Curtiss-Wright Reports 2007 Third Quarter And Nine Month Financial Results

Sales increase 27%; Operating Income up 19%; Backlog at Record Level

ROSELAND, N.J., Oct. 25 /PRNewswire-FirstCall/ -- Curtiss-Wright Corporation (NYSE: CW - News) today reports financial results for the third quarter and nine months ended September 30, 2007. The highlights are as follows::

THIRD QUARTER 2007 OPERATING HIGHLIGHTS

• Net sales for the third quarter of 2007 increased 27% to $396.3 million from $311.8 million in the third quarter of 2006.
• Operating income in the third quarter of 2007 increased 19% to $44.5 million from $37.3 million in the third quarter of 2006.
• Net earnings for the third quarter of 2007 increased 24% to $25.2 million, or $0.56 per diluted share, from $20.4 million, or $0.46 per diluted share, in the third quarter of 2006.

NINE MONTHS 2007 OPERATING HIGHLIGHTS

• Net sales for the first nine months of 2007 increased 21% to $1,094.5 million from $904.0 million in the first nine months of 2006.
• Operating income in the first nine months of 2007 increased 24% to $118.0 million from $94.9 million in the first nine months of 2006.
• Net earnings for the first nine months of 2007 increased 23% to $66.1 million, or $1.47 per diluted share, from $53.7 million, or $1.21 per diluted share, in the first nine months of 2006. Net earnings for the first nine months of 2006 were favorably impacted by a lower effective tax rate resulting from one-time tax benefits of $3.6 million.
• New orders received in the first nine months of 2007 were $1,433.9 million, up 47% compared to the first nine months of 2006. At September 30, 2007, our record high backlog was $1,376.8 million, up 57% from $875.5 million at December 31, 2006.

"We are pleased to report increased sales and operating income for the third quarter of 2007," commented Martin R. Benante, Chairman and CEO of Curtiss-Wright Corporation. Our solid operating income performance in the third quarter was led by our Metal Treatment and Flow Control segments, which experienced organic operating income growth of 21% and 3%, respectively, over the prior year period. From a market perspective, our commercial sales continue to be strong with 20% overall organic sales growth in the third quarter of 2007, driven primarily by organic growth of 51% in the oil and gas market and 14% in the commercial aerospace market. Our record backlog is a clear indication of the success of our products and programs and provides great momentum for the remainder of 2007 and heading into 2008. We are excited about our recently signed contract with Westinghouse for the AP1000 nuclear reactors in China, where we will be supplying our advanced reactor coolant pumps. This effort solidifies our leadership in this new advanced nuclear plant design. We continue to invest in a number of military and commercial development programs and we expect these investments to provide future growth opportunities and improved profitability. Additionally, we anticipate higher operating margins in the fourth quarter of 2007 as a result of higher sales volume in both of our military and commercial businesses."

SALES

Sales growth for the Corporation in the third quarter of 2007 was primarily driven by solid organic growth and contributions from our 2007 and 2006 acquisitions as compared to the prior year period. Overall organic sales growth was 12% for the third quarter 2007 over the prior year period. All of our operating segments contributed to the organic sales growth in the third quarter of 2007, primarily due to strengths in the commercial markets. In the third quarter of 2007, acquisitions made since June 30, 2006 contributed $48.1 million in incremental sales over the prior year period.

In our base businesses, higher sales from our Flow Control segment to the oil and gas and power generation markets, higher sales from our Motion Control segment to defense markets and the commercial aerospace market, and higher sales from our Metal Treatment segment to the commercial aerospace and automotive markets all contributed to the quarterly organic sales growth. In addition, foreign currency translation positively impacted sales by $4.1 million for the third quarter of 2007, as compared to the prior year period.

OPERATING INCOME

Operating income for the Corporation for the third quarter of 2007 increased 19% over the prior year period. The organic operating income growth for the third quarter of 2007 was 8%, led by our Metal Treatment and Flow Control segments, which experienced solid organic growth of 21% and 3%, respectively, over the prior year period. The organic operating income for our Motion Control segment decreased 4%, mainly due to less favorable sales mix resulting from reduced spares sales and increased development work. Our consolidated operating margin in the third quarter of 2007 decreased as compared to the prior year period mainly due to sales mix, increased research and development expenses, and our acquisitions which typically have lower margins initially than our base businesses. Non-segment operating expense improved $1.0 million primarily due to lower unallocated medical costs under the Company's self-insured medical insurance plan. In addition, foreign currency translation unfavorably impacted operating income by $0.2 million for the third quarter 2007, compared to the prior year period.

NET EARNINGS

Net earnings increased 24% for the third quarter of 2007 over the comparable prior year period. Operating income from our business segments increased $6.3 million for the third quarter of 2007 over the prior year period. Our effective tax rate for the third quarter of 2007 was 32.0% versus 35.4% for the third quarter of 2006. The lower tax rate was mainly due to final return to provision adjustments. Interest expense for the third quarter of 2007 increased due to higher debt levels resulting from our recent acquisitions and slightly higher interest rates, as compared to the prior year period.

CASH FLOW

Net cash provided by operating activities for the first nine months of 2007 was $47 million, an improvement from the $25 million in the first nine months of 2006. Our 2007 free cash flow, defined as cash flow from operations less capital expenditures, was $11 million for the first nine months of 2007, as compared to a loss of ($3) million in the first nine months of 2006. Our Flow Control and Metal Treatment segments drove the improved results. The improved cash flow resulted primarily from higher advance payments received in 2007 for the AP1000 program. Higher earnings were offset by higher inventory and receivables year-over-year.

SEGMENT PERFORMANCE

Flow Control -- Sales for the third quarter of 2007 were $190.8 million, up 47% over the comparable period last year due to solid organic growth and the contribution from the 2006 and 2007 acquisitions. Organic sales growth was 12% in the third quarter of 2007 over the comparable prior year period. This organic sales growth was due to higher sales to the oil and gas market, led by increased demand for coker valve products, as well as strong sales of other products and services within the market. In addition, higher commercial nuclear power sales were driven by the timing of customer maintenance and replacement schedules and the addition of new teaming partners. In the third quarter of 2007, acquisitions made since June 30, 2006 contributed $45.7 million in incremental sales over the comparable prior year period. Sales of this segment were positively affected by foreign currency translation of $0.3 million in the third quarter of 2007 compared to the prior year period.

Operating income for this segment increased 34% in the third quarter of 2007 over the comparable prior year period. This segment's organic operating income increased 3% in the third quarter of 2007 mainly due to higher sales volume and improved operating performance resulting from our businesses that were consolidated in 2006. These items were partially offset by higher research and development costs, mainly within our commercial nuclear power market. This segment continues to invest in development programs, which have an adverse impact on the margins in the short-term, but should provide good growth opportunities in the future. In the third quarter of 2007, acquisitions made since June 30, 2006 contributed $4.3 million in incremental operating income over the comparable prior year period. Operating income of this segment was unfavorably affected by foreign currency translation of $0.1 million in the third quarter of 2007 compared to the prior year period.

Motion Control -- Sales for the third quarter of 2007 of $142.5 million increased 13% over the comparable period last year. This improvement was due primarily to organic sales growth of 12% and the contribution from our 2007 acquisition of $2.4 million in the third quarter of 2007. The organic sales growth was driven by higher sales of actuator and sensor products to the commercial aerospace market and increased sales of embedded computing and marine defense products to the defense markets. Sales of this segment were favorably affected by foreign currency translation of $1.9 million in the third quarter of 2007 compared to the prior year period.

Operating income for this segment decreased 4% for the third quarter of 2007 over the comparable prior year period. The reduction in operating income was primarily due to higher sales of lower margin new business, lower sales of higher margin military spares, increased research and development costs within our embedded computing business, and the negative impact of foreign currency translation, which unfavorably affected operating income by $0.8 million in the third quarter of 2007 compared to the prior year period.

Metal Treatment -- Sales for the third quarter of 2007 of $62.9 million were 12% higher than the comparable period last year, all growth being organic. The organic sales growth was driven by higher global shot peening revenues primarily in the commercial aerospace market along with strong demand in the specialty coatings business from the commercial aerospace and automotive markets. Sales of this segment were favorably affected by foreign currency translation of $1.9 million in the third quarter of 2007 compared to the prior year period.

Operating income increased 21% for the third quarter of 2007 as compared to the prior year period, primarily as a result of the higher sales volume. Operating income of this segment was favorably affected by foreign currency translation of $0.7 million in the third quarter of 2007 compared to the prior year period.

Mr. Benante concluded, "We are updating our guidance for the full year 2007. We expect our revenues to be in the range of $1.56 billion to $1.58 billion; operating income in the range of $176 million to $183 million; and fully diluted earnings per share in the range of $2.14 to $2.24. In addition, we are also updating our free cash flow guidance to a range of $75 million to $85 million to reflect the commencement of the AP1000 program."

"In 2007, we should once again demonstrate our ability to generate long- term shareholder value by growing our sales and earnings. Our historical performance demonstrates our ability to execute our strategy and achieve our financial targets. Our solid performance in the first nine months of 2007 continues this trend. We expect the fourth quarter of 2007 to be strong as many of our defense programs ramp up, our commercial markets continue to strengthen, and we realize additional benefits of our integration and cost control efforts. We continue to experience increased demand for our new technologies, many of which are only at the beginning of their life cycles, which should provide strong returns to our shareholders into the future. Our diversification strategy, the continued successful integration of our acquisitions, and ongoing emphasis on advanced technologies should continue to generate growth opportunities in each of our three business segments in 2007 and beyond."

**********

The Company will host a conference call to discuss the third quarter 2007 results at 10:00 A.M. EST Friday, October 26, 2007. A live webcast of the call can be heard on the Internet by visiting the company's website at curtisswright2014.q4web.com and clicking on the investor information page or by visiting other websites that provide links to corporate webcasts.

                              (Tables to Follow)


                 CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF EARNINGS
                    (In thousands, except per share data)



                    Three Months Ended            Nine Months Ended

                        September 30,    Change     September 30,    Change
                       2007      2006      %       2007     2006       %

    Net sales       $396,268  $311,801   27.1% $1,094,453 $903,988   21.1%
    Cost of sales    266,448   205,783   29.5%   735,223   600,356   22.5%
    Gross profit     129,820   106,018   22.5%   359,230   303,632   18.3%

    Research &
     development
     expenses         12,655     7,227   75.1%    35,481    28,531   24.4%
    Selling
     expenses         23,789    19,382   22.7%    66,392    57,004   16.5%
    General and
     administrative
     expenses         48,727    41,885   16.3%   138,833   122,788   13.1%
    Environmental
     remediation &
     administrative
     expenses, net       161       273  (41.0%)      485       362   34.0%

    Operating income  44,488    37,251   19.4%   118,039    94,947   24.3%

    Other income,
     net                 231      (18)(1383.3%)    1,581       295  435.9%
    Interest
     expense         (7,712)   (5,721)   34.8%  (18,916)  (17,103)   10.6%

    Earnings before
     income
     taxes            37,007    31,512   17.4%   100,704    78,139   28.9%
    Provision for
     income
     taxes            11,832    11,156    6.1%    34,635    24,413   41.9%

    Net earnings     $25,175   $20,356   23.7%   $66,069   $53,726   23.0%

    Basic earnings
     per
     share             $0.57     $0.46             $1.49     $1.23
    Diluted earnings
     per share         $0.56     $0.46             $1.47     $1.21

    Dividends
     per share         $0.06     $0.06             $0.18     $0.18

    Weighted average shares outstanding:

    Basic             44,413    43,903            44,285    43,779
    Diluted           45,102    44,338            44,925    44,254



                 CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                  (In thousands)



                                       September   December
                                          30,         31,          Change
                                         2007        2006        $        %
    Assets
      Current Assets:
       Cash and cash equivalents        $59,347    $124,517  $(65,170) (52.3%)
       Receivables, net                 369,838     284,774    85,064   29.9%
       Inventories, net                 251,005     161,528    89,477   55.4%
       Deferred income taxes             26,863      32,485    (5,622) (17.3%)
       Other current assets              20,112      19,341       771    4.0%

        Total current assets            727,165     622,645   104,520   16.8%
      Property, plant, & equipment,
       net                              320,818     296,652    24,166    8.1%
      Prepaid pension costs              56,113      92,262   (36,149) (39.2%)
      Goodwill, net                     587,238     411,101   176,137   42.8%
      Other intangible assets, net      226,317     158,080    68,237   43.2%
      Other assets                       15,184      11,416     3,768   33.0%

        Total Assets                 $1,932,835  $1,592,156  $340,679   21.4%

    Liabilities
      Current Liabilities:
       Short-term debt                     $902      $5,874   $(4,972) (84.6%)
       Accounts payable                 108,650      96,023    12,627   13.1%
       Accrued expenses                  89,584      81,532     8,052    9.9%
       Income taxes payable               4,016      23,003   (18,987) (82.5%)
       Deferred revenue                 104,392      57,305    47,087   82.2%
       Other current liabilities         35,830      28,388     7,442   26.2%

        Total current liabilities       343,374     292,125    51,249   17.5%

      Long-term debt                    571,986     359,000   212,986   59.3%
      Deferred income taxes              58,808      57,055     1,753    3.1%
      Accrued pension & other
       postretirement benefit costs      38,765      71,006   (32,241) (45.4%)
      Long-term portion of
       environmental reserves            18,777      21,220    (2,443) (11.5%)
      Other liabilities                  37,468      29,676     7,792   26.3%

        Total Liabilities             1,069,178     830,082   239,096   28.8%


    Stockholders' Equity
      Common stock, $1 par value         47,715      47,533       182    0.4%
      Additional paid in capital         78,604      69,887     8,717   12.5%
      Retained earnings                 772,710     716,030    56,680    7.9%
      Accumulated other
       comprehensive income              83,985      55,806    28,179   50.5%
                                        983,014     889,256    93,758   10.5%
      Less:  cost of treasury stock     119,357     127,182    (7,825)  (6.2%)

        Total Stockholders' Equity      863,657     762,074   101,583   13.3%

        Total Liabilities and
         Stockholders' Equity        $1,932,835  $1,592,156  $340,679   21.4%



                 CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
                             SEGMENT INFORMATION
                                (In thousands)

                        Three Months Ended       Nine Months Ended
                          September 30,           September 30,
                                            %                         %
                        2007      2006   Change    2007      2006  Change
    Sales:
    Flow Control    $190,811  $129,819   47.0%   $491,702  $380,277   29.3%
    Motion Control   142,524   125,639   13.4%    412,730   356,496   15.8%
    Metal Treatment   62,933    56,343   11.7%    190,021   167,215   13.6%

    Total Sales     $396,268  $311,801   27.1%  $1,094,453 $903,988   21.1%

    Operating Income:
    Flow Control     $18,733   $14,014   33.7%    $38,758   $36,901    5.0%
    Motion Control    14,756    15,310  (3.6%)     43,626    33,436   30.5%
    Metal Treatment   12,597    10,448   20.6%     38,554    31,630   21.9%

    Total Segments    46,086    39,772   15.9%   $120,938  $101,967   18.6%
    Corporate & Other (1,598)   (2,521) (36.6%)    (2,899)   (7,020) (58.7%)

    Total Operating
     Income          $44,488   $37,251   19.4%   $118,039   $94,947   24.3%



                 CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
                     NON-GAAP FINANCIAL DATA (UNAUDITED)
                                (In thousands)


                            Three Months Ended         Nine Months Ended
                               September 30,             September 30
                             2007       2006          2007          2006

    Net Cash Provided by
     Operating
     Activities           $(6,365)     $24,241      $46,739      $25,263

    Capital Expenditures  (11,518)     (10,789)     (35,496)     (27,926)

    Free Cash Flow(1)    $(17,883)     $ 13,452     $11,243      $(2,663)

    Cash Conversion(1)       (71%)          66%          17%         (5%)


    (1) The Corporation discloses free cash flow and cash conversion because
        the Corporation believes that they are measurements of cash flow that
        are available for investing and financing activities. Free cash flow
        is defined as net cash flow provided by operating activities less
        capital expenditures. Free cash flow represents cash generated after
        paying for interest on borrowings, income taxes, capital expenditures,
        and working capital requirements, but before repaying outstanding debt
        and investing cash or utilizing debt credit lines to acquire
        businesses and make other strategic investments. Cash conversion is
        defined as free cash flow divided by net earnings. Free cash flow, as
        we define it, may differ from similarly named measures used by
        entities and, consequently, could be misleading unless all entities
        calculate and define free cash flow in the same manner.

ABOUT CURTISS-WRIGHT

Curtiss-Wright Corporation is a diversified company headquartered in Roseland, New Jersey. The Company designs, manufactures and overhauls products for motion control and flow control applications and provides a variety of metal treatment services. The firm employs approximately 7,300 people. More information on Curtiss-Wright can be found at curtisswright2014.q4web.com.

###

Certain statements made in this release, including statements about future revenue, organic revenue growth, quarterly and annual revenue, net income, organic operating income growth, future business opportunities, cost saving initiatives, and future cash flow from operations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements present management's expectations, beliefs, plans and objectives regarding future financial performance, and assumptions or judgments concerning such performance. Any discussions contained in this press release, except to the extent that they contain historical facts, are forward- looking and accordingly involve estimates, assumptions, judgments and uncertainties. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Such risks and uncertainties include, but are not limited to: a reduction in anticipated orders; an economic downturn; changes in competitive marketplace and/or customer requirements; a change in government spending; an inability to perform customer contracts at anticipated cost levels; and other factors that generally affect the business of aerospace, defense contracting, electronics, marine, and industrial companies. Such factors are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and subsequent reports filed with the Securities and Exchange Commission.

This press release and additional information is available at curtisswright2014.q4web.com.

Source: Curtiss-Wright Corporation