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Exhibit Index - Page 26
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
[ ] 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 13-0612970
- ------------------------------- ----------------------------------
(State or other jurisdiction of I.R.S. Employer Identification No.
incorporation or organization)
1200 Wall Street West, Lyndhurst, NJ 07071
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 896-8400
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class 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 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, and (2) has been subject to such filing requirements
for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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. [ ]
The aggregate market value of the voting stock held by non-affiliates* of the
Registrant is $230,905,610.00 (based on the closing price of the Registrant's
Common Stock on the New York Stock Exchange on March 5, 2000 of $47.65).
Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock, as of the latest practicable date.
Number of Shares
Class Outstanding at March 5, 2001
----- ----------------------------
Common Stock, par value $1 per share 10,050,468
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders of the Registrant for the year
ended December 31, 2000 are incorporated by reference into Parts II, III, and
IV. Portions of the Proxy Statement of the Registrant with respect to the 2001
Annual Meeting of Stockholders are incorporated by reference into Part III.
- --------
* Shares held by Unitrin, Inc. and Argonaut Group, Inc. have been excluded from
the amount shown solely because of the definition of the term "affiliate" in the
regulations promulgated pursuant to the Securities Exchange Act of 1934. Also,
for purposes of this computation, all directors and executive officers of
Registrant have been deemed to be affiliates, but the Registrant disclaims that
any of such directors or officers is an affiliate. See material referred to
under Item 12, below.
INDEX TO FORM 10-K
PART I
Item 1. Business
Item 1a. Executive Officers and Directors of the Registrant as of
December 31, 2000
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 7a. Market Risk Disclosure
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K
FORWARD-LOOKING INFORMATION
Except for historical information, this Annual Report on Form 10-K may be deemed
to contain "forward-looking" information. Examples of forward-looking
information include, but are not limited to, (a) projections of or statements
regarding return on investment, future earnings, interest income, other income,
earnings or loss per share, investment mix and quality, growth prospects,
capital structure and other financial terms, (b) statements of plans and
objectives of management, (c) statements of future economic performance, and (d)
statements of assumptions, such as economic conditions underlying other
statements. Such forward-looking information can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should," "anticipates," or the negative of any of the foregoing or other
variations thereon or comparable terminology, or by discussion of strategy. No
assurance can be given that the future results described by the forward-looking
information will be achieved. Such statements are subject to risks,
uncertainties, and other factors which could cause actual results to differ
materially from future results expressed or implied by such forward-looking
information. Such statements in this Annual Report include, without limitation,
those contained in (a) Item 1. Business, (b) Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations and (c) Item 8. Notes
to the Consolidated Financial Statements including, without limitation, the
Environmental Matters Note. Important factors that could cause the actual
results to differ materially from those in these forward-looking statements
include, among other items, (a) a reduction in anticipated orders; (b) an
economic downturn; (c) unanticipated environmental remediation expenses or
claims; (d) changes in the need for additional machinery and equipment and/or in
the cost for the expansion of the Corporation's operations; (e) changes in the
competitive marketplace and/or customer requirements; (f) an inability to
perform customer contracts at anticipated cost levels and (g) other factors that
generally affect the business of companies operating in the Corporation's
segments.
Introduction
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Pursuant to the Securities Exchange Act of 1934, the Registrant,
Curtiss-Wright Corporation hereby files its Annual Report on Form 10-K for the
fiscal year ended December 31, 2000. References in the text to the
"Corporation," "Company," "Curtiss-Wright" or the "Registrant" include
Curtiss-Wright Corporation and its consolidated subsidiaries unless the context
indicates otherwise. References to the Company's "Annual Report" are to its 2000
Annual Report to Stockholders, which is attached hereto as Exhibit 13.
PART I
Item 1. Business.
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General Business
- ---------------------
On November 6, 2000, the Company and Unitrin, Inc. ("Unitrin"), the
holder of approximately 44% of the Company's outstanding capital stock,
announced a series of transactions that will permit Unitrin to distribute to its
stockholders in a tax-free distribution the approximately 4.4 million shares of
the Company's common stock currently held by Unitrin. In order to permit this
distribution to be tax-free for U.S. federal income tax purposes, the Company
proposed to make certain changes to its capital structure.
The proposed transactions (the "recapitalization") between the Company
and Unitrin will also result in the creation of a new class of common stock of
the Company. The recapitalization is being proposed because current U.S. federal
income tax law requires that, in order for the distribution to be tax-free to
Unitrin and its stockholders, Unitrin must own, at the time of the distribution,
capital stock of the Company having the right to elect at least 80% of our board
of directors, and must distribute all of that stock to its stockholders in a
single transaction. The Company's common stock currently held by Unitrin will be
converted on a one for one basis into approximately 4.4 million shares of Class
B common stock of the Company. Unitrin will distribute all of the Class B common
stock issued to Unitrin in the recapitalization to its stockholders immediately
following the recapitalization. Each Curtiss-Wright stockholder other than
Unitrin will retain its shares of Curtiss-Wright common stock. Due to continuing
consideration of the transaction, the filing date of February 16, 2001 for the
proxy statement relating to the recapitalization, as mentioned in the Company's
2000 Annual Report, has been postponed, but it is anticipated to be filed in the
first half of 2001. The distribution of the Class B common stock is also
expected to be completed in the first half of 2001, subject to, among other
things, approval of the tax-free status of the distribution by the Internal
Revenue Service and approval by the stockholders of the Company at a Special
Meeting of Stockholder also anticipated to be held in the first half of 2001.
If the Recapitalization and related corporate governance amendments are
approved by the stockholders of the Company, as detailed below, the holders of
shares of Class B common stock will be entitled to elect at least 80% of our
board of directors. The holders of shares of common stock will have the right to
elect the remaining members of our board of directors. In all other respects the
rights of the holders of the common stock and the Class B common stock will be
identical, including with respect to voting rights on fundamental transactions
affecting the Company. The minimum number of directors on our board will be set
at five so the holders of common stock will always be assured of representation.
Business Description
- ------------------------------
Curtiss-Wright Corporation was incorporated in 1929 under the laws of the
State of Delaware. During 1998, the Company adopted the Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information" (SFAS No. 131). Consistent with the requirements of SFAS
No. 131, the Company now reports its operations in three Segments: Motion
Control, Metal Treatment, and Flow Control.
Motion Control
- -----------------------------------------
This segment of the corporation primarily designs, develops and
manufactures flight control actuation systems and components for the aerospace
industry. Manufactured products offered consist of electro-mechanical and
hydro-mechanical actuation components and systems, which are designed to
position aircraft control surfaces, or to operate canopies, cargo doors, weapons
bay doors or other devices used on aircraft. They include actuators and control
systems for the Boeing 737, 747, 757, 767 and 777 jet airliners, the Lockheed
Martin F-16 Falcon fighter, the Boeing F/A-18 fighter, the F-22 Raptor fighter
jointly developed by Lockheed Martin and Boeing, the Bell Boeing V-22 Osprey,
and the Sikorsky Black Hawk and Seahawk helicopters. The segment is also
developing wing flap actuators for business jet and small cargo aircraft. In
1999 and 2000, the Corporation relocated its manufacturing and overhaul
operations from its facility in Fairfield, New Jersey to its facilities in
Shelby and Gastonia, North Carolina. In addition, the segment's engineering and
development functions were relocated to a new facility in Pine Brook, New
Jersey.
The segment also offers electro-mechanical and electro-hydraulic actuation
components and systems including electronic controls to the military tracked and
wheeled vehicle, high speed railroad train, and commercial marine propulsion
markets. These products, which are designed and manufactured at the segment's
facility in Neuhausen am Rheinfall, Switzerland, primarily consist of drives and
suspension systems for armored military vehicles sold to defense equipment
manufacturers, and tilting systems for high speed railway car applications.
The actuation and control products and services of this segment are
marketed directly to customers by employees of the segment. These products are
sold in competition with a number of other system suppliers, most of which have
broader product lines and financial, technical, and human resources greater than
those of the segment. Competition is primarily on the basis of engineering
capability, quality and price and is directed to the placement of systems to
perform control and actuation functions on the limited number of new production
programs.
As a related service within this segment, Curtiss-Wright also provides
commercial airlines, the military and general aviation customers with component
overhaul and repair services. The services provided include the overhaul and
repair of hydraulic, pneumatic, mechanical, electro-mechanical, and electronic
components, aircraft parts sourcing, and component exchange services for a wide
array of aircraft. The segment provides these services from facilities in
Gastonia, North Carolina; Miami, Florida; Karup, Denmark; and a marketing and
distribution facility in Singapore.
This segment's overhaul and repair services are sold in competition with a
number of other overhaul and repair providers. Competition in the overhaul and
repair business is based upon quality, delivery and price. Marketing is
accomplished through independent sales representatives and by direct sales
employees.
The segment also sells a commercial rescue tool using its "Power Hinge"(TM)
aerospace technology under the trademark Power Hawk(R). Various accessories and
related equipment are also offered. The primary use for this tool is the
extrication of automobile accident victims.
Sales by this segment to the Boeing Company in 2000, 1999, and 1998 were
$41.6 million, $42.9 million, and $39.3 million, respectively. The loss of the
Boeing Company as a customer would have a material adverse affect on this
segment. U.S. Government direct and end use sales of this segment in 2000, 1999,
and 1998 were $21.2 million, $17.4 million, and $19.7 million, respectively. The
loss of this business would also have a material adverse effect on this segment.
The backlog of this segment as of January 31, 2001 was $123.2 million as
compared with $164.4 million as of January 31, 2000. Of the January 31, 2001
amount, approximately 63% is expected to be shipped during 2001. None of the
business of this segment is seasonal, except for the performance of the
Curtiss-Wright Drive Technology business unit, which has a very seasonal volume
pattern with sales being concentrated in the last half of the year. Raw
materials are generally available in adequate quantities from a number of
suppliers.
Metal Treatment
- ---------------------
This segment of Curtiss-Wright provides approximately 50 metal-treating
services, with its principal services being "shot-peening" and "heat treating."
"Shot-peening" is the process by which durability of metal parts are improved by
the bombardment of the part's surface with spherical media such as steel shot,
ceramic or glass beads to compress the outer layer of the metal. "Heat treating"
is a metallurgical process of subjecting metal objects to heat and/or cold, or
otherwise treating the material to change the physical and/or chemical
characteristics or properties of the material. An overview of the metal treating
services is provided on page 15 in the Company's Annual Report, such description
being incorporated by reference in this Form 10-K. These processes are used
principally to improve the service life, strength and durability of metal parts.
They are also used to form curvatures in metal panels, which are assembled as
wingskins of commercial and military planes, and to manufacture valve reeds used
in compressors. The segment provides these services for a broad spectrum of
customers in various industries, including aerospace, automotive, construction
equipment, oil, petrochemical, metal working, and other industries. Operations
are conducted from 39 facilities located in the United States, Canada, England,
France, Germany, and Belgium.
The services and products of this segment are marketed directly by
employees of the segment. Although numerous companies compete with the segment
in this field, and many customers for the services provided have the resources
to perform such services themselves, Curtiss-Wright believes that its greater
technical know-how and superior quality provide it with a competitive advantage.
The segment also competes on the basis of quality, service and price.
The backlog of this segment as of January 31, 2001 was $1.2 million, as
compared with $1.4 million as of January 31, 2000. All of such backlog is
expected to be shipped in the first quarter of 2001. The business of this
segment is not seasonal. Raw materials are generally available in adequate
quantities from a number of suppliers, and the segment is not materially
dependent upon any single source of supply. No single customer accounted for 10%
or more of total sales in 2000, 1999, and 1998 and the active customer base
numbers in excess of 5,000.
Flow Control
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At its facility located in East Farmingdale, New York, this segment
designs, manufactures, refurbishes and tests highly engineered valves of various
types and sizes, such as motor operated and solenoid operated globe, gate,
control and safety relief valves. These valves are used to control the flow of
liquids and gases and to provide safety relief in high-pressure applications.
This segment also supplies actuators and controllers for its own valves as well
as for valves manufactured by others. The primary customers for these valves are
the U.S. Navy, which uses them in nuclear propulsion systems, and owners and
operators of commercial power utilities who use them in new and existing nuclear
and fossil fuel power plants. All of the new nuclear plants are outside the U.S.
and recent sales for such plants have been in Korea and Taiwan. Sales are made
by responding directly to requests for proposals from customers. The production
of valves for the U.S. Navy and for new power plants is characterized by long
lead times from order placement to delivery.
Through its Enertech operation, the segment also designs, manufactures, and
distributes additional flow control products for sale into global commercial
nuclear power markets from its facility in Brea, California. Enertech's product
lines include: snubbers, advanced valves, valve actuators, test and diagnostic
equipment, as well as related diagnostic services. In addition, the segment now
provides training, on-site services, staff augmentation and engineering programs
relating to nuclear power plants. The segment also provides hydraulic power
units and components primarily for the automotive and entertainment industries.
In August 1999, the segment further expanded its product lines and
distribution base through the acquisitions of Farris Engineering ("Farris") and
Sprague Products ("Sprague"), two former business units of Teledyne Fluid
Systems, Inc. Farris is one of the world's leading manufacturers of
spring-loaded and pilot operated pressure-relief valves supplying products and
services to the processing industries. Farris' primary customers are refineries,
petrochemical/chemical plants and pharmaceutical manufacturing facilities.
Farris products are manufactured in Brecksville, Ohio and Brantford, Ontario. In
January 2001, Farris discontinued its service and distribution operations
located in Edmonton, Alberta.
Sprague, also located in Brecksville, Ohio, manufactures and provides
specialty hydraulic and pneumatic valves, air-driven pumps and gas boosters
under the "Sprague" and "PowerStar" trade names. Sprague products are used
generally in various industrial applications as well as directional control
valves for truck transmissions and car transport carriers.
Strong competition in flow control products and services is encountered
primarily from a large number of domestic and foreign sources. Sales to
commercial users are accomplished through independent sales representatives and
by direct sales employees. These products and services are sold to customers who
are sophisticated and demanding. Performance, quality, technology, delivery and
price are the principal drivers of competition.
The backlog of this segment as of January 31, 2001 was $52.6 million as
compared with $66.8 million as of January 31, 2000. Of the January 31, 2001
amount, approximately 70% is expected to be shipped during 2001. Approximately
65% of this segment's backlog is comprised of orders with the U.S. Navy through
its prime contractor, the Plant Apparatus Division of Bechtel Plant Machinery,
Inc., ("Bechtel") a unit of Bechtel Group, Inc. Sales by this segment to Bechtel
accounted for 19% of gross sales in 2000. The loss of this customer would have a
significant adverse impact on the business of this segment.
None of the business of this segment is seasonal. Raw materials are
generally available in adequate quantities from a number of suppliers.
Other Information
- ------------------------------
Government Sales
- --------------------------
From 1998 to 2000, the Company's direct sales to the United States
Government and sales for United States Government and foreign government end use
aggregated approximately 17% of total sales for all three segments. United
States Government sales, both direct and subcontract, are generally made under
one of the standard types of government contracts, including fixed price and
fixed price-redeterminable.
In accordance with normal practice in the case of United States Government
business, 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 by
the Corporation of its allowable incurred costs and a proportionate share of the
profit or fee on the work completed, consistent with regulations of the United
States Government. Contracts for Navy nuclear valves usually provide that
Curtiss-Wright absorb most of any overrun of "target" costs. In the event that
there is a cost underrun, the customer is to recoup a portion of the underrun
based upon a formula in which the customer's portion increases as the underrun
exceeds certain established levels.
It is the policy of the Corporation to seek customary progress payments on
certain of its contracts. Where such payments are obtained by the Corporation
under United States Government prime contracts or subcontracts, they are secured
by a lien in favor of the Government on the materials and work in process
allocable or chargeable to the respective contracts. (See Notes 1.C, 4 and 5 to
the Consolidated Financial Statements, on pages 29, 31 and 32 of the Annual
Report, which notes are incorporated by reference in this Form 10-K Annual
Report.) In the case of most valve products for United States Government end
use, the contracts typically provide for the retention by the customer of
stipulated percentages of the contract price, pending completion of contract
closeout conditions.
Research and Development
- ----------------------------------------
Research and development expenditures incurred by the Corporation amounted
to $3,443,000 in 2000 as compared with $2,801,000 in 1999 and $1,346,000 in
1998. The Corporation owns and is licensed under a number of United States and
foreign patents and patent applications, which have been obtained or filed over
a period of years. Curtiss-Wright does not consider that the successful conduct
of its business is materially dependent upon the protection of any one or more
of the patents, patent applications or patent license agreements under which it
now operates.
Environmental Protection
- ------------------------
The effect of compliance upon the Corporation with present legal
requirements concerning protection of the environment is described in Notes 1.H
and 11 to the Consolidated Financial Statements which appears on pages 30 and
36, respectively of the Registrant's Annual Report and is incorporated by
reference in this Form 10-K Annual Report.
Employees
- ---------
At the end of 2000, the Corporation had 2,286 employees, 194 of which were
represented by labor unions and are covered by collective bargaining agreements.
Certain Financial Information
- -----------------------------
The industry segment information is described in Note 14 to the
Consolidated Financial Statements, which appears on pages 38 to 40 of the
Registrant's Annual Report to Stockholders, and is incorporated by reference in
this Form 10-K Annual Report. In 2000, 1999, and 1998, foreign operations of the
Corporation generated 26.4%, 25.6%, and 30.2%, respectively, of the
Corporation's pre-tax earnings. The Company does not regard the risks associated
with these foreign operations to be materially greater than those applicable to
its business in the U.S.
Item 2. Properties.
- -----------------------
The principal physical properties of the Corporation and its subsidiaries
are described below:
Owned/
Location Description(1) Leased Principal Use
East Farmingdale, 215,000 sq. ft. Owned(2) Flow Control
New York on 11 acres
Chester, Wales 175,666 sq. ft. Owned Metal Treatment
United Kingdom
Owned/
Location Description(1) Leased Principal Use
Shelby, 137,440 sq. ft. Owned Motion Control
North Carolina on 29 acres
Brampton, 86,650 sq. ft. on Owned Metal Treatment
Ontario, Canada 8 acres
Columbus, Ohio 75,000 sq. ft. Owned Metal Treatment
on 9 acres
Brecksville, Ohio 68,000 sq. ft Owned Flow Control
on 5.56 acres
Miami, Florida 65,000 sq. ft. Leased Motion Control
on 2.6 acres
Fort Wayne, 62,589 sq. ft. on Owned Metal Treatment
Indiana 3.2 acres
Gastonia, 52,860 sq. ft. Owned Motion Control
North Carolina on 7.5 acres
Pine Brook, 45,000 sq. ft. within Leased Motion Control
New Jersey a business complex
Neuhausen am, 40,100 sq. ft. within Leased Motion Control
Rheinfall, a business complex
Switzerland
York, 32,396 sq. ft. Owned Metal Treatment
Pennsylvania on 3.6 acres
Brea, California 30,550 sq. ft. Leased Flow Control
on 1.76 acres
Brantford, 21,000 sq. ft Owned Flow Control
Ontario, Canada on 8.13 acres
(1) Sizes are approximate. Unless otherwise indicated, all properties are owned
in fee, are not subject to any major encumbrance and are occupied primarily by
factory and/or warehouse buildings.
(2) The Suffolk County Industrial Development Agency, in connection with the
issuance of an industrial revenue bond, holds title to approximately six acres
of land and the building located thereon.
In addition to the properties listed above, the Corporation leases an
aggregate of approximately 390,090 square feet of space at twenty-three
different locations in the United States and England and owns buildings
encompassing about 392,704 square feet in eighteen different locations in the
United States, France, Germany, Belgium and England. None of these properties
individually is material to the Company's business.
The Corporation also owns a multi-tenant industrial rental facility located
in Wood-Ridge, New Jersey encompassing 2,322,000 square feet on 138 acres. The
former manufacturing facility has approximately 2,264,000 square feet leased to
other parties with the remaining 58,000 square feet vacant and available for
lease. Additionally, Curtiss-Wright leases approximately 14,000 square feet of
office space in Lyndhurst, New Jersey, for its corporate office.
The buildings on the properties referred to in this Item are well
maintained, in good condition, and are suitable and adequate for the uses
presently being made of them.
The following tracts of property, owned by the Registrant, are not
attributable to a particular Segment and are being held for sale: Hardwick
Township, New Jersey (the "Hardwick Property"), 21 acres; and Fairfield, New
Jersey, 39.8 acres (the "Fairfield Property"). The Company is also currently
engaged in negotiations to sell the Fairfield Property. The Company has also
entered into a contract for sale to sell the Hardwick Property. The contract is
continent upon zoning approval. In December 2000, the Company sold 112 acres
located in Perico Island, Florida (the bulk of which was below water) for the
amount of $300,000. The Corporation also owns approximately 7.4 acres of land in
Lyndhurst, New Jersey, which is leased, on a long-term basis, to the owner of
the commercial building located on the land.
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. The
Corporation does not believe that disposition of any of these matters will have
a material adverse effect on the Corporation's consolidated financial position
or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders.
- --------------------------------------------------------------------------
Not applicable.
PART II
Item 5. Market for Registrant's Common Stock
And Related Stockholder Matters.
- ----------------------------------------------------------
See the information contained in the Registrant's Annual Report on the
inside back cover under the captions "Common Stock Price Range," "Dividends,"
and "Stock Exchange Listing" which information is incorporated herein by
reference. The approximate number of record holders of the Common Stock, $1.00
par value, of the Registrant was 3,564 as of March 5, 2001.
Item 6. Selected Financial Data.
- ---------------------------------------
See the information contained in the Registrant's Annual Report on page 19
under the caption "Consolidated Selected Financial Data," which information is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
- -------------------------------------------------------------------------
See the information contained in the Registrant's Annual Report on pages 20
through 23, under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which information is incorporated herein
by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
- -------------------------------------------------------------------------------
The Corporation is exposed to certain market risks from changes in interest
rates and foreign currency exchange rates as a result of its global operating
and financing activities. Although foreign currency translation had an unusually
adverse impact on sales and operating income in 2000, the Corporation seeks to
minimize the risks from these interest rate and foreign currency exchange rate
fluctuations through its normal operating and financing activities and, when
deemed appropriate, through the use of derivative financial instruments. The
Corporation did not use such instruments for trading or other speculative
purposes and did not use leveraged derivative financial instruments during the
year ended December 31, 2000. Information regarding the Corporation's accounting
policy on financial instruments is contained in Note 1.G to the Consolidated
Financial Statements on page 29 of the Annual Report, which is incorporated by
reference in this Form 10-K Annual Report.
The Corporation's market risk for a change in interest rates relates
primarily to the debt obligations. Approximately 62% of the Corporation's debt
at December 31, 2000 and 49% of the December 31, 1999 debt is comprised of
Industrial Revenue Bond financing. As described in Note 8 to the Consolidated
Financial Statements on page 34 of the Annual Report, which is incorporated by
reference in this Form 10-K Annual Report, at December 31, 2000, the Corporation
has outstanding variable rate debt borrowings of 18,250,000 Swiss Francs under
its revolving credit agreement arising from the purchase of SIG Antriebstechnik
AG to mitigate its currency exposure.
Financial instruments expose the Corporation to counter-party credit
risk for nonperformance and to market risk for changes in interest and currency
rates. The Corporation manages exposure to counter-party credit risk through
specific minimum credit standards, diversification of counter-parties and
procedures to monitor concentrations of credit risk. The Corporation monitors
the impact of market risk on the fair value and cash flows of its investments by
considering reasonably possible changes in interest rates and by limiting the
amount of potential interest and currency rate exposures to amounts that are not
material to the Corporation's consolidated results of operations and cash flows.
Item 8. Financial Statements and Supplementary Data.
- ------------------------------------------------------------------
The following Consolidated Financial Statements of the Registrant and
its subsidiaries, and supplementary financial information, are included in the
Registrant's Annual Report, which information is incorporated herein by
reference.
Consolidated Statements of Earnings for the years ended December 31,
2000, 1999, and 1998, page 25.
Consolidated Balance Sheets at December 31, 2000 and 1999, page 26.
Consolidated Statements of Cash Flows for the years ended December 31,
2000, 1999, and 1998, page 27.
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 2000, 1999, and 1998, page 28.
Notes to Consolidated Financial Statements, pages 29 through 40, inclusive,
and Quarterly Results of Operations, page 19.
Report of Independent Accountants for the years ended December 31, 2000,
1999, and 1998, page 24.
Item 9. Changes in and Disagreements with Accountants
On Accounting and Financial Disclosure.
- ---------------------------------------------------------------------
Not applicable.
PART III
Item 10. Directors and Executive Officers
Of the Registrant.
- ----------------------------------------------------
Information required in connection with directors and executive officers is
set forth below, as well as under the caption "Election of Directors," in the
Registrant's Proxy Statement with respect to the Corporation's 2001 Annual
Meeting of Stockholders (the "Proxy Statement"), which information is
incorporated herein by reference.
Executive Officers of the Registrant
--------------------------------------------
The following table sets forth the names, ages, and principal occupations
and employment of all executive officers of the Registrant. The period of
service is for at least the past five years and such occupations and employment
are with Curtiss-Wright Corporation, except as otherwise indicated:
Principal Occupation
Name and Employment Age
Martin R. Benante Chairman and Chief Executive 48
Officer since April 2000; formerly
President and Chief Operating Officer;
from April 1999 to April 2000; formerly
Vice President of the Corporation
from April 1996 to April 1999;
President of Curtiss-Wright Flow
Control Corporation, a wholly-owned
Subsidiary from March 1995 to April 1999
David Lasky Formerly Chairman from May 1995 to 68
April 2000; formerly Chief Executive Officer
from April 1999 to April 2000; formerly
President from 1993 to April 1999.1
Gerald Nachman Executive Vice President; 71
President of Metal Improvement
Company, Inc., a wholly owned subsidiary,
since May 1970.
- -------------------------
1 On April 11, 2000, Mr. Lasky retired from the office of Chairman and Chief
Executive Officer of the Corporation.
Principal Occupation
Name and Employment Age
George J. Yohrling Vice President; President, Curtiss-Wright 60
Flight Systems, Inc., a wholly owned subsidiary,
since April 1998; Executive Vice President
for Aerospace Operations of Curtiss-Wright Flight
Systems, Inc. from April 1997 to April 1998,
Senior Vice President from July 1996 to April
1997 of Curtiss-Wright Flight Systems, Inc.;
Vice President and General Manager of Curtiss-
Wright Flight Systems/Shelby, Inc.,
then a wholly owned subsidiary.
Robert A. Bosi Vice President - Finance since January 1993. 45
Joseph Napoleon Vice President since February 2001; 54
President, Curtiss-Wright Flow Control
Corporation, a wholly owned subsidiary,
since August 1999; Vice President and General
Manager of Curtiss-Wright Flow Control
Corporation from April 1999 to August 1999;
Vice President, Curtiss-Wright Flow Control
Corporation from October 1995 to April 1999.
Brian D. O'Neill Secretary, General Counsel since April 1999; 51
Assistant General Counsel from December
1997 until April 1999; Staff Attorney and
Associate General Counsel from December
1980 to December 1997.
Gary J. Benschip Treasurer since February 1993. 53
Glenn E. Tynan Controller since June 2000. 42
Vice President and Corporate Controller
of the Movado Group until May 2000;
Corporate Controller of Dexter Corporation
from 1998 to 1999; Vice President Finance
and Controller of Lightolier from 1995 to 1998
The executive officers of the Registrant are elected annually by the Board
of Directors at its organization meeting in May and hold office until the
organization meeting in the next subsequent year and until their respective
successors are chosen and qualified.
There are no family relationships among these officers, or between any of
them and any director of Curtiss-Wright Corporation, nor any arrangements or
understandings between any officer and any other person pursuant to which the
officer was elected.
Section 16(a) Beneficial Ownership Reporting Compliance
----------------------------------------------------------------------
Information required by Item 405 of Regulation S-K is set forth in the Proxy
Statement under the heading "Section 16(a) Beneficial Ownership Reporting
Compliance," which information is incorporated herein by reference.
Item 11. Executive Compensation.
- ------------------------------------------
Information required by this Item is included under the captions "Executive
Compensation" and in the "Summary Compensation Table" in the Registrant's Proxy
Statement, which information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial
Owners and Management.
- -------------------------------------------------------------
See the following portions of the Registrant's Proxy Statement, all of
which information is incorporated herein by reference: (i) the material under
the caption "Security Ownership and Transactions with Certain Beneficial Owners"
and (ii) the material included under the caption "Election of Directors."
Item 13. Certain Relationships and Related Transactions.
- ---------------------------------------------------------------------
Information required by this Item is included under the captions "Executive
Compensation" and "Security Ownership and Transactions with Certain Beneficial
Owners" in the Registrant's Proxy Statement, which information is incorporated
herein by reference.
PART IV
Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K.
- ----------------------------------------------------
(a)(1) Financial Statements:
The following Consolidated Financial Statements of the Registrant and
supplementary financial information, included in the Registrant's
Annual Report, are incorporated herein by reference in Item 8:
(i) Consolidated Statements of Earnings for the years ended
December 31, 2000, 1999, and 1998
(ii) Consolidated Balance Sheets at December 31, 2000 and 1999
(iii) Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999, and 1998
(iv) Consolidated Statements of Stockholders' Equity for the years
ended December 31, 2000, 1999, and 1998
(v) Notes to Consolidated Financial Statements
(vi) Report of Independent Accountants for the years ended December
31, 2000, 1999, and 1998
(a)(2) Financial Statement Schedules:
The items listed below are presented herein on pages 25 and 26 of this
Form 10-K.
Report of Independent Accountants on Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts
Schedules other than those listed above have been omitted since they are not
required, are not applicable, or because the required information is included in
the financial statements or notes thereto.
(a)(3) Exhibits:
(2) Plan of acquisition, reorganization, arrangement,
liquidation, or succession
(2) (i) Asset Purchase and Sale Agreement dated July 23, 1999
between Teledyne Industries, Inc., Teledyne Industries Canada
Limited and Curtiss-Wright Corporation (incorporated by
reference to Exhibit 2.1 to Registrant's Current Report on
Form 8-K, filed September 15, 1999).
(3) Articles of Incorporation and By-laws of the Registrant
(3)(i) Restated Certificate of Incorporation as amended May 8, 1987
(incorporated by reference to Exhibit 3(a) to Registrant's
Form 10-Q Report for the quarter ended June 30, 1987).
Restated Certificate of Incorporation as amended through April
18, 1997 (incorporated by reference to Exhibit 3(i) to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997).
(3)(ii) By-laws as amended through April 30, 1999, (incorporated by
reference to Exhibit 3(ii) to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1999).
(4) Instruments defining the rights of security holders,
including indentures
(4)(i) Agreement to furnish to the Commission upon request, a copy of
any long term debt instrument where the amount of the
securities authorized thereunder does not exceed 10% of the
total assets of the Registrant and its subsidiaries on a
consolidated basis (incorporated by reference to Exhibit 4 to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1985).
(4)(ii) Revolving Credit Agreement dated December 20, 1999
between Registrant, the Lenders parties thereto from time
to time, the Issuing Banks referred to therein and Mellon
Bank, N.A., (incorporated by reference to Exhibit 4(ii)
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1999).
(4)(iii) Short-Term Credit Agreement dated as of December 20, 1999
between Registrant, the Lender Parties and Mellon Bank,
N.A., as Agent, (incorporated by reference to Exhibit
4(iii) to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1999)
(10) Material Contracts:
(i) Modified Incentive Compensation Plan, as amended
November 9, 1989 (incorporated by reference to
Exhibit 10(a) to Registrant's Form 10-Q Report for
the quarter ended September 30, 1989).*
(ii) Curtiss-Wright Corporation 1995 Long-Term Incentive
Plan (incorporated by reference to Exhibit 4.1 to
Registrant's Form S-8 Registration Statement No.
95602114 filed December 15, 1995).*
(iii) Standard Severance Agreement with Officers of
Curtiss-Wright (incorporated by reference to Exhibit
10(iv) to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1991).*
(iv) Retirement Benefits Restoration Plan as amended April
15, 1997 (incorporated by reference to Exhibit 10 to
Registrant's Form 10-Q Report for the quarter ended
June 30, 1997).*
(v) Curtiss-Wright Corporation Retirement Plan as amended
through August 1, 1997 (incorporated by reference to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997); Fourth Amendment to the
Curtiss-Wright Corporation Retirement Plan dated
October 20, 1997 (incorporated by reference to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997); Fifth Amendment to the
Curtiss-Wright Corporation Retirement Plan dated
January 1, 1998 (incorporated by reference to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997); Sixth through Ninth
Amendment to Curtiss-Wright Retirement Plan dated
April 1, 1998, April 20, 1998, April 30, 1998 and
June 30, 1998, respectively (incorporated by
reference to Exhibit a(ii) to Registrant's Quarterly
Report for the quarter ended June 30, 1998); Tenth
Amendment to the Curtiss-Wright Retirement Plan
(incorporated by reference to Exhibit 10 to
Registrant's Quarterly Report for the quarter ended
September 30, 2000).*
(vi) Curtiss-Wright Corporation Savings and Investment
Plan dated March 1, 1995 (incorporated by reference
to Exhibit (10)(vii) to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994).
First through Sixth Amendments dated effective
December 31, 1997, December 31, 1997, April 30, 1998,
January 21, 2000, July 7, 2000, and December 29,
2000, respectively, filed herewith.*
(vii) Curtiss-Wright Corporation 1996 Stock Plan for
Non-Employee Directors (incorporated by reference to
Exhibit 4.1 to Registrant's Form S-8 Registration
Statement No. 96583181, filed June 19, 1996).*
(viii) Curtiss-Wright Corporation Executive Deferred
Compensation Plan effective November 18, 1997
(incorporated by reference to Exhibit (10)(viii) to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997).*
(ix) Standard Severance Protection Agreement dated June
19, 1998 between the Registrant and Officers of the
Registrant (incorporated by reference to Exhibit A(i)
to Registrant's Quarterly Report on Form 10-Q for the
period ended June 30, 1998).*
(x) Trust Agreement dated January 20, 1998 by and between
Curtiss-Wright Corporation and PNC Bank, National
Association (incorporated by reference to Exhibit
10(a) to Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998).*
(xi) Consulting Agreement dated April 10, 2000 between
Registrant and David Lasky, filed herewith.*
(13) Annual Report to Stockholders for the year ended December 31, 2000
(21) Subsidiaries of the Registrant
(23) Consents of Experts and Counsel-see Consent of Independent Accountants
- -----------
*Management contract or compensatory plan or arrangement
(b) Reports on Form 8-K
(i) On November 7, 2000, the Company filed a report on Form 8-K
reporting conversations by Curtiss-Wright management with
financial analysts and institutional investors held on
November 7, 2000.
(ii) On November 8, 2000, the Company filed a report on Form 8-K
describing a proposed recapitalization of the Company (the
"Recapitalization") intended to facilitate the plan of
Unitrin, Inc. to spin off to its stockholders all of its
controlling equity position in the Company.
(iii) On November 8, 2000 the Company filed a report on Form 8-K
reporting the adoption by the Board of Directors of the
Company of a stockholder rights plan.
(iv) On November 28, 2000 the Company filed a report on Form 8-K
reporting conversations by Curtiss-Wright management with
certain shareholders, financial analysts and institutional
investors held on November 28, 2000.
SIGNATURES
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.
CURTISS-WRIGHT CORPORATION
(Registrant)
Date: March 16, 2001 By: /s/ Martin R. Benante
---------------------------
Martin R. Benante
Chairman and CEO
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: March 16, 2001 By: /s/ Robert A. Bosi
------------------------------
Robert A. Bosi
Vice President - Finance
Date: March 16, 2001 By: /s/ Glenn E. Tynan
------------------------------
Glenn E. Tynan
Controller
Date: March 16, 2001 By: /s/ Martin R. Benante
------------------------------
Martin R. Benante
Director
Date: March 16, 2001 By: /s/ James B. Busey
------------------------------
James B. Busey IV
Director
Date: March 16, 2001 By: /s/ S. Marce Fuller
------------------------------
S. Marce Fuller
Director
Date: March 16, 2001 By: /s/ David Lasky
------------------------------
David Lasky
Director
Date: March 16, 2001 By: /s/ William B. Mitchell
------------------------------
William B. Mitchell
Director
Date: March 16, 2001 By: /s/ John R. Myers
-------------------------------
John R. Myers
Director
Date: March 16, 2001 By: /s/ William W. Sihler
------------------------------
William W. Sihler
Director
Date: March 16, 2001 By: /s/ J. McLain Stewart
------------------------------
J. McLain Stewart
Director
PRICEWATERHOUSECOOPERS LLP [LOGO]
PricewaterhouseCoopers LLP
400 Campus Drive
P.O. Box 988
Florham Park, NJ 07932
Telephone (973) 236 4000
Facsimile (973) 236 5000
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
Of Curtiss-Wright Corporation:
Our audits of the consolidated financial statements referred to in our report
dated January 31, 2001 in the 2000 Annual Report to Shareholders of
Curtiss-Wright Corporation (which report and consolidated financial statements
are incorporated by reference in this Annual Report on Form 10-K) also included
an audit of the financial statement schedule listed in Item 14(a)(2) of this
Form 10-K. In our opinion, this financial statement schedule presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
/s/PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Florham Park, New Jersey
January 31, 2001
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
SCHEDULE II - VALUATION and QUALIFYING ACCOUNTS
for the years ended December 31, 2000, 1999, and 1998
(In thousands)
Additions
----------------------
Charged to
Balance at Charged to Other
Beginning Costs and Accounts Deductions Balance at
Description of Period Expenses -Describe -Describe End of Period
Deducted from assets to which they apply:
Reserves for doubtful accounts and notes:
Year-ended
December 31, 2000 $3,230 $803 $ -0- $1,374 $2,659
====== ==== ======== ====== ======
Year-ended
December 31, 1999 $1,910 $970 $ 733(A) $ 383 $3,230
====== ==== ======== ====== ======
Year-ended
December 31, 1998 $1,747 $352 $ 20(B) $ 209 $1,910
====== ==== ======== ====== ======
Notes:
(A) Acquired from the purchases of Drive Technology, Farris and Sprague.
(B) Acquired from the purchase of Enertech.
EXHIBIT INDEX
The following is an index of the exhibits included
in this report or incorporated herein by
reference.
Exhibit Name Page
No.
(3)(i) Restated Certificate of Incorporation as amended May 8, 1987 *
(incorporated by reference to Exhibit 3(a) to Registrant's
Form 10-Q Report for the quarter ended June 30, 1987).
Restated Certificate of Incorporation as amended through
April 18, 1997 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1997).
(3)(ii) By-laws as amended through April 30, 1999, *
(incorporated by reference to Exhibit 3(ii) to Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1999).
(4)(i) Agreement to furnish to the Commission upon request, a copy *
of any long term debt instrument where the amount of the
securities authorized thereunder does not exceed 10% of
the total assets of the Registrant and its subsidiaries on
a consolidated basis (incorporated by reference to Exhibit
4 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1985).
(4)(ii) Revolving Credit Agreement dated December 20, 1999 between *
Registrant, the Lenders parties thereto from time to time,
the Issuing Banks referred to therein and Mellon Bank,
N.A.,(incorporated by reference to Exhibit 4(ii) to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1999).
(4)(iii) Short-Term Credit Agreement dated as of December 20, 1999 *
Registrant, the Lenders parties thereto from time to time,
the Issuing Banks referred to therein and Mellon Bank, N.A.,
(incorporated by reference to Exhibit 4(iii) to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1999).
10(i)** Modified Incentive Compensation Plan, as amended November *
9, 1989 (incorporated by reference to Exhibit 10(a) to
Registrant's Form 10-Q Report for the quarter ended
September 30, 1989).
(10)(ii)** Curtiss-Wright Corporation 1995 Long-Term Incentive Plan *
(incorporated by * reference to Exhibit 4.1 to Registrant's Form
S-8 Registration Statement No. 95602114 filed December 15, 1995).
(10)(iii)**Standard Severance Agreement with Officers of Curtiss-Wright *
(incorporated by reference to Exhibit 10(iv) to Registrant's Annual
Report on Form 10-K Report for the year ended December 31, 1991).
(10)(iv)** Curtiss-Wright Corporation Retirement Benefits Restoration *
Plan as amended April 15, 1997 (incorporated by reference to Exhibit
10 to Registrant's Report on Form 10-Q Report for the quarter
ended June 30, 1997).
(10)(v)** Curtiss-Wright Corporation Retirement Plan as amended through *
August 1, 1997(incorporated by reference to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1997); Fourth
Amendment to the Curtiss-Wright Corporation Retirement Plan dated
October 20, 1997(incorporated by reference to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1997); Fifth
Amendment to the Curtiss-Wright Corporation Retirement Plan dated
January 1, 1998 (incorporated by reference to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1997); Sixth
through Ninth Amendments to Curtiss-Wright Retirement Plan dated
April 1, 1998, April 20, 1998, April 30, 1998 and June 30, 1998,
respectively, (incorporated by reference to Exhibit a(ii) to
Registrant's Quarterly Report for the quarter ended June 30, 1998);
Tenth Amendment to the Curtiss-Wright Retirement Plan (incorporated
by reference to Exhibit 10 to Registrant's Quarterly Report for the
quarter ended September 30, 2000).*
(10)(vi)** Amended Curtiss-Wright Corporation Savings and Investment Plan 30
dated March 1, 1995 (incorporated by reference to Exhibit
(10)(vii) to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994). First through Sixth Amendments dated
effective December 31, 1997, December 31, 1997, April 30, 1998,
January 21, 2000, July 7, 2000, and December 29, 2000, respectively,
filed herewith.
(10)(vii)**Curtiss-Wright Corporation 1996 Stock Plan for Non-Employee *
Directors (incorporated by reference to Exhibit 4.1 to
Registrant's Form S-8 Registration Statement No. 96583181
filed June 19, 1996).
(10)(viii)**Curtiss-Wright Corporation Executive Deferred Compensation *
Plan effective November 18, 1997 (incorporated by reference
to Exhibit 4.1 to Registrant's Form S-8 Registration
Statement No. 96583181,filed June 19, 1996).
(10)(ix)** Standard Severance Protection Agreement dated June 19, 1998 *
between the Registrant and Officers of the Registrant
(incorporated by reference to Exhibit 4.1 to Registrant's
Form S-8 Registration Statement No. 96583181, filed June 19, 1996).
(10)(x)** Trust Agreement approved April 17, 1998 dated as of January *
30, 1998 by and between Registrant and PNC Bank, National
Association (incorporated by reference to Exhibit 10(a) to
Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998).
(10)(xi)** Consulting Agreement dated April 10, 2000 between Registrant 39
and David Lasky, filed herewith.*
(13) Annual Report to Stockholders for the year ended December 46
31, 2000 (only those portions expressly incorporated
herein by reference in this document are deemed "filed.")
(21) Subsidiaries of the Registrant 87
(23) Consents of Experts and Counsel - see Consent of Independent 88
Accountants
- --------------------------
* Incorporated by reference as noted.
** Management contract or compensatory plan or arrangement.
- --------