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CURTISS WRIGHT CORP Annual Report, Year Ended Dec 31, 2002

Filing Date
Filed March 31, 2003
Period End
December 31, 2002
Security
CW
In the record · 2016–202610-K1110-Q338-K95

CW filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 95 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · May ’20May ’20
  2. Material agreement8-K · May ’22May ’22
  3. FY2024 annual report10-K · Feb ’25Feb ’25

01—Abstract

Summary

Summary of the 10-K filed March 31, 2003. Cited figures are marked; the original filing is the authoritative source.

Curtiss-Wright Corporation's 2002 Form 10-K shows a company transformed by acquisitions.

Consolidated net sales rose 50% to $513.3 milliona from $343.2 million, driven by six 2002 acquisitions, most notably the Penny & Giles/Autronics purchase (Motion Control), the Electro-Mechanical Division from Westinghouse for $80.0 million (Flow Control), and TAPCO. Reported GAAP net earnings fell 28% to $45.1 million ($4.33 per diluted share) from $62.9 million in 2001, but that comparison is distorted by a $23.0 million after-tax gain on the 2001 Wood-Ridge property sale. Management's normalized net earnings rose 2% to $41.6 million ($3.99 per diluted share), and normalized operating income from the three segments increased 32% to $65.1 million.

The balance sheet and backlog expanded materially. Total assets grew to $812.9 millionb from $500.4 million, and total debt rose to $151.9 million from $21.4 million to fund acquisitions. Year-end backlog nearly doubled to $478.5 million, including $246.9 million from 2002 acquisitions, with the Flow Control backlog up sharply on the EMD and Navy nuclear work.

Operating cash flow improved to $89.0 millionc from $61.3 million, though free cash flow after $35.0 million of capex was reduced by $164.7 million of acquisition spending. Investors should weigh several risks. Concentration is significant: U.S. government business reached 39% of 2002 revenue, Boeing fell to 15% of Motion Control segment sales, and Bechtel is about 30% of Flow Control segment sales.

The company also assumed $73.7 milliond of underfunded pension and postretirement liabilities and a $13.6 million environmental reserve with EMD, and short-term credit of $90 million must be extended in May 2003. Management expects lower pension income in 2003 and capital expenditures of about $50 million.

02—Key points

Key Highlights

  1. Net sales up 50% to $513.3 million in 2002, driven largely by acquisitions; organic base-business growth was more modest and commercial aerospace weakened.
  2. GAAP diluted EPS of $4.33 versus $6.14 in 2001, which included a large $23.0 million after-tax gain on the Wood-Ridge sale; normalized diluted EPS rose to $3.99 from $3.97.
  3. Year-end backlog rose to $478.5 million from $242.3 million, with $246.9 million coming from 2002 acquisitions, providing revenue visibility into 2003.
  4. Total debt increased to $151.9 million from $21.4 million, and the company funded $164.7 million of net acquisition cash outflows through revolver and short-term borrowings.
  5. Significant government and customer concentration: U.S. government-related revenue was 39% of consolidated sales, and Bechtel accounted for about 30% of Flow Control segment sales.
  6. Acquired EMD brought $73.7 million of underfunded pension and postretirement obligations and a $13.6 million environmental reserve, with a $2.8 million NRC-related parent guarantee.
  7. Post-year-end, the company completed or agreed to three more acquisitions (Collins Technologies $12.0M, Advanced Material Process $5.7M, E/M Engineered Coatings $16.7M), and expects 2003 capex of about $50 million.

03—Questions

Frequently Asked Questions

  1. Why did reported net earnings decline in 2002 even though sales grew 50%?

    2001 net earnings of $62.9 million included a $23.0 million after-tax gain on the sale of the Wood-Ridge Business Complex, which was non-recurring. Excluding that and other nonrecurring items, normalized net earnings rose 2% to $41.6 million, and normalized operating income from the segments increased 32%.

  2. What drove the 2002 sales growth, and how much came from acquisitions?

    Six 2002 acquisitions, including Penny & Giles/Autronics, the Westinghouse Electro-Mechanical Division, and TAPCO, contributed $181.8 million of 2002 sales. Base-business demand was mixed: stronger military aerospace and nuclear/naval flow control sales offset declines in commercial aerospace OEM, overhaul and repair, and shot-peening.

  3. How is the company financing its acquisitions, and is leverage a concern?

    Debt rose to $151.9 million, mostly under a May 2002 $225 million credit facility (a $135 million five-year revolver and a $90 million short-term facility). The short-term facility expires May 9, 2003 and requires bank group consent to extend, which is not guaranteed. Management considers operating cash flow and available credit adequate for 2003 needs.

  4. What are the main risks investors should consider?

    Key risks include dependence on U.S. government defense spending (39% of 2002 revenue), reliance on Boeing and Bechtel as major customers, the cost-overrun exposure on Navy nuclear contracts, the assumed EMD pension and environmental liabilities, refinancing of the short-term credit line, and the expected decline in pension income in 2003.

04—Continue

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