UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~June 30, 2017~~March 31, 2018

o 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 incorporation or organization)		(I.R.S. Employer Identification No.)



~~13925 Ballantyne Corporate~~130 Harbour Place Drive, Suite 300
~~Suite 400, Charlotte,~~Davidson, North Carolina		~~28277~~28036
(Address of principal executive offices)		(Zip Code)

(704) 869-4600

(Registrant’s telephone number, including area code)

13925 Ballantyne Corporate Place, Suite 400, Charlotte, North Carolina 28277

(Former name, former address and former fiscal year, if changed since last report)

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 (or for such shorter period of time that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer ý		Accelerated filer o
Non-accelerated filer o	(Do not check if a smaller reporting company)	Smaller reporting company o
		Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, par value $1.00 per share: ~~44,137,906~~44,211,431 shares (as of ~~June~~April 30, ~~2017)~~2018).

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

TABLE of CONTENTS



PART I – FINANCIAL INFORMATION			PAGE


Item 1.	Financial Statements (Unaudited):

		Condensed Consolidated Statements of Earnings	4

		Condensed Consolidated Statements of Comprehensive Income	5

		Condensed Consolidated Balance Sheets	6

		Condensed Consolidated Statements of Cash Flows	7

		Condensed Consolidated Statements of Stockholders’ Equity	8

		Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		3029

Item 4.	Controls and Procedures		3029


PART II – OTHER INFORMATION


Item 1.	Legal Proceedings		3130

Item 1A.	Risk Factors		3130

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		3130

Item 3.	Defaults upon Senior Securities		3231

Item 4.	Mine Safety Disclosures		3231

Item 5.	Other Information		3331

Item 6.	Exhibits		3432

Signatures			3533

PART 1- FINANCIAL INFORMATION

Item 1. Financial Statements

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(UNAUDITED)


	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
(In thousands, except per share data)	2017			2016			2017			2016			2018			2017
Net sales
Product sales	$	459,774		$	427,324		$	883,003		$	830,242		$	444,687		$	423,229
Service sales	107,879			105,442			208,241			206,031			102,835			100,362
Total net sales	567,653			532,766			1,091,244			1,036,273			547,522			523,591
Cost of sales
Cost of product sales	299,739			279,869			586,231			544,604			299,311			289,610
Cost of service sales	69,144			67,518			135,468			134,387			67,020			67,046
Total cost of sales	368,883			347,387			721,699			678,991			366,331			356,656
Gross profit	198,770			185,379			369,545			357,282			181,191			166,935
Research and development expenses	15,501			15,236			30,799			30,396			15,941			15,591
Selling expenses	28,560			29,126			57,513			58,752			31,520			29,458
General and administrative expenses	71,438			72,928			146,735			142,782			69,232			74,194
Operating income	83,271			68,089			134,498			125,352			64,498			47,692
Interest expense	10,750			10,273			21,127			20,206			8,204			10,377
Other income, net	190			101			502			335			4,683			3,847
Earnings before income taxes	72,711			57,917			113,873			105,481			60,977			41,162
Provision for income taxes	(22,061		)	(17,954		)	(30,676		)	(32,699		)	(17,334		)	(8,615		)
Net earnings	$	50,650		$	39,963		$	83,197		$	72,782		$	43,643		$	32,547

Net earnings per share:
Basic earnings per share	$	1.15		$	0.90		$	1.88		$	1.63		$	0.99		$	0.74
Diluted earnings per share	$	1.13		$	0.88		$	1.86		$	1.61		$	0.98		$	0.73

Dividends per share	0.13			0.13			0.26			0.26			$	0.15		$	0.13
Weighted-average shares outstanding:
Basic	44,213			44,487			44,221			44,526			44,188			44,246
Diluted	44,807			45,164			44,825			45,195			44,678			44,860

See notes to condensed consolidated financial statements

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(In thousands)


	Three Months Ended					Six Months Ended					Three Months Ended
	June 30,					June 30,					March 31,
	2017		2016			2017		2016			2018		2017
Net earnings	$	50,650	$	39,963		$	83,197	$	72,782		$	43,643	$	32,547
Other comprehensive income (loss)
Foreign currency translation, net of tax ⁽¹⁾	$	32,677	$	(31,646	)	$	43,901	$	(14,541	)
Other comprehensive income
Foreign currency translation adjustments, net of tax ⁽¹⁾											$	15,411	$	11,224
Pension and postretirement adjustments, net of tax ⁽²⁾	1,743		1,520			3,694		3,132			2,622		1,951
Other comprehensive income (loss), net of tax	34,420		(30,126		)	47,595		(11,409		)
Other comprehensive income, net of tax											18,033		13,175
Comprehensive income	$	85,070	$	9,837		$	130,792	$	61,373		$	61,676	$	45,722

⁽¹⁾ The tax ~~expense~~benefit included in other comprehensive income for foreign currency translation adjustments for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017 ~~were $1.1~~was $0.7 million and ~~$1.2~~$0.1 million, respectively. ~~The tax benefit included in other comprehensive loss for foreign currency translation adjustments for the three and six months ended June 30, 2016 were $1.3 million and $0.3 million, respectively.~~

⁽²⁾ The tax expense included in other comprehensive income for pension and postretirement adjustments for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017 ~~were~~was $0.9 million and $1.2 million, ~~and $2.5 million,~~ respectively. ~~The tax expense included in other comprehensive income for pension and postretirement adjustments for the three and six months ended June 30, 2016 were $1.1 million and $2.1 million, respectively.~~

See notes to condensed consolidated financial statements

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except ~~per~~ share data)


	June 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
Assets
Current assets:
Cash and cash equivalents	$	342,711		$	553,848		$	396,518		$	475,120
Receivables, net	502,216			463,062			518,784			494,923
Inventories, net	396,245			366,974			386,787			378,866
Other current assets	45,932			30,927			50,688			52,951
Total current assets	1,287,104			1,414,811			1,352,777			1,401,860
Property, plant, and equipment, net	390,520			388,903			385,287			390,235
Goodwill	1,082,944			951,057			1,099,450			1,096,329
Other intangible assets, net	345,991			271,461			322,856			329,668
Other assets	14,715			11,549			18,689			18,229
Total assets	$	3,121,274		$	3,037,781		$	3,179,059		$	3,236,321
Liabilities
Current liabilities:
Current portion of long-term and short-term debt	$	150,820		$	150,668		$	982		$	150
Accounts payable	157,088			177,911			165,413			185,176
Accrued expenses	116,492			130,239			102,602			150,406
Income taxes payable	10,578			18,274			8,810			4,564
Deferred revenue	183,955			170,143			217,959			214,891
Other current liabilities	34,858			28,027			45,519			35,810
Total current liabilities	653,791			675,262			541,285			590,997
Long-term debt	814,810			815,630			813,576			813,989
Deferred tax liabilities, net	55,675			49,722			58,486			49,360
Accrued pension and other postretirement benefit costs	103,181			107,151			67,984			121,043
Long-term portion of environmental reserves	16,091			14,024			14,681			14,546
Other liabilities	84,561			84,801			104,072			118,586
Total liabilities	1,728,109			1,746,590			1,600,084			1,708,521
Contingencies and commitments (Note 12)
Stockholders’ equity
Common stock, $1 par value,100,000,000 shares authorized at June 30, 2017 and December 31, 2016; 49,187,378 shares issued at June 30, 2017 and December 31, 2016; outstanding shares were 44,137,906 at June 30, 2017 and 44,181,050 at December 31, 2016	49,187			49,187
Contingencies and commitments (Note 13)
Stockholders' Equity
Common stock, $1 par value,100,000,000 shares authorized as of March 31, 2018 and December 31, 2017; 49,187,378 shares issued as of March 31, 2018 and December 31, 2017; outstanding shares were 44,235,280 as of March 31, 2018 and 44,123,519 as of December 31, 2017							49,187			49,187
Additional paid in capital	122,584			129,483			116,221			120,609
Retained earnings	1,825,697			1,754,907			1,979,051			1,944,324
Accumulated other comprehensive loss	(244,161		)	(291,756		)	(198,807		)	(216,840		)
Common treasury stock, at cost (5,049,472 shares at June 30, 2017 and 5,006,328 shares at December 31, 2016)	(360,142		)	(350,630		)
Total stockholders’ equity	1,393,165			1,291,191
Total liabilities and stockholders’ equity	$	3,121,274		$	3,037,781
Common treasury stock, at cost (4,952,098 shares as of March 31, 2018 and 5,063,859 shares as of December 31, 2017)							(366,677		)	(369,480		)
Total stockholders' equity							1,578,975			1,527,800
Total liabilities and stockholders' equity							$	3,179,059		$	3,236,321

See notes to condensed consolidated financial statements

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six Months Ended						Three Months Ended
	June 30,						March 31,
(In thousands)	2017			2016			2018			2017
Cash flows from operating activities:
Net earnings	$	83,197		$	72,782		$	43,643		$	32,547
Adjustments to reconcile net earnings to net cash provided by operating activities
Adjustments to reconcile net earnings to net cash provided by (used for) operating activities:
Depreciation and amortization	49,961			48,987			24,601			24,926
Gain on divestiture							(2,108		)	—
Gain on fixed asset disposals	(197		)	(28		)	(697		)	(38		)
Deferred income taxes	(1,750		)	14,127			7,806			(877		)
Share-based compensation	6,016			4,985			4,591			3,364
Change in operating assets and liabilities, net of businesses acquired and divested:
Change in operating assets and liabilities, net of businesses acquired:
Receivables, net	(27,246		)	85,281			(2,451		)	(7,373		)
Inventories, net	534			(14,527		)	(28,652		)	(3,688		)
Progress payments	(1,316		)	(345		)	(3,121		)	(797		)
Accounts payable and accrued expenses	(48,229		)	(65,856		)	(79,564		)	(75,676		)
Deferred revenue	11,171			9,153			6,410			3,743
Income taxes payable	(13,217		)	(25,412		)	1,407			(2,249		)
Net pension and postretirement liabilities	1,041			412			(48,704		)	(2,019		)
Termination of interest rate swap	—			20,405
Other current and long-term assets and liabilities	967			6,667			5,577			3,196
Net cash provided by operating activities	60,932			156,631
Net cash used for operating activities							(71,262		)	(24,941		)
Cash flows from investing activities:
Proceeds from sales and disposals of long lived assets	349			244			819			85
Acquisition of intangible assets							(1,500		)	—
Additions to property, plant, and equipment	(23,288		)	(15,733		)	(8,971		)	(10,374		)
Acquisition of businesses, net of cash acquired	(232,630		)	(295		)	—			(239,372		)
Net cash used for investing activities	(255,569		)	(15,784		)	(9,652		)	(249,661		)
Cash flows from financing activities:
Borrowings under revolving credit facility	2,736			3,755
Payment of revolving credit facility	(2,584		)	(3,901		)
Borrowings under revolving credit facilities							3,716			120
Payment of revolving credit facilities							(2,884		)	(209		)
Repurchases of common stock	(26,454		)	(54,958		)	(12,328		)	(12,885		)
Proceeds from share-based compensation	5,374			13,098			6,151			5,195
Dividends paid	(5,757		)	(5,797		)
Excess tax benefits from share-based compensation plans	—			6,220
Other	(336		)	(308		)	(181		)	(224		)
Net cash used for financing activities	(27,021		)	(41,891		)	(5,526		)	(8,003		)
Effect of exchange-rate changes on cash	10,521			(4,502		)	7,838			1,663
Net increase (decrease) in cash and cash equivalents	(211,137		)	94,454
Net decrease in cash and cash equivalents							(78,602		)	(280,942		)
Cash and cash equivalents at beginning of period	553,848			288,697			475,120			553,848
Cash and cash equivalents at end of period	$	342,711		$	383,151		$	396,518		$	272,906
Supplemental disclosure of non-cash activities:
Capital expenditures incurred but not yet paid	$	1,641		$	775		$	182		$	1,370

See notes to condensed consolidated financial statements

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(In thousands)


	Common Stock			Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Common Stock		Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock
December 31, 2015	$	49,190		$	144,923		$	1,590,645		$	(225,928	)	$	(303,407	)
December 31, 2016																$	49,187	$	129,483		$	1,754,907		$	(291,756	)	$	(350,630	)
Net earnings	—			—			187,329			—			—			—		—			214,891			—			—
Other comprehensive loss, net of tax	—			—			—			(65,828		)	—
Other comprehensive income, net of tax																—		—			—			74,916			—
Dividends paid	—			—			(23,067		)	—			—			—		—			(24,740		)	—			—
Restricted stock, net of tax	—			(12,086		)	—			—			17,275			—		(12,104		)	—			—			12,105
Stock options exercised, net of tax	—			(11,271		)	—			—			39,483			—		(5,724		)	—			—			19,902
Other	(3		)	(1,104		)	—			—			811
Share-based compensation	—			9,021			—			—			457			—		11,191						—			381
Repurchase of common stock	—			—			—			—			(105,249		)	—		—			—			—			(52,127		)
December 31, 2016	$	49,187		$	129,483		$	1,754,907		$	(291,756	)	$	(350,630	)
Other																—		(2,237		)	(734		)	—			889
December 31, 2017																$	49,187	$	120,609		$	1,944,324		$	(216,840	)	$	(369,480	)
Cumulative effect from adoption of ASC 606																—		—			(2,274		)	—			—
Net earnings	—			—			83,197			—			—			—		—			43,643			—			—
Other comprehensive income, net of tax	—			—			—			47,595			—			—		—			—			18,033			—
Dividends declared	—			—			(11,498		)	—			—			—		—			(6,642		)	—			—
Restricted stock	—			(9,618		)	—			—			9,618			—		(6,828		)	—			—			6,828
Stock options exercised	—			(851		)	—			—			6,227			—		(1,237		)	—			—			7,389
Other	—			(2,099		)	(909		)	—			750
Share-based compensation	—			5,669			—			—			347			—		4,402			—			—			189
Repurchase of common stock	—			—			—			—			(26,454		)	—		—			—			—			(12,328		)
June 30, 2017	$	49,187		$	122,584		$	1,825,697		$	(244,161	)	$	(360,142	)
Other																—		(725		)	—			—			725
March 31, 2018																$	49,187	$	116,221		$	1,979,051		$	(198,807	)	$	(366,677	)

See notes to condensed consolidated financial statements

~~Page 8~~

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BASIS OF PRESENTATION

Curtiss-Wright Corporation and its subsidiaries (the "Corporation" or the "Company") is a global, diversified ~~multinational~~ manufacturing and service company that designs, manufactures, and overhauls precision components and provides highly engineered products and services to the aerospace, defense, power generation, and general industrial markets.

The unaudited condensed consolidated financial statements include the accounts of Curtiss-Wright and its majority-owned subsidiaries. All intercompany transactions and accounts have been eliminated.

The unaudited condensed consolidated financial statements of the Corporation have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted as permitted by such rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of these financial statements.

Management is required to make estimates and judgments that affect the reported amount of assets, liabilities, revenue, and expenses and disclosure of contingent assets and liabilities in the accompanying financial statements. Actual results may differ from these estimates. The most significant of these estimates includes the estimate of costs to complete long-term contracts under the percentage-of-completion accounting methods, the estimate of useful lives for property, plant, and equipment, cash flow estimates used for testing the recoverability of assets, pension plan and postretirement obligation assumptions, estimates for inventory obsolescence, estimates for the valuation and useful lives of intangible assets, legal reserves, and the estimate of future environmental costs. Changes in estimates of contract sales, costs, and profits are recognized using the cumulative catch-up method of accounting. This method recognizes in the current period the cumulative effect of the changes on current and prior periods. Accordingly, the effect of the changes on future periods of contract performance is recognized as if the revised estimate had been the original estimate. ~~During~~In the three month periods ended March 31, 2018 and ~~six months ended June 30,~~ 2017, ~~and 2016,~~ there were no individual significant changes in estimated contract costs. In the opinion of management, all adjustments considered necessary for a fair presentation have been reflected in these financial statements.

The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Corporation’s ~~2016~~2017 Annual Report on Form 10-K. The results of operations for interim periods are not necessarily indicative of trends or of the operating results for a full year.

Recent accounting pronouncements adopted

ASU 2014-09 - Revenue from Contracts with Customers - On January 1, 2018, the Corporation adopted ASC 606, Revenue from Contracts with Customers, and the related amendments (“new revenue standard”) using the modified retrospective method. The Corporation recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the retained earnings balance as of January 1, 2018. Comparative information for prior periods has not been restated and continues to be reported under the accounting standard in effect for those respective periods.

~~Page 9~~

The cumulative effect from the adoption of the new revenue standard as of January 1, 2018 was as follows:



Balance Sheet (In thousands)	As of December 31, 2017		Adjustments due to ASU 2014-09			As of January 1, 2018
Receivables, net	$	494,923	$	18,363		$	513,286
Inventories, net	378,866		(23,555		)	355,311
Other assets	18,229		878			19,107
Deferred revenue	214,891		(2,040		)	212,851
Retained earnings	1,944,324		(2,274		)	1,942,050

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The impact of adoption on the Corporation's Condensed Consolidated Statement of Earnings and Condensed Consolidated Balance Sheet was as follows:



	Three Months Ended March 31, 2018
Statement of Earnings (In thousands)	As Reported			Adjustments Increase/(Decrease)			Balances Without Adoption of ASC 606
Product sales	$	444,687		$	(2,034	)	$	442,653
Cost of product sales	299,311			368			299,679
Provision for income taxes	(17,334		)	615			(16,719		)
Net Income	$	43,643		$	(1,787	)	$	41,856



	As of March 31, 2018
Balance Sheet (In thousands)	As Reported		Adjustments Increase/(Decrease)			Balances Without Adoption of ASC 606
Receivables, net	$	518,784	$	(22,668	)	$	496,116
Inventories, net	386,787		23,270			410,057
Other assets	18,689		(878		)	17,811
Income taxes payable	8,810		(615		)	8,195
Deferred revenue	217,959		(148		)	217,811
Retained earnings	1,979,051		487			1,979,538

ASU 2017-07, Retirement Benefits - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost - On January 1, 2018, the Corporation adopted the amendments to ASC 715 that improve the presentation of net periodic pension and postretirement benefit costs. The Corporation retrospectively adopted the presentation of service cost separate from the other components of net periodic costs and included it as a component of employee compensation cost in operating income. The interest cost, expected return on assets, amortization of prior service costs, and net actuarial gain/loss components of net periodic benefit costs have been reclassified from operating income to other income, net. Additionally, the Corporation elected to apply the practical expedient which allows it to reclassify amounts disclosed previously in Note 15 of the Corporation's 2017 Annual Report on Form 10-K as the basis for applying retrospective presentation for comparative periods.

The effect of the retrospective change on the Corporation's Condensed Consolidated Statement of Earnings for the three months ended March 31, 2017, was as follows:



	Three Months Ended March 31, 2017
Statement of Earnings (In thousands)	Previously Reported		Adjustments Increase/(Decrease)			As Revised
Cost of product sales	$	286,492	$	3,118		$	289,610
Cost of service sales	66,324		722			67,046
Research and development expenses	15,298		293			15,591
Selling expenses	28,953		505			29,458
General and administrative expenses	75,297		(1,103		)	74,194
Other income, net	312		3,535			3,847

ASU 2017-01, Business Combinations - Clarifying the Definition of a Business. On January 1, 2018, the Corporation adopted the amendments to ASC 805 which clarifies the definition of a business. The standard introduces a screen for determining when assets acquired are not a business and clarifies that a business must include, at a minimum, an input and a substantive process that contribute to an output. The adoption of this standard did not have a financial impact on the Condensed Consolidated Financial Statements.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Recent accounting pronouncements to be adopted



Standard	Description	Effect on the condensed consolidated financial statements
~~ASU 2017-04 Simplifying the Test for Goodwill Impairment~~	In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the measurement of goodwill impairment testing by removing step two. This guidance was early adopted effective January 1, 2017 and will be applied prospectively.	~~The adoption of this standard does not have a financial impact on the Condensed Consolidated Financial Statements.~~
~~Date of adoption: January 1, 2017~~
~~ASU 2016-09 Improvements to Employee Share-Based Payment Accounting~~	In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes and forfeitures. Excess tax benefits previously reported as cash flows from financing activities in the Condensed Consolidated Financial Statements are now required to be reported as operating activities. The Company adopted this guidance effective January 1, 2017.	The Corporation recorded an income tax benefit of approximately $4 million within the provision for income taxes for the six months ended June 30, 2017 related to the excess tax benefit on stock options and performance share units. Prior to adoption, this amount would have been recorded as an increase to additional paid-in capital. ~~The Corporation elected to account for forfeitures as they occur, which did not have a material impact on its Condensed Consolidated Financial Statements.~~
~~Date of adoption: January 1, 2017~~

~~Page 10~~

~~CURTISS-WRIGHT CORPORATION and SUBSIDIARIES~~

~~NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~Recent accounting pronouncements to be adopted~~



~~Standard~~	~~Description~~	~~Effect on the condensed consolidated financial statements~~
~~ASU 2014-09 Revenue from Contracts with Customers~~	In May 2014, the FASB issued a comprehensive new revenue recognition standard which will supersede previous existing revenue recognition guidance. The standard creates a five-step model for revenue recognition that requires companies to exercise judgment when considering contract terms and relevant facts and circumstances. The five-step model includes (1) identifying the contract, (2) identifying the separate performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations and (5) recognizing revenue when each performance obligation has been satisfied. The standard also requires expanded disclosures surrounding revenue recognition. The standard is effective for fiscal periods beginning after December 15, 2017 and allows for either full retrospective or modified retrospective adoption.	The Corporation plans to apply the modified retrospective approach upon adoption and is currently evaluating the impact of adoption on its Condensed Consolidated Financial Statements as of January 1, 2018. We have performed a preliminary review of our customer contracts; however, our assessment is still ongoing and not yet complete. It is expected that the disclosures in our Notes to the Condensed Consolidated Financial Statements related to revenue recognition will be expanded under the new standard. The Corporation will continue to monitor interpretative guidance issued by the FASB which may cause our evaluation to change.
~~Date of adoption: January 1, 2018~~
ASU 2016-02 Leases	In February 2016, the FASB issued final guidance that will require lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to today’s accounting. ~~The guidance requires the use of a modified retrospective approach.~~	The Corporation is currently evaluating the impact of the adoption of this standard on its Condensed Consolidated Financial Statements.
Date of adoption: January 1, 2019
ASU ~~2017-01~~ ~~Clarifying the Definition~~2018-02 Reclassification of ~~a Business~~ Certain Tax Effects from Accumulated Other Comprehensive Income	In ~~January 2017,~~February 2018, the FASB issued ASU ~~2017-01, which clarifies~~2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU permits the ~~definition~~reclassification of tax effects stranded in accumulated other comprehensive income to retained earnings as a ~~business to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals~~result of ~~assets or businesses.~~the 2017 Tax Cuts and Jobs Act (the Tax Act). The standard introduces a screen for determining when assets acquired are not a business and clarifies that a business must include, at a minimum, an input and a substantive process that contribute to an output. The standard iswill be effective for fiscal years beginning after December 15, ~~2017,~~2018, and interim periods within those fiscal ~~years.~~years, with early adoption permitted.	The Corporation is currently evaluating the impact of the adoption of this standard on its Condensed Consolidated Financial Statements.
Date of adoption: January 1, ~~2018~~
~~ASU 2017-07~~ ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~	In March 2017, the FASB issued final guidance that will change how the net periodic benefit cost for defined benefit pension and other postretirement benefit plans are presented in the income statement and the respective capitalization of assets on the balance sheet. The guidance requires the use of a retrospective approach for the presentation of the income statement and a prospective approach for the presentation of the balance sheet.	~~The Corporation is currently evaluating the impact of the adoption of this standard on its Condensed Consolidated Financial Statements.~~
~~Date of adoption: January 1, 2018~~2019

Impact from the Tax Act

In accordance with Staff Bulletin No. 118, Income Tax Implications of the Tax Cuts and Jobs Act, the Corporation recognized the income tax effects of the Tax Act in its consolidated financial statements for the year ended December 31, 2017. During the three months ended March 31, 2018, the Corporation recorded additional provisional tax expense of $6.5 million for foreign withholding taxes associated with the Tax Act. The Corporation expects to finalize any provisional amounts associated with the Tax Act over the next nine months based on ongoing assessment of its tax positions and other relevant data.

2.2. REVENUE

As discussed in Note 1, the Corporation accounts for revenues in accordance with ASC 606, Revenue from Contracts with Customers, which was adopted as January 1, 2018 on a modified retrospective basis. Under ASC 606, revenue is recognized when control of a promised good and/or service is transferred to a customer in an amount that reflects the consideration that the Corporation expects to be entitled to in exchange for that good and/or service.

Performance Obligations

The Corporation identifies a performance obligation for each promise in a contract to transfer a distinct good or service to the customer. As part of its assessment, the Corporation considers all goods and/or services promised in the contract, regardless of whether they are explicitly stated or implied by customary business practices. The Corporation’s contracts may contain either a single performance obligation, including the promise to transfer individual goods or services that are not separately distinct within the context of the respective contracts, or multiple performance obligations. For contracts with multiple performance obligations, the Corporation allocates the overall transaction price to each performance obligation using standalone selling prices, where available, or utilizes estimates for each distinct good or service in the contract where standalone prices are not available.

The Corporation’s performance obligations are satisfied either at a point-in-time or on an over-time basis. Revenue recognized on an over-time basis accounted for approximately 31% of total net sales for the three months ended March 31, 2018. Typically, over-time revenue recognition is based on the utilization of an input measure used to measure progress, such as costs incurred to date relative to total estimated costs. Revenue recognized at a point-in-time accounted for approximately 69% of total net sales for the three months ended March 31, 2018. Revenue for these types of arrangements is recognized at the point in time in which control is transferred to the customer, typically based upon the terms of delivery.

Contract backlog represents the remaining performance obligations that have not yet been recognized as revenue. Backlog includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Total backlog was approximately $2.1 billion as of March 31, 2018, of which the Corporation expects to recognize approximately 88% as net sales over the next 12 -36 months. The remainder will be recognized thereafter.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Disaggregation of Revenue

The following table presents the Corporation’s total net sales disaggregated by end market and customer type:



	Three Months Ended March 31,
Total Net Sales by End Market and Customer Type (In thousands)	2018		2017
Defense
Aerospace	$	75,941	$	65,293
Ground	22,011		19,737
Naval	102,782		90,970
Other	4,581		7,041
Total Defense Customers	$	205,315	$	183,041

Commercial
Aerospace	$	99,404	$	98,614
Power Generation	99,012		105,551
General Industrial	143,791		136,385
Total Commercial Customers	$	342,207	$	340,550

Total	$	547,522	$	523,591

Contract Balances

Timing of revenue recognition and cash collection may result in billed receivables, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on the Condensed Consolidated Balance Sheet. The Corporation’s contract assets primarily relate to its rights to consideration for work completed but not billed as of the reporting date. Contract assets are transferred to billed receivables when the rights to consideration become unconditional. This is typical in situations where amounts are billed as work progresses in accordance with agreed-upon contractual terms or upon achievement of contractual milestones. The Corporation’s contract liabilities primarily consist of customer advances received prior to revenue being earned. Revenue recognized during the three months ended March 31, 2018 included in the contract liabilities balance at the beginning of the year was approximately $36 million. Changes in contract assets and contract liabilities as of March 31, 2018, were not materially impacted by any other factors. Contract assets and contract liabilities are reported in the "Receivables, net" and "Deferred revenue" lines, respectively, within the Condensed Consolidated Balance Sheet.

3. ACQUISITIONS

The Corporation continually evaluates potential acquisitions that either strategically fit within the Corporation’s existing portfolio or expand the Corporation’s portfolio into new product lines or adjacent markets. The Corporation has completed a number of acquisitions that have been accounted for as business combinations and have resulted in the recognition of goodwill in the Corporation's financial statements. This goodwill arises because the purchase prices for these businesses reflect the future earnings and cash flow potential in excess of the earnings and cash flows attributable to the current product and customer set at the time of acquisition. Thus, goodwill inherently includes the know-how of the assembled workforce, the ability of the workforce to further improve the technology and product offerings, and the expected cash flows resulting from these efforts. Goodwill may also include expected synergies resulting from the complementary strategic fit these businesses bring to existing operations.

The Corporation allocates the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities. In the months after closing, as the Corporation obtains additional information about these assets and liabilities, including through tangible and intangible asset appraisals, and as the Corporation learns more about the newly acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price.

~~Page 11~~

~~CURTISS-WRIGHT CORPORATION and SUBSIDIARIES~~

~~NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

Only items identified as of the acquisition date are considered for subsequent adjustment. The Corporation will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required.

No acquisitions were made during the three months ended March 31, 2018. During the ~~six~~three months ended ~~June 30,~~March 31, 2017, the Corporation acquired two businesses for an aggregate purchase price of ~~$233~~$239 million, both of which are described in more detail below. ~~No acquisitions were made during the six months ended June 30, 2016.~~

~~The Condensed Consolidated Statement of Earnings includes $25 million of total net sales~~

CURTISS-WRIGHT CORPORATION and ~~$4 million of net losses from the Corporation's 2017 acquisitions.~~SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for ~~all~~those acquisitions consummated during the ~~six~~three months ended ~~June 30,~~March 31, 2017.


(In thousands)	2017			2016		2017
Accounts receivable	$	5,020		$	—	$	5,020
Inventory	22,702			—		21,573
Property, plant, and equipment	4,598			—		4,598
Other current and non-current assets	2,815			—		2,815
Intangible assets	88,900			—		89,900
Current and non-current liabilities	(7,163		)	—		(7,354		)
Due to seller, net	(509		)	—
Due from seller, net ⁽¹⁾						6,509
Net tangible and intangible assets	116,363			—		123,061
Purchase price, net of cash acquired	232,630			—		239,372
Goodwill	$	116,267		$	—	$	116,311

Goodwill deductible for tax purposes	$	116,267		$	—	$	116,311

⁽¹⁾ Amount is primarily due to working capital adjustments.

2017 Acquisitions

Teletronics Technology Corporation (TTC)

On January 3, 2017, the Corporation acquired 100% of the issued and outstanding capital stock of TTC for ~~$226.0~~$232.8 million, net of cash acquired. The Share Purchase Agreement contains a purchase price adjustment mechanism and representations and warranties customary for a transaction of this type, including a portion of the purchase price deposited in escrow as security for potential indemnification claims against the seller. TTC is a designer and manufacturer of high-technology data acquisition and comprehensive flight test instrumentation systems for critical aerospace and defense applications. ~~For the year ended December 31, 2016, TTC generated sales of $64 million.~~The acquired business operates within the Defense segment. ~~The acquisition is subject to post-closing adjustments as the purchase price allocation is not yet complete.~~

Para Tech Coating, Inc. (Para Tech)

On February 8, 2017, the Corporation acquired certain assets and assumed certain liabilities of Para Tech for $6.6 million in cash. The Asset Purchase Agreement contains a purchase price adjustment mechanism and representations and warranties customary for a transaction of this type, including a portion of the purchase price held back as security for potential indemnification claims against the seller. Para Tech is a provider of parylene conformal coating services for aerospace & defense electronic components as well as critical medical devices. The acquired business operates within the Commercial/Industrial segment. ~~The acquisition is subject to post-closing adjustments as the purchase price allocation is not yet complete.~~

3.4. RECEIVABLES

Receivables primarily include amounts billed to customers, unbilled charges on long-term contracts consisting of amounts recognized as sales but not billed, and other receivables. Substantially all amounts of unbilled receivables are expected to be billed and collected within one year. An immaterial amount of unbilled receivables are subject to retainage provisions. The amount of claims and unapproved change orders within our receivables balances are immaterial.

The composition of receivables is as follows:



(In thousands)	March 31, 2018			December 31, 2017
Billed receivables:
Trade and other receivables	$	344,310		$	363,234
Less: Allowance for doubtful accounts	(7,725		)	(7,486		)
Net billed receivables	336,585			355,748
Unbilled receivables (Contract Assets):
Recoverable costs and estimated earnings not billed	202,893			160,727
Less: Progress payments applied	(20,694		)	(21,552		)
Net unbilled receivables	182,199			139,175
Receivables, net	$	518,784		$	494,923

~~Page 12~~

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(In thousands) June 30, 2017 December 31, 2016
Billed receivables:
Trade and other receivables $ 374,691
$ 340,091
Less: Allowance for doubtful accounts (7,219 ) (4,832 )
Net billed receivables 367,472
335,259
Unbilled receivables:
Recoverable costs and estimated earnings not billed 158,006
149,847
Less: Progress payments applied (23,262 ) (22,044 )
Net unbilled receivables 134,744
127,803
Receivables, net $ 502,216
$ 463,062

4.5. INVENTORIES

Inventoried costs contain amounts relating to long-term contracts and programs with long production cycles, a portion of which will not be realized within one year. Long-term contract inventory includes an immaterial amount of claims or other similar items subject to uncertainty concerning their determination or realization. Inventories are valued at the lower of cost or market.

The composition of inventories is as follows:


(In thousands)	June 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
Raw materials	$	195,461		$	189,228		$	206,004		$	191,855
Work-in-process	85,321			73,843			75,204			73,937
Finished goods	123,362			112,478
Finished goods and component parts							117,241			114,307
Inventoried costs related to U.S. Government and other long-term contracts	60,008			57,516			53,477			65,150
Gross inventories	464,152			433,065			451,926			445,249
Less: Inventory reserves	(58,108		)	(54,988		)	(55,238		)	(54,638		)
Progress payments applied, principally related to long-term contracts	(9,799		)	(11,103		)	(9,901		)	(11,745		)
Inventories, net	$	396,245		$	366,974		$	386,787		$	378,866

Inventoried costs related to long-term contracts include capitalized contract development costs related to certain aerospace and defense programs of ~~$29.9~~$43.1 million and ~~$28.8~~$35.0 million as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively. These capitalized costs will be liquidated as control of production units ~~are delivered~~is transferred to the ~~customers.~~customer. As of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016, $4.6~~2017, $8.6 million and ~~$3.9~~$5.4 million, respectively, are scheduled to be liquidated under existing firm orders.

5.6. GOODWILL

The changes in the carrying amount of goodwill for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 are as follows:

(In thousands) Commercial/Industrial Defense Power Consolidated
December 31, 2016 $ 436,141
$ 327,655
$ 187,261
$ 951,057
Acquisitions 2,420
113,847
—
116,267
Foreign currency translation adjustment 6,468
9,044
108
15,620
June 30, 2017 $ 445,029
$ 450,546
$ 187,369
$ 1,082,944



(In thousands)	Commercial/ Industrial		Defense			Power			Consolidated
December 31, 2017	$	448,531	$	460,332		$	187,466		$	1,096,329
Adjustments	—		(1,439		)	—			(1,439		)
Foreign currency translation adjustment	2,907		1,734			(81		)	4,560
March 31, 2018	$	451,438	$	460,627		$	187,385		$	1,099,450

6.7. OTHER INTANGIBLE ASSETS, NET

~~Page 13~~

~~CURTISS-WRIGHT CORPORATION and SUBSIDIARIES~~

~~NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

The following tables present the cumulative composition of the Corporation’s intangible assets:

June 30, 2017 December 31, 2016
(In thousands) Gross Accumulated Amortization Net Gross Accumulated Amortization Net
Technology $ 240,858
$ (105,400 ) $ 135,458
$ 166,859
$ (98,266 ) $ 68,593
Customer related intangibles 363,500
(168,351 ) 195,149
349,742
(157,154 ) 192,588
Other intangible assets 40,250
(24,866 ) 15,384
36,709
(26,429 ) 10,280
Total $ 644,608
$ (298,617 ) $ 345,991
$ 553,310
$ (281,849 ) $ 271,461

During the six months ended June 30, 2017, the Corporation acquired intangible assets of $88.9 million. The Corporation acquired Technology of $73.0 million, Customer related intangibles of $12.9 million, and Other intangible assets of $3.0 million, which have a weighted average amortization period of 15.0 years, 16.3 years, and 7.0 years, respectively.



	March 31, 2018							December 31, 2017
(In thousands)	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Technology	$	244,292	$	(116,671	)	$	127,621	$	243,440	$	(114,036	)	$	129,404
Customer related intangibles	365,149		(182,629		)	182,520		367,230		(180,580		)	186,650
Other intangible assets	40,749		(28,034		)	12,715		40,640		(27,026		)	13,614
Total	$	650,190	$	(327,334	)	$	322,856	$	651,310	$	(321,642	)	$	329,668

Total intangible amortization expense for both the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 and 2017 was ~~$19.1~~$9.6 million ~~as compared to $16.8 million in the prior year period.~~. The estimated amortization expense for the five years ending December 31, ~~2017~~2018 through ~~2021~~2022 is ~~$38.7~~$38.7 million ~~$37.7~~, $36.9 million ~~$36.0~~, $34.9 million ~~$34.1~~, $33.1 million, and ~~$32.3~~$30.5 million, respectively.

7.8. FAIR VALUE OF FINANCIAL INSTRUMENTS

Forward Foreign Exchange and Currency Option Contracts

The Corporation has foreign currency exposure primarily in the United Kingdom, Europe, and Canada. The Corporation uses financial instruments, such as forward ~~and option~~ contracts, to hedge a portion of existing and anticipated foreign currency denominated transactions. The purpose of the Corporation’s foreign currency risk management program is to reduce volatility in earnings caused

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

by exchange rate fluctuations. Guidance on accounting for derivative instruments and hedging activities requires companies to recognize all of the derivative financial instruments as either assets or liabilities at fair value in the Condensed Consolidated Balance Sheets based upon quoted market prices for comparable instruments.

Interest Rate Risks and Related Strategies

The Corporation’s primary interest rate exposure results from changes in U.S. dollar interest rates. The Corporation’s policy is to manage interest cost using a mix of fixed and variable rate debt. The Corporation periodically uses interest rate swaps to manage such exposures. Under these interest rate swaps, the Corporation exchanges, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. The Corporation’s foreign exchange contracts and interest rate swaps are considered Level 2 instruments which are based on market based inputs or unobservable inputs and corroborated by market data such as quoted prices, interest rates, or yield curves.

Effects on Condensed Consolidated Balance Sheets

As of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the fair values of the asset and liability derivative instruments are immaterial.

Effects on Condensed Consolidated Statements of Earnings

Undesignated hedges

The location and amount of (gains) and losses ~~or (gains)~~ recognized in income on forward exchange derivative contracts not designated for hedge accounting for the three ~~and six~~ months ended ~~June 30,~~March 31, were as follows:

Three Months Ended Six Months Ended
(In thousands) June 30, June 30,
Derivatives not designated as hedging instrument 2017 2016 2017 2016
Forward exchange contracts:
General and administrative expenses $ (93 ) $ 4,452
$ 614
$ 5,036

~~Page 14~~

~~CURTISS-WRIGHT CORPORATION and SUBSIDIARIES~~

~~NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~



	Three Months Ended
(In thousands)	March 31,
Derivatives not designated as hedging instrument	2018			2017
Forward exchange contracts:
General and administrative expenses	$	(353	)	$	707

Debt

The estimated fair value amounts were determined by the Corporation using available market information that is primarily based on quoted market prices for the same or similar ~~issues~~issuances as of ~~June 30, 2017~~March 31, 2018. Accordingly, all of the Corporation’s debt is valued at a Level 2. The fair values described below may not be indicative of net realizable value or reflective of future fair values. Furthermore, the use of different methodologies to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.


	June 30, 2017						December 31, 2016						March 31, 2018						December 31, 2017
(In thousands)	Carrying Value			Estimated Fair Value			Carrying Value			Estimated Fair Value			Carrying Value			Estimated Fair Value			Carrying Value			Estimated Fair Value
5.51% Senior notes due 2017	150,000			152,161			150,000			154,509
3.84% Senior notes due 2021	100,000			104,107			100,000			102,463			100,000			101,165			100,000			102,472
3.70% Senior notes due 2023	225,000			232,173			225,000			226,946			225,000			225,407			225,000			228,783
3.85% Senior notes due 2025	100,000			103,389			100,000			100,338			100,000			100,123			100,000			102,164
4.24% Senior notes due 2026	200,000			211,038			200,000			203,592			200,000			203,790			200,000			208,873
4.05% Senior notes due 2028	75,000			77,685			75,000			74,630			75,000			74,972			75,000			76,997
4.11% Senior notes due 2028	100,000			104,158			100,000			99,876			100,000			100,424			100,000			103,226
Other debt	820			820			668			668			982			982			150			150
Total debt	950,820			985,531			950,668			963,022			800,982			806,863			800,150			822,665
Debt issuance costs, net	(907		)	(907		)	(984		)	(984		)	(796		)	(796		)	(831		)	(831		)
Unamortized interest rate swap proceeds	15,717			15,717			16,614			16,614			14,372			14,372			14,820			14,820
Total debt, net	$	965,630		$	1,000,341		$	966,298		$	978,652		$	814,558		$	820,439		$	814,139		$	836,654

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

9. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

The following ~~tables are~~table is a consolidated ~~disclosures~~disclosure of all domestic and foreign defined benefit pension plans as described in the Corporation’s ~~2016~~2017 Annual Report on Form ~~10-K.~~10-K filed with the SEC.

Pension Plans

The components of net periodic pension cost for the three ~~and six~~ months ended ~~June 30, 2017~~March 31, 2018 and ~~2016~~2017 ~~were~~are as follows:


													Three Months Ended
	Three Months Ended						Six Months Ended						March 31,
(In thousands)	June 30,						June 30,						2018			2017
	2017			2016			2017			2016
Service cost	$	6,474		$	6,248		$	12,945		$	12,485		$	6,506		$	6,471
Interest cost	6,236			7,709			12,455			15,412			6,534			6,219
Expected return on plan assets	(13,310		)	(13,590		)	(26,595		)	(27,171		)	(14,716		)	(13,285		)
Amortization of prior service cost	(26		)	(11		)	(51		)	(23		)	(63		)	(25		)
Amortization of unrecognized actuarial loss	3,585			3,093			7,166			6,186			3,906			3,581
Net periodic benefit cost	$	2,959		$	3,449		$	5,920		$	6,889		$	2,167		$	2,961

During the ~~six~~three months ended ~~June 30, 2017~~,March 31, 2018, the Corporation made ~~no contributions~~a $50 million contribution to the Curtiss-Wright Pension ~~Plan, and~~Plan. The Corporation does not expect to make any further contributions in ~~2017.~~2018. Contributions to the foreign benefit plans are not expected to be material in ~~2017.~~2018.

Defined Contribution Retirement Plan

~~Page 15~~

~~CURTISS-WRIGHT CORPORATION and SUBSIDIARIES~~

~~NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

Effective January 1, 2014, all non-union employees who ~~are~~were not currently receiving final or career average pay benefits became eligible to receive employer contributions in the ~~Corporation’s~~Corporation's sponsored 401(k) plan. The employer contributions include both employer match and non-elective contribution components, up to a maximum employer contribution of 6% of eligible compensation. During the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ the expense relating to the plan was ~~$6.8~~$4.2 million and ~~$6.0~~$3.7 million, respectively. The Corporation made ~~$9.4~~$9.2 million in contributions to the plan ~~during~~for the ~~six months ended June 30, 2017,~~first quarter of 2018, and expects to make total contributions of ~~$11.8~~$14.0 million in ~~2017.~~2018.

9.10. EARNINGS PER SHARE

Diluted earnings per share were computed based on the weighted-average number of shares outstanding plus all potentially dilutive common shares. A reconciliation of basic to diluted shares used in the earnings per share calculation is as follows:


					Three Months Ended
	Three Months Ended		Six Months Ended		March 31,
(In thousands)	June 30,		June 30,		2018	2017
	2017	2016	2017	2016
Basic weighted-average shares outstanding	44,213	44,487	44,221	44,526	44,188	44,246
Dilutive effect of stock options and deferred stock compensation	594	677	604	669	490	614
Diluted weighted-average shares outstanding	44,807	45,164	44,825	45,195	44,678	44,860

For the three months ~~and six~~ended March 31, 2018, there were no anti-dilutive equity-based awards. For the three months ended ~~June 30,~~March 31, 2017, approximately 38,000 shares issuable under equity-based awards were excluded from the calculation of diluted earnings per share as they were anti-dilutive based on the average stock price during the period. ~~For the three and six months ended June 30, 2016, there were no anti-dilutive equity-based awards.~~

~~10.~~11. SEGMENT INFORMATION

The Corporation manages and evaluates its operations based on end markets to strengthen its ability to service customers and recognize certain organizational efficiencies. Based on this approach, the Corporation has three reportable segments: Commercial/Industrial, Defense, and Power.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The ~~Corporation’s~~Corporation's measure of segment profit or loss is operating income. Interest expense and income taxes are not reported on an operating segment basis as they are not considered in the segments’ performance evaluation by the Corporation’s chief operating decision-maker, its Chief Executive Officer.

Net sales and operating income by reportable segment were as follows:

Three Months Ended Six Months Ended
(In thousands) June 30, June 30,
2017 2016 2017 2016
Net sales
Commercial/Industrial $ 291,856
$ 290,428
$ 570,912
$ 565,633
Defense 127,399
114,877
242,236
220,607
Power 149,970
129,123
280,565
252,869
Less: Intersegment revenues (1,572 ) (1,662 ) (2,469 ) (2,836 )
Total consolidated $ 567,653
$ 532,766
$ 1,091,244
$ 1,036,273

Operating income (expense)
Commercial/Industrial $ 43,693
$ 38,957
$ 74,314
$ 69,009
Defense 21,187
18,609
32,342
35,454
Power 24,870
16,114
41,410
30,742
Corporate and eliminations ⁽¹⁾
(6,479 ) (5,591 ) (13,568 ) (9,853 )
Total consolidated $ 83,271
$ 68,089
$ 134,498
$ 125,352

~~Page 16~~

~~CURTISS-WRIGHT CORPORATION and SUBSIDIARIES~~

~~NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~



	Three Months Ended
	March 31,
(In thousands)	2018			2017
Net sales
Commercial/Industrial	$	296,753		$	279,056
Defense	120,883			114,837
Power	132,158			130,595
Less: Intersegment revenues	(2,272		)	(897		)
Total consolidated	$	547,522		$	523,591

Operating income (expense)
Commercial/Industrial	$	39,225		$	30,552
Defense	19,728			11,097
Power	15,342			15,545
Corporate and eliminations ⁽¹⁾	(9,797		)	(9,502		)
Total consolidated	$	64,498		$	47,692

⁽¹⁾ Corporate and eliminations includes pension and other postretirement benefit expense, certain environmental costs related to remediation at legacy sites, foreign currency transactional gains and losses, and certain other expenses.

Adjustments to reconcile operating income to earnings before income ~~taxes are as follows:~~taxes:


									Three Months Ended
	Three Months Ended				Six Months Ended				March 31,
(In thousands)	June 30,				June 30,				2018		2017
	2017		2016		2017		2016
Total operating income	$	83,271	$	68,089	$	134,498	$	125,352	$	64,498	$	47,692
Interest expense	10,750		10,273		21,127		20,206		8,204		10,377
Other income, net	190		101		502		335		4,683		3,847
Earnings before income taxes	$	72,711	$	57,917	$	113,873	$	105,481	$	60,977	$	41,162


(In thousands)	June 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Identifiable assets
Commercial/Industrial	$	1,420,411	$	1,391,040	$	1,476,555	$	1,444,097
Defense	1,013,636		751,859		1,055,115		1,044,776
Power	517,053		516,321		487,278		482,753
Corporate and Other	170,174		378,561		160,111		264,695
Total consolidated	$	3,121,274	$	3,037,781	$	3,179,059	$	3,236,321

~~11.~~12. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The cumulative balance of each component of accumulated other comprehensive income ~~(AOCI)~~(loss), net of tax, is as follows:

(In thousands) Foreign currency translation adjustments, net Total pension and postretirement adjustments, net Accumulated other comprehensive income (loss)
December 31, 2015 $ (107,810 ) $ (118,118 ) $ (225,928 )
Other comprehensive income (loss) before reclassifications⁽¹⁾
(64,840 ) (7,892 ) (72,732 )
Amounts reclassified from accumulated other comprehensive loss ⁽¹⁾
—
6,904
6,904
Net current period other comprehensive loss (64,840 ) (988 ) (65,828 )
December 31, 2016 $ (172,650 ) $ (119,106 ) $ (291,756 )
Other comprehensive income (loss) before reclassifications ⁽¹⁾
43,901
(507 ) 43,394
Amounts reclassified from accumulated other comprehensive income (loss) ⁽¹⁾
—
4,201
4,201
Net current period other comprehensive income 43,901
3,694
47,595
June 30, 2017 $ (128,749 ) $ (115,412 ) $ (244,161 )


~~(1)~~	~~All amounts are after tax.~~

~~Details of amounts reclassified from accumulated other comprehensive income (loss) are below:~~

~~Page 17~~

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(In thousands) Amount reclassified from AOCI Affected line item in the statement where net earnings is presented
Defined benefit pension and other postretirement benefit plans
Amortization of prior service costs 379
(1)
Amortization of actuarial losses (7,064 ) (1)
(6,685 ) Total before tax
2,484
Income tax
Total reclassifications $ (4,201 ) Net of tax



(In thousands)	Foreign currency translation adjustments, net			Total pension and postretirement adjustments, net			Accumulated other comprehensive income (loss)
December 31, 2016	$	(172,650	)	$	(119,106	)	$	(291,756	)
Other comprehensive loss before reclassifications ⁽¹⁾	77,942			(10,831		)	67,111
Amounts reclassified from accumulated other comprehensive loss ⁽¹⁾	—			7,805			7,805
Net current period other comprehensive loss	77,942			(3,026		)	74,916
December 31, 2017	$	(94,708	)	$	(122,132	)	$	(216,840	)
Other comprehensive income (loss) before reclassifications ⁽¹⁾	15,411			(145		)	15,266
Amounts reclassified from accumulated other comprehensive income (loss) ⁽¹⁾	—			2,767			2,767
Net current period other comprehensive income	15,411			2,622			18,033
March 31, 2018	$	(79,297	)	$	(119,510	)	$	(198,807	)


~~(1)~~	~~These items are included in the computation of net periodic benefit cost. See Note 8, Pension and Other Postretirement Benefit Plans.~~

⁽¹⁾ All amounts are after tax.

Details of amounts reclassified from accumulated other comprehensive income (loss) are below:



(In thousands)	Amount reclassified from Accumulated other comprehensive income (loss)			Affected line item in the statement where net earnings is presented
Defined benefit pension and other postretirement benefit plans
Amortization of prior service costs	227			⁽¹⁾
Amortization of actuarial losses	(3,898		)	⁽¹⁾
	(3,671		)	Total before tax
	904			Income tax
Total reclassifications	$	(2,767	)	Net of tax

⁽¹⁾ These items are included in the computation of net periodic pension cost. See Note 9, Pension and Other Postretirement Benefit Plans.

~~12.~~13. CONTINGENCIES AND COMMITMENTS

Legal Proceedings

The Corporation has been named in a number of lawsuits that allege injury from exposure to asbestos. To date, the Corporation has not been found liable for or paid any material sum of money in settlement in any case. The Corporation believes its minimal use of asbestos in its past operations and the relatively non-friable condition of asbestos in its products makes it unlikely that it will face material liability in any asbestos litigation, whether individually or in the aggregate. The Corporation maintains insurance coverage for these potential liabilities and believes adequate coverage exists to cover any unanticipated asbestos liability.

In December 2013, the Corporation, along with other unaffiliated parties, received a claim from Canadian Natural Resources Limited (CNRL) filed in the Court of ~~Queen’s~~Queen's Bench of Alberta, Judicial District of Calgary. The claim pertains to a January 2011 fire and explosion at a delayed coker unit at its Fort McMurray refinery that resulted in the injury of five CNRL employees, damage to property and equipment, and various forms of consequential loss, such as loss of profit, lost opportunities, and business interruption. The fire and explosion occurred when a CNRL employee bypassed certain safety controls and opened an operating coker unit. The total quantum of alleged damages arising from the incident has not been finalized, but is estimated to meet or exceed $1 billion. The Corporation maintains various forms of commercial, property and casualty, product liability, and other forms of insurance; however, such insurance may not be adequate to cover the costs associated with a judgment against us. In October 2017, all parties agreed in principle to participate in a formal mediation in late 2018 with the intention of settling this claim. In an effort to induce the parties to participate in the formal mediation, CNRL agreed to reduce its claim to approximately $400 million, which reflects the monetary amount of property damage incurred as a result of the fire and explosion. The Corporation is currently unable to estimate an amount, or range of potential losses, if any, from this matter. The Corporation believes that it has adequate legal defenses and intends to defend

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

this matter vigorously. The ~~Corporation’s~~Corporation's financial condition, results of operations, and cash flows could be materially affected during a future fiscal quarter or fiscal year by unfavorable developments or outcome regarding this claim.

~~In addition to the CNRL litigation, the~~The Corporation is party to a number of other legal actions and claims, none of which individually or in the aggregate, in the opinion of management, are expected to have a material effect on the Corporation’s results of operations or financial position.

Westinghouse Bankruptcy

On March 29, 2017, ~~Westinghouse Electric Company (“WEC”)~~WEC filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York (the Court), Case No. 17-10751. The ~~Bankruptcy~~ Court overseeing the Bankruptcy Case ~~has~~ approved, on an interim basis, an $800 million Debtor-in-Possession Financing Facility to help WEC finance its business operations during the reorganization process. On January 4, 2018, WEC announced that it had agreed to be acquired by Brookfield Business Partners L.P (Brookfield) for approximately $4.6 billion with the acquisition expected to close in the third quarter of 2018. On March 27, 2018, the Court approved the sale to Brookfield. The acquisition is not expected to have a material impact on the Corporation’s financial condition or results of operations as WEC plans to continue operating in the ordinary course of business under existing senior management.

The Corporation had approximately ~~$6.5~~$2.9 million in pre-petition billings outstanding with WEC as of ~~June 30, 2017. The~~March 31, 2018. On March 27, 2018, the Court approved WEC's Plan of Reorganization, whereby the Corporation is expected to recover substantially all of its general unsecured claims inclusive of pre-petition billings. As it relates to post-petition work, the Corporation will continue ~~for the time being and while it monitors and evaluates the Bankruptcy Case,~~ to honor its executory contracts and expects to collect all ~~post-petition~~ amounts due. At this time, the Corporation has assessed that any pre-petition amounts will be substantially recoverable and does not believe that rejection of the outstanding contracts with WEC, taken in part or combined, would have a material adverse impact on the Company’s cash flow or operations. The Corporation ~~continues~~will continue to monitor and evaluate the status of the WEC bankruptcy ~~as well as the status of the plant construction projects~~ for potential impacts on ~~our~~its business.

Letters of Credit and Other Financial Arrangements

~~Page 18~~

~~CURTISS-WRIGHT CORPORATION and SUBSIDIARIES~~

~~NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

The Corporation enters into standby letters of credit agreements and guarantees with financial institutions and customers primarily relating to guarantees of repayment, future performance on certain contracts to provide products and services, and to secure advance payments from certain international customers. As of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, there were ~~$48.8~~$20.7 million and ~~$47.2~~$21.3 million of stand-by letters of credit outstanding, respectively, and ~~$13.9~~$15.0 million and ~~$12.8~~$14.6 million of bank guarantees outstanding, respectively. In addition, the Corporation is required to provide the Nuclear Regulatory Commission financial assurance demonstrating its ability to cover the cost of decommissioning its Cheswick, Pennsylvania facility upon closure, though the Corporation does not intend to close this facility. The Corporation has provided this financial assurance in the form of a ~~$56.0~~$56.0 million surety bond.

AP1000 Program

~~The Electro-Mechanical Division, which is within~~Within the Corporation’s Power segment, our Electro-Mechanical Division is the reactor coolant pump (RCP) supplier for the ~~Westinghouse~~WEC AP1000 nuclear power plants under construction in China and the United States. The terms of the AP1000 China and United States contracts include liquidated damage penalty provisions for failure to meet contractual delivery dates if the Corporation caused the delay and the delay was not excusable. On October 10, 2013, the Corporation received a letter from ~~Westinghouse~~WEC stating entitlements to the maximum amount of liquidated damages allowable under the AP1000 China contract ~~from Westinghouse~~ of approximately $25 million. The Corporation would be liable for liquidated damages under the contract if certain contractual delivery dates were not met and if the Corporation was deemed responsible for the delay. As of ~~June 30, 2017,~~March 31, 2018, the Corporation has not met certain contractual delivery dates under its AP 1000 ~~China and US~~ contracts; however there are significant uncertainties as to which parties are responsible for the delays. The Corporation believes it has adequate legal defenses and intends to vigorously defend this matter. Given the uncertainties surrounding the responsibility for the delays, no accrual has been made for this matter as of ~~June 30, 2017.~~March 31, 2018. As of ~~June 30, 2017,~~March 31, 2018, the range of possible loss is $0 million to $31 million for the AP1000 USU.S. contract, for a total range of possible loss ofis $0 million to $55.5 million.

~~13.~~14. SUBSEQUENT EVENTS

On ~~July 20, 2017,~~April 2, 2018, the ~~Board~~Corporation acquired the assets of ~~Directors unanimously authorized~~the Dresser-Rand Government Business (Dresser-Rand) for $212.5 million in cash. Dresser-Rand operates as a ~~$0.02, or 15%, increase~~business unit of Siemens Government Technologies, which is a wholly-owned U.S. subsidiary of Siemens AG in Germany. Dresser-Rand is a leading designer and manufacturer of mission-critical, high-speed rotating equipment solutions and also acts as the ~~Corporation’s quarterly dividend to $0.15 per share.~~sole supplier of steam turbines and main engine guard valves on all aircraft carrier programs. The ~~increase~~acquired business will ~~be reflected in~~operate within the ~~Corporation’s third quarter distribution, to be paid in October 2017.~~Corporation's Power segment.

~~Page 19~~

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I- ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

Except for historical information, this Quarterly Report on Form 10-Q may be deemed to contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not limited to: (a) projections of or statements regarding return on investment, future earnings, interest income, sales, volume, other income, earnings or loss per share, 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 statements can be identified by the use of forward-looking terminology such as “anticipates,” “believes,” “continue,” “could,” “estimate,” “expects,” “intend,” “may,” “might,” “outlook,” “potential,” “predict,” “should,” “will,” as well as the negative of any of the foregoing or variations of such terms or comparable terminology, or by discussion of strategy. No assurance may be given that the future results described by the forward-looking statements will be achieved. While we believe these forward-looking statements are reasonable, they are only predictions and are subject to known and unknown risks, uncertainties, and other factors, many of which are beyond our control, which could cause actual results, performance, or achievement to differ materially from anticipated future results, performance, or achievement expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, those described in “Item 1A. Risk Factors” of our ~~2016~~2017 Annual Report on Form 10-K, and elsewhere in that report, those described in this Quarterly Report on Form 10-Q, and those described from time to time in our future reports filed with the Securities and Exchange Commission. Such forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, those contained in Item 1. Financial Statements and Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date they were made, and we assume no obligation to update forward-looking statements to reflect actual results or changes in or additions to the factors affecting such forward-looking statements.

~~Page 20~~

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

COMPANY ORGANIZATION

Curtiss-Wright Corporation and its subsidiaries is a global, diversified, ~~multinational~~industrial provider of highly engineered and technologically advanced ~~value-added~~ products and services to a broad range of industries which are reported through our Commercial/Industrial, Defense, and Power segments. We are positioned as a market leader across a diversified array of niche markets through engineering and technological leadership, precision manufacturing, and strong relationships with our customers. We provide products and services to a number of global markets, including the commercial aerospace, defense, power generation, and ~~have achieved balanced growth through the successful application of our core competencies in engineering and precision manufacturing.~~general industrial markets. Our overall strategy is to be a balanced and diversified company, less vulnerable to cycles or downturns in any one market, and to establish strong positions in profitable niche markets. Approximately ~~38%~~40% of our ~~2017~~2018 revenues are expected to be generated from defense-related markets.

RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand the results of operations and financial condition of the Corporation for the three ~~and six month periods~~months ended ~~June 30, 2017.~~March 31, 2018. The financial information as of ~~June 30, 2017~~March 31, 2018 should be read in conjunction with the financial statements for the year ended December 31, ~~2016~~2017 contained in our Form 10-K.

The MD&A is organized into the following sections: Condensed Consolidated Statements of Earnings, Results by Business Segment, and Liquidity and Capital Resources. Our discussion will be focused on the overall results of ~~continuing~~ operations followed by a more detailed discussion of those results within each of our reportable segments.

Our three reportable segments are generally concentrated in a few end markets; however, each may have sales across several end markets. ~~An end~~A market is defined as an area of demand for products and services. The sales trends for the relevant markets will be discussed throughout the MD&A.

Analytical Definitions

Throughout management’s discussion and analysis of financial condition and results of operations, the terms “incremental” and “organic” are used to explain changes from period to period. The term “incremental” is used to highlight the impact acquisitions and divestitures had on the current year results. The results of operations for acquisitions are incremental for the first twelve months from the date of acquisition. Additionally, the results of operations of divested businesses are removed from the comparable prior year period for purposes of calculating “organic” or “incremental” results. The definition of “organic” excludes the effect of foreign currency translation.

~~Page 21~~

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued


Consolidated Statements of Earnings
Condensed Consolidated Statements of Earnings																	Three Months Ended
	Three Months Ended								Six Months Ended								March 31,
(In thousands)	June 30,								June 30,								2018			2017			% change
	2017			2016			% change		2017			2016			% change
Sales
Commercial/Industrial	$	291,599		$	290,046		1	%	$	570,421		$	564,773		1	%	$	296,641		$	278,822		6	%
Defense	126,361			113,961			11	%	241,023			219,352			10	%	118,901			114,662			4	%
Power	149,693			128,759			16	%	279,800			252,148			11	%	131,980			130,107			1	%
Total sales	$	567,653		$	532,766		7	%	$	1,091,244		$	1,036,273		5	%	$	547,522		$	523,591		5	%

Operating income
Commercial/Industrial	$	43,693		$	38,957		12	%	$	74,314		$	69,009		8	%	$	39,225		$	30,552		28	%
Defense	21,187			18,609			14	%	32,342			35,454			(9	)%	19,728			11,097			78	%
Power	24,870			16,114			54	%	41,410			30,742			35	%	15,342			15,545			(1	%)
Corporate and eliminations	(6,479		)	(5,591		)	(16	)%	(13,568		)	(9,853		)	(38	)%	(9,797		)	(9,502		)	(3	%)
Total operating income	$	83,271		$	68,089		22	%	$	134,498		$	125,352		7	%	$	64,498		$	47,692		35	%

Interest expense	10,750			10,273			5	%	21,127			20,206			5	%	8,204			10,377			(21	%)
Other income, net	190			101			NM		502			335			NM		4,683			3,847			22	%
Earnings before income taxes																	60,977			41,162			48	%

Earnings before taxes	72,711			57,917			26	%	113,873			105,481			8	%
Provision for income taxes	(22,061		)	(17,954		)	23	%	(30,676		)	(32,699		)	(6	)%	(17,334		)	(8,615		)	101	%
Net earnings	$	50,650		$	39,963				$	83,197		$	72,782				$	43,643		$	32,547		34	%

New orders	$	548,201		$	523,649		5	%	$	1,192,477		$	1,152,269		3	%	$	604,903		$	644,276		(6	%)

NM- not a meaningful percentage

~~Components of sales and operating income increase (decrease):~~


	Three Months Ended				Six Months Ended
Components of sales and operating income increase (decrease):									Three Months Ended
	June 30,				June 30,				March 31,
	2017 vs. 2016				2017 vs. 2016				2018 vs. 2017
	Sales		Operating Income		Sales		Operating Income		Sales		Operating Income
Organic	5	%	22	%	4	%	12	%	3	%	37	%
Acquisitions	3	%	(2	%)	2	%	(6	%)	—	%	—	%
Foreign currency	(1	%)	2	%	(1	%)	1	%	2	%	(2	%)
Total	7	%	22	%	5	%	7	%	5	%	35	%

Three months ended March 31, 2018 compared with three months ended March 31, 2017

Sales for the ~~second quarter~~first three months of ~~2017~~2018 increased ~~$35~~$24 million ~~or 7%,~~ to ~~$568~~$548 million, compared with the ~~prior year period.~~same period in 2017. On a segment basis, sales from the Commercial/Industrial segment, Defense segment, and Power segment increased $2$18 million, ~~$12~~$4 million, and ~~$21 million, respectively.~~

Sales during the six months ended June 30, 2017 increased $55 million, or 5%, to $1,091 million, compared with the prior year period. On a segment basis, sales from the Commercial/Industrial, Defense and Power segments increased $5 million, $22 million, and $28$2 million, respectively. Changes in sales by segment are discussed in further detail in the results by business segment ~~section below.~~section.

Operating income induring the ~~second~~first quarter of ~~2017~~ 2018increased ~~$15~~$17 million, or ~~22%~~35%, to ~~$83~~$64 million, and operating margin increased ~~190~~270 basis points, to ~~14.7% compared with~~11.8%, from the ~~same period in 2016. Increases~~comparable prior year period. The increases in operating income and operating margin ~~were~~are primarily attributable to higher ~~production levels on~~sales volumes of our industrial vehicles and surface treatment services in the ~~AP1000 China Direct program~~Commercial/Industrial segment, the benefits of our ongoing margin improvement initiatives, and improved profitability in the Defense segment as we moved beyond first year purchase accounting costs from our TTC acquisition.

~~Page 22~~

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

aftermarket business in our Power segment. Operating income and operating margin also benefited from improved volume on industrial vehicle products in the Commercial/Industrial segment, and our ongoing margin improvement initiatives.

Operating income during the six months ended June 30, 2017 increased $9 million, or 7%, to $134 million and operating margin increased 20 basis points to 12.3%, compared with the same period in 2016. Increases in operating income and operating margin were primarily attributable to higher production levels in our Power segment on the AP1000 China Direct Program, improved volume on industrial vehicle products in the Commercial/Industrial segment, and our ongoing margin improvement initiatives. These increases were partially offset by first year purchase accounting costs on the TTC acquisition, which reduced operating income by $7 million.

Non-segment operating expense inof$10 million was essentially flat compared to the ~~second quarter and six months ended June 30, 2017 increased $1 million, or 16%, to $6 million and $4 million, or 38%, to $14 million, respectively, from the comparable~~ prior ~~year periods. These increases were primarily due to foreign exchange losses and other corporate costs.~~period.

Interest expense in the ~~second~~first quarter ~~and six months ended June 30, 2017~~ of ~~$11~~2018 decreased $2 million, ~~and $21~~or 21%, to $8 million ~~respectively, was essentially flat as compared to~~from the ~~respective~~comparable prior year ~~periods.~~period, primarily due to maturation of the $150 million 5.51% Senior Notes, which were repaid in full on December 1, 2017.

The effective tax rates ~~rate~~ for the ~~three~~3 months ended ~~June 30,~~March 31, 2018 and 2017 ~~was 30.3%~~were28.4% and 20.9%, ~~as compared to an~~respectively. The increase in the effective tax rate ~~of 31.0% in~~during the prior year period. The reduction in rate was principally driven by changes in valuation allowances. The effective tax rate for the six months ended June 30, 2017 of 26.9% as compared to an effective tax rate of 31.0% in the prior yearcurrent period was primarily due to ~~our~~additional provisional tax expense associated with the 2017 Tax Cuts and Jobs Act (the Tax Act) for foreign withholding taxes as well as the elimination of the Section 199 manufacturers’ deduction. These increases were partially offset by the current ~~year adoption~~period reduction of ~~ASU 2016-09~~ ~~Improvements to Employee Share-Based Payment Accounting~~ ~~and changes in valuation allowances. Without~~ the ~~adoption of ASU 2016-09, our effective~~U.S. corporate income tax rate ~~for the six months ended June 30, 2017 was 30.~~5%from 35% to 21%.

Comprehensive income in the ~~second~~first quarter of ~~2017~~2018 was ~~$85~~$62 million, compared to comprehensive income of ~~$10~~$46 million in the comparable prior year period. The change was primarily due to the following:

Net earnings increased $11 million, ~~primarily due to the~~as higher operating income ~~discussed above.~~of $17 million was partially offset by an increase in the effective tax rate during the current period.

Foreign currency translation adjustments induring the ~~second quarter~~current period resulted in a ~~$33~~$15 million comprehensive gain, compared to a ~~$32~~$11 million comprehensive ~~loss~~gain in the prior year period. The comprehensive gain during the current period was primarily attributed to increases in the British Pound, ~~and Euro.~~

~~Pension and postretirement adjustments within comprehensive income of $2 million were essentially flat against the comparable prior year period.~~

~~Comprehensive income for the six months ended June 30, 2017 was $131 million, compared to comprehensive income of $61 million~~partially offset by decreases in the ~~prior year period. The change was primarily due to the following:~~

~~Net earnings increased $10 million, primarily due to the higher operating income discussed above.~~

Foreign currency translation adjustments for the six months ended June 30, 2017 resulted in a $44 million comprehensive gain, compared to a $15 million comprehensive loss in the prior period. The comprehensive gain during the current period was primarily attributed to increases in the British Pound, Euro, and Canadian dollar.

Pension and postretirement adjustments within comprehensive income of $4$3 million were essentially flat against the comparable prior year period.

New orders ~~increased $25~~in the first quarter of 2018 decreased $39 million ~~and $40~~to $605 million, ~~during~~as compared to the ~~three and six months ended June 30, 2017, from the comparable~~ prior year ~~periods. The increase in new orders for each of the respective periods~~period. This decrease was primarily due to ~~the acquisition of TTC in the Defense segment and~~ a ~~significant~~prior period government order ~~and higher demand~~ for ~~our industrial vehicle products in~~ the ~~Commercial/Industrial segment. These increases were partially offset by a decrease~~CVN-80 aircraft carrier in the Power ~~segment due to the timing of funding for pumps and generators with government customers.~~segment. New orders ~~during the six months ended June 30, 2017 also benefited favorably from a government order for aircraft handling systems~~ in ~~the Defense segment, partially offset by the timing of funding from government customers in~~both the Commercial/Industrial ~~segment.~~ and Defense segments were essentially flat.

RESULTS BY BUSINESS SEGMENT

Commercial/Industrial

The following tables summarize sales, operating income and margin, and new orders within the Commercial/Industrial segment.

~~Page 23~~



	Three Months Ended
	March 31,
(In thousands)	2018			2017			% change
Sales	$	296,641		$	278,822		6	%
Operating income	39,225			30,552			28	%
Operating margin	13.2		%	11.0		%	220	bps
New orders	$	329,278		$	327,907		—	%



Components of sales and operating income increase (decrease):	Three Months Ended
	March 31,
	2018 vs. 2017
	Sales		Operating Income
Organic	4	%	28	%
Acquisitions	—	%	—	%
Foreign currency	2	%	—	%
Total	6	%	28	%

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

~~The following tables summarize sales, operating income and margin, and new orders within the Commercial/Industrial segment.~~

Three Months Ended Six Months Ended
(In thousands) June 30, June 30,
2017 2016 % change 2017 2016 % change
Sales $ 291,599
$ 290,046
1 % $ 570,421
$ 564,773
1 %
Operating income 43,693
38,957
12 % 74,314
69,009
8 %
Operating margin 15.0 % 13.4 % 160 bps 13.0 % 12.2 % 80 bps
New orders $ 315,014
$ 280,332
12 % $ 642,921
$ 637,719
1 %

~~Components of sales and operating income increase (decrease):~~

Three Months Ended Six Months Ended
June 30, June 30,
2017 vs. 2016 2017 vs. 2016
Sales Operating Income Sales Operating Income
Organic 2 % 12 % 2 % 7 %
Acquisitions — % — % — % — %
Foreign currency (1 %) — % (1 %) 1 %
Total 1 % 12 % 1 % 8 %

Sales in the Commercial/Industrial segment are primarily generated from the commercial aerospace and general industrial markets, and to a lesser extent the defense and power generation markets.

Sales induring the ~~second~~first quarter of 2018 increased $2$18 million, or 1%6%, to ~~$292~~$297 million ~~from~~over the comparable prior year period. In the general industrial market, sales increased ~~$10~~$5 million primarily due to higher demand for our industrial vehicle products. ~~This increase was partially offset by lower sales~~Sales in the naval defense market benefited $6 million primarily from higher production levels on CVN-80 pumps. Aerospace defense sales increased $7 million primarily due to ~~the timing~~higher sales of ~~production~~actuation systems on ~~the Virginia-class submarine program.~~fighter jets. Sales in the commercial aerospace market ~~decreased primarily due to lower sales of actuation and sensors products.~~

~~Sales during the six months ended June 30, 2017 increased $6 million, or 1%, to $570 million from the prior year period. In the general industrial market, we experienced~~were flat as higher sales of ~~$18 million primarily due to increased demand for our industrial vehicle~~sensors, actuation systems, and ~~industrial automation products. This increase was partially~~surface treatment services were offset by lower sales in the naval defense and commercial aerospace markets primarily due to the timing of production on the Virginia-class submarine program and lower sales of actuation and sensors products, respectively. Unfavorableprior year, one-time FAA directive revenues which did not recur. Favorable foreign currency translation ~~reduced~~benefited sales ~~by $8~~$7 million.

Operating incomeduring the ~~second~~first quarter of 2018 increased $5$9 million, or ~~12%~~28%, to ~~$44~~$39 million, and operating margin increased 220 basis points from the comparable prior year period ~~while operating margin increased 160 basis points~~ to ~~15.0%. Operating income during the six months ended June 30, 2017 increased $5 million, or 8%, to $74 million from the prior year period, while operating margin increased 80 basis points to 13.0%~~13.2%. The increases in operating income and operating margin ~~for each of the respective periods~~ were primarily due to ongoing margin improvement initiatives and ~~improved volume on~~higher sales volumes of our industrial ~~vehicle~~vehicles and ~~medical mobility products. These increases were partially offset by lower profitability for sensors and controls products due to lower volume and unfavorable mix.~~surface treatment services.

New ordersincreased ~~$35~~$1 million ~~and $5 million during~~in the ~~three and six months ended June 30, 2017~~first quarter of 2018 from the comparable prior year ~~periods, primarily due to a government order for the F-35 Joint Strike Fighter (JSF) and increased~~period, as higher demand for ~~our industrial vehicle products. The increase in new orders during the six months ended June 30, 2017~~surface treatment services was ~~partially~~essentially offset by the timing of ~~funding from government customers.~~naval defense and aerospace defense orders.

Defense

The following tables summarize sales, operating income and margin, and new orders within the Defense segment.



	Three Months Ended
	March 31,
(In thousands)	2018			2017			% change
Sales	$	118,901		$	114,662		4	%
Operating income	19,728			11,097			78	%
Operating margin	16.6		%	9.7		%	690	bps
New orders	$	133,889		$	133,973		—	%



Components of sales and operating income increase (decrease):	Three Months Ended
	March 31,
	2018 vs. 2017
	Sales		Operating Income
Organic	2	%	85	%
Acquisitions	—	%	—	%
Foreign currency	2	%	(7	%)
Total	4	%	78	%

Sales in the Defense segment are primarily generated from the defense market, and to a lesser extent, the commercial aerospace and general industrial markets.

~~Page 24~~

Sales during the first quarter of 2018 increased $4 million, or 4%, to $119 million, from the comparable prior year period. In the aerospace defense market, increased demand for data acquisition and flight test equipment was partially offset by declines in helicopter and unmanned aerial vehicle (UAV) production. In the ground defense market, we experienced higher domestic vehicle product sales, most notably on the G/ATOR program.

Operating income during the first quarter of 2018 increased $9 million, or 78%, to $20 million, and operating margin increased 690 basis points from the comparable prior year period to 16.6%. The increases in operating income and operating

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

~~Defense~~

~~The following tables summarize sales, operating income and margin, and new orders within the Defense segment.~~

Three Months Ended Six Months Ended
(In thousands) June 30, June 30,
2017 2016 % change 2017 2016 % change
Sales $ 126,361
$ 113,961
11 % $ 241,023
$ 219,352
10 %
Operating income 21,187
18,609
14 % 32,342
35,454
(9 %)
Operating margin 16.8 % 16.3 % 50 bps 13.4 % 16.2 % (280 ) bps
New orders $ 118,048
$ 92,732
27 % $ 252,021
$ 198,624
27 %

~~Components of sales and operating income increase (decrease):~~

Three Months Ended Six Months Ended
June 30, June 30,
2017 vs. 2016 2017 vs. 2016
Sales Operating Income Sales Operating Income
Organic — % 14 % — % 8 %
Acquisitions 12 % (7 %) 11 % (20 %)
Foreign currency (1 %) 7 % (1 %) 3 %
Total 11 % 14 % 10 % (9 %)

~~Sales~~ ~~in the Defense segment are primarily to the defense markets and, to a lesser extent, the commercial aerospace and the general industrial markets.~~

Sales in the second quarter increased $12 million, or 11%, to $126 million from the prior year period, primarily due to the incremental impact of our TTC acquisition which contributed $13 million in sales. Excluding the impact of TTC, sales were relatively flat as higher foreign military sales and increased unmanned aerial vehicle (UAV) production in the aerospace defense market were largely offset by declines in helicopter sales.

Sales during the six months ended June 30, 2017 increased $22 million, or 10%, to $241 million from the prior year period, primarily due to the incremental impact of our TTC acquisition which contributed $23 million in sales. Excluding the impact of TTC, sales were relatively flat. In the aerospace defense market, higher foreign military sales and increased UAV production were largely offset by declines in helicopter sales. Sales in the ground defense market decreased primarily due to lower sales of embedded computing products on the G/ATOR program, partially offset by increased demand for our turret drive stabilization systems (TDSS) on international ground defense platforms.

~~Operating income~~ during the second quarter increased $3 million, or 14%, to $21 million, and operating margin increased 50 basis points from the prior year quarter to 16.8%. The increases in operating income and operating margin were primarily driven by favorable mix for our defense electronics products, as well as the benefits of our margin improvement initiatives. Favorable foreign currency translation also benefited operating income by approximately $1 million.

Operating income during the six months ended June 30, 2017 decreased $3 million, or 9%, to $32 million, and operating margin decreased 280 basis points from the prior year period to 13.4%. The decreases in operating income and operating margin were primarily due to the benefits of our ongoing margin improvement initiatives and increased profitability as we moved beyond first year purchase accounting costs ~~on the~~from our TTC ~~acquisition which reduced operating income by $7 million. This decrease was partially offset by increased volume on our COTS products.~~acquisition.

New orders ~~increased $25 million during~~in the ~~three months ended June 30, 2017 from~~first quarter of 2018 were flat compared to the ~~comparable~~ prior year period, primarily due to the acquisition of TTC. New orders increased $53 million during the six months ended June 30, 2017 from the comparable prior year period, primarily due to the acquisition of TTC and a government order for aircraft handling systems.period.

~~Page 25~~

~~CURTISS-WRIGHT CORPORATION and SUBSIDIARIES~~

~~PART I - ITEM 2~~

~~MANAGEMENT’S DISCUSSION and ANALYSIS of~~

~~FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued~~

Power

The following tables summarize sales, operating income and margin, and new orders within the Power segment.


																	Three Months Ended
	Three Months Ended								Six Months Ended								March 31,
(In thousands)	June 30,								June 30,								2018			2017			% change
	2017			2016			% change		2017			2016			% change
Sales	$	149,693		$	128,759		16	%	$	279,800		$	252,148		11	%	$	131,980		$	130,107		1	%
Operating income	24,870			16,114			54	%	41,410			30,742			35	%	15,342			15,545			(1	%)
Operating margin	16.6		%	12.5		%	410	bps	14.8		%	12.2		%	260	bps	11.6		%	11.9		%	(30	bps)
New orders	$	115,139		$	150,585		(24	%)	$	297,535		$	315,926		(6	%)	$	141,736		$	182,396		(22	%)

~~Components of sales and operating income increase (decrease):~~


	Three Months Ended				Six Months Ended
Components of sales and operating income increase (decrease):									Three Months Ended
	June 30,				June 30,				March 31,
	2017 vs. 2016				2017 vs. 2016				2018 vs. 2017
	Sales		Operating Income		Sales		Operating Income		Sales		Operating Income
Organic	16	%	54	%	11	%	35	%	1	%	(1	%)
Acquisitions	—	%	—	%	—	%	—	%	—	%	—	%
Foreign currency	—	%	—	%	—	%	—	%	—	%	—	%
Total	16	%	54	%	11	%	35	%	1	%	(1	%)

Salesin the Power segment are primarily togenerated from the power generation and naval defense markets.

Sales during the first quarter of 2018 increased $2 million, or 1%, to $132 million from the comparable prior year period. Sales in the ~~second quarter increased $21 million, or 16%, to $150~~naval defense market benefited $8 million primarily due to higher aircraft carrier program revenues. Within the power generation market, lower production ~~levels~~volumes of $11 million on the AP1000 ~~China Direct and domestic programs which resulted in increased sales of $16 million and $4 million, respectively. The power generation market also benefited from improved~~U.S. program were partially offset by higher aftermarket sales supporting currently operating ~~domestic~~ nuclear reactors ~~primarily due to a strong spring outage season. In the naval defense market, higher production levels of CVN-80 pumps~~ and ~~valves were offset by the timing of production on the Virginia-class submarine program.~~

~~Sales for the six months ended June 30, 2017 increased $28 million, or 11%, to $280 million from the prior year period, as~~ higher production revenues on the AP1000 China Direct and domestic programs of $35 million and $6 million, respectively, were partially offset by lower aftermarket sales of $12 million supporting domestic and international nuclear reactors. In the naval defense market, higher production levels of CVN-80 pumps and valves were offset by the timing of production on the Virginia-class submarine program and lower sales of CVN-79 pumps and valves as production is nearing completion.program.

Operating incomein of $15 million during the ~~second~~first quarter ~~of 2017 increased $9 million, or 54%,~~was essentially flat compared to ~~$25 million, and operating margin increased 410 basis points from~~ the prior year period, ~~to 16.6%. Operating income during the six months ended June 30, 2017 increased $11 million, or 35%, to $41 million,~~ and operating margin ~~increased 260~~decreased 30 basis points ~~from the prior year period~~ to ~~14.8%~~11.6%. ~~The increases in operating income and operating margin for each of the respective periods were primarily driven by higher production levels on the AP1000 China Direct program, as well as improved~~This performance reflects reduced profitability in the nuclear aftermarket business and lower revenues on the ~~benefits of our ongoing margin improvement initiatives.~~AP1000 U.S. program, partially offset by higher production and profitability on the AP1000 China Direct program.

New orders decreased ~~$35~~$41 million ~~during~~in the ~~three months ended June 30, 2017~~first quarter of 2018 from the comparable prior year period, primarily due to ~~the timing of funding for pumps and generators with~~a government ~~customers. New orders decreased $18 million during the six months ended June 30, 2017 from the comparable prior year period primarily due to the timing of funding of government orders and a commercial~~ order for pumps on the CVN-80 aircraft carrier received in the prior ~~year period. The decrease for the six months ended June 30, 2017 was partially offset by new orders for international nuclear reactors.~~year.

SUPPLEMENTARY INFORMATION

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~~CURTISS-WRIGHT CORPORATION and SUBSIDIARIES~~

~~PART I - ITEM 2~~

~~MANAGEMENT’S DISCUSSION and ANALYSIS of~~

~~FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued~~

The table below depicts sales by end market. End market sales help provide an enhanced understanding of our businesses and the markets in which we operate. The table has been included to supplement the discussion of our consolidated operating results.

Net Sales by End Market
Three Months Ended Six Months Ended
(In thousands) June 30, June 30,
2017 2016 % change 2017 2016 % change
Defense markets:
Aerospace $ 88,097
$ 76,558
15 % $ 153,880
$ 138,107
11 %
Ground 17,515
19,880
(12 %) 37,251
39,055
(5 %)
Naval 100,048
103,998
(4 %) 191,018
196,950
(3 %)
Other 5,964
2,541
135 % 13,007
3,794
243 %
Total Defense $ 211,624
$ 202,977
4 % $ 395,156
$ 377,906
5 %

Commercial markets:
Aerospace $ 101,631
$ 102,595
(1 %) $ 200,455
$ 204,781
(2 %)
Power Generation 114,773
95,628
20 % 220,325
195,518
13 %
General Industrial 139,625
131,566
6 % 275,308
258,068
7 %
Total Commercial $ 356,029
$ 329,789
8 % $ 696,088
$ 658,367
6 %

Total Curtiss-Wright $ 567,653
$ 532,766
7 % $ 1,091,244
$ 1,036,273
5 %

~~Note: Certain amounts in the prior year have been reclassed to conform to the current year presentation.~~

~~Defense markets~~

Sales during the three months ended June 30, 2017 increased $9 million, or 4%, to $212 million against the comparable prior year period while sales during the six months ended June 30, 2017 increased $17 million, or 5%, to $395 million. The increases in each of the respective periods were primarily due to higher sales in the aerospace defense and other defense markets, partially offset by decreased sales in the ground defense and naval defense markets. The sales increases in the aerospace defense market were primarily due to the incremental impact of our TTC acquisition, which contributed $8 million and $15 million in sales, respectively, during the three and six months ended June 30, 2017. The aerospace defense market also benefited favorably from increased demand for UAVs, partially offset by declines in helicopter sales. Sales in the ground defense market decreased primarily due to lower sales of embedded computing products on the G/ATOR program, partially offset by increased demand for our TDSS products on international ground defense platforms. Lower sales in the naval defense market were primarily due to the timing of production on the Virginia-class submarine program and the substantial completion of CVN-79 pump and valve production. These decreases were partially offset by higher production levels of CVN-80 pumps and valves. Other defense sales increased during both respective periods due to various projects across government entities.

~~Commercial markets~~

Sales during the three months ended June 30, 2017 increased $26 million, or 8%, to $356 million against the comparable prior year period while sales during the six months ended June 30, 2017 increased $38 million, or 6%, to $696 million. The increases in each of the respective periods were primarily due to increased sales in the general industrial and power generation markets. In the general industrial market, we experienced higher demand for our industrial vehicle products. Within the power generation market, we generated higher production revenues of $16 million and $35 million on the AP1000 China Direct Program for the three and six months ended June 30, 2017, respectively. Higher sales in the power generation market for the six months ended June 30, 2017 were partially offset by lower aftermarket sales of $10 million supporting domestic and international nuclear reactors. Increases in the general industrial and power generation markets were partially offset by lower actuation system sales in the commercial aerospace market.

~~LIQUIDITY AND CAPITAL RESOURCES~~

~~Page 27~~

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MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued



Net Sales by End Market	Three Months Ended
	March 31,
(In thousands)	2018		2017		% change
Defense markets
Aerospace	$	75,941	$	65,293	16	%
Ground	22,011		19,737		12	%
Naval	102,782		90,970		13	%
Other	4,581		7,041		(35	)%
Total Defense	$	205,315	$	183,041	12	%

Commercial markets
Aerospace	$	99,404	$	98,614	1	%
Power Generation	99,012		105,551		(6	%)
General Industrial	143,791		136,385		5	%
Total Commercial	$	342,207	$	340,550	—	%

Total Curtiss-Wright	$	547,522	$	523,591	5	%



Note: Certain amounts in the prior year have been reclassed to conform to the current year presentation.

Defense market sales increased $22 million, or 12%, to $205 million from the comparable prior year period, primarily due to higher sales in the aerospace defense and naval defense markets. Aerospace defense sales increased primarily due to higher demand of $5 million for data acquisition and flight test equipment and higher sales of actuation systems on fighter jets. Within the naval defense market, sales benefited from higher aircraft carrier program revenues of $9 million.

Commercial market sales increased $2 million, or less than 1%, to $342 million, from the comparable prior year period. In the general industrial market, we experienced increased demand of $7 million for our industrial vehicle products. Within the power generation market, lower production volumes of $11 million on the AP1000 U.S. program were partially offset by higher aftermarket sales supporting currently operating nuclear reactors and higher production revenues on the AP1000 China Direct program.

LIQUIDITY AND CAPITAL RESOURCES

Sources and Use of Cash

We derive the majority of our operating cash inflow from receipts on the sale of goods and services and cash outflow for the procurement of materials and labor; cash flow is therefore subject to market fluctuations and conditions. Most of our long-term contracts allow for several billing points (progress or milestone) that provide us with cash receipts as costs are incurred throughout the project rather than upon contract completion, thereby reducing working capital requirements. In some cases, these payments can exceed the costs incurred on a project.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued



Condensed Consolidated Statements of Cash Flows	Three Months Ended
	March 31,
(In thousands)	2018			2017
Net Cash provided by (used in):
Operating activities	$	(71,262	)	$	(24,941	)
Investing activities	(9,652		)	(249,661		)
Financing activities	(5,526		)	(8,003		)
Effect of exchange-rate changes on cash	7,838			1,663
Net decrease in cash and cash equivalents	(78,602		)	(280,942		)

Net cash used in operating activities increased $46 million from the comparable prior year period. The increase is primarily due to a voluntary pension contribution of $50 million during the current period.

Net cash used in investing activities decreased $240 million from the comparable prior year period, primarily due to prior year acquisitions. The Corporation acquired two businesses during the three months ended March 31, 2017 for approximately $239 million, net of cash acquired.

Financing Activities

Debt

The Corporation’s debt outstanding had an average interest rate of 3.7% and 4.0% for the three months ended March 31, 2018 and March 31, 2017, respectively. The Corporation's average debt outstanding was $800 million and $950 million for the three months ended March 31, 2018 and March 31, 2017, respectively.

Revolving Credit Agreement

As of March 31, 2018, the Corporation had no borrowings under the 2012 Senior Unsecured Revolving Credit Agreement (the "Credit Agreement" or "credit facility") and $21 million in letters of credit supported by the credit facility. The unused credit available under the Credit Agreement as of March 31, 2018 was $479 million, which could be borrowed without violating any of our debt covenants.

Repurchase of common stock

During the first three months of 2018, the Corporation used $12 million of cash to repurchase approximately 95,000 outstanding shares under its share repurchase program. During the first quarter of 2017, the Corporation used $13 million of cash to repurchase approximately 133,000 outstanding shares.

Cash Utilization

Management continually evaluates cash utilization alternatives, including share repurchases, acquisitions, and increased dividends ~~and paying down debt,~~ to determine the most beneficial use of available capital resources. We believe that our cash and cash equivalents, cash flow from operations, available borrowings under the credit facility, and ability to raise additional capital through the credit markets are sufficient to meet both the short-term and long-term capital needs of the organization.

Condensed Consolidated Statements of Cash Flows

(In thousands) June 30, 2017 June 30, 2016
Cash provided by (used):
Operating activities $ 60,932
$ 156,631
Investing activities (255,569 ) (15,784 )
Financing activities (27,021 ) (41,891 )
Effect of exchange-rate changes on cash 10,521
(4,502 )
Net increase (decrease) in cash and cash equivalents (211,137 ) 94,454

~~Net cash provided by operating activities~~ decreased $96 million from the prior year period. The decrease in net cash provided is primarily due to prior period net collections of $83 million related to the AP1000 program and a one-time prior period benefit of $20 million as a result of the interest rate swap termination.

~~Net cash used for investing activities~~ ~~increased~~$240 million from the comparable prior year period primarily due to current year acquisitions. The Corporation acquired two businesses during the six months ended June 30, 2017 for approximately $233 million, net of cash acquired. The Corporation did not acquire any businesses during the six months ended June 30, 2016. The capital expenditures for the six months ended June 30, 2017 and June 30, 2016 were $23 million and $16 million, respectively.

~~Financing Activities~~

~~Debt~~

The Corporation’s debt outstanding had an average interest rate of 4.0% for both the three and six months ended June 30, 2017 as compared to an average interest rates of 4.0% and 3.9% for the comparable periods ended June 30, 2016. The Corporation’s average debt outstanding was $950 million for both the three and six months ended June 30, 2017 and June 30, 2016, respectively.

~~Revolving Credit Agreement~~

As of June 30, 2017, the Corporation had no outstanding borrowings under the 2012 Senior Unsecured Revolving Credit Agreement (the “Credit Agreement” or “credit facility”) and $49 million in letters of credit supported by the credit facility. The unused credit available under the Credit Agreement as of June 30, 2017 was $451 million, which could be borrowed without violating any of our debt covenants.

~~Repurchase of common stock~~

During the six months ended June 30, 2017, the Corporation used $26 million of cash to repurchase approximately 284,000 outstanding shares under its share repurchase program. During the six months ended June 30, 2016, the Corporation used $55 million of cash to repurchase approximately 745,000 outstanding shares.

~~Page 28~~

~~CURTISS-WRIGHT CORPORATION and SUBSIDIARIES~~

~~PART I - ITEM 2~~

~~MANAGEMENT’S DISCUSSION and ANALYSIS of~~

~~FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued~~

~~Dividends~~

~~The Corporation made dividend payments of $6 million during each of the six months ended June 30, 2017 and June 30, 2016, respectively.~~

Debt Compliance

As of the date of this report, we were in compliance with all debt agreements and credit facility covenants, including our most restrictive covenant, which is our debt to capitalization limit of 60%. The debt to capitalization limit is a measure of our indebtedness (as defined per the notes purchase agreement and credit facility) to capitalization, where capitalization equals debt plus equity, and is the same for and applies to all of our debt agreements and credit facility.

As of ~~June 30, 2017,~~March 31, 2018, we had the ability to borrow additional debt of ~~$986 million~~$1.4 billion without violating our debt to capitalization covenant.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

CRITICAL ACCOUNTING POLICIES

Our condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. Preparation of these statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates and assumptions are affected by the application of our accounting policies. Critical accounting policies are those that require application of management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain and may change in subsequent periods. A summary of significant accounting policies and a description of accounting policies that are considered critical may be found in our ~~2016~~2017 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission on February ~~21, 2017,~~22, 2018, in the Notes to the

Consolidated Financial Statements, Note 1, and the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations. Additionally, refer above to Note 2 in the Notes to Condensed Consolidated Financial Statements for our revised accounting policy on revenue recognition, which became effective on January 1, 2018.

~~Page 29~~

CURTISS WRIGHT CORPORATION and SUBSIDIARIES

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There ~~has~~have been no material changes in our market risk during the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018. Information regarding market risk and market risk management policies is more fully described in item “7A.Quantitative and Qualitative Disclosures about Market Risk” of our ~~2016~~2017 Annual Report on Form 10-K.

Item 4. CONTROLS AND PROCEDURES

As of ~~June 30, 2017~~March 31, 2018, our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of ~~June 30, 2017~~March 31, 2018 insofar as they are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and they include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

During the quarter ended ~~June 30, 2017,~~March 31, 2018, we implemented ~~new controls as part of our efforts to adopt the new revenue recognition standard. Those efforts resulted in~~ changes to our accounting processes and procedures ~~related~~in response to ~~monitoring~~ the adoption ~~process. As we continue the implementation process, we expect that there will be additional changes in our internal control over financial reporting.~~of ASC 606, Revenue from Contracts with Customers, which became effective on January 1, 2018. However, there have been no other changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended ~~June 30, 2017~~March 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

In the ordinary course of business, wethe Corporation and ~~our~~its subsidiaries are subject to various pending claims, lawsuits, and contingent liabilities. We do not believe that the disposition of any of these matters, individually or in the aggregate, will have a material adverse effect on our consolidated financial ~~position or~~condition, results of ~~operations.~~operations, and cash flows.

In December 2013, the Corporation, along with other unaffiliated parties, received a claim from Canadian Natural Resources Limited (CNRL), which was filed in the Court of ~~Queen’s~~Queen's Bench of Alberta, Judicial District of Calgary. The claim pertains to a January 2011 fire and explosion at a delayed coker unit at its Fort McMurray refinery that resulted in the injury of five CNRL employees, damage to property and equipment, and various forms of consequential loss such as loss of profit, lost opportunities, and business interruption. The fire and explosion occurred when a CNRL employee bypassed certain safety controls and opened an operating coker unit. The total quantum of alleged damages arising from the incident has not been finalized, but is estimated to meet or exceed $1 billion. ~~The Corporation maintains~~We maintain various forms of commercial, property and casualty, product liability, and other forms of insurance; however, such insurance may not be adequate to cover the costs associated with a judgment against us. ~~The Corporation is~~In October 2017, all parties agreed in principle to participate in a formal mediation in late 2018 with the intention of settling this claim. In an effort to induce the parties to participate in the formal mediation, CNRL agreed to reduce its claim to approximately $400 million, which reflects the monetary amount of property damage incurred as result of the fire and explosion. We are currently unable to estimate an amount, or range of potential losses, if any, from this matter. ~~The Corporation believes it has~~We believe that we have adequate legal defenses and ~~intends~~intend to defend this matter vigorously. ~~The Corporation’s~~Our financial condition, results of operations, and cash flows could be materially affected during a future fiscal quarter or fiscal year by unfavorable developments or outcome regarding this claim.

We ~~or our subsidiaries~~ have been named in ~~a number of~~pending lawsuits that allege injury from exposure to asbestos. To date, ~~neither~~ we ~~nor our subsidiaries~~ have not been found liable or paid any material sum of money in settlement in any case. We believe that the minimal use of asbestos in our past operations and the relatively non-friable condition of asbestos in our products ~~makes~~make it unlikely that we will face material liability in any asbestos litigation, whether individually or in the aggregate. We maintain insurance coverage for these potential liabilities and we believe adequate coverage exists to cover any unanticipated asbestos liability.

On March 29, 2017, ~~Westinghouse Electric Company (“WEC”)~~WEC filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York (the Court), Case No. 17-10751. The ~~Bankruptcy~~ Court overseeing the Bankruptcy Case ~~has~~ approved, on an interim basis, an $800 million Debtor-in-Possession Financing Facility to help WEC finance its business operations during the reorganization process. On January 4, 2018, WEC announced that it had agreed to be acquired by Brookfield Business Partners L.P. (Brookfield) for approximately $4.6 billion, with the acquisition expected to close in the third quarter of 2018. On March 27, 2018, the Court approved the sale to Brookfield. The ~~Corporation has~~acquisition is not expected to have a material impact on our financial condition or results of operations as WEC plans to continue operating in the ordinary course of business under existing senior management.

We have approximately ~~$6.5~~$2.9 million in pre-petition billings outstanding with WEC as of ~~June 30, 2017. The Corporation~~March 31, 2018. On March 27, 2018, the Court approved WEC's Plan of Reorganization, whereby we are expected to recover substantially all of our general unsecured claims inclusive of pre-petition billings. As it relates to our post-petition work, we will continue ~~for the time being and while it monitors and evaluates the Bankruptcy Case,~~ to honor ~~its~~our executory contracts and ~~expects~~expect to collect all ~~post-petition~~ amounts due. ~~At this time, the Corporation has assessed that any pre-petition amounts~~We will ~~be substantially recoverable~~continue to monitor and does not believe that rejection of the outstanding contracts with WEC, taken in part or combined, would have a material adverse impact on the Company’s cash flow or operations. The Corporation continues to monitorevaluate the status of the WEC bankruptcy ~~as well as the status of the plant construction projects~~ for potential impacts on our business.

Item 1A. RISK FACTORS

There have been no material changes in our Risk Factors during the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018. Information regarding our Risk Factors is more fully described in Item “1A. Risk Factors” of our ~~2016~~2017 Annual Report on Form 10-K.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF ~~PROCEEDS.~~PROCEEDS

The following table provides information about our repurchase of equity securities that are registered by us pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, during the quarter ended ~~June 30, 2017~~March 31, 2018.

Total Number of shares purchased Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Program Maximum Dollar amount of shares that may yet be Purchased Under the Program
April 1 - April 30 41,200
$ 90.43
173,922
$ 33,389,558
May 1 - May 31 63,152
87.61
237,074
27,856,980
June 1 - June 30 47,200
91.33
284,274
23,546,308
For the quarter ended 151,552
$ 89.53
284,274
$ 23,546,308



	Total Number of shares purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program	Maximum Dollar amount of shares that may yet be Purchased Under the Program
January 1 - January 31	33,910	$	127.71	33,910	$	145,060,942
February 1 - February 28	30,001	126.62		63,911	141,262,196
March 1 - March 31	30,877	135.99		94,788	137,063,292
For the quarter ended	94,788	$	130.06	94,788	137,063,292

On ~~December 7, 2016,~~November 30, 2017, the Corporation authorized ~~an additional $100~~$50 million ~~for future~~of share repurchases ~~raising total authorized and available capital~~ for ~~share repurchases to $200 million. The Corporation plans to repurchase at least $50 million in shares in 2017.~~fiscal 2018. Under the current program, shares may be purchased on the open market, in privately negotiated transactions, and under plans complying with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended.

Item 3. DEFAULTS UPON SENIOR SECURITIES

~~None.~~Not Applicable.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

There have been no material changes in our procedures by which our security holders may recommend nominees to our board of directors during the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018. Information regarding security holder recommendations and nominations for directors is more fully described in the section entitled “Stockholder Recommendations and Nominations for Director” of our ~~2017~~2018 Proxy Statement on Schedule 14A, which is incorporated by reference to our ~~2016~~2017 Annual Report on Form 10-K.

Item 6. EXHIBITS



		Incorporated by Reference		Filed
Exhibit No.	Exhibit Description	Form	Filing Date	Herewith

3.1	Amended and Restated Certificate of Incorporation of the Registrant	8-A/A	May 24, 2005

3.2	Amended and Restated Bylaws of the Registrant	8-K	May 18, 2015

31.1	Certification of David C. Adams, Chairman and CEO, Pursuant to Rules 13a – 14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended			X

31.2	Certification of Glenn E. Tynan, Chief Financial Officer, Pursuant to Rules 13a – 14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended			X

32	Certification of David C. Adams, Chairman and CEO, and Glenn E. Tynan, Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350			X

101.INS	XBRL Instance Document			X

101.SCH	XBRL Taxonomy Extension Schema Document			X

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document			X

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document			X

101.LAB	XBRL Taxonomy Extension Label Linkbase Document			X

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document			X

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this ~~Report~~report to be signed on its behalf by the undersigned thereunto duly authorized.

CURTISS-WRIGHT CORPORATION

(Registrant)

By: /s/ Glenn E. Tynan

Glenn E. Tynan

Vice President ~~of Finance~~ and Chief Financial Officer

Dated: ~~July 27, 2017~~May 3, 2018

Page 3533



(In thousands)	Amount reclassified from AOCI			Affected line item in the statement where net earnings is presented
Defined benefit pension and other postretirement benefit plans
Amortization of prior service costs	379			(1)
Amortization of actuarial losses	(7,064		)	(1)
	(6,685		)	Total before tax
	2,484			Income tax
Total reclassifications	$	(4,201	)	Net of tax