News Details
CURTISS-WRIGHT'S 2002 SECOND QUARTER OPERATING INCOME INCREASES 15%
July 30, 2002
LYNDHURST, N.J., Jul 30, 2002 /PRNewswire-FirstCall via COMTEX/ -- Curtiss-Wright Corporation (NYSE: CW; CW.B) announced today its financial results for the second quarter of 2002. The second quarter's highlights are as follows:
- Sales increased 41%, reaching $121,777,000 in the second quarter of 2002 up from $86,604,000 reported for the same period last year, due principally to recent acquisitions.
- Operating income of $15,078,000 for the second quarter of 2002 was 15% higher than the $13,066,000 reported for the comparable quarter of 2001.
- Net earnings increased to $10,816,000, up from $10,465,000 for the second quarter of 2001.
- Second quarter 2002 earnings per share were $1.03 versus $1.02 in the prior-year period, despite a two percent increase in diluted shares outstanding.
- Backlog increased to $276,588,000 from $242,257,000 at December 31, 2001.
Curtiss-Wright's 2002 performance reflects a deliberate shift in the components of earnings from non-operating to operating elements. The increase in operating income more than offset the decrease in non-operating income. Last year's performance included rental income associated with a property that was sold in December 2001 and higher investment income generated from cash resources, which have since been utilized for acquisitions. These non- operating items contributed to higher net earnings in 2001 of $955,000, or $0.09 per diluted share, and $2,006,000, or $0.19 per diluted share, for the three months and six months, respectively, as compared to the comparable periods this year. These non-operating assets, which would not produce future growth in sales or operating earnings for the Company, have now been redeployed where they can be more effectively utilized. Accordingly, operating income from our business segments increased $1,943,000 and $3,876,000 for the second quarter and six months of 2002, respectively, over the comparable prior-year periods. The increase in business segment operating income after tax equates to $0.11 per diluted share and $0.23 per diluted share for the second quarter and first six months of 2002, respectively.
For the first half of 2002, sales increased 32% to $219,564,000 from $166,521,000 in last year's comparable six-month period. Operating income improved 15% to $27,992,000 from $24,331,000 a year ago. These improvements were due principally to the acquisitions made during the last 12 months. For the first six months of 2002, net earnings were $20,132,000, or $1.93 per diluted share, up from $19,684,000, or $1.92 per diluted share, for the first half of 2001.
Operating profit for the second-quarter and six-month periods of 2001 included the amortization of goodwill of $442,000 and $883,000 for the respective periods, which amounted to $0.03 and $0.05 per diluted share, respectively. With the implementation of SFAS Nos. 141 and 142, the amortization of goodwill was discontinued effective January 1, 2002. In addition, foreign currency translation had a favorable impact on sales and operating income in the second quarter, which offset the unfavorable impact from the first quarter. The net impact for the first six months of 2002 was not significant.
Martin Benante, Chairman and CEO of Curtiss-Wright, stated, "While our financial performance has benefited from the acquisitions since November of last year, we continue to be pleased with the performance of our base businesses. Excluding acquisitions, 2002 sales are near prior-year levels despite a significant reduction in production schedules of commercial aircraft by Airbus and Boeing and a sharp decline in the overhaul and repair services provided to the global airline industry. Our Flow Control base business continues the strong growth it experienced in the first quarter with sales of comparable products up over 15% in the second quarter of 2002 as compared to the same period in 2001. The segment experienced higher sales for its nuclear products to both the commercial and naval markets.
"We have been very successful in improving margins in our aerospace component overhaul and repair services, which have been pressured by lower demand from commercial airlines. Operating margins in this area for the second quarter of 2002 exceeded those of the second quarter of last year despite 23% lower sales. Operating margins in the second quarter for our Metal Treatment business segment, while not matching last year's second- quarter performance, have shown improvement over the first quarter of this year. As with all our business segments, we continue to focus on programs to improve efficiencies and these are examples of the results of these efforts."
Mr. Benante added, "We have made a total of 10 acquisitions since the beginning of 2001. Sales related to acquisitions contributed $54,142,000 to revenues for the first half of 2002, which represented 25% of our total revenue for the period. Operating income related to these acquisitions was $3,756,000 for the first six months of 2002. As I have previously stated, businesses that we acquire historically have lower operating margins than our base businesses. We have demonstrated the ability to improve the profitability of the companies we acquire by introducing those manufacturing techniques and synergies that have enabled us to rank in the top tier of the peer group against which we benchmark ourselves."
Provided below are the financial results for the second quarter and first six months of 2002 and 2001:
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(In thousands except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001(A) 2002 2001(A)
Net sales $121,777 $86,604 $219,564 $166,521
Cost of sales 78,078 53,767 139,710 103,673
Gross profit 43,699 32,837 79,854 62,848
Research & development
expenses 2,714 1,025 4,025 1,922
Selling expenses 7,144 4,487 12,886 9,080
General and administrative
expenses 18,718 14,134 34,704 27,472
Environmental remediation and
administrative expenses 45 125 247 43
Operating income 15,078 13,066 27,992 24,331
Investment income, net 380 650 511 1,493
Rental income, net 50 1,308 99 2,342
Pension income, net 2,254 2,343 4,508 4,687
Other income (expense), net 18 (69) (90) (527)
Interest expense (466) (396) (659) (645)
Earnings before income taxes 17,314 16,902 32,361 31,681
Provision for income taxes 6,498 6,437 12,229 11,997
Net earnings $10,816 $10,465 $20,132 $19,684
Basic earnings per share $1.06 $1.04 $1.98 $1.96
Diluted earnings per share $1.03 $1.02 $1.93 $1.92
Dividends per share $0.15 $0.13 $0.30 $0.26
Weighted average shares
outstanding:
Basic 10,203 10,059 10,163 10,049
Diluted 10,511 10,269 10,421 10,259
(A) Certain prior-year information has been reclassified to conform to
current presentation.
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
June 30, December 31, Change
2002 2001(A) $ %
Assets
Current Assets:
Cash and cash
equivalents $23,360 $25,495 $(2,135) -8.4%
Short-term
investments 422 41,658 (41,236) -99.0%
Receivables, net 101,662 86,354 15,308 17.7%
Inventories, net 68,706 57,115 11,591 20.3%
Deferred income
taxes 9,919 9,565 354 3.7%
Other current
assets 7,937 5,770 2,167 37.6%
Total current
assets 212,006 225,957 (13,951) -6.2%
Property, plant
and equipment,
at cost 263,424 226,435 36,989 16.3%
Accumulated
depreciation 145,667 121,914 23,753 19.5%
Property, plant
and equipment,
net 117,757 104,521 13,236 12.7%
Prepaid pension
costs 75,290 70,796 4,494 6.3%
Goodwill and other
intangible assets,
net 139,020 92,630 46,390 50.1%
Other assets 7,771 6,524 1,247 19.1%
Total Assets $551,844 $500,428 $51,416 10.3%
Liabilities
Current Liabilities:
Accounts
payable $ 24,038 $ 19,362 $ 4,676 24.2%
Accrued expenses 28,866 23,163 5,703 24.6%
Income taxes
payable 6,549 17,704 (11,155) -63.0%
Other current
liabilities 10,694 15,867 (5,173) -32.6%
Total current
liabilities 70,147 76,096 (5,949) -7.8%
Long-term debt 47,446 21,361 26,085 122.1%
Deferred income
taxes 26,566 26,043 523 2.0%
Other liabilities 28,212 26,974 1,238 4.6%
Total
Liabilities 172,371 150,474 21,897 14.6%
Stockholders' Equity
Common stock,
$1 par value 10,618 10,618 - 0.0%
Class B common
stock, $1 par
value 4,382 4,382 - 0.0%
Capital surplus 50,048 52,532 (2,484) -4.7%
Retained earnings 486,382 469,303 17,079 3.6%
Unearned portion
of restricted
stock (69) (78) 9 -11.5%
Accumulated other
comprehensive
income 1,201 (6,831) 8,032 -117.6%
552,562 529,926 22,636 4.3%
Less: cost of
treasury stock 173,089 179,972 (6,883) -3.8%
Total
Stockholders'
Equity 379,473 349,954 29,519 8.4%
Total
Liabilities and
Stockholders'
Equity $551,844 $500,428 $51,416 10.3%
(A) Certain prior-year information has been reclassified to conform to
current presentation.
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
SEGMENT INFORMATION
(UNAUDITED)
(In thousands)
Three Months Ended June 30, Six Months Ended June 30,
% %
2002 2001 Change 2002 2001 Change
Sales:
Motion Control $59,771 $35,728 67.3% $102,023 $65,685 55.3%
Metal Treatment 27,254 27,049 0.8% 52,671 54,921 -4.1%
Flow Control 34,752 23,827 45.9% 64,870 45,915 41.3%
Total Segments $121,777 $86,604 40.6% $219,564 $166,521 31.9%
Operating Income:
Motion Control $7,332 $5,999 22.2% $14,114 $10,582 33.4%
Metal Treatment 3,576 4,917 -27.3% 6,336 10,380 -39.0%
Flow Control 4,634 2,683 72.7% 8,290 3,902 112.5%
Total Segments 15,542 13,599 14.3% 28,740 24,864 15.6%
Corporate & Other (464) (533) -12.9% (748) (533) 40.3%
Total Operating
Income $15,078 $13,066 15.4% $27,992 $24,331 15.0%
Operating Margins:
Motion Control 12.3% 16.8% 13.8% 16.1%
Metal Treatment 13.1% 18.2% 12.0% 18.9%
Flow Control 13.3% 11.3% 12.8% 8.5%
Total Curtiss-Wright 12.4% 15.1% 12.7% 14.6%
MOTION CONTROL
Sales in the second quarter of 2002 increased $24,043,000 or 67% from 2001. The increase is due primarily to acquisitions offset partially by lower sales in base businesses. The decline in the base business was due to reduced volume associated with the overhaul and repair services provided to the global airline industry and lower production of commercial aircraft by Boeing. Sales increased in the second quarter for defense-related products compared to the second quarter last year.
Operating income for the second quarter benefited from stronger margins from aerospace defense related sales, continued margin improvement at the Company's Swiss-based business providing aiming and stabilizing systems for land-based military vehicles and the favorable impact of foreign currency translation. While cost reductions improved the profitability in overhaul and repair services, profits were below those experienced in the second quarter of 2001 because of the lower sales levels.
METAL TREATMENT
Metal Treatment sales for the second quarter of 2002 are slightly above sales for the same period last year, despite the slowdown in commercial aircraft production rates. When compared to the first quarter of 2002, sales in the second quarter increased 7%, resulting from an increase in shot-peening sales in both North America and Europe.
Operating income for the second quarter of 2002 as compared to the same period in 2001 declined due to reduced gross margins. Operating margins have improved over this year's first quarter, even after adjusting for non- recurring costs in that quarter associated with the relocation of one of the segment's shot-peening facilities. Foreign currency translation also had a favorable impact for the second quarter of 2002.
FLOW CONTROL
Sales increased $10,925,000, or 46%, in the second quarter of 2002 from the same period last year. Acquisitions represented $7,864,000 of this increase, while the base business increased $3,061,000, or 13%, over the same period last year and $2,436,000, or 10%, over this year's first quarter. Sales benefited from higher shipments of nuclear products for the Navy and power generation plants as well as increased sales to non-nuclear commercial markets and, to a lesser degree, a rebound in sales to the automotive market.
Operating income for the second quarter of 2002 was $4,634,000, of which $660,000 resulted from the segment's 2001 acquisitions. The base business saw an operating income improvement of $715,000, or a 22% increase over the first quarter of 2002. The increase was driven by improved operating profits for most of the business segment's product offerings.
Curtiss-Wright Corporation is a diversified provider of highly engineered products and services to the Motion Control, Flow Control and Metal Treatment industries. The firm employs approximately 3,250 people. More information on Curtiss-Wright can be found on the Internet at curtisswright2014.q4web.com .
Forward-looking statements in this release relate to expectations of continued high revenues related to new commercial aircraft and continued sales and income growth, and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Such risks and uncertainties include, but are not limited to: a reduction in anticipated orders; an economic downturn; changes in the need for additional machinery and equipment and/or in the cost for the expansion of the Corporation's operations; changes in the competitive marketplace and/or customer requirements; an inability to perform customer contracts at anticipated cost levels; and other factors that generally affect the business of aerospace, defense, marine, and industrial companies. Please refer to the Company's SEC filings under the Securities and Exchange Act of 1934, as amended, for further information.
SOURCE Curtiss-Wright Corporation
CONTACT:
Gary Benschip of Curtiss-Wright Corporation,
+1-201-896-8520,
or [email protected]