10-QPeriod: Q3 FY2001

CURTISS WRIGHT CORP Quarterly Report for Q3 Ended Sep 30, 2001

Filed November 15, 2001For Securities:CW

Summary

Curtiss-Wright Corporation (CW) reported its third-quarter and nine-month results for the period ended September 30, 2001. For the third quarter, net sales were $79.4 million, a 3% decrease compared to the prior year, while net earnings were $8.7 million, a 14% decrease. For the nine-month period, net sales were $245.9 million, a slight decline from the prior year, with net earnings at $28.4 million, an 8% decrease. The company noted that the events of September 11th had an impact on operating results, particularly in the commercial aerospace overhaul and repair market. Despite a decrease in sales and earnings for the quarter, the company highlighted positive operational aspects. Normalized operating income for the nine-month period was slightly higher than the prior year, driven by profit improvement and cost reduction programs. The company also strengthened its financial position with an increase in working capital and cash, cash equivalents, and short-term investments. Several strategic acquisitions were completed in early November 2001, expanding the company's capabilities in defense and heat-treating sectors. Furthermore, the company announced a significant recapitalization plan approved by shareholders to facilitate a tax-free distribution by Unitrin, its major shareholder.

Key Highlights

  • 1Third-quarter net sales declined 3% year-over-year to $79.4 million, and net earnings decreased 14% to $8.7 million ($0.85 per diluted share).
  • 2Nine-month net sales were $245.9 million, a slight decrease from the prior year, with net earnings falling 8% to $28.4 million ($2.78 per diluted share).
  • 3The company experienced a softening in demand for aerospace overhaul and repair services, partly attributed to the events of September 11th, which also impacted OEM Aerospace business outlook.
  • 4Normalized operating income for the nine months of 2001 was slightly higher than the prior year's normalized income, reflecting successful profit improvement and cost reduction programs.
  • 5Cash, cash equivalents, and short-term investments increased by 20% to $86.0 million by September 30, 2001.
  • 6The company completed several strategic acquisitions in early November 2001, including Lau Defense Systems/Vista Controls, Ironbound Heat Treating, and Peerless Instrument Co., enhancing its offerings in defense and industrial markets.
  • 7Shareholders approved a recapitalization plan aimed at increasing the public float and diversifying the shareholder base.

Frequently Asked Questions

The events of September 11th had an impact on Curtiss-Wright's operating results, primarily affecting the commercial aerospace overhaul and repair market. Reduced flight schedules and the grounding of older aircraft led to lower demand for maintenance services. This, coupled with indications of lower future production schedules from Boeing, was expected to soften the OEM Aerospace business.

For the first nine months of 2001, net sales were $245.9 million, a slight decline from $247.2 million in the prior year. Net earnings were $28.4 million, down 8% from $30.9 million. However, when excluding unusual items from the prior year, the normalized net earnings for the nine months of 2001 were 2.5% higher than the normalized earnings for the same period in 2000, indicating underlying operational strength driven by cost-saving measures.

Operating income for the third quarter of 2001 was $11.1 million, down 15% from $13.0 million in the prior year. This decrease was attributed to several factors: adverse foreign exchange rates, lower gross profit, increased research and development costs for new products, higher general and administrative expenses related to acquisition activities and the recapitalization proposal, and a significant contribution of the Power Hawk rescue tool to the September 11th disaster sites.

In the period immediately following the quarter's end, Curtiss-Wright completed three notable acquisitions: On November 2, 2001, it acquired Lau Defense Systems and Vista Controls for $41 million, expanding its defense market capabilities. On November 6, 2001, it acquired Ironbound Heat Treating for $4.5 million, strengthening its metal treatment segment. On November 8, 2001, it acquired Peerless Instrument Co. for $7 million, bolstering its Flow Control business with a focus on nuclear naval programs.