10-QPeriod: Q2 FY2002

CURTISS WRIGHT CORP Quarterly Report for Q2 Ended Jun 30, 2002

Filed August 14, 2002For Securities:CW

Summary

Curtiss-Wright Corporation reported solid performance for the six months ended June 30, 2002, driven by strategic acquisitions and organic growth in key segments. Net sales increased by 32% to $219.6 million, and operating income rose by 15% to $28.0 million, reflecting the successful integration of newly acquired businesses, particularly in the Motion Control and Flow Control segments. The adoption of new accounting standards (SFAS 141 and 142) eliminated goodwill amortization, positively impacting reported earnings. The company's financial position strengthened with a significant increase in long-term debt, primarily to fund these acquisitions, alongside improved liquidity from operating activities. Despite some headwinds in the Metal Treatment segment due to market softness and facility start-up costs, the overall outlook remains positive, supported by strong order intake and a diversified business model. Investors should note the company's active acquisition strategy and its focus on integrating these businesses to drive future growth and profitability.

Key Highlights

  • 1Net sales for the first six months of 2002 increased by 32% to $219.6 million, driven by acquisitions and organic growth.
  • 2Operating income for the first six months of 2002 grew by 15% to $28.0 million, benefiting from acquisitions and the elimination of goodwill amortization.
  • 3The company completed two significant acquisitions in Q2 2002: Penny & Giles/Autronics for $60 million and Ytstruktur Arboda AB for $1.0 million, bolstering the Motion Control and Metal Treatment segments respectively.
  • 4Total assets grew to $551.8 million from $500.4 million at year-end 2001, largely due to increases in goodwill and net property, plant, and equipment, reflecting acquisition activity.
  • 5Long-term debt increased significantly to $47.4 million from $21.4 million, primarily to fund acquisitions.
  • 6Net earnings for the six months ended June 30, 2002, were $20.1 million, or $1.93 per diluted share, a slight increase from the prior year.
  • 7The adoption of SFAS 141 and 142 eliminated goodwill amortization, which favorably impacted net earnings by $0.5 million (net of tax) for the six-month period.

Frequently Asked Questions

The significant increase in net sales for the first half of 2002 was primarily driven by the successful integration of businesses acquired in 2001 and 2002, contributing substantially to the overall revenue growth. Organic growth in the base businesses, particularly in nuclear products and aerospace/defense related sales, also played a role, although offset in some segments by market softness.

The company made two notable acquisitions in Q2 2002, Penny & Giles/Autronics and Ytstruktur Arboda AB. These acquisitions significantly increased goodwill and other intangible assets on the balance sheet, contributing to the overall growth in total assets. The funding for these acquisitions led to a substantial increase in long-term debt.

The adoption of SFAS 141 and 142, effective January 1, 2002, eliminated the amortization of goodwill. This change favorably impacted reported net earnings by $0.5 million (net of tax) for the six months ended June 30, 2002, and also contributed to the increase in operating income by removing prior goodwill amortization expenses.

The company noted challenges in the Metal Treatment segment due to industrial market softness, slowdowns in commercial aerospace, and facility start-up costs, which impacted operating income. Other potential risks mentioned include a reduction in anticipated orders, economic downturns, unanticipated environmental remediation expenses, and changes in the competitive marketplace.