectively. Changes in sales by segment are discussed in further detail in the “Results by Business Segment” section below. Operating income for the year increased $29 million, or 10%, to $325 million, and operating margin increased 20 basis points compared with 2016. Increases in operating income and operating margin were primarily attributable to higher production levels on the AP1000 China Direct program in our Power segment, higher volume on industrial vehicle products in the Commercial/Industrial segment, and the benefits of our ongoing margin improvement initiatives. These increases in operating income and operating margin were partially offset by first year purchase accounting costs from our TTC acquisition and an unfavorable shift in mix within our defense electronic products in the Defense segment. Non-segment operating expense of $33 million and interest expense of $41 million were essentially flat compared to the respective prior year period. The effective tax rates from continuing operations for 2017 and 2016 were 28.3% and 29.3%, respectively. The decrease in the effective tax rate in 2017, as compared to 2016, was primarily due to the recognition of excess tax benefits on stock-based compensation and higher research and development credits. This decrease was partially offset by the impact of the Tax Act, which increased the current year provision for income taxes by approximately $10 million. Refer to Note 12 to the Consolidated Financial Statements for more information. 25 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 26 OPERATOR ALFREDOB New orders increased $141 million from the prior year period to $2,290 million, primarily due to the TTC acquisition in the Defense segment, which contributed $70 million of new orders, and higher demand of $56 million for our industrial vehicle products in the Commercial/Industrial segment. New orders in the Defense segment also benefited from higher demand for our defense electronics products and naval defense products of $18 million and $13 million, respectively. Growth in both our actuation and sensors and controls products to the aerospace defense and naval defense markets increased new orders $30 million in the Commercial/Industrial segment. These increases were partially offset by a decrease in new orders of $44 million in the Power segment and a decrease in naval new orders of $37 million in the Commercial/Industrial segment due to the timing of funding. Changes in new orders by segment are discussed in further detail in the “Results by Business Segment” section below. Comprehensive income (loss) Pension and postretirement adjustments within comprehensive income during the year ended December 31, 2017, were a $3 million loss compared with a $1 million loss for the prior year period. The changes were primarily due to a higher discount rate loss in 2017 compared to the prior period. The discount rate loss was partially offset by higher asset returns in the current period versus the prior period, and higher loss amortization in 2017 compared to the prior period. Foreign currency translation adjustments during the year ended December 31, 2017 resulted in a $78 million gain, compared to a foreign currency translation loss of $65 million in the comparable prior period. The comprehensive gain during the current period was primarily attributed to increases in the British Pound, Canadian dollar, and Euro with the prior period comprehensive loss primarily impacted by a decrease in the British Pound. RESULTS BY BUSINESS SEGMENT Commercial/Industrial Sales in the Commercial/Industrial segment are primarily generated from the general industrial and commercial aerospace markets and, to a lesser extent, the defense and power generation markets. The following tables summarize sales, operating income and margin, and new orders within the Commercial/Industrial segment. (In thousands, except percentages) Sales Operating income Operating margin New orders Backlog 2018 $1,209,178 182,669 Year Ended December 31, 2017 $1,162,689 168,146 2016 $ 1,118,768 156,084 15.1% 14.5% 14.0% $1,225,407 $ 596,468 $1,234,698 $ 585,556 $1,173,563 $ 504,482 Percent Changes 2018 vs 2017 4% 9% 60bps (1%) 2% 2017 vs 2016 4% 8% 50bps 5% 16% Components of sales and operating income growth (decrease): Organic Acquisitions Foreign currency Total 2018 vs 2017 2017 vs 2016 Sales 3% —% 1% 4% Operating Income 7% —% 2% 9% Sales 4% —% —% 4% Operating Income 7% —% 1% 8% Year ended December 31, 2018 compared to year ended December 31, 2017 Sales increased $46 million, or 4%, to $1,209 million, from the comparable prior year period. In the general industrial market, we experienced higher sales of $25 million, primarily due to increased demand for our industrial vehicle, industrial controls, and industrial valve products. Sales in the naval defense market increased $9 million, primarily due to higher valve production on the CVN-80 aircraft carrier 26 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 27 OPERATOR ALFREDOB program. Aerospace defense sales increased $6 million, primarily due to higher sales of actuation systems on fighter jets. Sales in the commercial aerospace market increased as higher sales of surface treatment services and sensors and controls products were partially offset by the timing of FAA directive revenues. Favorable foreign currency translation benefited sales $9 million. Operating income increased $15 million, or 9%, to $183 million, and operating margin increased 60 basis points to 15.1%. The increases in operating income and operating margin were primarily due to higher sales volumes and favorable overhead absorption for industrial vehicle and industrial valve products as well as the benefits of our ongoing margin improvement initiatives. New orders decreased $9 million as compared to the prior year, as higher demand for aerospace defense products and surface treatment services of $26 million and $18 million, respectively, was more than offset by the timing of commercial aerospace and naval defense orders of $33 million and $20 million, respectively. Year ended December 31, 2017 compared to year ended December 31, 2016 Sales increased $44 million, or 4%, to $1,163 million, from the comparable prior year period. In the general industrial market, we experienced higher sales of $50 million, primarily due to increased demand for our industrial vehicle products. The commercial aerospace market benefited from higher sales of surface treatment services and actuation system products. These increases were partially offset by lower sales of $15 million in the naval defense market, primarily due to the timing of production on the Virginia-class submarine program. Operating income increased $12 million, or 8%, to $168 million, and operating margin increased 50 basis points to 14.5%. The increases in operating income and operating margin were primarily driven by ongoing margin improvement initiatives and higher sales volumes of our industrial vehicle products and surface treatment services. New orders increased $61 million as compared to the prior year, primarily due to growth in our industrial vehicle products of $56 million and higher demand of $30 million for both our actuation and sensors and controls products to the aerospace defense and naval defense markets. This increase was partially offset by a decline in naval valve new orders of $37 million due to the timing of funding. Defense Sales in the Defense segment are primarily to the defense markets and, to a lesser extent, the commercial aerospace and the general industrial markets. The following tables summarize sales, operating income and margin, and new orders, within the Defense segment. (In thousands, except percentages) Sales Operating income Operating margin New orders Backlog 2018 $554,374 128,446 Year Ended December 31, 2017 $555,479 109,338 2016 $466,654 98,182 23.2% 19.7% 21.0% $553,384 $522,994 $569,360 $547,273 $445,230 $499,993 Percent Changes 2018 vs. 2017 —% 17% 350bps (3%) (4%) 2017 vs. 2016 19% 11% (130bps) 28% 9% Components of sales and operating income growth (decrease): Organic Acquisitions Foreign currency Total 2018 vs. 2017 2017 vs. 2016 Sales (1%) —% 1% —% Operating Income 17% —% —% 17% Sales 5% 14% —% 19% Operating Income 4% 8% (1%) 11% 27 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 28 OPERATOR ALFREDOB Year ended December 31, 2018 compared to year ended December 31, 2017 Sales decreased $1 million, or less than 1%, to $554 million, from the comparable prior year period, as higher sales in the aerospace defense market were more than offset by declines in the naval defense market. In the aerospace defense market, we experienced higher demand for embedded computing products and data acquisition and flight test equipment on fighter jet programs, partially offset by lower sales of embedded computing products supporting various UAV programs. Sales in the naval defense market decreased primarily due to lower submarine sales, while sales in the ground defense and commercial aerospace markets were essentially flat. Operating income increased $19 million, or 17%, to $128 million, compared with the same period in 2017, while operating margin increased 350 basis points to 23.2%. The increases in operating income and operating margin were primarily due to improved profitability as we moved beyond first year purchase accounting costs from our TTC acquisition, favorable contract adjustments within our naval defense business, and the benefits of our ongoing margin improvement initiatives. New orders decreased $16 million as compared to the prior year, primarily due to the timing of naval defense orders. Year ended December 31, 2017 compared to year ended December 31, 2016 Sales increased $89 million, or 19%, to $555 million, from the comparable prior year period, primarily due to the incremental impact of our TTC acquisition, which contributed $65 million in sales. Excluding the impact of TTC, sales to the aerospace defense, ground defense, and naval defense markets increased $9 million, $6 million, and $9 million, respectively, while sales to the commercial aerospace market were essentially flat. The increase in sales to the aerospace defense market was primarily due to increased UAV production and higher foreign military sales, partially offset by declines in helicopter production. The ground defense market benefited primarily from higher TDSS demand on international ground defense platforms. Sales to the naval defense market increased primarily due to higher submarine production. Operating income increased $11 million, or 11%, to $109 million, compared with the same period in 2016, while operating margin decreased 130 basis points to 19.7%. The increase in operating income was driven primarily by the incremental impact of our TTC acquisition, which contributed operating income of $7 million. Operating income also benefited from improved profitability in our avionics business, higher sales volumes in our defense electronics business, and ongoing margin improvement initiatives. Both operating income and operating margin were negatively impacted by first year purchase accounting costs from our TTC acquisition and an unfavorable shift in mix within our defense electronic products. New orders increased $124 million as compared to the prior year, primarily due to the acquisition of TTC, which contributed $70 million in new orders. New orders also benefited from higher demand for our defense electronics products and naval defense products of $18 million and $13 million, respectively. Power Sales in the Power segment are primarily to the power generation and naval defense markets. The following tables summarize sales, operating income and margin, and new orders, within the Power segment. Year Ended December 31, Percent Changes (In thousands, except percentages) Sales Operating income Operating margin New orders Backlog 2018 $648,283 98,858 2017 $552,858 81,119 2016 $523,509 74,360 15.2% 14.7% 14.2% $647,891 $912,989 $486,097 $878,263 $530,398 $946,275 2018 vs. 2017 17% 22% 50bps 33% 4% 2017 vs. 2016 6% 9% 50bps (8%) (7%) 28 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 29 OPERATOR ALFREDOB Components of sales and operating income growth (decrease): Organic Acquisitions Foreign currency Total 2018 vs. 2017 2017 vs. 2016 Sales 6% 11% —% 17% Operating Income 21% 1% —% 22% Sales 6% —% —% 6% Operating Income 9% —% —% 9% Year ended December 31, 2018 compared to year ended December 31, 2017 Sales increased $95 million, or 17%, to $648 million, from the comparable prior year period, primarily due to the incremental impact from our DRG acquisition which contributed $64 million in sales. Excluding the impact of DRG, sales in the naval defense market increased $18 million primarily due to higher pump production on the CVN-80 aircraft carrier program. Within the power generation market, sales increased as higher revenues on the AP1000 China Direct program were partially offset by lower sales on the AP1000 U.S. program. Sales in the general industrial market increased $13 million, primarily due to higher sales supporting the subsea oil and gas market. Operating income increased $18 million, or 22%, to $99 million and operating margin increased 50 basis points to 15.2%. The increases in operating income and operating margin were primarily due to higher profitability on the AP1000 China Direct program and the benefits of our ongoing margin improvement initiatives. Both operating income and operating margin were negatively impacted by first year purchase accounting costs from our DRG acquisition. New orders increased $162 million as compared to the prior year, primarily due to the acquisition of DRG, which contributed $121 million in new orders. Excluding the impact of DRG, new orders increased $49 million in the naval defense market due to the timing of customer funding. These increases were partially offset by the lower commercial orders in the power generation market. Year ended December 31, 2017 compared to year ended December 31, 2016 Sales increased $29 million, or 6%, to $553 million, from the comparable prior year period, primarily due to higher production revenues of $52 million on the AP1000 China Direct program. This increase was partially offset by lower aftermarket sales of $20 million supporting domestic nuclear operating reactors and lower total production revenues of $13 million on the AP1000 U.S. and China programs. Within the naval defense market, sales increased $12 million primarily due to higher production levels on CVN-80 pumps and increased development on the Columbia class submarine program. Operating income increased $7 million, or 9%, to $81 million and operating margin increased 50 basis points to 14.7%. The increases in operating income and operating margin were primarily driven by higher production levels on the AP1000 China Direct program and the benefits of our ongoing margin improvement initiatives. New orders decreased $44 million as compared to the prior year, as new orders to the commercial and defense markets decreased $34 million and $10 million, respectively. These decreases were primarily due to the timing of commercial orders received as well as the timing of customer funding. SUPPLEMENTARY INFORMATION The table below depicts sales by end market. End market sales help provide an enhanced understanding of our businesses and the markets in which we operate. The table has been included to supplement the discussion of our consolidated operating results. 29 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 30 OPERATOR ALFREDOB Net Sales by End Market (In thousands, except percentages) Defense markets: Aerospace Ground Naval Total Defense Commercial markets: Aerospace Power Generation General Industrial Total Commercial Total Curtiss-Wright Year Ended December 31, 2017 2018 2016 2018 vs. 2017 2017 vs. 2016 Percent changes $ 376,951 97,131 486,476 $ 960,558 $ 414,422 431,793 605,062 $1,451,277 $ 2,411,835 $ 372,678 96,042 408,221 $ 876,941 $ 409,384 423,747 560,954 $1,394,085 $2,271,026 $ 303,430 86,139 403,343 $ 792,912 $ 397,327 409,201 509,491 $1,316,019 $2,108,931 1% 1% 19% 10% 1% 2% 8% 4% 6% 23% 11% 1% 11% 3% 4% 10% 6% 8% Year ended December 31, 2018 compared to year ended December 31, 2017 Defense sales increased $84 million, or 10%, to $961 million, as compared to the prior year period, primarily due to higher sales in the naval and aerospace defense markets. Higher sales in the naval defense market were primarily due to the incremental impact from our DRG acquisition, which contributed $58 million in sales. Excluding the impact of DRG, naval defense sales also benefited from higher aircraft carrier program revenues of $22 million, partially offset by lower Columbia class submarine development revenues. The sales increase in the aerospace defense market was primarily due to higher demand for embedded computing products and data acquisition and flight test equipment on fighter jet programs, partially offset by lower sales of embedded computing products supporting various UAV programs. Commercial sales increased $57 million, or 4%, to $1,451 million, as compared to the prior year period, primarily due to higher demand for our industrial vehicle, industrial controls, and industrial valve products in the general industrial market. Within the power generation market, higher revenues of $23 million on the AP1000 China Direct program and higher aftermarket sales of $12 million supporting international nuclear operating reactors were partially offset by lower production revenues of $22 million on the AP1000 U.S. program. Year ended December 31, 2017 compared to year ended December 31, 2016 Defense sales increased $84 million, or 11%, to $877 million, as compared to the prior year period, primarily due to higher sales in the aerospace defense and ground defense markets. The sales increase in the aerospace defense market was primarily due to the incremental impact of our TTC acquisition, which contributed $54 million of sales. The aerospace defense market also benefited from increased demand of $7 million for UAVs and higher production of $8 million on the F-16 program, partially offset by declines in helicopter sales of $5 million. Sales in the ground defense market increased primarily due to higher demand of $8 million for our TDSS products on international ground defense platforms. Commercial sales increased $78 million, or 6%, to $1,394 million, as compared to the prior year period, due to higher sales across all markets. In the commercial aerospace market, our TTC acquisition contributed $8 million of incremental sales. Sales also benefited from increased demand for both our actuation and sensors and controls products. Within the power generation market, we generated higher production revenues of $52 million on the AP1000 China Direct program, partially offset by lower aftermarket sales of $25 million supporting domestic nuclear operating reactors and lower total production revenues of $13 million on the AP1000 U.S. and China programs. In the general industrial market, we experienced higher demand for our industrial vehicle products which resulted in a sales increase of $52 million. 30 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 31 OPERATOR ALFREDOB Liquidity and Capital Resources Sources and Uses of Cash We derive the majority of our operating cash inflow from receipts on the sale of goods and services and cash outflow for the procurement of materials and labor; cash flow is therefore subject to market fluctuations and conditions. Most of our long-term contracts allow for several billing points (progress or milestone) that provide us with cash receipts as costs are incurred throughout the project rather than upon contract completion, thereby reducing working capital requirements. Consolidated Statement of Cash Flows (In thousands) Net cash provided by (used in): Operating activities Investing activities Financing activities Effect of exchange rates Net increase (decrease) in cash and cash equivalents 2018 December 31, 2017 2016 $ 336,273 (255,516) (263,639) (16,172) $(199,054) $388,712 (272,328) (213,898) 18,786 $ (78,728) $423,197 (42,934) (96,141) (18,971) $265,151 Year ended December 31, 2018 compared to year ended December 31, 2017 Operating Activities Cash provided by operating activities decreased $52 million to $336 million during the year ended December 31, 2018, as compared to the prior year period. The decrease in cash provided by operating activities was primarily due to a voluntary pension contribution of $50 million during the current period. Investing Activities Capital Expenditures Our capital expenditures were $53 million for both 2018 and 2017. For 2019, we anticipate capital expenditures of approximately $75 million to $85 million. Divestitures No material divestitures took place during 2018 or 2017. Acquisitions In 2018, we acquired one business for a total purchase price of $210 million. In 2017, we acquired two businesses for a total purchase price of $233 million. Future acquisitions will depend, in part, on the availability of financial resources at a cost of capital that meet our stringent criteria. As such, future acquisitions, if any, may be funded through the use of our cash and cash equivalents, through additional financing available under the credit agreement, or through new financing alternatives. Financing Activities Debt Issuances There were no debt issuances in 2018 or 2017. In 2018, we made a discretionary $50 million prepayment on our 2013 Notes. In 2017, we fully repaid the $150 million 2005 Senior Notes that had matured. 31 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 32 OPERATOR ALFREDOB Revolving Credit Agreement As of December 31, 2018, the Corporation had no borrowings outstanding under the Revolving Credit Agreement (the Credit Agreement or credit facility) and $22 million in letters of credit supported by the credit facility. The unused credit available under the Credit Agreement as of December 31, 2018 was $478 million, which could be borrowed in full without violating any of our debt covenants. Repurchase of Common Stock During 2018, the Company repurchased approximately 1,700,000 shares of its common stock for $199 million. In 2017, the Company repurchased approximately 526,000 shares of its common stock for $52 million. Dividends During 2018 and 2017, the Company made dividend payments of approximately $26 million and $25 million, respectively. Year ended December 31, 2017 compared to year ended December 31, 2016 Operating Activities Cash provided by operating activities decreased $34 million to $389 million during the year ended December 31, 2017, as compared to the prior year period. The decrease in cash provided by operating activities was primarily due to prior year collections related to the AP1000 China Direct program of $102 million and a one-time $20 million benefit in the prior year as a result of the interest rate swap termination. This was partially offset by the timing of advanced collections of $48 million and higher cash earnings of $36 million during the current period. Investing Activities Capital Expenditures Our capital expenditures were $53 million in 2017 as compared to $47 million in 2016. This increase was primarily due to increased capital investment in our Defense and Power segments. Divestitures No material divestitures took place during 2017 or 2016. Acquisitions In 2017, we acquired two businesses for a total purchase price of $233 million. No material acquisitions took place in 2016. Financing Activities Debt Issuances There were no debt issuances in 2017 or 2016. In 2017, we fully repaid the $150 million 2005 Senior Notes that had matured. No principal payments on outstanding notes took place in 2016. Revolving Credit Agreement As of December 31, 2017, the Corporation had no borrowings outstanding under the Credit Agreement and $21 million in letters of credit supported by the credit facility. The unused credit available under the Credit Agreement as of December 31, 2017 was $479 million, which could be borrowed in full without violating any of our debt covenants. 32 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 33 OPERATOR ALFREDOB Repurchase of Common Stock During 2017, the Company repurchased approximately 526,000 shares of its common stock for $52 million. In 2016, the Company repurchased approximately 1,300,000 shares of its common stock for $105 million. Dividends During 2017 and 2016, the Company made dividend payments of approximately $25 million and $23 million, respectively. Capital Resources Cash in Foreign Jurisdictions Cash and cash equivalents as of December 31, 2018 and December 31, 2017 were $276 million and $475 million, respectively, of which $148 million and $293 million were held by foreign subsidiaries, respectively. As of December 31, 2018, our European, Canadian, and British subsidiaries held a substantial portion of the Company’s cash and cash equivalents, totaling approximately $44 million, $36 million, and $30 million, respectively, As of December 31, 2017, our British subsidiaries held a substantial portion of the Company’s cash and cash equivalents, totaling approximately $122 million. The decrease in cash held by U.S. subsidiaries during 2018 as compared to 2017 was primarily due to the acquisition of DRG as well as a voluntary pension contribution during the current period. The decrease in cash held by foreign subsidiaries during 2018 as compared to 2017 was primarily due to cash repatriation of $226 million. There are no legal or economic restrictions on the ability of any of our subsidiaries to transfer funds, absent certain regulatory approvals in China, where approximately $22 million of our foreign cash resides. Refer to Note 12 to the Consolidated Financial Statements for impacts on our foreign undistributed earnings due to the Tax Act. Cash Utilization Management continually evaluates cash utilization alternatives, including share repurchases, acquisitions, and increased dividends to determine the most beneficial use of available capital resources. We believe that our cash and cash equivalents, cash flow from operations, available borrowings under the credit facility, and ability to raise additional capital through the credit markets are sufficient to meet both the short-term and long-term capital needs of the organization, including the return of capital to shareholders through dividends and share repurchases and growing our business through acquisitions. Debt Compliance As of December 31, 2018, we were in compliance with all debt agreements and credit facility covenants, including our most restrictive covenant, which is our debt to capitalization ratio limit of 60%. As of December 31, 2018, we had the ability to incur total additional indebtedness of $1.4 billion without violating our debt to capitalization covenant. Future Commitments Cash generated from operations should be adequate to meet our planned capital expenditures of approximately $75 million to $85 million and expected dividend payments of approximately $26 million in 2019. There can be no assurance, however, that we will continue to generate cash from operations at the current level, or that these projections will remain constant throughout 2019. If cash generated from operations is not sufficient to support these operating requirements and investing activities, we may be required to reduce capital expenditures, borrow from our existing credit line, refinance a portion of our existing debt, or obtain additional financing. While all companies are subject to economic risk, we believe that our cash and cash equivalents, cash flow from operations, and available borrowings are sufficient to meet both the short-term and long-term capital needs of the organization. In February 2018, we made a discretionary pension contribution of $50 million to the Curtiss-Wright Pension Plan. For more information on our pension and other postretirement benefits plans, see Note 16 to the Consolidated Financial Statements. 33 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 34 OPERATOR ALFREDOB The following table quantifies our significant future contractual obligations and commercial commitments as of December 31, 2018: (In thousands) Debt Principal Repayments Interest Payments on Fixed Rate Debt Operating Leases Tax Act - Transition Tax Payments(1) Build-to-suit Lease Total Total $ 750,243 2019 2020 2021 2022 2023 $ 243 $ — $100,000 $ — $202,500 Thereafter $447,500 198,531 216,325 29,710 29,562 29,710 28,514 29,465 24,501 25,870 19,996 23,248 19,778 60,528 93,974 8,992 15,773 $1,189,864 — 1,309 $60,824 — 1,342 $59,566 — 1,375 $155,341 — 1,410 $47,276 — 1,445 $246,971 8,992 8,892 $619,886 (1) Refer to Note 12 to the Consolidated Financial Statements for more information. We do not have material purchase obligations. Most of our raw material purchase commitments are made directly pursuant to specific contract requirements. We enter into standby letters of credit agreements and guarantees with financial institutions and customers primarily relating to future performance on certain contracts to provide products and services and to secure advance payments we have received from certain international customers. As of December 31, 2018, we had contingent liabilities on outstanding letters of credit due as follows: (In thousands) Letters of Credit Total $21,727 2019 $11,383 2020 $7,276 2021 $1,273 2022 $551 2023 $286 Thereafter(1) $958 (1) Amounts indicated as Thereafter are letters of credit that expire during the revolving credit agreement term but will automatically renew on the date of expiration. In addition, amounts exclude bank guarantees of approximately $11.7 million. Critical Accounting Estimates and Policies Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates and assumptions are affected by the application of our accounting policies. Critical accounting policies are those that require application of management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain and may change in subsequent periods. We believe that the following are some of the more critical judgment areas in the application of our accounting policies that affect our financial condition and results of operations: Revenue Recognition We account for revenues in accordance with ASC 606, Revenue from Contracts with Customers, which was adopted as of January 1, 2018 on a modified retrospective basis. Under ASC 606, revenue is recognized when control of a promised good and/or service is transferred to a customer at a transaction price that reflects the consideration that we expect to be entitled to in exchange for that good and/or service. The unit of account is a performance obligation whereby a contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when the respective performance obligation is satisfied. In certain instances, the transaction price may include estimated amounts of variable consideration including but not limited to incentives, awards, price escalations, liquidated damages, and penalties, only to the extent that it is probable that a significant reversal of cumulative revenue recognized to date around such variable consideration will not occur. We estimate variable consideration to be included in the transaction price using either the expected value method or most likely amount method, contingent upon the facts and circumstances of the specific arrangement. Variable consideration associated with our respective arrangements is not typically constrained. 34 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 35 OPERATOR ALFREDOB Performance obligations are satisfied either at a point-in-time or on an over-time basis. Contracts that qualify for over-time revenue recognition are generally associated with the design, development, and manufacture of highly engineered industrial products used in commercial and defense applications and generally span between 2-5 years in duration. Revenue recognized on an over-time basis for the year ended December 31, 2018 accounted for approximately 46% of total net sales. Typically, over-time revenue recognition is based on the utilization of an input measure used to measure progress, such as costs incurred to date relative to total estimated costs. Application of an over-time revenue recognition method requires the use of reasonable and dependable estimates of future material, labor, and overhead costs that will be incurred as well as a disciplined cost estimating system in which all functions of the business are integrally involved. These estimates are determined based on industry knowledge and experience of our engineers, project managers, and financial staff. Changes in total estimated costs are recognized using the cumulative catch-up method of accounting which recognizes the cumulative effect of the changes on current and prior periods in the current period. During the twelve months ended December 31, 2018, 2017, and 2016, there were no significant changes in estimated contract costs. If a performance obligation does not qualify for over-time revenue recognition, revenue is then recognized at the point-in-time in which control of the distinct good or service is transferred to the customer, typically based upon the terms of delivery. Revenue recognized at a point-in-time for the year ended December 31, 2018 accounted for approximately 54% of total net sales. Timing of revenue recognition and cash collection may result in billed receivables, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on the Consolidated Balance Sheet. Contract assets primarily relate to our right to consideration for work completed but not billed as of the reporting date. Contract assets are transferred to billed receivables when the rights to consideration become unconditional. Contract liabilities primarily consist of customer advances received prior to revenue being earned. Contract assets and contract liabilities are reported in the “Receivables, net” and “Deferred revenue” lines, respectively, within the Consolidated Balance Sheet. As we adopted ASC 606 using a modified retrospective method, our Consolidated Financial Statements for the years ended December 31, 2017 and 2016 were not retrospectively adjusted. For the years ended December 31, 2017 and 2016, revenue was recognized when the earnings process was considered substantially complete with all of the following criteria met: 1) persuasive evidence of an arrangement existed; 2) delivery occurred or services were rendered; 3) our price to the customer was fixed or determinable; and 4) collectability was reasonably assured. We determined the appropriate revenue recognition method by analyzing the terms and conditions of each contract. Revenue was recognized on product sales as production units were shipped and title and risk of loss was transferred. Revenue was recognized on service-type contracts as services were rendered. The significant estimates made in recognizing revenue were primarily for long-term contracts, which were generally accounted for using the cost-to-cost method of percentage of completion accounting. Under the cost-to-cost percentage of completion accounting, profits were recorded pro-rata, based upon estimates of direct and indirect costs to complete such contracts. Any changes in estimates of contract sales, costs, or profits were recognized using the cumulative catch-up method of accounting. Inventory Inventory costs include materials, direct labor, purchasing, and manufacturing overhead costs, which are stated at the lower of cost or market, where market is limited to the net realizable value. We estimate the net realizable value of our inventories and establish reserves to reduce the carrying amount of these inventories to net realizable value, as necessary. We continually evaluate the adequacy of the inventory reserves by reviewing historical scrap rates, on-hand quantities as compared with historical and projected usage levels, and other anticipated contractual requirements. We generally hold reserved inventory for extended periods before scrapping and disposing of the reserved inventory, which contributes to a higher level of reserved inventory relative to the level of annual inventory write-offs. We purchase materials for the manufacture of components for sale. The decision to purchase a set quantity of a particular item is influenced by several factors including: current and projected price, future estimated availability, existing and projected contracts to produce certain items, and the estimated needs for our businesses. 35 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 36 OPERATOR ALFREDOB Pension and Other Postretirement Benefits In consultation with our actuaries, we determine the appropriate assumptions for use in determining the liability for future pension and other postretirement benefits. The most significant of these assumptions include the discount rates used to determine plan obligations, the expected return on plan assets, and the number of employees who will receive benefits, their tenure, their salary levels, and their projected mortality. Changes in these assumptions, if significant in future years, may have an effect on our pension and postretirement expense, associated pension and postretirement assets and liabilities, and our annual cash requirements to fund these plans. The discount rate used to determine the plan benefit obligations as of December 31, 2018, and the annual periodic costs for 2019, was increased from 3.63% to 4.28% for the Curtiss-Wright Pension Plan, and from 3.55% to 4.19% for the nonqualified benefit plan, to reflect current economic conditions. The rates reflect the hypothetical rates at which the projected benefit obligations could be effectively settled or paid out to participants on that date. We determine our discount rates for past service liabilities and service cost utilizing a select bond yield curve developed by our actuaries, by using the rates of return on high-quality, fixed-income corporate bonds available at the measurement date with maturities that match the plan’s expected cash outflows for benefit payments. Interest cost is determined by applying the spot rate from the full yield curve to each anticipated benefit payment. The discount rate changes contributed to a decrease in the benefit obligation of $55 million in the CW plans. The rate of compensation increase for base pay in the pension plans was unchanged at a weighted average of 3.5% based upon a graded scale of 4.9% to 2.9% that decrements as pay increases, which reflects the experience over past years and the Company’s expectation of future salary increases. We also utilized the RP-2014 mortality tables published by the Society of Actuaries, and updated the projected mortality scale to MP-2018, which reflects a slower rate of future mortality improvements than the previous MP-2017 table utilized. This change contributed to a decrease in the benefit obligation of $2 million in all U.S. plans. The overall expected return on assets assumption is based primarily on the expectations of future performance. Expected future performance is determined by weighting the expected returns for each asset class by the plan’s asset allocation. The expected returns are based on long-term capital market assumptions provided by our investment consultants. Based on a review of market trends, actual returns on plan assets, and other factors, the Company’s expected long-term rate of return on plan assets remained at 8.00% as of December 31, 2018, which will be utilized for determining 2019 pension cost. Expected long-term rates of return of 8.00%, 8.00%, and 8.25% were used for determining 2018, 2017 and 2016 pension expense, respectively. The timing and amount of future pension income or expense to be recognized each year is dependent on the demographics and expected compensation of the plan participants, the expected interest rates in effect in future years, inflation, and the actual and expected investment returns of the assets in the pension trust. The funded status of the Curtiss-Wright Pension Plan increased by $19 million in 2018, primarily driven by an increase in market interest rates as of December 31, 2018. This was partially offset by unfavorable asset experience due to weaker market performance in 2018. The following table reflects the impact of changes in selected assumptions used to determine the funded status of the Company’s U.S. qualified and nonqualified pension plans as of December 31, 2018 (in thousands, except for percentage point change): Assumption Discount rate Rate of compensation increase Expected return on assets Percentage Point Change (0.25)% 0.25% (0.25)% Increase in Benefit Obligation $21,000 $ 2,000 — Increase in Expense $2,500 $ 500 $1,700 See Note 16 to the Consolidated Financial Statements for further information on our pension and postretirement plans. 36 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 37 OPERATOR ALFREDOB Purchase Accounting We apply the purchase method of accounting to our acquisitions. Under this method, we allocate the cost of business acquisitions to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition, commonly referred to as the purchase price allocation. As part of the purchase price allocations for our business acquisitions, identifiable intangible assets are recognized as assets apart from goodwill if they arise from contractual or other legal rights, or if they are capable of being separated or divided from the acquired business and sold, transferred, licensed, rented, or exchanged. The purchase price is allocated to the underlying tangible and intangible assets acquired and liabilities assumed based on their respective fair market values, with any excess recorded as goodwill. We determine the fair values of such assets and liabilities, generally in consultation with third-party valuation advisors. Such fair value assessments require significant judgments and estimates such as projected cash flows, discount rates, royalty rates, and remaining useful lives that can differ materially from actual results. The analysis, while substantially complete, is finalized no later than twelve months from the date of acquisition. Goodwill We have $1.1 billion in goodwill as of December 31, 2018. Generally, the largest separately identifiable asset from the businesses that we acquire is the value of their assembled workforces, which includes the additional benefit received from management, administrative, marketing, business development, engineering, and technical employees of the acquired businesses. The success of our acquisitions, including the ability to retain existing business and to successfully compete for and win new business, is based on the additional benefit received from management, administrative, marketing, and business development, scientific, engineering, and technical skills and knowledge of our employees rather than on productive capital (plant and equipment, technology, and intellectual property). Therefore, since intangible assets for assembled workforces are part of goodwill, the substantial majority of the intangible assets for our acquired business acquisitions are recognized as goodwill. We test for goodwill impairment annually, at the reporting unit level, in the fourth quarter, which coincides with the preparation of our strategic operating plan. Additionally, goodwill is tested for impairment when an event occurs or if circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We perform either a quantitative or qualitative assessment to assess if the fair value of the respective reporting unit exceeds its carrying value. The qualitative goodwill impairment assessment requires evaluating factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. As part of our goodwill qualitative assessment process for each reporting unit, when utilized, we evaluate various factors that are specific to the reporting unit as well as industry and macroeconomic factors in order to determine whether it is reasonably likely to have a material impact on the fair value of our reporting units. Examples of the factors that are considered include the results of the most recent impairment test, current and long-range forecasts, and changes in the strategic outlook or organizational structure of the reporting units. The long-range financial forecasts of the reporting units are compared to the forecasts used in the prior year analysis to determine if management expectations for the business have changed. Actual results may differ from those estimates. When performing the quantitative assessment to calculate the fair value of a reporting unit, we consider both comparative market multiples as well as estimated discounted cash flows for the reporting unit. The significant estimates and assumptions include, but are not limited to, revenue growth rates, operating margins, and future economic and market conditions. The discount rates are based upon the reporting unit’s weighted average cost of capital. As a supplement, we conduct additional sensitivity analysis to assess the risk for potential impairment based upon changes in the key assumptions such as the discount rate, expected long-term growth rate, and cash flow projections. Based upon the completion of our annual test, which included qualitative assessments, we determined that there was no impairment of goodwill and that all reporting units’ estimated fair values were substantially in excess of their carrying amounts. 37 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 38 OPERATOR ALFREDOB Other Intangible Assets Other intangible assets are generally the result of acquisitions and consist primarily of purchased technology, customer related intangibles, and trademarks. Intangible assets are recorded at their fair values as determined through purchase accounting, based on estimates and judgments regarding expectations for the estimated future after-tax earnings and cash flows arising from follow-on sales. Definite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives, which generally range from 1 to 20 years. Customer-related intangibles primarily consist of customer relationships, which reflect the value of the benefit derived from the incremental revenue and related cash flows as a direct result of the customer relationship. We review the recoverability of all intangible assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount might not be recoverable. We would record any impairment in the reporting period in which it has been identified. Item 7A. Quantitative and Qualitative Disclosures about Market Risk. We are exposed to certain market risks from changes in interest rates and foreign currency exchange rates as a result of our global operating and financing activities. We seek to minimize any material risks from foreign currency exchange rate fluctuations through our normal operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. We used forward foreign currency contracts to manage our currency rate exposures during the year ended December 31, 2018, and, in order to manage our interest rate risk, we may, from time to time, enter into interest rate swaps to balance the ratio of fixed to floating rate debt. We do not use such instruments for trading or other speculative purposes. Information regarding our accounting policy on financial instruments is contained in Note 1 to the Consolidated Financial Statements. Interest Rates The market risk for a change in interest rates relates primarily to our debt obligations. Our fixed rate interest exposure was 100% as of December 31, 2018 and December 31, 2017. As of December 31, 2018, a change in interest rates of 1% would not have a material impact on consolidated interest expense. Information regarding our Senior Notes and Revolving Credit Agreement is contained in Note 13 to the Consolidated Financial Statements. Foreign Currency Exchange Rates Although the majority of our business is transacted in U.S. dollars, we do have market risk exposure to changes in foreign currency exchange rates, primarily as it relates to the value of the U.S. dollar versus the British Pound, Canadian dollar, and Euro. Any significant change against the U.S. dollar in the value of the currencies of those countries in which we do business could have an effect on our business, financial condition, and results of operations. If foreign exchange rates were to collectively weaken or strengthen against the U.S. dollar by 10%, net earnings would have decreased or increased, respectively, by approximately $7 million as it relates exclusively to foreign currency exchange rate exposures. Financial instruments expose us to counter-party credit risk for non-performance and to market risk for changes in interest and foreign currency rates. We manage exposure to counter-party credit risk through specific minimum credit standards, diversification of counter-parties, and procedures to monitor concentrations of credit risk. We monitor the impact of market risk on the fair value and cash flows of our investments by investing primarily in investment grade interest-bearing securities, which have short-term maturities. We attempt to minimize possible changes in interest and currency exchange rates to amounts that are not material to our consolidated results of operations and cash flows. 38 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 39 OPERATOR ALFREDOB Item 8. Financial Statements and Supplementary Data. CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share data) 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 Research and development expenses 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 Loss from discontinued operations, net of taxes Net earnings Basic earnings per share: Earnings from continuing operations Loss from discontinued operations Total Diluted earnings per share: Earnings from continuing operations Loss from discontinued operations Total Dividends per share Weighted average shares outstanding: Basic Diluted For the years ended December 31, 2018 2017 2016 $1,993,249 418,586 2,411,835 $1,854,216 416,810 2,271,026 $1,714,358 394,573 2,108,931 1,272,599 267,975 1,540,574 871,261 64,525 126,641 306,469 373,626 33,983 16,596 356,239 (80,490) 275,749 — $ 275,749 1,198,881 271,360 1,470,241 800,785 61,393 121,873 292,399 325,120 41,471 15,970 299,619 (84,728) 214,891 — $ 214,891 1,113,078 261,162 1,374,240 734,691 59,424 113,164 265,584 296,519 41,248 12,690 267,961 (78,579) 189,382 (2,053) $ 187,329 $ $ $ $ $ 6.28 — 6.28 6.22 — 6.22 0.60 $ $ $ $ $ 4.86 — 4.86 4.80 — 4.80 0.56 $ $ $ $ $ 4.27 (0.05) 4.22 4.20 (0.05) 4.15 0.52 43,892 44,316 44,182 44,761 44,389 45,045 See notes to consolidated financial statements 39 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 40 OPERATOR ALFREDOB CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Net earnings Other comprehensive income Foreign currency translation, net of tax(1) Pension and postretirement adjustments, net of tax(2) Other comprehensive income (loss), net of tax Comprehensive income For the years ended December 31, 2018 $275,749 2017 $214,891 2016 $187,329 (52,440) (19,167) (71,607) $204,142 77,942 (3,026) 74,916 $289,807 (64,840) (988) (65,828) $121,501 (1) The tax benefit (expense) included in other comprehensive income for foreign currency translation adjustments for 2018, 2017, and 2016 were $0.8 million, ($1.9) million, and $1.7 million, respectively. (2) The tax benefit (expense) included in other comprehensive income for pension and postretirement adjustments for 2018, 2017, and 2016 were $7.0 million, $2.8 million, and ($1.7) million, respectively. See notes to consolidated financial statements 40 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 41 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB CONSOLIDATED BALANCE SHEETS (In thousands, except share data) ASSETS Current assets: Cash and cash equivalents Receivables, net Inventories, net Other current assets Total current assets Property, plant, and equipment, net Goodwill Other intangible assets, net Other assets Total assets Current liabilities: 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 postretirement benefit costs Long-term portion of environmental reserves Other liabilities Total liabilities Contingencies and Commitments (Notes 13, 17 and 19) STOCKHOLDERS’ EQUITY Common stock, $1 par value, 100,000,000 shares authorized as of December 31, 2018 and December 31, 2017; 49,187,378 shares issued as of December 31, 2018 and December 31, 2017; outstanding shares were 42,772,417 as of December 31, 2018 and 44,123,519 as of December 31, 2017 Additional paid in capital Retained earnings Accumulated other comprehensive loss Common treasury stock, at cost (6,414,961 shares as of December 31, 2018 and 5,063,859 shares as of December 31, 2017) Total stockholders’ equity Total liabilities and stockholders’ equity See notes to consolidated financial statements As of December 31, 2018 2017 $ 276,066 593,755 423,426 50,719 1,343,966 374,660 1,088,032 429,567 19,160 $3,255,385 $ 243 232,983 166,954 5,811 236,508 44,829 687,328 762,313 47,121 101,227 15,777 110,838 1,724,604 $ 475,120 494,923 378,866 52,951 1,401,860 390,235 1,096,329 329,668 18,229 $3,236,321 $ 150 185,176 150,406 4,564 214,891 35,810 590,997 813,989 49,360 121,043 14,546 118,586 1,708,521 49,187 118,234 2,191,471 (288,447) 49,187 120,609 1,944,324 (216,840) (539,664) 1,530,781 $3,255,385 (369,480) 1,527,800 $3,236,321 41 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 42 OPERATOR ALFREDOB CONSOLIDATED STATEMENTS OF CASH FLOWS (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 sale of businesses (Gain) loss on fixed asset disposals Deferred income taxes Share-based compensation Changes in operating assets and liabilities, net of businesses acquired and disposed of: Receivables, net Inventories, net Progress payments Accounts payable and accrued expenses Deferred revenue Income taxes Net pension and postretirement liabilities Termination of interest rate swap Other liabilities Other Net cash provided by operating activities Cash flows from investing activities: Proceeds from sales and disposals of long-lived assets Proceeds from divestitures Acquisition of intangible assets Additions to property, plant, and equipment Acquisition of businesses, net of cash acquired Additional consideration paid on prior year acquisitions Net cash used for investing activities Cash flows from financing activities: Borrowings under revolving credit facilities Payment of revolving credit facilities Principal payments on debt Repurchases of company stock Proceeds from share-based compensation plans Dividends paid Other Excess tax benefits from share-based compensation Net cash used for financing activities Effect of exchange-rate changes on cash 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: For the years ended December 31, 2016 2018 2017 $ 275,749 $ 214,891 $ 187,329 102,949 (1,735) (1,120) 8,562 14,094 (57,492) (41,197) (11,121) 48,930 23,082 (8,847) (43,759) — 23,357 4,821 336,273 99,995 (875) 29 (5,782) 11,572 (16,388) 19,711 (774) 4,323 36,898 (5,479) 3,481 — 25,686 1,424 388,712 9,117 958 (1,547) (53,417) (210,167) (460) (255,516) 6,769 6,973 — (52,705) (232,630) (735) (272,328) 372,980 (372,887) (50,000) (198,592) 11,940 (26,328) (752) — (263,639) (16,172) (199,054) 475,120 7,658 (8,176) (150,000) (52,127) 14,179 (24,740) (692) — (213,898) 18,786 (78,728) 553,848 $ 276,066 $ 475,120 96,008 (845) (2,069) 1,224 9,478 91,692 4,391 2,583 4,125 (11,084) 11,797 3,405 20,405 11,474 (6,716) 423,197 3,674 1,027 — (46,776) (295) (564) (42,934) 7,839 (8,430) — (105,249) 22,300 (23,067) (635) 11,101 (96,141) (18,971) 265,151 288,697 $ 553,848 Capital expenditures incurred but not yet paid 2,193 976 2,512 See notes to consolidated financial statements 42 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 43 OPERATOR ALFREDOB CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) January 1, 2016 Net earnings Other comprehensive loss, net of tax Dividends paid Restricted stock Stock options exercised Other Share-based compensation Repurchase of common stock December 31, 2016 Net earnings Other comprehensive income, net of tax Dividends paid Restricted stock Stock options exercised Other Share-based compensation Repurchase of common stock December 31, 2017 Cumulative effect from adoption of ASC 606 Net earnings Other comprehensive loss, net of tax Dividends paid Restricted stock Stock options exercised Other Share-based compensation Repurchase of common stock December 31, 2018 Retained Earnings Common Stock — — — — — — — (12,086) — (11,271) (1,104) (3) 9,021 — — — Additional Paid in Capital $49,190 $144,923 $1,590,645 187,329 — (23,067) — — — — — $49,187 $129,483 $1,754,907 214,891 — (24,740) — — (734) — — $49,187 $120,609 $1,944,324 (2,274) 275,749 — (26,328) — — — — — $49,187 $ 118,234 $2,191,471 — — — — — — — — — (13,134) (2,355) — (752) — 13,866 — — — — — — — — — — (12,104) (5,724) — (2,237) — 11,191 — — — Accumulated Other Comprehensive Income (Loss) $(225,928) — (65,828) — — — — — — $(291,756) — 74,916 — — — — — — $(216,840) — — (71,607) — — — — — — $(288,447) Treasury Stock $(303,407) — — — 17,275 39,483 811 457 (105,249) $(350,630) — — — 12,105 19,902 889 381 (52,127) $(369,480) — — — — 13,134 14,294 752 228 (198,592) $(539,664) See notes to consolidated financial statements 43 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 44 OPERATOR ALFREDOB NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Curtiss-Wright Corporation and its subsidiaries (the Corporation or the Company) is a global, diversified manufacturing and service company that designs, manufactures, and overhauls precision components and provides highly engineered products and services to the aerospace, defense, general industrial, and power generation markets. Principles of Consolidation The consolidated financial statements include the accounts of the Corporation and its majority-owned subsidiaries. All intercompany transactions and accounts have been eliminated. Use of Estimates The financial statements of the Corporation have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP), which requires management to make estimates and judgments that affect the reported amount of assets, liabilities, revenue, and expenses and disclosure of contingent assets and liabilities in the accompanying financial statements. The most significant of these estimates includes the estimate of costs to complete long-term contracts, the estimate of useful lives for property, plant, and equipment, cash flow estimates used for testing the recoverability of assets, pension plan and postretirement obligation assumptions, estimates for inventory obsolescence, estimates for the valuation and useful lives of intangible assets and legal reserves. Actual results may differ from these estimates. Cash and Cash Equivalents Cash equivalents consist of money market funds and commercial paper that are readily convertible into cash, all with original maturity dates of three months or less. Inventory Inventories are stated at lower of cost or net realizable value. Production costs are comprised of direct material and labor and applicable manufacturing overhead. Progress Payments Certain long-term contracts provide for interim billings as costs are incurred on the respective contracts. Pursuant to contract provisions, agencies of the U.S. Government and other customers obtain control of promised goods or services to the extent that progress payments are received. Accordingly, these receipts have been reported as a reduction of unbilled receivables as presented in Note 5 to the Consolidated Financial Statements. In the event that progress payments received exceed revenue recognized to date on a specific contract, a contract liability has been established with such amount reported in the “Deferred revenue” line within the Consolidated Balance Sheet. The Corporation also receives progress payments on development contracts related to certain aerospace and defense programs. Progress payments received on partially funded development contracts have been reported as a reduction of inventories, as presented in Note 6 to the Consolidated Financial Statements. Property, Plant, and Equipment Property, plant, and equipment are carried at cost less accumulated depreciation. Major renewals and betterments are capitalized, while maintenance and repairs that do not improve or extend the life of the asset are expensed in the period that they are incurred. Depreciation is computed using the straight-line method based over the estimated useful lives of the respective assets. 44 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 45 OPERATOR ALFREDOB Average useful lives for property, plant, and equipment are as follows: Buildings and improvements Machinery, equipment, and other 5 to 40 years 3 to 15 years Intangible Assets Intangible assets are generally the result of acquisitions and consist primarily of purchased technology, customer related intangibles, trademarks, and technology licenses. Intangible assets are amortized on a straight-line basis over their estimated useful lives, which range from 1 to 20 years. See Note 9 to the Consolidated Financial Statements for further information on other intangible assets. Impairment of Long-Lived Assets The Corporation reviews the recoverability of all long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable. If required, the Corporation compares the estimated fair value determined by either the undiscounted future net cash flows or appraised value to the related asset’s carrying value to determine whether there has been an impairment. If an asset is considered impaired, the asset is written down to fair value in the period in which the impairment becomes known. The Corporation recognized no significant impairment charges on assets held in use during the years ended December 31, 2018, 2017, and 2016. Goodwill Goodwill results from business acquisitions. The Corporation accounts for business acquisitions by allocating the purchase price to the tangible and intangible assets acquired and liabilities assumed. Assets acquired and liabilities assumed are recorded at their fair values, and the excess of the purchase price over the amounts allocated is recorded as goodwill. The recoverability of goodwill is subject to an annual impairment test or whenever an event occurs or circumstances change that would more likely than not result in an impairment. The impairment test is based on the estimated fair value of the underlying businesses. The Corporation’s goodwill impairment test is performed annually in the fourth quarter of each year. See Note 8 to the Consolidated Financial Statements for further information on goodwill. Fair Value of Financial Instruments Accounting guidance requires certain disclosures regarding the fair value of financial instruments. Due to the short maturities of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, the net book value of these financial instruments is deemed to approximate fair value. See Notes 10 and 13 to the Consolidated Financial Statements for further information on the Corporation’s financial instruments. Research and Development The Corporation funds research and development programs for commercial products and independent research and development and bid and proposal work related to government contracts. Development costs include engineering and field support for new customer requirements. Corporation-sponsored research and development costs are expensed as incurred. Research and development costs associated with customer-sponsored programs are capitalized to inventory and are recorded in cost of sales when products are delivered or services performed. Funds received under shared development contracts are a reduction of the total development expenditures under the shared contract and are shown net as research and development costs. Accounting for Share-Based Payments The Corporation follows the fair value based method of accounting for share-based employee compensation, which requires the Corporation to expense all share-based employee compensation. Share-based employee compensation is a non-cash expense since the Corporation settles these obligations by issuing the shares of Curtiss-Wright Corporation instead of settling such obligations with cash payments. 45 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 46 OPERATOR ALFREDOB Compensation expense for non-qualified share options, performance shares, and time-based restricted stock is recognized over the requisite service period for the entire award based on the grant date fair value. Income Taxes The Corporation accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The effect on deferred tax assets and liabilities of a change in tax laws is recognized in the results of operations in the period the new laws are enacted. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that such assets will be realized. The Corporation records amounts related to uncertain income tax positions by 1) prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements and 2) the measurement of the income tax benefits recognized from such positions. The Corporation’s accounting policy is to classify uncertain income tax positions that are not expected to be resolved in one year as a non-current income tax liability and to classify interest and penalties as a component of Interest expense and General and administrative expenses, respectively. See Note 12 to the Consolidated Financial Statements for further information. Foreign Currency For operations outside the United States of America that prepare financial statements in currencies other than the U.S. dollar, the Corporation translates assets and liabilities at period-end exchange rates and income statement amounts using weighted-average exchange rates for the period. The cumulative effect of translation adjustments is presented as a component of accumulated other comprehensive income (loss) within stockholders’ equity. This balance is affected by foreign currency exchange rate fluctuations and by the acquisition of foreign entities. (Gains) and losses from foreign currency transactions are included in General and administrative expenses in the Consolidated Statement of Earnings, which amounted to ($4.5) million, $5.4 million, and ($8.9) million for the years ended December 31, 2018, 2017, and 2016, respectively. Derivatives Forward Foreign Exchange and Currency Option Contracts The Corporation uses financial instruments, such as forward exchange and currency option contracts, to hedge a portion of existing and anticipated foreign currency denominated transactions. The purpose of the Corporation’s foreign currency risk management program is to reduce volatility in earnings caused by exchange rate fluctuations. All of the derivative financial instruments are recorded at fair value based upon quoted market prices for comparable instruments, with the gain or loss on these transactions recorded into earnings in the period in which they occur. These (gains) and losses are classified as General and administrative expenses in the Consolidated Statement of Earnings and amounted to $6.6 million, ($0.3) million, and $11.5 million for the years ended December 31, 2018, 2017, and 2016, respectively. The Corporation does not use derivative financial instruments for trading or speculative purposes. Interest Rate Risks and Related Strategies The Corporation’s primary interest rate exposure results from changes in U.S. dollar interest rates. The Corporation’s policy is to manage interest cost using a mix of fixed and variable rate debt. The Corporation periodically uses interest rate swaps to manage such exposures. Under these interest rate swaps, the Corporation exchanges, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. For interest rate swaps designated as fair value hedges (i.e., hedges against the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), changes in the fair value of the interest rate swaps offset changes in the fair value of the fixed rate debt due to changes in market interest rates. 46 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 47 OPERATOR ALFREDOB Recently Issued Accounting Standards Recent accounting standards adopted ASU 2014-09 - Revenue from Contracts with Customers - On January 1, 2018, the Corporation adopted ASC 606, Revenue from Contracts with Customers, and the related amendments (“new revenue standard”) using the modified retrospective method. The Corporation recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the retained earnings balance as of January 1, 2018. Comparative information for prior periods has not been restated and continues to be reported under the accounting standard in effect for those respective periods. The cumulative effect from the adoption of the new revenue standard as of January 1, 2018 was as follows: Balance Sheet (In thousands) Receivables, net Inventories, net Other assets Deferred revenue Retained earnings As of December 31, 2017 $ 494,923 378,866 18,229 214,891 1,944,324 Adjustments due to ASU 2014-09 $ 18,363 (23,555) 878 (2,040) (2,274) As of January 1, 2018 $ 513,286 355,311 19,107 212,851 1,942,050 The impact of adoption on the Corporation’s Consolidated Statement of Earnings and Consolidated Balance Sheet was as follows: Statement of Earnings (In thousands) Product sales Cost of product sales Provision for income taxes Net earnings Balance Sheet (In thousands) Receivables, net Inventories, net Other assets Income taxes payable Deferred revenue Retained earnings Year Ended December 31, 2018 As Reported $1,993,249 1,272,599 (80,490) $ 275,749 Adjustments Increase/(Decrease) $(5,668) (383) 1,313 $(3,972) Balances Without Adoption of ASC 606 $1,987,581 1,272,216 (79,177) $ 271,777 As Reported $ 593,755 423,426 19,160 5,811 236,508 2,191,471 As of December 31, 2018 Adjustments Increase/(Decrease) $(22,378) 24,235 (879) (1,296) 3,972 (1,698) Balances Without Adoption of ASC 606 $ 571,377 447,661 18,281 4,515 240,480 2,189,773 ASU 2017-07, Retirement Benefits - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost - On January 1, 2018, the Corporation adopted the amendments to ASC 715 that improve the presentation of net periodic pension and postretirement benefit costs. The Corporation retrospectively adopted the presentation of service cost separate from the other components of net periodic costs and included it as a component of employee compensation cost in operating income. The interest cost, expected return on assets, amortization of prior service costs, and net actuarial gain/ loss components of net periodic benefit costs have been reclassified from operating income to other income, net. Additionally, the Corporation elected to apply the practical expedient which allows it to reclassify amounts previously disclosed in Note 15 of the Corporation’s 2017 Annual Report on Form 10-K as the basis for applying retrospective presentation for comparative periods. 47 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 48 OPERATOR ALFREDOB The effect of the retrospective change on the Corporation’s Consolidated Statement of Earnings for the year ended December 31, 2017 and 2016 was as follows: Statement of Earnings (In thousands) Cost of product sales Cost of service sales Research and development expenses Selling expenses General and administrative expenses Other income, net Statement of Earnings (In thousands) Cost of product sales Cost of service sales Research and development expenses Selling expenses General and administrative expenses Other income, net Previously Reported $1,184,358 268,073 60,308 120,002 298,542 1,347 Year Ended December 31, 2017 Adjustments Increase/(Decrease) $14,523 3,287 1,085 1,871 (6,143) 14,623 As Revised $1,198,881 271,360 61,393 121,873 292,399 15,970 Previously Reported $1,100,287 258,161 58,592 111,228 272,565 1,111 Year Ended December 31, 2016 Adjustments Increase/(Decrease) $12,791 3,001 832 1,936 (6,981) 11,579 As Revised $ 1,113,078 261,162 59,424 113,164 265,584 12,690 ASU 2017-01, Business Combinations - Clarifying the Definition of a Business. On January 1, 2018, the Corporation adopted the amendments to ASC 805 which clarifies the definition of a business. The standard introduces a screen for determining when assets acquired are not a business and clarifies that a business must include, at a minimum, an input and a substantive process that contribute to an output. The adoption of this standard did not have a financial impact on the Consolidated Financial Statements. 48 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 49 OPERATOR ALFREDOB Recent accounting standards to be adopted Standard ASU 2016-02 Leases Description In February 2016, the FASB issued final guidance that will require lessees to record both right-of-use assets and lease liabilities for most leases on their balance sheets but recognize expenses on their income statements in a manner similar to today’s accounting. Date of adoption: January 1, 2019 ASU 2018-02 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income Date of adoption: January 1, 2019 In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU permits the reclassification of tax effects stranded in accumulated other comprehensive income to retained earnings as a result of the 2017 Tax Cuts and Jobs Act. The standard will be effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. 49 Effect on the consolidated financial statements The Corporation will apply the optional transition method of adoption as of January 1, 2019, which permits the entity to continue presenting all periods prior to January 1, 2019 under previous lease accounting guidance. In conjunction with adoption, the Corporation plans to elect the package of practical expedients which permits the entity to forgo reassessment of conclusions reached regarding lease existence and lease classification under previous guidance, as well as the practical expedient to not separate non-lease components. Further, the Corporation will make an accounting policy election to account for short-term leases in a manner consistent with the methodology applied under previous guidance. The adoption of this standard is expected to result in an increase of approximately $175 million to $185 million in total assets and total liabilities in the Corporation’s Consolidated Balance Sheet as of January 1, 2019. However, the standard is not expected to have a material impact on the Corporation’s cash flows or statement of earnings. The adoption is expected to result in a reclassification of approximately $25 million from accumulated other comprehensive loss to retained earnings in the Corporation’s Consolidated Balance Sheet as of January 1, 2019. <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 50 OPERATOR ALFREDOB Effect on the consolidated financial statements The Corporation does not expect the adoption of this standard to have a material impact on its Consolidated Financial Statements. Description In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting. The ASU simplifies the accounting for share- based payments to nonemployees by aligning it with the accounting for share- based payments to employees, with certain exceptions. The standard will be effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. Standard ASU 2018-07 Improvements to Nonemployee Share- Based Payment Accounting Date of adoption: January 1, 2019 2. REVENUE The Corporation accounts for revenues in accordance with ASC 606, Revenue from Contracts with Customers, which was adopted as of January 1, 2018 on a modified retrospective basis. Under ASC 606, revenue is recognized when control of a promised good and/or service is transferred to a customer at a transaction price that reflects the consideration that the Corporation expects to be entitled to in exchange for that good and/or service. Performance Obligations The Corporation identifies a performance obligation for each promise in a contract to transfer a distinct good or service to the customer. As part of its assessment, the Corporation considers all goods and/or services promised in the contract, regardless of whether they are explicitly stated or implied by customary business practices. The Corporation’s contracts may contain either a single performance obligation, including the promise to transfer individual goods or services that are not separately distinct within the context of the respective contracts, or multiple performance obligations. For contracts with multiple performance obligations, the Corporation allocates the overall transaction price to each performance obligation using standalone selling prices, where available, or utilizes estimates for each distinct good or service in the contract where standalone prices are not available. In certain instances, the transaction price may include estimated amounts of variable consideration including but not limited to incentives, awards, price escalations, liquidated damages, and penalties, only to the extent that it is probable that a significant reversal of cumulative revenue recognized to date around such variable consideration will not occur. The Corporation estimates variable consideration to be included in the transaction price using either the expected value method or most likely amount method, contingent upon the facts and circumstances of the specific arrangement. Variable consideration associated with the Corporation’s respective arrangements is not typically constrained. The Corporation’s performance obligations are satisfied either at a point-in-time or on an over-time basis. Revenue recognized on an over-time basis for the year ended December 31, 2018 accounted for approximately 46% of total net sales. Typically, over-time revenue recognition is based on the utilization of an input measure used to measure progress, such as costs incurred to date relative to total estimated costs. Changes in total estimated costs are recognized using the cumulative catch-up method of accounting which recognizes the cumulative effect of the changes on current and prior periods in the current period. Accordingly, the effect of the changes on future periods of contract performance is recognized as if the revised estimate had been the original estimate. A significant change in an estimate on more or more contracts could have a material effect on the Corporation’s consolidated financial position, results or operations, or cash flows. However, there were no significant changes in estimated contract costs during 2018, 2017, or 2016. 50 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 51 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB If a performance obligation does not qualify for over-time revenue recognition, revenue is then recognized at the point-in-time in which control of the distinct good or service is transferred to the customer, typically based upon the terms of delivery. Revenue recognized at a point-in-time for the year ended December 31, 2018 accounted for approximately 54% of total net sales. Contract backlog represents the remaining performance obligations that have not yet been recognized as revenue. Backlog includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Total backlog was approximately $2.0 billion as of December 31, 2018, of which the Corporation expects to recognize approximately 94% as net sales over the next 12 -36 months. The remainder will be recognized thereafter. Disaggregation of Revenue The following table presents the Corporation’s total net sales disaggregated by end market and customer type: Total Net Sales by End Market and Customer Type (In thousands) Year Ended December 31, 2018 2017 2016 Defense Aerospace Ground Naval Total Defense Customers Commercial Aerospace Power Generation General Industrial Total Commercial Customers Total Contract Balances $ 376,951 97,131 486,476 $ 960,558 $ 372,678 96,042 408,221 $ 876,941 $ 303,430 86,139 403,343 $ 792,912 $ 414,422 431,793 605,062 $1,451,277 $ 2,411,835 $ 409,384 423,747 560,954 $1,394,085 $2,271,026 $ 397,327 409,201 509,491 $1,316,019 $2,108,931 Timing of revenue recognition and cash collection may result in billed receivables, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on the Consolidated Balance Sheet. The Corporation’s contract assets primarily relate to its rights to consideration for work completed but not billed as of the reporting date. Contract assets are transferred to billed receivables when the rights to consideration become unconditional. This is typical in situations where amounts are billed as work progresses in accordance with agreed-upon contractual terms or upon achievement of contractual milestones. The Corporation’s contract liabilities primarily consist of customer advances received prior to revenue being earned. Revenue recognized for the year ended December 31, 2018 included in the contract liabilities balance at the beginning of the year was approximately $164 million. Changes in contract assets and contract liabilities as of December 31, 2018, were not materially impacted by any other factors. Contract assets and contract liabilities are reported in the “Receivables, net” and “Deferred revenue” lines, respectively, within the Consolidated Balance Sheet. Pre-adoption of ASC 606 As the Corporation adopted ASC 606 using the modified retrospective method, the Consolidated Financial Statements for the years ended December 31, 2017 and 2016 were not retrospectively adjusted. For the years ended December 31, 2017 and 2016, revenue was recognized when the earnings process was considered substantially complete with all of the following criteria met: 1) persuasive evidence of an arrangement existed; 2) delivery occurred or services were rendered; 3) the Corporation’s price to its customer was fixed or determinable; and 4) collectability was reasonably assured. The Corporation determined the appropriate revenue recognition method by analyzing the terms and conditions of each contract. Revenue was recognized on product sales as production units were shipped and title and risk of loss was transferred. Revenue was recognized on service-type contracts as services were rendered. The significant estimates made in recognizing revenue were primarily for long-term contracts, which were 51 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 52 OPERATOR ALFREDOB generally accounted for using the cost-to-cost method of percentage of completion accounting. Under the cost-to-cost percentage of completion accounting, profits were recorded pro-rata, based upon estimates of direct and indirect costs to complete such contracts. Any changes in estimates of contract sales, costs, or profits were recognized using the cumulative catch-up method of accounting. 3. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE As part of a strategic portfolio review conducted in 2014, the Corporation identified certain businesses it considered non-core. The Corporation considers businesses non-core when their products or services do not complement existing businesses and where the long-term growth and profitability prospects are below the Corporation’s expectations. As part of this initiative, the Corporation divested all five businesses during 2015 that were classified as held for sale as of December 31, 2014. The results of operations of these businesses are reported as discontinued operations within our Consolidated Statement of Earnings. The aggregate financial results of all discontinued operations for the years ended December 31 were as follows: (In thousands) Net sales Loss from discontinued operations before income taxes Income tax benefit / (expense) Loss on sale of businesses Loss from discontinued operations 2018 $— — — — $— 2016 2017 $— $ — — (2,053)(1) — $— $(2,053) — — — (1) Amount represents finalization of the income tax provision related to discontinued operations for the year ended December 31, 2015. 4. ACQUISITIONS The Corporation continually evaluates potential acquisitions that either strategically fit within the Corporation’s existing portfolio or expand the Corporation’s portfolio into new product lines or adjacent markets. The Corporation has completed a number of acquisitions that have been accounted for as business combinations and have resulted in the recognition of goodwill in the Corporation’s financial statements. This goodwill arises because the purchase prices for these businesses reflect the future earnings and cash flow potential in excess of the earnings and cash flows attributable to the current product and customer set at the time of acquisition. Thus, goodwill inherently includes the know-how of the assembled workforce, the ability of the workforce to further improve the technology and product offerings, and the expected cash flows resulting from these efforts. Goodwill may also include expected synergies resulting from the complementary strategic fit these businesses bring to existing operations. The Corporation allocates the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities. In the months after closing, as the Corporation obtains additional information about these assets and liabilities, including through tangible and intangible asset appraisals, and as the Corporation learns more about the newly acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price. Only items identified as of the acquisition date are considered for subsequent adjustment. The Corporation will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required. During the twelve months ended December 31, 2018, the Corporation acquired one business for an aggregate purchase price of $210 million. During the twelve months ended December 31, 2017, the Corporation acquired two businesses for an aggregate purchase price of $233 million, net of cash acquired. These acquisitions are described in more detail below. For the year ended December 31, 2018 and 2017, included within the Consolidated Statement of Earnings, the Corporation’s acquisitions contributed $64 million and $71 million of total net sales, respectively, and $1 million and $5 million of net earnings, respectively. 52 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 53 OPERATOR ALFREDOB The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for all acquisitions consummated during 2018 and 2017: (In thousands) Accounts receivable Inventory Property, plant, and equipment Intangible assets Other current and non-current assets Current and non-current liabilities Due to seller Net tangible and intangible assets Purchase price Goodwill Goodwill deductible for tax purposes 2018 Acquisitions Dresser-Rand Government Business (DRG) 2018 $ 24,385 31,875 3,206 146,100 47 (5,374) — 200,239 210,167 9,928 $ $ 2017 4,994 22,702 4,598 88,900 2,816 (6,730) (804) 116,476 232,630 $ 116,154 $ 9,928 $ 115,532 On April 2, 2018, the Corporation acquired certain assets and assumed certain liabilities of DRG for $210.2 million in cash. The Asset Purchase Agreement contains a purchase price adjustment mechanism and representations and warranties customary for a transaction of this type. DRG is a designer and manufacturer of mission-critical, high-speed rotating equipment solutions and also acts as the sole supplier of steam turbines and main engine guard valves on all aircraft carrier programs. The acquired business operates within the Power segment. 2017 Acquisitions Teletronics Technology Corporation (TTC) On January 3, 2017, the Corporation acquired 100% of the issued and outstanding capital stock of TTC for $226.0 million, net of cash acquired. The Share Purchase Agreement contains a purchase price adjustment mechanism and representations and warranties customary for a transaction of this type, including a portion of the purchase price deposited in escrow as security for potential indemnification claims against the seller. TTC is a designer and manufacturer of high-technology data acquisition and comprehensive flight test instrumentation systems for critical aerospace and defense applications. The acquired business operates within the Defense segment. Para Tech Coating, Inc. (Para Tech) On February 8, 2017, the Corporation acquired certain assets and assumed certain liabilities of Para Tech for $6.6 million in cash. The Asset Purchase Agreement contains a purchase price adjustment mechanism and representations and warranties customary for a transaction of this type, including a portion of the purchase price held back as security for potential indemnification claims against the seller. Para Tech is a provider of parylene conformal coating services for aerospace & defense electronic components as well as critical medical devices. The acquired business operates within the Commercial/Industrial segment. 5. RECEIVABLES Receivables include current notes, amounts billed to customers, claims, other receivables, and unbilled revenue on long-term contracts, which consists of amounts recognized as sales but not billed. Substantially all amounts of unbilled receivables are expected to be billed and collected in the subsequent year. An immaterial amount of unbilled receivables are subject to retainage provisions. The amount of claims and unapproved change orders within our receivables balances are immaterial. 53 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 54 OPERATOR ALFREDOB Credit risk is diversified due to the large number of entities comprising the Corporation’s customer base and their geographic dispersion. The Corporation is either a prime contractor or subcontractor to various agencies of the U.S. Government. Revenues derived directly and indirectly from government sources (primarily the U.S. Government) were 40% and 39% of total net sales in 2018 and 2017, respectively. Total receivables due primarily from the U.S Government were $329.1 million and $208.4 million as of December 31, 2018 and 2017, respectively. Government (primarily the U.S. Government) unbilled receivables, net of progress payments, were $180.0 million and $89.3 million as of December 31, 2018 and 2017, respectively. The composition of receivables as of December 31 is as follows: (In thousands) Billed receivables: Trade and other receivables Less: Allowance for doubtful accounts Net billed receivables Unbilled receivables: Recoverable costs and estimated earnings not billed Less: Progress payments applied Net unbilled receivables Receivables, net 6. INVENTORIES 2018 2017 $ 390,306 (7,436) 382,870 $ 363,234 (7,486) 355,748 225,810 (14,925) 210,885 $ 593,755 160,727 (21,552) 139,175 $ 494,923 Inventoried costs contain amounts relating to long-term contracts and programs with long production cycles, a portion of which will not be realized within one year. Long term contract inventory includes an immaterial amount of claims or other similar items subject to uncertainty concerning their determination or realization. Inventories are valued at the lower of cost or market. The composition of inventories as of December 31 is as follows: (In thousands) Raw material Work-in-process Finished goods Inventoried costs related to U.S. Government and other long-term contracts Gross inventories Less: Inventory reserves Progress payments applied Inventories, net 2018 $ 214,442 74,536 143,016 54,195 486,189 (55,776) (6,987) $ 423,426 2017 $ 191,855 73,937 114,307 65,150 445,249 (54,638) (11,745) $ 378,866 As of December 31, 2018 and 2017, inventory also includes capitalized development costs of $44.4 million and $35.0 million, respectively, related to certain aerospace and defense programs. These capitalized costs will be liquidated as units are produced under contract. As of December 31, 2018 and 2017, $18.7 million and $5.4 million, respectively, are scheduled to be liquidated under existing firm orders. 54 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 55 OPERATOR ALFREDOB 7. PROPERTY, PLANT, AND EQUIPMENT The composition of property, plant, and equipment as of December 31 is as follows: (In thousands) Land Buildings and improvements Machinery, equipment, and other Property, plant, and equipment, at cost Less: Accumulated depreciation Property, plant, and equipment, net $ 2018 18,548 226,743 801,169 1,046,460 (671,800) $ 374,660 $ 2017 19,947 234,539 783,430 1,037,916 (647,681) $ 390,235 Depreciation expense from continuing operations for the years ended December 31, 2018, 2017, and 2016 was $59.4 million, $61.6 million, and $62.6 million, respectively. 8. GOODWILL The changes in the carrying amount of goodwill for 2018 and 2017 are as follows: (In thousands) December 31, 2016 Acquisitions Divestitures Foreign currency translation adjustment December 31, 2017 Acquisitions Divestitures Foreign currency translation adjustment December 31, 2018 Commercial/ Industrial $436,141 2,677 (1,168) 10,881 $448,531 — (111) (6,405) $442,015 Defense $327,655 113,477 (647) 19,847 $460,332 — (1,594) (9,867) $448,871 Power $187,261 — — 205 $187,466 9,928 — (248) $197,146 Consolidated $ 951,057 116,154 (1,815) 30,933 $1,096,329 9,928 (1,705) (16,520) $1,088,032 The purchase price allocations relating to the businesses acquired are initially based on estimates. The Corporation adjusts these estimates based upon final analysis, including input from third party appraisals when deemed appropriate. The determination of fair value is finalized no later than twelve months from acquisition. Goodwill adjustments represent subsequent adjustments to the purchase price allocation for acquisitions. The Corporation completed its annual goodwill impairment testing as of October 31, 2018, 2017, and 2016 and concluded that there was no impairment of goodwill. The estimated fair value of each respective reporting unit substantially exceeded its recorded book value. 9. OTHER INTANGIBLE ASSETS, NET Intangible assets are generally the result of acquisitions and consist primarily of purchased technology, customer related intangibles, and trademarks. Intangible assets are amortized over useful lives that generally range between 1 and 20 years. 55 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 56 OPERATOR ALFREDOB The following tables present the cumulative composition of the Corporation’s intangible assets as of December 31, 2018 and December 31, 2017, respectively. (In thousands) Technology Customer related intangibles Programs(1) Other intangible assets Total Gross 2018 Accumulated Amortization $238,212 $(123,156) (193,455) (5,400) (29,806) $781,384 $(351,817) 358,832 144,000 40,340 Net 2017 Accumulated Amortization Gross $ 115,056 $243,440 $ (114,036) (180,580) 367,230 — — (27,026) 40,640 $429,567 $651,310 $(321,642) 165,377 138,600 10,534 Net $129,404 186,650 — 13,614 $329,668 (1) Programs include values assigned to major programs of acquired businesses and represent the aggregate value associated with the customer relationships, contracts, technology, and trademarks underlying the associated program. During the year ended December 31, 2018, the Corporation acquired intangible assets of $146.1 million which included Programs of $144.0 million, Customer-related intangibles of $1.8 million, and Other intangible assets of $0.3 million. The weighted average amortization periods for these aforementioned intangible assets are 20.0 years, 10.4 years, and 8.0 years, respectively. Amortization expense from continuing operations for the years ended December 31, 2018, 2017, and 2016 was $43.6 million, $38.4 million, and $33.4 million, respectively. The estimated future amortization expense of intangible assets over the next five years is as follows: (In thousands) 2019 2020 2021 2022 2023 $43,488 41,576 39,826 37,312 33,641 10. FAIR VALUE OF FINANCIAL INSTRUMENTS Forward Foreign Exchange and Currency Option Contracts The Corporation has foreign currency exposure primarily in the United Kingdom, Canada, and Europe. The Corporation uses financial instruments, such as forward and option contracts, to hedge a portion of existing and anticipated foreign currency denominated transactions. The purpose of the Corporation’s foreign currency risk management program is to reduce volatility in earnings caused by exchange rate fluctuations. Guidance on accounting for derivative instruments and hedging activities requires companies to recognize all of the derivative financial instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets. Interest Rate Risks and Related Strategies The Corporation’s primary interest rate exposure results from changes in U.S. dollar interest rates. The Corporation’s policy is to manage interest cost using a mix of fixed and variable rate debt. The Corporation periodically uses interest rate swaps to manage such exposures. Under these interest rate swaps, the Corporation exchanges, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. The Corporation’s foreign exchange contracts and interest rate swaps are considered Level 2 instruments which are based on market based inputs or unobservable inputs and corroborated by market data such as quoted prices, interest rates, or yield curves. For interest rate swaps designated as fair value hedges (i.e., hedges against the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), changes in the fair value of the interest rate swaps offset changes in the fair value of the fixed rate debt due to changes in market interest rates. 56 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 57 OPERATOR ALFREDOB Effects on Consolidated Balance Sheet As of December 31, 2018 and December 31, 2017, the fair values of the asset and liability derivative instruments are immaterial. Effects on Consolidated Statement of Earnings Undesignated hedges The location and amount of (gains) and losses recognized in income on forward exchange derivative contracts not designated for hedge accounting for the years ended December 31, were as follows: (In thousands) Forward exchange contracts: 2018 2017 2016 General and administrative expenses $6,643 $(346) $11,510 Debt The estimated fair value amounts were determined by the Corporation using available market information, which is primarily based on quoted market prices for the same or similar issues as of December 31, 2018. The fair value of our debt instruments are characterized as a Level 2 measurement which are based on market based inputs or unobservable inputs and corroborated by market data such as quoted prices, interest rates, or yield curves. The estimated fair values of the Corporation’s fixed rate debt instruments as of December 31, 2018, net of debt issuance costs, totaled $750 million compared to a carrying value, net of debt issuance costs, of $749 million. The estimated fair values of the Corporation’s fixed rate debt instruments as of December 31, 2017, net of debt issuance costs, totaled $822 million compared to a carrying value, net of debt issuance costs, of $799 million. The fair values described above may not be indicative of net realizable value or reflective of future fair values. Furthermore, the use of different methodologies to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. 11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses consist of the following as of December 31: (In thousands) Accrued compensation Accrued commissions Accrued interest Accrued insurance Other Total accrued expenses Other current liabilities consist of the following as of December 31: (In thousands) Warranty reserves Additional amounts due to sellers on acquisitions Reserves on loss contracts Pension and other postretirement liabilities Other Total other current liabilities 2018 $ 118,479 7,769 8,944 6,951 24,811 $166,954 2017 $108,268 6,296 9,894 7,015 18,933 $150,406 2018 $17,293 233 2,487 6,528 18,288 $44,829 2017 $14,212 1,941 1,418 5,060 13,179 $35,810 57 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 58 OPERATOR ALFREDOB 12. INCOME TAXES 2017 Tax Cuts and Jobs Act On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the Tax Act) was enacted into law. The new legislation contained several key tax provisions, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the U.S. corporate income tax rate to 21%. The Corporation will also generally be eligible for a 100% dividends received exemption on its foreign earnings. The Tax Act subjects a U.S. shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The Corporation has applied an accounting policy election to provide for the tax expense related to GILTI in the year in which the tax is incurred. The Corporation has summarized the most significant impacts from the Tax Act below: Reduction of the U.S. Corporate Income Tax Rate The Corporation measures deferred tax assets and liabilities using enacted tax rates that are applicable in the years in which the temporary differences are expected to be recovered or paid. Accordingly, the Corporation’s deferred tax assets and liabilities were remeasured to reflect the reduction of the U.S. corporate income tax rate from 35 percent to 21 percent, resulting in a provisional $13.4 million decrease in income tax expense for the year ended December 31, 2017 and a corresponding $13.4 million decrease in net deferred tax liabilities as of December 31, 2017. Transition Tax on Foreign Earnings The Corporation recorded provisional income tax expense of $18.2 million for the year ended December 31, 2017 related to the one-time transition tax on certain foreign earnings. Prior to assessing the impact of the Tax Act, the Corporation had a deferred tax liability of $5.5 million for certain foreign subsidiaries whose earnings were not considered permanently reinvested. As of December 31, 2017, the Corporation’s provisional income tax liability related to the transition tax was $23.7 million. The finalized transition tax of $23.6 million was to be paid over eight years pursuant to the Tax Act, with $1.9 million paid in 2018. An additional $12.7 million carryforward from the 2017 income tax return further reduced the transition tax liability to $9.0 million, which will be paid in 2024 and 2025. Given that foreign undistributed earnings are no longer considered permanently reinvested, the Corporation also recorded provisional income tax expense of $3.8 million for the year ended December 31, 2017 for withholding taxes that would arise upon distribution of the Corporation’s foreign undistributed earnings. During the year ended December 31, 2018, the Corporation recorded additional tax expense of $9.3 million for foreign withholding taxes associated with the Tax Act, $6.5 million of which related to the prior period. The Corporation is considered permanently reinvested to the extent of any outside basis differences in its foreign subsidiaries in excess of the amount of undistributed earnings. Earnings before income taxes for the years ended December 31 consist of: (In thousands) Domestic Foreign 2018 $217,374 138,865 $356,239 2017 $179,006 120,613 $299,619 2016 $154,571 113,390 $267,961 58 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 59 OPERATOR ALFREDOB The provision for income taxes for the years ended December 31 consists of: (In thousands) Current: Federal State Foreign Total current Deferred: Federal State Foreign Total deferred Provision for income taxes 2018 2017 2016 $37,648 9,228 25,285 72,161 8,518 (1,047) 858 8,329 $80,490 $54,963 2,648 23,162 80,773 2,595 4,282 (2,922) 3,955 $84,728 $45,523 8,002 20,861 74,386 4,267 73 (147) 4,193 $78,579 The effective tax rate varies from the U.S. federal statutory tax rate for the years ended December 31, principally: U.S. federal statutory tax rate Add (deduct): State and local taxes, net of federal benefit R&D tax credits Foreign earnings(1) Stock compensation - excess tax benefits Impacts related to the Tax Act All other, net Effective tax rate 2018 2017 21.0% 35.0% 35.0% 2016 1.8 2.2 (1.3) (1.0) (6.0) 0.9 (2.6) (1.3) 3.4 1.8 (2.0) (1.0) 22.6% 28.3% 29.3% 1.1 (0.9) (5.8) — — (0.1) (1) Foreign earnings primarily include the net impact of differences between local statutory rates and the U.S. Federal statutory rate, the cost of repatriating foreign earnings, and the impact of changes to foreign valuation allowances. The components of the Corporation’s deferred tax assets and liabilities as of December 31 are as follows: (In thousands) Deferred tax assets: Pension plans Environmental reserves Inventories Postretirement/postemployment benefits Incentive compensation Net operating loss Capital loss carryover Other Total deferred tax assets Deferred tax liabilities: Depreciation Goodwill amortization Other intangible amortization Withholding taxes Other Total deferred tax liabilities Valuation allowance Net deferred tax liabilities 59 2018 2017 $ 28,020 8,613 14,154 7,636 8,472 9,868 6,972 27,795 111,530 24,983 70,850 33,600 10,300 5,345 145,078 11,646 $ 45,194 $ 18,903 7,109 15,116 8,241 7,721 10,908 7,047 28,775 103,820 19,586 67,779 38,252 3,800 8,836 138,253 12,322 $ 46,755 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 60 OPERATOR ALFREDOB Deferred tax assets and liabilities are reflected on the Corporation’s consolidated balance sheet as of December 31 as follows: (In thousands) Net noncurrent deferred tax assets Net noncurrent deferred tax liabilities Net deferred tax liabilities 2018 1,927 47,121 $45,194 2017 2,605 49,360 $46,755 The Corporation has income tax net operating loss carryforwards related to international operations of $19.2 million, of which $16.4 million have an indefinite life and $2.8 million which expire through 2027. The Corporation has federal and state income tax net loss carryforwards of $102.2 million, of which $71.1 million are net operating losses which expire through 2037 and $31.1 million are capital loss carryforwards which expire through 2020. The Corporation has recorded a deferred tax asset of $16.8 million reflecting the benefit of the loss carryforwards. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2018 in certain of the Corporation’s foreign locations. Such objective evidence limits the ability to consider other subjective evidence such as projections for future growth. The Corporation provisionally decreased its valuation allowance by $0.7 million to $11.6 million, as of December 31, 2018, in order to measure only the portion of the deferred tax asset that more likely than not will be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as projections for growth. Income tax payments, net of refunds, of $79.1 million, $92.1 million, and $54.5 million were made in 2018, 2017, and 2016, respectively. The Corporation has recognized a liability in Other liabilities for interest of $3.2 million and penalties of $1.7 million as of December 31, 2018. 60 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 61 OPERATOR ALFREDOB A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: (In thousands) Balance as of January 1, Additions for tax positions of prior periods Reductions for tax positions of prior periods Additions for tax positions related to the current year Settlements Balance as of December 31, 2018 $13,174 88 (290) 1,036 (445) $13,563 2017 $11,454 1,069 (194) 1,273 (428) $13,174 2016 $12,414 32 (1,679) 789 (102) $11,454 In many cases, the Corporation’s uncertain tax positions are related to tax years that remain subject to examination by tax authorities. The following describes the open tax years, by major tax jurisdiction, as of December 31, 2018: United States (Federal) United States (Various states) United Kingdom Canada 2015 - present 2007 - present 2011 - present 2012 - present The Corporation does not expect any significant changes to the estimated amount of liability associated with its uncertain tax positions through the next twelve months. Included in total unrecognized tax benefits as of December 31, 2018, 2017, and 2016 is $11.0 million, $10.1 million, and $7.7 million, respectively, which if recognized, would favorably impact the effective income tax rate. 13. DEBT Debt consists of the following as of December 31: (In thousands) 3.84% Senior notes due 2021 3.70% Senior notes due 2023 3.85% Senior notes due 2025 4.24% Senior notes due 2026 4.05% Senior notes due 2028 4.11% Senior notes due 2028 Other debt Total debt Debt issuance costs, net Unamortized interest rate swap proceeds Total debt, net Less: current portion of long-term debt and short-term debt Total long-term debt 2018 Carrying Value 100,000 202,500 90,000 200,000 67,500 90,000 243 750,243 (714) 13,027 762,556 2018 Estimated Fair Value 100,359 201,813 89,711 202,288 66,942 89,647 243 751,003 (714) 13,027 763,316 2017 Carrying Value 100,000 225,000 100,000 200,000 75,000 100,000 150 800,150 (831) 14,820 814,139 2017 Estimated Fair Value 102,472 228,783 102,164 208,873 76,997 103,226 150 822,665 (831) 14,820 836,654 243 $762,313 243 $763,073 150 $813,989 150 $836,504 The weighted-average interest rate of the Corporation’s Revolving Credit Agreement was 3.2% in 2018. The Corporation did not have any borrowings against the Revolving Credit Agreement in 2017. The Corporation’s total debt outstanding had weighted-average interest rates of 3.7% and 3.9% in 2018 and 2017, respectively. 61 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 62 OPERATOR ALFREDOB Aggregate maturities of debt are as follows: (In thousands) 2019 2020 2021 2022 2023 Thereafter Total $ 243 — 100,000 — 202,500 447,500 $750,243 Interest payments of $32 million, $39 million, and $38 million were made in 2018, 2017, and 2016, respectively. Revolving Credit Agreement In October 2018, the Corporation amended the terms of its existing Credit Agreement (Credit Agreement) with a syndicate of financial institutions, led by Bank of America N.A., Wells Fargo, N.A., and JP Morgan Chase Bank, N.A.. The amended agreement, which provides the Corporation with a borrowing capacity of $500 million, extended the maturity date from November 2019 to October 2023 and expanded the accordion feature from $100 million to $200 million. The proceeds available under the Credit Agreement are to be used for working capital, internal growth initiatives, funding of future acquisitions, and general corporate purposes. As of December 31, 2018, the Corporation had $22 million in letters of credit supported by the credit facility and no borrowings outstanding under the credit facility. The unused credit available under the credit facility as of December 31, 2018 was $478 million, which the Corporation had the ability to borrow in full without violating its debt to capitalization covenant. The Credit Agreement contains covenants that the Corporation considers usual and customary for an agreement of this type for comparable commercial borrowers, including a maximum consolidated debt to capitalization ratio of 60%. The Credit Agreement has customary events of default, such as non-payment of principal when due; nonpayment of interest, fees, or other amounts; cross-payment default and cross-acceleration. Borrowings under the credit agreement will accrue interest based on (i) Libor or (ii) a base rate of the highest of (a) the federal funds rate plus 0.5%, (b) BofA’s announced prime rate, or (c) the Eurocurrency rate plus 1%, plus a margin. The interest rate and level of facility fees are dependent on certain financial ratios, as defined in the Credit Agreement. The Credit Agreement also provides customary fees, including administrative agent and commitment fees. In connection with the Credit Agreement, the Corporation paid customary transaction fees that have been deferred and are being amortized over the term of the Credit Agreement. Senior Notes On February 26, 2013, the Corporation issued $500 million of Senior Notes (the “2013 Notes”). The 2013 Notes consist of $225 million of 3.70% Senior Notes that mature on February 26, 2023, $100 million of 3.85% Senior Notes that mature on February 26, 2025, and $75 million of 4.05% Senior Notes that mature on February 26, 2028. $100 million of additional 4.11% Senior Notes were deferred and subsequently issued on September 26, 2013 that mature on September 26, 2028. On October 15, 2018, the Corporation made a discretionary $50 million prepayment on the $500 million 2013 Notes. The 2013 Notes are senior unsecured obligations, equal in right of payment to the Corporation’s existing senior indebtedness. The Corporation, at its option, can prepay at any time all or any part of the 2013 Notes, subject to a make- whole payment in accordance with the terms of the Note Purchase Agreement. In connection with the issuance of the 2013 Notes, the Corporation paid customary fees that have been deferred and are being amortized over the term of the 2013 Notes. Under the terms of the Note Purchase Agreement, the Corporation is required to maintain certain financial ratios, the most restrictive of which is a debt to capitalization limit of 60%. The debt to capitalization ratio (as defined per the Notes Purchase Agreement and Credit Agreement) is calculated using the same formula for all of the Corporation’s debt agreements and is a measure of the Corporation’s indebtedness to capitalization, where capitalization equals debt plus 62 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 63 OPERATOR ALFREDOB equity. As of December 31, 2018, the Corporation had the ability to borrow additional debt of $1.4 billion without violating our debt to capitalization covenant. The 2013 Notes also contain a cross default provision with respect to the Corporation’s other senior indebtedness. On December 8, 2011, the Corporation issued $300 million of Senior Notes (the “2011 Notes”). The 2011 Notes consist of $100 million of 3.84% Senior Notes that mature on December 1, 2021 and $200 million of 4.24% Senior Series Notes that mature on December 1, 2026. The 2011 Notes are senior unsecured obligations, equal in right of payment to our existing senior indebtedness. The Corporation, at its option, can prepay at any time all or any part of our 2011 Notes, subject to a make-whole payment in accordance with the terms of the Note Purchase Agreement. In connection with our 2011 Notes, the Corporation paid customary fees that have been deferred and are being amortized over the term of our 2011 Notes. Under the Note Purchase Agreement, the Corporation is required to maintain certain financial ratios, the most restrictive of which is a debt to capitalization limit of 60%. The 2011 Notes also contain a cross default provision with our other senior indebtedness. Interest Rate Swaps On February 5, 2016, the Corporation terminated its fixed-to floating interest rate swap agreements on the 3.85% and 4.24% Senior Notes. As a result of the termination, the Corporation received a cash payment of $20.4 million, representing the fair value of the interest rate swaps on the date of termination. In connection with the termination, the Corporation and the counterparties released each other from all obligations under the interest rate swaps agreement, including, without limitation, the obligation to make periodic payments under such agreements. The gain on termination is reflected as a bond premium to the carrying value of the respective Senior Notes and will be amortized into interest expense over the remaining terms of the notes. 14. EARNINGS PER SHARE The Corporation is required to report both basic earnings per share (EPS), based on the weighted-average number of common shares outstanding, and diluted earnings per share, based on the basic EPS adjusted for all potentially dilutive shares issuable. As of December 31, 2018, 2017, and 2016, there were no options outstanding that were considered anti-dilutive. Earnings per share calculations for the years ended December 31, 2018, 2017, and 2016, are as follows: (In thousands, except per share data) 2018 Basic earnings per share from continuing operations Dilutive effect of stock options and deferred stock compensation Diluted earnings per share from continuing operations 2017 Basic earnings per share from continuing operations Dilutive effect of stock options and deferred stock compensation Diluted earnings per share from continuing operations 2016 Basic earnings per share from continuing operations Dilutive effect of stock options and deferred stock compensation Diluted earnings per share from continuing operations Earnings from continuing operations Weighted- Average Shares Outstanding Earnings per share from continuing operations $275,749 43,892 $6.28 $275,749 424 44,316 $214,891 44,182 $214,891 579 44,761 $189,382 44,389 $189,382 656 45,045 $6.22 $4.86 $4.80 $4.27 $4.20 63 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 64 OPERATOR ALFREDOB 15. SHARE-BASED COMPENSATION PLANS In May 2014, the Corporation adopted the Curtiss-Wright 2014 Omnibus Incentive Plan (the “2014 Omnibus Plan”). The plan replaced the Corporation’s existing 2005 Long Term Incentive Plan and the 2005 Stock Plan for Non-Employee Directors (collectively the “2005 Stock Plans”). Beginning in May 2014, all awards were granted under the 2014 Omnibus Plan. The maximum aggregate number of shares of common stock that may be issued under the 2014 Omnibus Plan are 2,400,000 less one share of common stock for every one share of common stock granted under any prior plan after December 31, 2013 and prior to the effective date of the 2014 Omnibus Plan. In addition, any awards that were previously granted under any prior plan that terminate without issuance of shares, shall be eligible for issuance under the 2014 Omnibus Plan. Awards under the 2014 Omnibus Plan may be in the form of stock options, stock appreciation rights, restricted stock, restricted stock units (RSU), other stock-based awards, performance share units (PSU), or cash-based performance units (PU). During 2018, the Corporation granted awards in the form of RSUs, PSUs, and restricted stock. Previous grants under the 2005 Stock Plans included non-qualified stock options. Under our employee benefit program, the Corporation also provides an Employee Stock Purchase Plan (ESPP) to most active employees. Certain awards provide for accelerated vesting if there is a change in control. The compensation cost for employee and non-employee director share-based compensation programs during 2018, 2017, and 2016 is as follows: (In thousands) Employee Stock Purchase Plan Performance Share Units Restricted Share Units Other share-based payments Total share-based compensation expense before income taxes 2018 1,435 4,746 7,026 887 $14,094 2017 1,207 4,340 4,931 1,094 $11,572 2016 1,184 3,910 3,426 958 $9,478 Other share-based grants include service-based restricted stock awards to non-employee directors, who are treated as employees as prescribed by the accounting guidance on share-based payments. The compensation cost recognized follows the cost of the employee, which is primarily reflected as General and administrative expenses in the Consolidated Statement of Earnings. No share-based compensation costs were capitalized during 2018, 2017, or 2016. The following table summarizes the cash received from share-based awards on share-based compensation: (In thousands) Cash received from share-based awards 2018 $11,940 2017 $14,179 2016 $22,300 A summary of employee stock option activity is as follows: Outstanding as of December 31, 2017 Exercised Forfeited Outstanding as of December 31, 2018 Exercisable as of December 31, 2018 Weighted- Average Exercise Price $30.30 30.23 30.12 $30.34 $30.34 Shares (000’s) 264 (105) (1) 158 158 Weighted- Average Remaining Contractual Term in Years Aggregate Intrinsic Value (000’s) 1.5 1.5 $11,345 $11,345 The total intrinsic value of stock options exercised during 2018, 2017, and 2016 was $10.1 million, $12.7 million, and $20.6 million, respectively. 64 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 65 OPERATOR ALFREDOB Performance Share Units The Corporation has granted performance share units to certain employees, whose three year cliff vesting is contingent upon the Corporation’s total shareholder return over the three-year term of the awards compared to a self-constructed peer group. The non-vested shares are subject to forfeiture if established performance goals are not met or employment is terminated other than due to death, disability, or retirement. Share plans are denominated in share-based units based on the fair market value of the Corporation’s common stock on the date of grant. The performance share unit’s compensation cost is amortized to expense on a straight-line basis over the three-year requisite service period. Restricted Share Units Restricted share units cliff vest at the end of the awards’ vesting period. The restricted share units are service-based and thus compensation cost is amortized to expense on a straight-line basis over the requisite service period, which is typically three years. The non-vested restricted units are subject to forfeiture if employment is terminated other than due to death, disability, or retirement. A summary of the Corporation’s 2018 activity related to performance share units and restricted share units are as follows: Nonvested as of December 31, 2017 Granted Vested Forfeited Nonvested as of December 31, 2018 Expected to vest as of December 31, 2018 Performance Share Units (PSUs) Restricted Share Units (RSUs) Shares/Units (000’s) 135 75 (93) — 117 117 Weighted- Average Fair Value $ 75.51 126.46 83.52 — $101.70 $101.70 Shares/Units (000’s) 169 47 (77) (2) 137 137 Weighted- Average Fair Value $ 75.19 135.46 147.26 95.92 $ 54.66 $ 54.66 Nonvested PSUs had an intrinsic value of $12.0 million and unrecognized compensation costs of $6.8 million as of December 31, 2018. Nonvested RSUs had an intrinsic value of $14.0 million and unrecognized compensation costs of $6.7 million as of December 31, 2018. Unrecognized compensation costs related to PSUs and RSUs are expected to be recognized over periods of 1.3-1.9 years. Employee Stock Purchase Plan The Corporation’s ESPP enables eligible employees to purchase the Corporation’s common stock at a price per share equal to 85% of the fair market value at the end of each offering period. Each offering period of the ESPP lasts six months, commencing on January 1st and July 1st of each year. Compensation cost is recognized on a straight-line basis over the six-month vesting period during which employees perform related services. 16. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS The Corporation maintains ten separate and distinct pension and other post-retirement defined benefit plans, consisting of three domestic plans and seven separate foreign pension plans. The domestic plans include a qualified pension plan, a non-qualified pension plan, and a postretirement health-benefits plan. The foreign plans consist of one defined benefit pension plan each in the United Kingdom, Canada, and Switzerland, two in Germany, and two in Mexico. 65 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 66 OPERATOR ALFREDOB Domestic Plans Qualified Pension Plan The Corporation maintains a defined benefit pension plan (the “CW Pension Plan”) covering certain employee populations under six benefit formulas: a non-contributory non-union and union formula for certain Curtiss-Wright (CW) employees, a contributory union and non-union benefit formula for employees at the EMD business unit, and two benefit formulas providing annuity benefits for participants in the former Williams Controls salaried and union plans. CW non-union employees hired prior to February 1, 2010 receive a “traditional” benefit based on years of credited service, using the five highest consecutive years’ compensation during the last ten years of service. These employees became participants under the CW Pension Plan after one year of service and were vested after three years of service. CW non-union employees hired on or after the effective date were eligible for a cash balance benefit through December 31, 2013, and were transitioned to the new defined contribution plan, further described below. CW union employees who have negotiated a benefit under the CW Pension Plan are entitled to a benefit based on years of service multiplied by a monthly pension rate. The formula for EMD employees covers both union and non-union employees and is designed to satisfy the requirements of relevant collective bargaining agreements. Employee contributions are withheld each pay period and are equal to 1.5% of salary. The benefits for the EMD employees are based on years of service and compensation. On December 31, 2012, the Corporation amended the CW Pension Plan to close the benefit to EMD employees hired after January 1, 2014. Participants of the former Williams Controls Retirement Income Plan for salaried employees are either deferred vested participants or currently receiving benefits, as benefit accruals under the plan were frozen to future accruals effective January 1, 2003. Benefits in the salaried plan are based on average compensation and years of service. Participants of the former Williams Controls UAW Local 492 Plan for union employees are entitled to a benefit based on years of service multiplied by a monthly pension rate, and may be eligible for supplemental benefits based upon attainment of certain age and service requirements. Effective January 1, 2014, all active non-union employees participating in the final and career average pay formulas in the defined benefit plan will cease accruals 15 years from the effective date of the amendment. In addition to the sunset provision, the “cash balance” benefit for non-union participants ceased as of January 1, 2014. Non-Union employees who were not currently receiving final or career average pay benefits became eligible to participate in a new defined contribution plan which provides both employer match and non-elective contribution components. The amendment did not affect CW employees that are subject to collective bargaining agreements. As of December 31, 2018 and 2017, the Corporation had a noncurrent pension liability of $26.6 million and $45.1 million, respectively. This decrease was driven by a $50 million pension contribution to the Curtiss- Wright Pension Plan in February 2018 and an increase in the discount rate as of December 31, 2018, partially offset by unfavorable asset experience during 2018. Due to the aforementioned discretionary pension contribution of $50 million, the Corporation does not expect to make any required contributions through 2023. Nonqualified Pension Plan The Corporation also maintains a non-qualified restoration plan (the “CW Restoration Plan”) covering those employees of CW and EMD whose compensation or benefits exceed the IRS limitation for pension benefits. Benefits under the CW Restoration Plan are not funded, and, as such, the Corporation had an accrued pension liability of $52.8 million and $48.7 million as of December 31, 2018 and 2017, respectively. The Corporation’s contributions to the CW Restoration Plan are expected to be $4.6 million in 2019. 66 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 67 OPERATOR ALFREDOB Other Post-Employment Benefits (OPEB) Plan The Corporation provides post-employment benefits consisting of retiree health and life insurance to three distinct groups of employees/retirees: the CW Grandfathered plan, and plans assumed in the acquisitions of EMD and Williams Controls. The Corporation also provides retiree health and life insurance benefits for substantially all of the Curtiss- Wright EMD employees. The plan provides basic health and welfare coverage for pre-65 participants based on years of service and are subject to certain caps. Effective January 1, 2011, the Corporation modified the benefit design for post-65 retirees by introducing Retiree Reimbursement Accounts (RRA’s) to participants in lieu of the traditional benefit delivery. Participant accounts are funded a set amount annually that can be used to purchase supplemental coverage on the open market, effectively capping the benefit. The plan also provides retiree health and life insurance benefits for certain retirees of the Williams Controls salaried and union pension plans. Effective August 31, 2013, the Corporation modified the benefit design for post-65 retirees by introducing Retiree Reimbursement Accounts (RRA’s) to align with the EMD delivery model. The Corporation had an accrued postretirement benefit liability as of December 31, 2018 and 2017 of $22.0 million and $25.0 million, respectively. The Corporation expects to contribute $1.6 million to the plan during 2019. Foreign Plans As of December 31, 2018 and 2017, the total projected benefit obligation related to all foreign plans was $83.5 million and $97.4 million, respectively. As of December 31, 2018 and 2017, the Corporation had a net pension asset of $2.7 million and $1.5 million, respectively. The Corporation’s contributions to the foreign plans are expected to be $2.3 million in 2019. Components of net periodic benefit expense The net pension and net postretirement benefit costs (income) consisted of the following: Pension Benefits Postretirement Benefits (In thousands) Service cost Interest cost Expected return on plan assets Amortization of prior service cost Recognized net actuarial loss/(gain) Cost of settlements/curtailments Net periodic benefit cost (income) 2017 2017 2018 2018 2016 2016 $ 27,116 $ 25,093 $ 25,100 $ 490 $ 435 $ 338 996 30,495 — (54,101) (657) (46) (296) 12,029 — — $ 11,576 $ 10,588 $ 13,477 $ 422 $ 318 $ 381 26,149 (58,641) (252) 16,867 337 25,895 (53,552) (100) 12,925 327 762 — (656) (223) — 719 — (656) (131) — The cost of settlements/curtailments indicated above represents events that are accounted for under guidance on employers’ accounting for settlements and curtailments of defined benefit pension plans. In 2018, a settlement charge was incurred in connection with a restructuring in Switzerland. In 2017, there were settlement charges incurred in both the U.K. and Switzerland. 67 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 68 OPERATOR ALFREDOB The following table outlines the Corporation’s consolidated disclosure of the pension benefits and postretirement benefits information described previously. The Corporation had no foreign postretirement plans. All plans were valued using a December 31, 2018 measurement date. Pension Benefits Postretirement Benefits 2018 2017 2018 2017 $868,887 27,116 26,149 1,402 (58,913) (41,962) (1,371) (2,228) (4,186) $814,894 $776,482 (44,876) 55,311 1,402 (44,190) (1,371) (4,462) $738,296 $ (76,598) $798,605 25,093 25,895 1,655 56,727 (41,233) (1,301) (4,151) 7,597 $868,887 $714,608 94,960 4,561 1,655 (45,384) (1,301) 7,383 $776,482 $ (92,405) $ 9,098 (4,905) (80,791) $ (76,598) $ 8,663 (3,374) (97,694) $ (92,405) $ 25,035 490 719 319 (1,982) (2,521) — — — $ 22,060 $ 24,436 435 762 253 2,056 (2,907) — — — $ 25,035 $ — $ — 2,203 319 (2,522) — — — $ — — 2,654 253 (2,907) — — — $(25,035) $ $(22,060) $ — $ (1,623) (20,437) $(22,060) — (1,686) (23,349) $(25,035) $228,430 (1,225) $227,205 $201,390 (1,461) $199,929 $ (4,751) (2,060) $ (6,811) $ (2,899) (2,718) $ (5,617) $ 10,368 $ (284) $784,205 $ 15,615 $ (250) $834,745 $ $ 131 (657) N/A $ $ (29) (657) N/A $743,632 714,146 658,327 $785,039 752,371 684,756 N/A N/A N/A N/A N/A N/A (In thousands) Change in benefit obligation: Beginning of year Service cost Interest cost Plan participants’ contributions Actuarial (gain) loss Benefits paid Actual expenses Settlements Currency translation adjustments End of year Change in plan assets: Beginning of year Actual return on plan assets Employer contribution Plan participants’ contributions Benefits paid Actual Expenses Currency translation adjustments End of year Funded status Amounts recognized on the balance sheet Noncurrent assets Current liabilities Noncurrent liabilities Total Amounts recognized in accumulated other comprehensive income (AOCI) Net actuarial loss (gain) Prior service cost Total Amounts in AOCI expected to be recognized in net periodic cost in the coming year: Loss (gain) recognition Prior service cost recognition Accumulated benefit obligation Information for pension plans with an accumulated benefit obligation in excess of plan assets: Projected benefit obligation Accumulated benefit obligation Fair value of plan assets 68 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 69 OPERATOR ALFREDOB Plan Assumptions Weighted-average assumptions in determination of benefit obligation: Discount rate Rate of compensation increase Health care cost trends: Rate assumed for subsequent year Ultimate rate reached in 2026 Weighted-average assumptions in determination of net periodic benefit cost: Discount rate Expected return on plan assets Rate of compensation increase Health care cost trends: Rate assumed for subsequent year Ultimate rate reached in 2026 Pension Benefits Postretirement Benefits 2018 2017 2018 2017 4.09% 3.46% 4.20% 3.54% 3.50% 3.55% N/A N/A N/A N/A N/A N/A 7.85% 8.30% 4.50% 4.50% 3.46% 3.93% 3.54% 4.02% 7.47% 7.47% 3.50% 3.54% N/A N/A N/A N/A N/A N/A N/A N/A 8.30% 8.25% 4.50% 4.50% Effective December 31, 2016, the Corporation adopted the spot rate, or full yield curve, approach for developing discount rates. The discount rate for each plan’s past service liabilities and service cost is determined by discounting the plan’s expected future benefit payments using a yield curve developed from high quality bonds that are rated Aa or better by Moody’s as of the measurement date. The yield curve calculation matches the notional cash inflows of the hypothetical bond portfolio with the expected benefit payments to arrive at one effective rate for these components. Interest cost is determined by applying the spot rate from the full yield curve to each anticipated benefit payment, based on the anticipated optional form elections. The overall expected return on assets assumption is based on a combination of historical performance of the pension fund and expectations of future performance. Expected future performance is determined by weighting the expected returns for each asset class by the plan’s asset allocation. The expected returns are based on long-term capital market assumptions utilizing a ten-year time horizon through consultation with investment advisors. While consideration is given to recent performance and historical returns, the assumption represents a long-term prospective return. The effect on the Other Post-Employment Benefits plan of a 1% change in the health care cost trend is as follows: (In thousands) Total service and interest cost components Postretirement benefit obligation Pension Plan Assets 1% Increase $ 29 $331 1% Decrease $ (23) $(272) The overall objective for plan assets is to earn a rate of return over time to meet anticipated benefit payments in accordance with plan provisions. The long-term investment objective of the domestic retirement plans is to achieve a total rate of return, net of fees, which exceeds the actuarial overall expected return on asset assumptions used for funding purposes and which provides an appropriate premium over inflation. The intermediate-term objective of the domestic retirement plans, defined as three to five years, is to outperform each of the capital markets in which assets are invested, net of fees. During periods of extreme market volatility, preservation of capital takes a higher precedence than outperforming the capital markets. 69 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 70 OPERATOR ALFREDOB The Finance Committee of the Corporation’s Board of Directors is responsible for formulating investment policies, developing investment manager guidelines and objectives, and approving and managing qualified advisors and investment managers. The guidelines established define permitted investments within each asset class and apply certain restrictions such as limits on concentrated holdings, and prohibits selling securities short, buying on margin, and the purchase of any securities issued by the Corporation. The Corporation maintains the funds of the CW Pension Plan under a trust that is diversified across investment classes and among investment managers to achieve an optimal balance between risk and return. As a part of its diversification strategy, the Corporation has established target allocations for each of the following assets classes: domestic equity securities, international equity securities, and debt securities. Below are the Corporation’s actual and established target allocations for the CW Pension Plan, representing 88% of consolidated assets: Asset class Domestic equities International equities Total equity Fixed income As of December 31, 2017 2018 Target Exposure Expected Range 48% 15% 63% 37% 52% 15% 67% 33% 50% 15% 65% 35% 40%-60% 10%-20% 55%-75% 25%-45% As of December 31, 2018 and 2017, cash funds in the CW Pension Plan represented approximately 6% of portfolio assets in both periods. Foreign plan assets represent 12% of consolidated plan assets, with the majority of the assets supporting the U.K. plan. Generally, the foreign plans follow a similar asset allocation strategy and are more heavily weighted in fixed income resulting in a weighted expected return on assets assumption of 4.50% for all foreign plans. The Corporation may from time to time require the reallocation of assets in order to bring the retirement plans into conformity with these ranges. The Corporation may also authorize alterations or deviations from these ranges where appropriate for achieving the objectives of the retirement plans. Fair Value Measurements The following table presents consolidated plan assets (in thousands) as of December 31, 2018 using the fair value hierarchy, as described in Note 10 to the Consolidated Financial Statements. Asset Category Cash and cash equivalents Equity securities-Mutual funds(1) Bond funds(2) Insurance Contracts(3) Other(4) December 31, 2017 Cash and cash equivalents Equity securities-Mutual funds(1) Bond funds(2) Insurance Contracts(3) Other(4) December 31, 2018 Quoted Prices in Active Markets for Identical Assets (Level 1) $ 12,551 455,175 150,265 — — $617,991 $ 20,034 404,509 177,731 — — $602,274 Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) $ 29,823 49,458 66,107 — — $145,388 $ 22,227 41,925 61,149 — — $125,301 $ — — — 10,912 2,191 $13,103 — $ — — 8,408 2,313 $10,721 Total $ 42,374 504,633 216,372 10,912 2,191 $776,482 $ 42,261 446,434 238,880 8,408 2,313 $738,296 70 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 71 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB (1) This category consists of domestic and international equity securities. It is comprised of U.S. securities benchmarked against the S&P 500 index and Russell 2000 index, international mutual funds benchmarked against the MSCI EAFE index, global equity index mutual funds associated with our U.K. based pension plans and balanced funds associated with the U.K. and Canadian based pension plans. (2) This category consists of domestic and international bonds. The domestic fixed income securities are benchmarked against the Bloomberg Barclays Capital Aggregate Bond index, actively-managed bond mutual funds comprised of domestic investment grade debt, fixed income derivatives, and below investment-grade issues, U.S. mortgage backed securities, asset backed securities, municipal bonds, and convertible debt. International bonds consist of bond mutual funds for institutional investors associated with the CW Pension Plan, Switzerland, and U.K. based pension plans. (3) This category consists of a guaranteed investment contract (GIC) in Switzerland. Amounts contributed to the plan are guaranteed by a foundation for occupational benefits that in turn entered into a group insurance contract and the foundation pays a guaranteed rate of interest that is reset annually. (4) This category consists primarily of real estate investment trusts in Switzerland. Valuation Equity securities and exchange-traded equity and bond mutual funds are valued using a market approach based on the quoted market prices of identical instruments. Pooled institutional funds are valued at their net asset values and are calculated by the sponsor of the fund. Fixed income securities are primarily valued using a market approach utilizing various underlying pricing sources and methodologies. Real estate investment trusts are priced at net asset value based on valuations of the underlying real estate holdings using inputs such as discounted cash flows, independent appraisals, and market-based comparable data. Cash balances in the United States are held in a pooled fund and classified as a Level 2 asset. Non-U.S. cash is valued using a market approach based on quoted market prices of identical instruments. The following table presents a reconciliation of Level 3 assets held during the years ended December 31, 2018 and 2017: (In thousands) December 31, 2016 Actual return on plan assets: Relating to assets still held at the reporting date Purchases, sales, and settlements Foreign currency translation adjustment December 31, 2017 Actual return on plan assets: Relating to assets still held at the reporting date Purchases, sales, and settlements Foreign currency translation adjustment December 31, 2018 Insurance Contracts $10,760 167 (503) 488 $10,912 163 (2,595) (72) $ 8,408 Other $1,618 Total $12,378 58 436 79 $2,191 (13) 152 (17) $2,313 226 (68) 567 $13,103 150 (2,443) (89) $10,721 71 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 72 OPERATOR ALFREDOB Benefit Payments The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid from the plans: (In thousands) 2019 2020 2021 2022 2023 2024 — 2028 Pension Plans $ 48,806 48,976 50,691 51,360 52,418 275,736 Postretirement Plans $1,623 1,630 1,616 1,615 1,619 7,611 Total $ 50,429 50,606 52,307 52,975 54,037 283,347 Defined Contribution Retirement Plans The Corporation offers all of its domestic employees the opportunity to participate in a defined contribution plan. Costs incurred by the Corporation in the administration and record keeping of the defined contribution plan are paid for by the Corporation and are not considered material. Effective January 1, 2014, all non-union employees who were not currently receiving final or career average pay benefits became eligible to receive employer contributions in the Corporation’s sponsored 401(k) plan, including both employer match and non-elective contribution components. Effective January 1, 2019, the employer contribution was increased to a maximum of 7% of eligible compensation from 6% previously. During the year ended December 31, 2018, the expense relating to the plan was $14.4 million, consisting of $6.3 million in matching contributions to the plan in 2018, and $8.1 million in non-elective contributions paid in January 2019. Cumulative contributions of approximately $81 million are expected to be made from 2019 through 2023. In addition, the Corporation had foreign pension costs under various defined contribution plans of $5.3 million, $4.2 million, and $4.2 million in 2018, 2017, and 2016, respectively. 17. LEASES The Corporation conducts a portion of its operations from leased facilities, which include manufacturing and service facilities, administrative offices, and warehouses. In addition, the Corporation leases vehicles, machinery, and office equipment under operating leases. The leases expire at various dates and may include renewals and escalations. Rental expenses for all operating leases amounted to $38.4 million, $37.1 million, and $35.3 million in 2018, 2017, and 2016, respectively. As of December 31, 2018, the approximate future minimum rental commitments under operating leases that have initial or remaining non-cancelable lease terms in excess of one year are as follows: (In thousands) 2019 2020 2021 2022 2023 Thereafter Total Rental Commitments $ 29,562 28,514 24,501 19,996 19,778 93,974 $216,325 18. SEGMENT INFORMATION The Corporation’s segments are composed of similar product groupings that serve the same or similar end markets. Based on this approach, the Corporation has three reportable segments: Commercial/Industrial, Defense, and Power, as described below in further detail. 72 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 73 OPERATOR ALFREDOB The Commercial/Industrial reportable segment is comprised of businesses that provide a diversified offering of highly engineered products and services supporting critical applications primarily across the commercial aerospace and general industrial markets. The products offered include electronic throttle control devices and transmission shifters, electro-mechanical actuation control components, valves, and surface technology services such as shot peening, laser peening, coatings, and advanced testing. The Defense reportable segment is comprised of businesses that primarily provide products to the defense markets and to a lesser extent the commercial aerospace market. The products offered include commercial off-the-shelf (COTS) embedded computing board level modules, integrated subsystems, turret aiming and stabilization products, weapons handling systems, avionics and electronics, flight test equipment, and aircraft data management solutions. The Power segment is comprised of businesses that primarily provide products to the power generation markets and to a lesser extent the naval defense market. The products offered include main coolant pumps, power-dense compact motors, generators, secondary propulsion systems, pumps, pump seals, control rod drive mechanisms, fastening systems, specialized containment doors, airlock hatches, spent fuel management products, and fluid sealing products. The Corporation’s measure of segment profit or loss is operating income. Interest expense and income taxes are not reported on an operating segment basis as they are not considered in the segments’ performance evaluation by the Corporation’s chief operating decision-maker, its Chief Executive Officer. Net sales and operating income by reportable segment are as follows: (In thousands) Net sales Commercial/Industrial Defense Power Less: Intersegment Revenues Total Consolidated (In thousands) Operating income (expense) Commercial/Industrial Defense Power Corporate and Eliminations(1) Total Consolidated Depreciation and amortization expense Commercial/Industrial Defense Power Corporate Total Consolidated Segment assets Commercial/Industrial Defense Power Corporate Total Consolidated Year Ended December 31, 2018 2017 2016 $1,209,943 559,058 649,754 (6,920) $2,411,835 $1,163,510 557,954 554,048 (4,486) $2,271,026 $1,120,326 469,796 524,967 (6,158) $2,108,931 2018 2017 2016 $ 182,669 128,446 98,858 (36,347) $ 373,626 $ 168,146 109,338 81,119 (33,483) $ 325,120 $ 156,084 98,182 74,360 (32,107) $ 296,519 $ 50,690 20,578 27,737 3,944 $ 102,949 $1,398,601 961,298 720,073 175,413 $3,255,385 $ $ 53,180 20,702 22,019 4,094 99,995 $1,444,097 1,044,776 482,753 264,695 $3,236,321 $ $ 53,970 14,488 23,032 4,518 96,008 $1,391,040 751,859 516,321 378,561 $3,037,781 73 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 JOB NUMBER 355625-1 TYPE SERIAL PAGE NO. 74 DATE Tuesday, March 12, 2019 OPERATOR ALFREDOB (In thousands) Capital expenditures Commercial/Industrial Defense Power Corporate Total Consolidated 2018 2017 2016 $ $ 30,411 5,793 11,350 5,863 53,417 $ $ 29,028 9,276 10,039 4,362 52,705 $ $ 30,145 5,870 6,653 4,108 46,776 (1) Corporate and Eliminations includes pension expense, environmental remediation and administrative expenses, legal, foreign currency transactional gains and losses, and other expenses. Reconciliations (In thousands) Earnings before taxes: Total segment operating income Corporate and Eliminations Interest expense Other income, net Total consolidated earnings before tax (In thousands) Assets: Total assets for reportable segments Non-segment cash Other assets Total consolidated assets Geographic Information (In thousands) Revenues United States of America United Kingdom Other foreign countries Consolidated total (In thousands) Long-Lived Assets United States of America United Kingdom Other foreign countries Consolidated total Year Ended December 31, 2018 2017 2016 $ 409,973 (36,347) 33,983 16,596 $ 356,239 $ 358,603 (33,483) 41,471 15,970 $ 299,619 $ 328,626 (32,107) 41,248 12,690 $ 267,961 As of December 31, 2018 2017 2016 $3,079,972 138,053 37,360 $3,255,385 $2,971,626 204,664 60,031 $3,236,321 $2,659,220 357,021 21,540 $3,037,781 Year Ended December 31, 2018 2017 2016 $1,623,511 126,439 661,885 $2,411,835 $1,562,180 118,350 590,496 $2,271,026 $1,472,241 114,752 521,938 $2,108,931 As of December 31, 2018 2017 2016 $ 258,504 34,649 81,507 $ 374,660 $ 264,829 41,100 84,306 $ 390,235 $ 272,826 39,014 77,063 $ 388,903 74 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 75 OPERATOR ALFREDOB Net sales by product line (In thousands) Net sales Flow Control Motion Control Surface Technologies Consolidated total Year Ended December 31, 2018 2017 2016 $1,008,262 1,090,703 312,870 $2,411,835 $ 899,705 1,075,218 296,103 $2,271,026 $ 883,735 940,162 285,034 $2,108,931 The Flow Control products include valves, pumps, motors, generators, and instrumentation that manage the flow of liquids and gases, generate power, and monitor or provide critical functions. Motion Control’s products include turret aiming and stabilization products, embedded computing board level modules, electronic throttle control devices, transmission shifters, and electro-mechanical actuation control components. Surface Technologies include shot peening, laser peening, and coatings services that enhance the durability, extend the life, and prevent premature fatigue and failure on customer-supplied metal components. 19. CONTINGENCIES AND COMMITMENTS Legal Proceedings The Corporation has been named in a number of lawsuits that allege injury from exposure to asbestos. To date, the Corporation has not been found liable for or paid any material sum of money in settlement in any case. The Corporation believes its minimal use of asbestos in its past operations and the relatively non- friable condition of asbestos in its products make it unlikely that it will face material liability in any asbestos litigation, whether individually or in the aggregate. The Corporation maintains insurance coverage for these potential liabilities and believes adequate coverage exists to cover any unanticipated asbestos liability. In December 2013, the Corporation, along with other unaffiliated parties, received a claim from Canadian Natural Resources Limited (CNRL) filed in the Court of Queen’s Bench of Alberta, Judicial District of Calgary. The claim pertains to a January 2011 fire and explosion at a delayed coker unit at its Fort McMurray refinery that resulted in the injury of five CNRL employees, damage to property and equipment, and various forms of consequential loss such as loss of profit, lost opportunities, and business interruption. The fire and explosion occurred when a CNRL employee bypassed certain safety controls and opened an operating coker unit. The total quantum of alleged damages arising from the incident has not been finalized, but is estimated to meet or exceed $1 billion. The Corporation maintains various forms of commercial, property and casualty, product liability, and other forms of insurance; however, such insurance may not be adequate to cover the costs associated with a judgment against it. All parties have agreed in principle to participate in a formal mediation in 2019 with the intention of settling this claim. In an effort to induce the parties to participate in the formal mediation, CNRL agreed to reduce its claim to approximately $400 million, which reflects the monetary amount of property damage incurred as a result of the fire and explosion. The Corporation is currently unable to estimate an amount, or range of potential losses, if any, from this matter. The Corporation believes that it has adequate legal defenses and intends to defend this matter vigorously. The Corporation’s financial condition, results of operations, and cash flows could be materially affected during a future fiscal quarter or fiscal year by unfavorable developments or outcome regarding this claim. The Corporation is party to a number of other legal actions and claims, none of which individually or in the aggregate, in the opinion of management, are expected to have a material effect on the Corporation’s results of operations or financial position. 75 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 76 OPERATOR ALFREDOB WEC Bankruptcy On March 29, 2017, WEC filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York, Case No. 17-10751. The Bankruptcy Court overseeing the Bankruptcy Case approved, on an interim basis, an $800 million Debtor-in-Possession Financing Facility to help WEC finance its business operations during the reorganization process. On January 4, 2018, WEC announced that it had agreed to be acquired by Brookfield Business Partners L.P for approximately $4.6 billion. The acquisition, which was completed on August 1, 2018, is not expected to have a material impact on the Corporation’s financial condition or results of operations as WEC plans to continue operating in the ordinary course of business under existing senior management. On January 18, 2019, the Corporation executed an agreement to settle substantially all of its general unsecured claims with WEC, including its pre-petition billings. As it relates to post-petition work, the Corporation will continue to honor its executory contracts and expects to collect all amounts due. The Corporation will continue to monitor and evaluate the status of the WEC bankruptcy for potential impacts on its business. Letters of Credit and Other Arrangements The Corporation enters into standby letters of credit agreements and guarantees with financial institutions and customers primarily relating to guarantees of repayment, future performance on certain contracts to provide products and services, and to secure advance payments from certain international customers. As of December 31, 2018 and 2017, there were $21.7 million and $21.3 million of stand-by letters of credit outstanding, respectively, and $11.7 million and $14.6 million of bank guarantees outstanding, respectively. The Corporation, through its Electro-Mechanical Division (EMD) business unit, has three Pennsylvania Department of Environmental Protection (PADEP) radioactive materials licenses that are utilized in the continued operation of the EMD business. In connection with these licenses, the Corporation has known conditional asset retirement obligations related to asset decommissioning activities to be performed in the future, when the Corporation terminates these licenses. For two of the three licenses, the Corporation has recorded an asset retirement obligation of approximately $7.2 million. For its third license, the Corporation has not recorded an asset retirement obligation as it is not reasonably estimable due to insufficient information about the timing and method of settlement of the obligation. Accordingly, this obligation has not been recorded in the Consolidated Financial Statements. A liability for this obligation will be recorded in the period when sufficient information regarding timing and method of settlement becomes available to make a reasonable estimate of the liability’s fair value. The Corporation is required to provide the Nuclear Regulatory Commission financial assurance demonstrating its ability to cover the cost of decommissioning its Cheswick, Pennsylvania facility upon closure, though the Corporation does not intend to close this facility. The Corporation has provided this financial assurance in the form of a $45.6 million surety bond. AP1000 Program Within the Corporation’s Power segment, the Electro-Mechanical Division is the RCP supplier for the WEC AP1000 nuclear power plants under construction in China and the United States. The terms of the AP1000 China and U.S. contracts include liquidated damage provisions for failure to meet contractual delivery dates if the Corporation caused the delay and the delay was not excusable. The Corporation would be liable for liquidated damages if the Corporation was deemed responsible for not meeting the delivery dates. On October 10, 2013, the Corporation received a letter from WEC stating entitlements to the maximum amount of liquidated damages allowable under the AP1000 China contract from WEC of approximately $25 million. As of December 31, 2018, the Corporation has not met certain contractual delivery dates under its AP1000 U.S. and China contracts; however, there are significant counterclaims and uncertainties as to which parties are responsible for the delays. The Corporation believes it has adequate legal defenses and intends to vigorously defend this matter. Given the uncertainties surrounding the responsibility for the delays, no accrual has been made for this matter as of December 31, 2018. As of December 31, 2018, the range of possible loss is $0 million to $31 million for the AP1000 U.S. contract, for a total range of possible loss of $0 to $55.5 million. 76 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 77 OPERATOR ALFREDOB 20. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The total cumulative balance of each component of accumulated other comprehensive income (loss), net of tax, is as follows: (In thousands) December 31, 2016 Other comprehensive loss before reclassifications(1) Amounts reclassified from accumulated other comprehensive income(1) Net current period other comprehensive income (loss) December 31, 2017 Other comprehensive loss before reclassifications(1) Amounts reclassified from accumulated other comprehensive income(1) Net current period other comprehensive loss December 31, 2018 (1) All amounts are after tax. Foreign currency translation adjustments, net $(172,650) 77,942 Total pension and postretirement adjustments, net $(119,106) (10,831) Accumulated other comprehensive income (loss) $(291,756) 67,111 — 77,942 $ (94,708) (52,440) — (52,440) $(147,148) 7,805 (3,026) $(122,132) (31,380) 12,213 (19,167) $(141,299) 7,805 74,916 $(216,840) (83,820) 12,213 (71,607) $(288,447) Details of amounts reclassified from accumulated other comprehensive income (loss) are below: (In thousands) Defined benefit pension and postretirement plans Amortization of prior service costs Amortization of net actuarial losses Settlements Total reclassifications Amount reclassified from Accumulated other comprehensive income (loss) 2018 2017 908 (16,736) (337) (16,165) 3,952 $(12,213) 756 (12,702) (327) (12,273) 4,468 $ (7,805) Affected line item in the statement where net earnings is presented (1) (1) (1) Total before tax Income tax effect Net of tax (1) These items are included in the computation of net periodic pension cost. See Note 16, Pension and Other Postretirement Benefit Plans. 77 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 78 OPERATOR ALFREDOB 21. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The following tables set forth selected unaudited quarterly Consolidated Statements of Earnings information for the fiscal years ended December 31, 2018 and 2017. (In thousands, except per share data) 2018 Net sales Gross profit Net earnings Net earnings per share Basic earnings per share Diluted earnings per share 2017 Net sales Gross profit Net earnings Net earnings per share Basic earnings per share Diluted earnings per share Note: Certain amounts may not add due to rounding. First Second Third Fourth $547,522 181,191 43,643 $620,298 226,500 74,788 $595,393 222,518 74,483 $648,622 241,052 82,835 $ $ 0.99 0.98 $ $ 1.69 1.68 $ $ 1.70 1.68 $ $ 1.91 1.89 $523,591 166,935 32,547 $567,653 195,010 50,650 $567,901 207,496 63,944 $611,881 231,344 67,750 $ $ 0.74 0.73 $ $ 1.15 1.13 $ $ 1.45 1.43 $ $ 1.54 1.52 78 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 79 OPERATOR ALFREDOB Report of the Corporation The Consolidated Financial Statements appearing in Item 8 of this Annual Report on Form 10-K have been prepared by the Corporation in conformity with accounting principles generally accepted in the United States of America. The financial statements necessarily include some amounts that are based on the best estimates and judgments of the Corporation. Other financial information in this Annual Report on Form 10-K is consistent with that in the Consolidated Financial Statements. The Corporation maintains accounting systems, procedures, and internal accounting controls designed to provide reasonable assurance that assets are safeguarded and that transactions are executed in accordance with the appropriate corporate authorization and are properly recorded. The accounting systems and internal accounting controls are augmented by written policies and procedures, organizational structure providing for a division of responsibilities, selection and training of qualified personnel, and an internal audit program. The design, monitoring, and revision of internal accounting control systems involve, among other things, management’s judgment with respect to the relative cost and expected benefits of specific control measures. Management of the Corporation has completed an assessment of the Corporation’s internal controls over financial reporting and has included “Management’s Annual Report on Internal Control Over Financial Reporting” in Item 9A of this Annual Report on Form 10-K. Deloitte & Touche LLP, our independent registered public accounting firm, performed an integrated audit of the Corporation’s Consolidated Financial Statements that also included forming an opinion on the internal controls over financial reporting of the Corporation for the year ended December 31, 2018. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. The objective of their audit is the expression of an opinion on the fairness of the Corporation’s Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America, in all material respects, and on the internal controls over financial reporting as of December 31, 2018. The Audit Committee of the Board of Directors, composed entirely of directors who are independent of the Corporation, appoints the independent registered public accounting firm for ratification by stockholders and, among other things, considers the scope of the independent registered public accounting firm’s examination, the audit results, and the adequacy of internal accounting controls of the Corporation. The independent registered public accounting firm and the internal auditor have direct access to the Audit Committee, and they meet with the committee from time to time, with and without management present, to discuss accounting, auditing, non-audit consulting services, internal control, and financial reporting matters. 79 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 80 OPERATOR ALFREDOB Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors of Curtiss-Wright Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Curtiss-Wright Corporation and subsidiaries (the “Company”) as of December 31, 2018 and 2017, 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, 2018, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2019, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Deloitte & Touche LLP Parsippany, New Jersey February 27, 2019 We have served as the Company’s auditor since 2003. 80 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 81 OPERATOR ALFREDOB Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors of Curtiss-Wright Corporation Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Curtiss-Wright Corporation and subsidiaries (the “Company”) as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2018, of the Company and our report dated February 27, 2019, expressed an unqualified opinion on those financial statements. As described in Management’s Annual Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Dresser-Rand Government Business, which was acquired on April 2, 2018 and whose financial statements constitute 3% of total net sales and 2% of total assets of the consolidated financial statement amounts (excluding acquired intangible assets and goodwill) as of and for the year ended December 31, 2018. Accordingly, our audit did not include the internal control over financial reporting at Dresser-Rand Government Business. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 81 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 82 OPERATOR ALFREDOB Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Parsippany, New Jersey February 27, 2019 82 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 83 OPERATOR ALFREDOB Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. Item 9A. Controls and Procedures. Disclosure Controls and Procedures As of December 31, 2018, the Corporation’s management, including the Corporation’s Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the Corporation’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on such evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures are effective as of December 31, 2018 insofar as they are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and they include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management’s Annual Report On Internal Control Over Financial Reporting The Corporation’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of the future effectiveness of controls currently deemed effective are subject to the risk that controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with the policies or procedures. The Corporation’s management assessed the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2018. In making this assessment, the Corporation’s management used the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. However, under guidelines established by the SEC, companies are allowed to exclude an acquired business from management’s report on internal control over financial reporting for the first year subsequent to the acquisition. Accordingly, in making its assessment of internal control over financial reporting as of December 31, 2018, management excluded the internal control activities of Dresser-Rand Government Business (DRG), which was acquired on April 2, 2018. DRG constituted 3% of total net sales and 2% of total assets (excluding acquired intangible assets and goodwill) as of and for the year ended December 31, 2018. Based on management’s assessment, management believes that as of December 31, 2018, the Corporation’s internal control over financial reporting is effective based on the established criteria. The Corporation’s internal controls over financial reporting as of December 31, 2018 have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, and their report thereon is included in Item 8 of this Annual Report on Form 10-K. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None. 83 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 84 OPERATOR ALFREDOB PART III The information required by Items 10, 11, 12, 13, and 14 of Part III of this Annual Report on Form 10-K, to the extent not set forth herein, is incorporated herein by reference from the registrant’s definitive proxy statement relating to the annual meeting of stockholders to be held on May 9, 2019 which definitive proxy statement shall be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates. Information required by Item 401(b) of Regulation S-K is included in Part I of this report under the caption “Executive Officers” and information required by Item 201(d) of Regulation S-K is included in Part II of this report under the caption “Securities Authorized For Issuance Under Equity Compensation Plans.” 84 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 85 OPERATOR ALFREDOB Item 15. Exhibits, Financial Statement Schedule. PART IV (a) Financial Statements and Footnotes Page 1. The following are documents filed as part of this report in Part II, Item 8: 39 40 41 42 43 44 89 Filed Herewith Consolidated Statements of Earnings Consolidated Statements of Comprehensive Income Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated Statements of Stockholders’ Equity Notes to Consolidated Financial Statements 2. Financial Statement Schedule (b) Exhibit No. 2.1 3.1 3.2 4.1 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 Schedule II-Valuation and Qualifying Accounts All other financial statement schedules have been omitted because they are either not required, not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto. Exhibits Exhibit Description Agreement and Plan of Merger and Recapitalization, dated as of February 1, 2005, by and between the Registrant and CW Merger Sub, Inc. Amended and Restated Certificate of Incorporation Amended and Restated By-Laws Form of stock certificate for Common Stock Curtiss-Wright Corporation 2005 Omnibus Long- Term Incentive Plan, amended and restated effective January 1, 2010* Form of Long Term Incentive Award Agreement, between the Registrant and the executive officers of the Registrant* Revised Standard Employment Severance Agreement with Senior Management of the Registrant* Amended and Restated Retirement Benefits Restoration Plan as amended January 1, 2009.* Instrument of Amendment No. 1 to Amended and Restated Retirement Benefits Restoration Plan as amended January 1, 2009* Instrument of Amendment No. 2 to Amended and Restated Retirement Benefits Restoration Plan as amended January 1, 2009* Instrument of Amendment No. 3 to Amended and Restated Retirement Benefits Restoration Plan as amended January 1, 2009* Instrument of Amendment No. 4 to Amended and Restated Retirement Benefits Restoration Plan as amended January 1, 2009* Curtiss-Wright Corporation Retirement Plan, as Amended and Restated January 1, 2015* 85 Incorporated by Reference Form Filing Date February 3, 2005 8-K 8-A12B/A May 24, 2005 8-K May 18, 2015 8-A12B/A May 24, 2005 14A March 19, 2010 10-K March 7, 2006 10-Q August 15, 2001 10-K February 25, 2011 10-K February 24, 2012 10-K February 19, 2015 10-K February 19, 2015 10-K February 25, 2016 10-K February 25, 2016 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 86 OPERATOR ALFREDOB Exhibit No. 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.24 10.25 10.26 10.27 Exhibit Description Instrument of Amendment No. 1 to Curtiss-Wright Corporation Retirement Plan, as Amended and Restated January 1, 2015* Instrument of Amendment No. 2 to Curtiss-Wright Corporation Retirement Plan, as Amended and Restated January 1, 2015* Instrument of Amendment No. 3 to Curtiss-Wright Corporation Retirement Plan, as Amended and Restated January 1, 2015* Instrument of Amendment No. 4 to Curtiss-Wright Corporation Retirement Plan, as Amended and Restated January 1, 2015* Instrument of Amendment No. 5 to Curtiss-Wright Corporation Retirement Plan, as Amended and Restated January 1, 2015* Instrument of Amendment No. 6 to Curtiss-Wright Corporation Retirement Plan, as Amended and Restated January 1, 2015* Curtiss-Wright Corporation Savings and Investment Plan, as Amended and Restated effective as of January 1, 2015* Instrument of Amendment No. 1 to the Curtiss- Wright Corporation Savings and Investment Plan, as Amended and Restated effective January 1, 2015* Instrument of Amendment No. 2 to the Curtiss- Wright Corporation Savings and Investment Plan, as Amended and Restated effective January 1, 2015* Instrument of Amendment No. 3 to the Curtiss- Wright Corporation Savings and Investment Plan, as Amended and Restated effective January 1, 2015* Instrument of Amendment No. 4 to the Curtiss- Wright Corporation Savings and Investment Plan, as Amended and Restated effective January 1, 2015* Instrument of Amendment No. 5 to the Curtiss- Wright Corporation Savings and Investment Plan, as Amended and Restated effective January 1, 2015* Instrument of Amendment No. 6 to the Curtiss- Wright Corporation Savings and Investment Plan, as Amended and Restated effective January 1, 2015* Instrument of Amendment No. 7 to the Curtiss- Wright Corporation Savings and Investment Plan, as Amended and Restated effective January 1, 2015* Instrument of Amendment No. 8 to the Curtiss- Wright Corporation Savings and Investment Plan, as Amended and Restated effective January 1, 2015* Instrument of Amendment No. 9 to the Curtiss- Wright Corporation Savings and Investment Plan, as Amended and Restated effective January 1, 2015* Curtiss-Wright Corporation 2014 Omnibus Incentive Plan* Curtiss-Wright Corporation Retirement Savings Restoration Plan* 86 Filed Herewith X X X X X Incorporated by Reference Form Filing Date February 21, 2017 10-K 10-K February 21, 2017 10-K February 22, 2018 10-K February 22, 2018 10-K February 25, 2016 10-K February 25, 2016 10-K February 21, 2017 10-K February 21, 2017 10-K February 21, 2017 10-K February 22, 2018 10-K February 22, 2018 14A March 21, 2014 10-K February 19, 2015 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 87 OPERATOR ALFREDOB Exhibit No. 10.28 10.29 10.30 10.31 10.32 10.33 10.34 10.35 10.36 10.37 10.38 10.39 10.40 10.41 10.42 10.43 10.44 10.45 Exhibit Description Instrument of Amendment No. 1 to the Curtiss- Wright Corporation Retirement Savings Restoration Plan* Form of indemnification Agreement entered into by the Registrant with each of its directors Amended and Restated Curtiss-Wright Electro- Mechanical Corporation Savings Plan, dated January 1, 2010* Instrument of Amendment No.1 to the Amended and Restated Curtiss-Wright Electro-Mechanical Corporation Savings Plan, dated January 1, 2010* Instrument of Amendment No. 2 to the Amended and Restated Curtiss-Wright Electro-Mechanical Corporation Savings Plan, dated January 1, 2010* Instrument of Amendment No.3 to the Amended and Restated Curtiss-Wright Electro-Mechanical Corporation Savings Plan, dated January 1, 2010* Instrument of Amendment No.4 to the Amended and Restated Curtiss-Wright Electro-Mechanical Corporation Savings Plan, dated January 1, 2010* Curtiss-Wright Corporation 2005 Stock Plan for Non-Employee Directors* Amended and Revised Curtiss-Wright Corporation Executive Deferred Compensation Plan, as amended November 2006* Instrument of Amendment No. 1 to the Amended and Revised Curtiss-Wright Corporation Executive Deferred Compensation Plan, as amended August 29, 2008* Instrument of Amendment No. 2 to the Amended and Revised Curtiss-Wright Corporation Executive Deferred Compensation Plan, as amended August 29, 2008* Instrument of Amendment No. 3 to the Amended and Revised Curtiss-Wright Corporation Executive Deferred Compensation Plan, as amended August 29, 2008* Standard Change In Control Severance Protection Agreement, dated July 9, 2001, between the Registrant and Key Executives of the Registrant* Curtiss-Wright Corporation Employee Stock Purchase Plan, as amended May 10, 2018* Incentive Compensation Plan, as amended November 15, 2010* Restricted Stock Unit Agreement, dated April 1, 2013, by and between the Registrant and Thomas Quinly* Trust Agreement, dated January 20, 1998, between the Registrant and PNC Bank, National Association Note Purchase Agreement between the Registrant and certain Institutional Investors, dated December 8, 2011 87 Incorporated by Reference Form Filing Date February 25, 2016 10-K Filed Herewith 10-Q May 7, 2012 10-K February 25, 2011 10-K February 24, 2012 10-K February 21, 2013 10-K February 21, 2013 10-K February 21, 2014 14A April 5, 2005 10-K February 27, 2007 10-K February 24, 2012 10-K February 19, 2015 10-K February 25, 2016 10-Q November 15, 2001 14A 14A March 23, 2018 March 24, 2011 10-Q May 2, 2013 10-Q May 13, 1998 8-K December 13, 2011 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 88 OPERATOR ALFREDOB Filed Herewith X X X X X Incorporated by Reference Form Filing Date December 13, 2011 8-K February 27, 2013 February 27, 2013 October 17, 2018 Exhibit No. 10.46 10.47 10.48 10.49 21.00 23.00 31.10 31.20 32.00 8-K 8-K 8-K Exhibit Description Restrictive Legends on Notes subject to Note Purchase Agreement between the Registrant and certain Institutional Investors, dated December 8, 2011 Note Purchase Agreement between the Registrant and certain Institutional Investors, dated February 26, 2013 Restrictive Legends on Notes subject to Note Purchase Agreement between the Registrant and certain Institutional Investors, dated February 26, 2013 Fourth Amended and Restated Credit Agreement dated as of October 17, 2018 among the Company and Certain Subsidiaries as Borrowers; the Lenders party thereto; Bank of America N.A., as Administrative Agent, Swingline Lender, and L/C Issuer; Merrill Lynch, Pierce, Fenner & Smith Incorporated, JPMorgan Chase Bank, N.A., and Wells Fargo Securities, LLC, as Joint Lead Arrangers and Joint Bookrunners; JPMorgan Chase Bank, N.A., and Wells Fargo, N.A., as Syndication Agents; and Citizens Bank, N.A., as Documentation Agents Subsidiaries of the Registrant Consent of Independent Registered Public Accounting Firm Certification of David C. Adams, Chairman and CEO, Pursuant to Rule 13a - 14(a) Certification of Glenn E. Tynan, Chief Financial Officer, Pursuant to Rule 13a - 14(a) Certification of David C. Adams, Chairman and CEO and Glenn E. Tynan, Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350 Indicates contract or compensatory plan or arrangement * 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document 88 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 89 OPERATOR ALFREDOB CURTISS-WRIGHT CORPORATION and SUBSIDIARIES SCHEDULE II – VALUATION and QUALIFYING ACCOUNTS for the years ended December 31, 2018, 2017, and 2016 (In thousands) Description Deducted from assets to which they apply: December 31, 2018 Tax valuation allowance Total December 31, 2017 Tax valuation allowance Total December 31, 2016 Tax valuation allowance Total Balance at Beginning of Period Additions Charged to Costs and Expenses Charged to Other Accounts Balance at End of Period Deductions 12,322 108 17(1) 801 11,646 $12,322 $ 108 $ 17 $ 801 $ 11,646 17,776 $17,776 17,895 $17,895 1,471 $1,471 1,951 $1,951 125(1) 7,050(3) 12,322 $ 125 $7,050 $12,322 (181)(1) 1,889(2) $(181) $1,889 17,776 $17,776 (1) Primarily foreign currency translation adjustments. (2) Capital loss on sale of upstream oil and gas business. (3) $4.3 million relates to the reduction of the U.S. corporate income tax rate due to the Tax Act. 89 <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 90 OPERATOR ALFREDOB Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES Date: February 27, 2019 CURTISS-WRIGHT CORPORATION (Registrant) By: /s/ David C. Adams David C. Adams Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Date: February 27, 2019 Date: February 27, 2019 Date: February 27, 2019 Date: February 27, 2019 Date: February 27, 2019 Date: February 27, 2019 Date: February 27, 2019 Date: February 27, 2019 Date: February 27, 2019 Date: February 27, 2019 Date: February 27, 2019 By: /s/ Glenn E. Tynan Glenn E. Tynan Vice President and Chief Financial Officer By: /s/ K. Christopher Farkas K. Christopher Farkas Vice President of Finance and Corporate Controller By: /s/ David C. Adams David C. Adams Director By: /s/ Dean M. Flatt Dean M. Flatt Director By: /s/ S. Marce Fuller S. Marce Fuller Director By: /s/ Bruce D. Hoechner Bruce D. Hoechner Director By: /s/ Allen A. Kozinski Allen A. Kozinski Director By: /s/ John B. Nathman John B. Nathman Director By: /s/ Robert J. Rivet Robert J. Rivet Director By: /s/ Albert E. Smith Albert E. Smith Director By: /s/ Peter C. Wallace Peter C. Wallace Director 90 <12345678>Clean JOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 91 OPERATOR ALFREDOB 2018 RECONCILIATIONS Year ended December 31 (Dollars in millions, except percentages; unaudited) Sales Commercial/Industrial Defense Power Total sales Operating income (expense) Commercial/Industrial Defense Power Total segments Corporate and other Total operating income Interest expense Other income, net Earnings before income taxes Provision for income taxes Net earnings Diluted earnings per share Diluted shares outstanding Effective tax rate Operating margins Commercial/Industrial Defense Power Total operating margin 2018 Reported (GAAP) 2018 Adjustments(1) (Non-GAAP) 2018 Adjusted (Non-GAAP) $1,209.2 554.4 648.3 $2,411.8 $ 182.7 128.4 98.9 $ 410.0 (36.3) $ 373.6 (34.0) 16.6 $ 356.2 (80.5) $ 275.7 $ 6.22 $ 44.3 22.6% 15.1% 23.2% 15.2% 15.5% $ — — — $ — $ — — 8.6 $ 8.6 — $ 8.6 — — $ 8.6 $ (1.9) $ 6.7 $0.15 — — +140bps +30bps $1,209.2 554.4 648.3 $2,411.8 $ 182.7 128.4 107.5 $ 418.6 (36.3) $ 382.3 (34.0) 16.6 $ 364.9 (82.4) $ 282.4 $ 6.37 $ 44.3 22.6% 15.1% 23.2% 16.6% 15.8% Note: Amounts may not add to the total due to rounding. (1) Adjusted financials are defined as Reported Operating Income, Operating Margin and Diluted EPS under GAAP, and excludes the impact of first year purchase accounting costs associated with acquisitions, specifically one-time inventory step-up, backlog amortization and transaction costs. <12345678>CleanJOB TITLE Curtis Wright Corporation 10K REVISION 3 SERIAL DATE Tuesday, March 12, 2019 JOB NUMBER 355625-1 TYPE PAGE NO. 92 OPERATOR ALFREDOB 2018 RECONCILIATIONS Year ended December 31 (Dollars in millions, except percentages; unaudited) Net cash provided by operating activities Capital expenditures Free cash flow Free cash flow conversion 2018 Reported $336,273 (53,417) $282,856 103% 2018 Adjustments(1) (Pension) — $ — $50,000 — 2018 Adjusted $ — — $332,856 121% (1) Adjusted free cash flow (FCF) is defined is cash flow from operations less capital expenditures, and excludes voluntary contributions to the Company’s corporate defined benefit pension plan. Adjusted FCF conversion is defined as adjusted free cash flow divided by net earnings from continuing operations. <12345678>CleanShareholder Information Corporate Headquarters 130 Harbour Place Drive, Suite 300 Davidson, NC 28036 www.curtisswright.com Tel: (704) 869-4600 Annual Meeting The 2019 annual meeting of stockholders will be held on Thursday, May 9, 2019, at the Homewood Suites by Hilton, 125 Harbour Place Drive, Davidson, NC, 28036, commencing at 1:00 p.m. local time. 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, 2018, the approximate number of registered holders of record of common stock, par value of $1.00 per share of the Corporation, was 3,294. 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 2018 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, NY 11717 or overnight to 1155 Long Island Avenue, Brentwood, NY 11717. Please include your name, address and telephone number with all correspondence. Telephone inquiries may be made toll-free to (855) 449-0995, or to (720) 864-4772 internationally. Internet inquiries should be directed to http://shareholder.broadridge.com/curtisswright and by email to shareholder@ broadridge.com. Hearing-impaired shareholders are invited to log on to the website and select the Live Chat option. Direct Stock Purchase Plan/Dividend Reinvestment Plan A plan is available to purchase or sell shares of Curtiss-Wright common stock. The plan provides a low-cost alternative to the traditional methods of buying, holding and selling stock. The plan also provides for the automatic reinvestment of Curtiss-Wright dividends. For more information, contact our transfer agent, Broadridge Corporate Issuer Solutions, Inc., P.O. Box 1342, Brentwood, NY 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, Senior Director of Investor Relations, at (704) 869-4600 or investor@curtisswright.com. Shareholder Communications Any stockholder wishing to communicate directly with our Board of Directors should write to Albert E. Smith, c/o Curtiss-Wright Corporation, 130 Harbour Place Drive, Suite 300, Davidson, NC 28036. 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, Senior Director of Investor Relations, at the Corporate Headquarters or through the Investor Relations section of the Corporation’s website: www.curtisswright.com. Curtiss-Wright Corporation 130 Harbour Place Drive, Suite 300 Davidson, N.C. 28036 www.curtisswright.com 

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