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Curtiss-Wright Reports 2005 Third Quarter and Nine Month Financial Results

October 27, 2005

Sales Increased 15%, Operating Income 27%, and Net Earnings 19% in the Third Quarter of 2005, Respectively;

Backlog at Record Level

ROSELAND, N.J., Oct. 27 /PRNewswire-FirstCall/ -- Curtiss-Wright Corporation (NYSE: CW) today reports financial results for the third quarter and nine months ended September 30, 2005. The highlights are as follows:

Third Quarter 2005 Operating Highlights

  • Net sales for the third quarter of 2005 increased 15% to $271.4 million from $236.6 million in the third quarter of 2004.
  • Operating income in the third quarter of 2005 increased 27% to $32.4 million from $25.5 million in the third quarter of 2004. In the third quarter of 2004, the Company incurred approximately $1.3 million of costs related to compliance with Sarbanes-Oxley Section 404.
  • Net earnings for the third quarter of 2005 increased 19% to $17.5 million, or $0.80 per diluted share, from $14.7 million, or $0.68 per diluted share, in the third quarter of 2004. The increase in the 2005 third quarter net earnings included a $1.1 million after-tax increase in interest expense (approximately $0.05 per diluted share). The net earnings for the third quarter of 2004 include a tax benefit of $0.6 million (approximately $0.03 per diluted share).
  • New orders received in the third quarter of 2005 were $277.2 million, up 16% compared to the third quarter of 2004.

Nine Months 2005 Operating Highlights

  • Net sales for the first nine months of 2005 increased 21% to $813.0 million from $673.9 million in the first nine months of 2004.
  • Operating income in the first nine months of 2005 increased 22% to $93.1 million from $76.0 million in the first nine months of 2004. Operating income in the first nine months of 2005 includes a gain of $2.8 million related to the sale of non-operating property. In the first nine months of 2004, the Company incurred approximately $1.7 million of costs related to compliance with Sarbanes-Oxley Section 404.
  • Net earnings for the first nine months of 2005 increased 12% to $50.0 million, or $2.28 per diluted share, from $44.7 million, or $2.08 per diluted share in the first nine months of 2004. The increase in the 2005 net earnings included a $3.5 million after-tax increase in interest expense (approximately $0.16 per diluted share).
  • New orders received in the first nine months of 2005 were $888.0 million, up 30% compared to the first nine months of 2004. At September 30, 2005, backlog increased 20% to a new record high of $752.1 million from $627.7 million at December 31, 2004.

"We are pleased to report higher sales, operating income, and net earnings for the third quarter and first nine months of 2005," commented Martin R. Benante, Chairman and CEO of Curtiss-Wright Corporation. "Our new orders were strong for the first nine months of 2005 and our backlog is at a new record level, which provides us with good momentum for the rest of the year and into 2006. We experienced strong overall organic growth in sales and operating income of 8% and 19%, respectively, in the first nine months of 2005. Our strong organic sales growth occurred primarily in the oil and gas and commercial and defense aerospace markets. Many of our military programs are progressing through the procurement cycle and we expect a ramp-up in the fourth quarter of this year. In addition, we continue to progress on several developmental contracts that should provide us future opportunities with improved profitability. We are continuing to integrate our acquisitions and these integration efforts are beginning to improve profitability that is expected to continue throughout the remainder of the year and into the future."

Sales

Sales growth in 2005 for the three and nine months ended September 30, 2005 compared to 2004 was achieved through a combination of organic growth in some of our base businesses and the contributions from our 2004 and 2005 acquisitions. Overall organic growth was 8% for both the three and nine months ended September 30, 2005 over the prior year periods. This organic sales growth was led by our Metal Treatment segment, which experienced strong organic growth of 11%, followed by our Motion Control and Flow Control segments at 7% and 6%, respectively, for the first nine months of 2005. Acquisitions made since June 30, 2004 contributed $17.3 million and $84.8 million in incremental sales for the quarter and nine months ended September 30, 2005, respectively, over the comparable prior year periods.

In our base businesses, higher sales from our Metal Treatment segment of global shot peening services, higher sales from our Motion Control segment to the military aerospace, global commercial aerospace OEM and repair and overhaul, and general industrial markets, and higher sales from our Flow Control segment to the oil and gas market, all contributed to the organic growth in the first nine months of 2005. In addition, foreign currency translation favorably impacted sales by $0.2 million and $4.5 million for the three and nine months ended September 30, 2005, as compared to the prior year periods.

Operating Income

Operating income for the three and nine months ended September 30, 2005 increased 27% and 22%, respectively, over the 2004 prior year periods. The increases were due to higher sales volumes and previously implemented cost control initiatives. Our consolidated operating income margins were 12.0% and 11.5% for the three and nine months ended September 30, 2005, respectively, an improvement over the comparable prior year periods. Overall, organic operating income organic growth was 28% and 19% for the three and nine months ended September 30, 2005, respectively, compared to the prior year periods. All three operating segments experienced strong organic operating income growth, led by our Metal Treatment segment, at 28% and 19% for the three and nine months ended September 30, 2005, respectively, over the prior year periods. Operating income for the nine months ended September 30, 2005 includes a gain of $2.8 million related to the sale of non-operating property. The higher segment operating income was partially offset by higher pension expense from the Curtiss-Wright Pension Plans of $0.2 million and $1.1 million for the three and nine months ended September 30, 2005, respectively, over the comparable prior year periods. In addition, foreign currency translation favorably impacted operating income by $0.1 million and $0.9 million for the three and nine months ended September 30, 2005, respectively, compared to the prior year periods.

Net Earnings

Net earnings increased 19% and 12% for the three and nine months ended September 30, 2005, respectively, over the comparable prior year periods. The improvement was due to strong operating income from our business segments, which increased $6.6 million and $14.3 million for the three and nine months ended September 30, 2005, respectively, over the prior year periods. Curtiss- Wright achieved strong growth in the oil and gas, shot peening, military aerospace, and commercial power generation markets. Higher interest expense, due to both higher debt levels and higher interest rates, lowered net earnings in the third quarter and first nine months of 2005 by $1.1 million and $3.5 million, respectively.

Segment Performance

Flow Control -- Sales for the third quarter of 2005 were $112.1 million, up 19% over the comparable period last year due to solid organic growth and the contributions from the 2004 acquisitions. Sales from the base businesses increased 10% in the third quarter of 2005 as compared to the prior year period. The organic sales growth was primarily from higher sales to the oil and gas market, led by higher demand for the Coker valve products, and higher sales of valves and development contract work to the U.S. Navy. The improvement was partially offset by lower sales of electromechanical pump products to the U.S. Navy due to the timing of customer driven delivery schedules. Sales of this business segment also benefited from favorable foreign currency translation of $0.3 million in the third quarter of 2005 compared to the prior year period.

Operating income for this segment increased 40% in the third quarter of 2005 compared to the prior year period mainly due to the strong organic operating income growth of 32%. The improvement was due to the higher sales volume and favorable sales mix for our oil and gas products, previously implemented cost control initiatives, higher sales volume for our valve products to the U.S. Navy, and the contributions from the 2004 acquisitions.

Motion Control -- Sales for the third quarter of 2005 of $110.2 million increased 13% over last year, principally due to organic growth and the contributions from the 2004 and 2005 acquisitions. Sales from the base businesses increased 4% in the third quarter of 2005 as compared to the prior year period. This organic sales growth was due primarily to higher sales of OEM and spares products and repair and overhaul services to the commercial aerospace market and increased F/A-22 production and F-16 spares sales to the military aerospace market, as compared to the prior year period. Partially offsetting these increases are lower sales of embedded computing products to the aerospace and ground defense markets. Foreign currency translation had minimal negative impact on sales for the third quarter of 2005 as compared to the prior year period.

Operating income for this segment increased 8% for the third quarter of 2005 compared to the prior year period mainly due to the strong organic operating income growth of 15%. The increase was driven primarily by higher sales volume mentioned above and previously implemented cost control initiatives. The improvement was partially offset by cost overruns on certain military contract work, mainly for the 767 Tanker program.

Metal Treatment -- Sales for the third quarter of 2005 of $49.0 million were 10% higher than the comparable period last year. The improvement, all of which was organic, was driven by higher global shot peening revenues from the aerospace market. In addition, sales for the coatings division also increased due to improved economic conditions. Foreign currency translation negatively impacted sales by $0.1 million in the third quarter of 2005 as compared to the prior year period.

Operating income increased 27% for the third quarter of 2005 as compared to the prior year period, primarily as a result of the higher sales volume and lower medical insurance costs.

Mr. Benante concluded, "In 2005, we continue to demonstrate our ability to generate long-term shareholder value by growing our sales and earnings. Our historical performance has demonstrated our ability to execute our strategy and achieve our financial targets. Our strong performance in 2005 continues this trend as we have grown operating profit at a pace greater than our sales. We expect the fourth quarter of 2005 to be strong as many of our defense programs ramp up, our commercial markets continue to strengthen, and we realize the benefits of integration efforts. Our diversification strategy and emphasis on new technologies, many of which are only at the beginning of their life cycles, should continue to generate growth opportunities in each of our three business segments for the remainder of 2005 and beyond."

2005 Management Guidance

We are tightening our full year 2005 guidance range to reflect current market conditions. We expect to achieve revenues in the range of $1,100 million to $1,125 million, operating income in the range of $135 - $140 million, which includes $2 million of pension expense from the Curtiss-Wright Pension Plans, and earnings per share in the range of $3.30 to $3.45 per share. Events occurred in the third quarter which will impact our annual results. First is the Boeing strike. Second is a procurement decision by the U.S. Navy to only acquire one new Recovery Assist, Secure and Traverse (RAST) system in 2005. Previously, the U.S. Navy had indicated that three new systems would be purchased in 2005 which we included in our previous guidance. The revised guidance above reflects the expected impact of these two previously unforeseen events.

This guidance reflects our expectations of 15-20% growth in revenue, 20- 25% growth in operating income, and 10 - 15% growth in EPS. EPS guidance is based on estimated fully diluted shares outstanding of 22 million for the full year 2005. Full year free cash flow (cash flow from operating activities less capital expenditures) is expected to be between $40 and $50 million for 2005.

The Company will host a conference call to discuss the third quarter 2005 results at 9:00 EDT Friday, October 28, 2005. A live webcast of the call can be heard on the Internet by visiting the company's website at http://curtisswright2014.q4web.com and clicking on the investor information page or by visiting other websites that provide links to corporate webcasts.

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


                                       Three Months Ended  Nine Months Ended
                                         September 30,       September 30,
                                         2005      2004      2005      2004


    Net sales                         $ 271,355 $ 236,574 $ 813,035 $ 673,935
    Cost of sales                       177,840   154,725   533,452   444,469
      Gross profit                       93,515    81,849   279,583   229,466


    Research & development expenses       8,504     8,443    30,312    24,409
    Selling expenses                     16,738    17,413    51,633    44,760
    General and administrative
     expenses                            35,046    30,033   105,015    83,071
    Environmental remediation and
     administrative expenses, net           188       200       844       491
    Pension expense, net                    500       295     1,500       377
    Loss (Gain) on sale of real estate
     and fixed assets.                       98        (6)   (2,827)      311


      Operating income                   32,441    25,471    93,106    76,047


    Other income (expenses), net            279       179      (421)      300
    Interest expense                     (4,912)   (3,135)  (13,993)   (8,418)


    Earnings before income taxes         27,808    22,515    78,692    67,929
    Provision for income taxes           10,289     7,795    28,716    23,276


    Net earnings                      $  17,519 $  14,720 $  49,976 $  44,653


    Basic earnings per share          $    0.81 $    0.69 $    2.31 $    2.11
    Diluted earnings per share        $    0.80 $    0.68 $    2.28 $    2.08


    Dividends per share               $    0.09 $    0.09 $    0.27 $    0.27


    Weighted average shares
     outstanding:
       Basic                             21,688    21,359    21,603    21,122
       Diluted                           21,973    21,715    21,890    21,476




                                          Three Months        Nine Months
                                             Change              Change
                                          $         %         $         %


    Net sales                        $  34,781     14.70% $ 139,100    20.64%
    Cost of sales                       23,115     14.94%    88,983    20.02%
      Gross profit                      11,666     14.25%    50,117    21.84%


    Research & development expenses         61      0.72%     5,903    24.18%
    Selling expenses                      (675)    -3.88%     6,873    15.36%
    General and administrative
     expenses                            5,013     16.69%    21,944    26.42%
    Environmental remediation and
     administrative expenses, net          (12)    -6.00%       353    71.89%
    Pension expense, net                   205     69.49%     1,123   297.88%
    Loss (Gain) on sale of real estate
     and fixed assets.                     104  -1733.33%    (3,138) 1009.00%


      Operating income                   6,970     27.36%    17,059    22.43%


    Other income (expenses), net           100     55.87%      (721) -240.33%
    Interest expense                    (1,777)    56.68%    (5,575)   66.23%


    Earnings before income taxes         5,293     23.51%    10,763    15.84%
    Provision for income taxes           2,494     31.99%     5,440    23.37%


    Net earnings                     $   2,799     19.02% $   5,323    11.92%


    Certain prior year information has been reclassified to conform to current
presentation.




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


                                     September   December
                                        30,         31,           Change
                                       2005        2004        $         %
    Assets
      Current Assets:
      Cash and cash equivalents    $    47,685 $    41,038 $   6,647    16.2%
      Receivables, net                 245,437     214,084    31,353    14.6%
      Inventories, net                 147,862     115,979    31,883    27.5%
      Deferred income taxes             26,157      25,693       464     1.8%
      Other current assets               9,922      12,460    (2,538)  -20.4%


        Total current assets           477,063     409,254    67,809    16.6%
      Property, plant, and
       equipment, net                  268,224     265,243     2,981     1.1%
      Prepaid pension costs             76,339      77,802    (1,463)   -1.9%
      Goodwill, net                    391,623     364,313    27,310     7.5%
      Other intangible assets, net     157,707     140,369    17,338    12.4%
      Other assets                      14,226      21,459    (7,233)  -33.7%


        Total Assets               $ 1,385,182 $ 1,278,440 $ 106,742     8.3%


    Liabilities
      Current Liabilities:
      Short-term debt              $       909 $     1,630 $    (721)  -44.2%
      Accounts payable                  65,979      65,364       615     0.9%
      Accrued expenses                  58,766      63,413    (4,647)   -7.3%
      Income taxes payable              19,317      13,895     5,422    39.0%
      Other current liabilities         41,379      52,793   (11,414)  -21.6%


        Total current liabilities      186,350     197,095   (10,745)   -5.5%


      Long-term debt                   409,060     340,860    68,200    20.0%
      Deferred income taxes             49,050      40,043     9,007    22.5%
      Accrued pension & other
       postretirement benefit costs     73,795      80,612    (6,817)   -8.5%
      Long-term portion of
       environmental reserves           22,829      23,356      (527)   -2.3%
      Other liabilities                 26,686      20,860     5,826    27.9%


        Total Liabilities              767,770     702,826    64,944     9.2%


    Stockholders' Equity
      Common stock, $1 par value        25,493      16,646     8,847    53.1%
      Class B common stock, $1 par
       value                                --       8,765    (8,765) -100.0%
      Additonal paid in capital         59,699      55,885     3,814     6.8%
      Retained earnings                645,195     601,070    44,125     7.3%
      Unearned portion of
       restricted stock                    (17)        (34)       17   -50.0%
      Accumulated other
       comprehensive income             23,218      36,797   (13,579)  -36.9%
                                       753,588     719,129    34,459     4.8%
      Less:  cost of treasury stock    136,176     143,515    (7,339)   -5.1%


        Total Stockholders' Equity     617,412     575,614    41,798     7.3%


        Total Liabilities and
         Stockholders' Equity      $ 1,385,182 $ 1,278,440 $ 106,742     8.3%




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


                                                  Three Months Ended
                                                     September 30,
                                                                        %
                                             2005         2004       Change
    Sales:
    Flow Control                            $ 112,126    $  94,204      19.0%
    Motion Control                            110,242       97,727      12.8%
    Metal Treatment                            48,987       44,643       9.7%


    Total Sales                             $ 271,355    $ 236,574      14.7%


    Operating Income:
    Flow Control                            $  13,800    $   9,845      40.2%
    Motion Control                             11,203       10,417       7.5%
    Metal Treatment                             8,618        6,805      26.6%


    Total Segments                             33,621       27,067      24.2%
    Pension Expense                              (500)        (295)     69.5%
    Corporate & Other                            (680)      (1,301)    -47.7%


    Total Operating Income                  $  32,441    $  25,471      27.4%



    Operating Margins:
    Flow Control                                12.3%        10.5%
    Motion Control                              10.2%        10.7%
    Metal Treatment                             17.6%        15.2%
    Total Curtiss-Wright                        12.0%        10.8%




                                                  Nine Months Ended
                                                    September 30,
                                                                      %
                                             2005        2004      Change
    Sales:
    Flow Control                           $ 335,863   $ 269,804      24.5%
    Motion Control                           328,180     272,649      20.4%
    Metal Treatment                          148,992     131,482      13.3%


    Total Sales                            $ 813,035   $ 673,935      20.6%


    Operating Income:
    Flow Control                           $  36,905   $  28,930      27.6%
    Motion Control                            30,331      28,731       5.6%
    Metal Treatment                           25,547      20,821      22.7%


    Total Segments                            92,783      78,482      18.2%
    Pension Expense                           (1,500)       (377)    297.9%
    Corporate & Other                          1,823      (2,058)   -188.6%


    Total Operating Income                 $  93,106   $  76,047      22.4%



    Operating Margins:
    Flow Control                               11.0%       10.7%
    Motion Control                              9.2%       10.5%
    Metal Treatment                            17.1%       15.8%
    Total Curtiss-Wright                       11.5%       11.3%

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 5,900 people. More information on Curtiss-Wright can be found at http://curtisswright2014.q4web.com .

Certain statements made in this release, including statements about future revenue, organic revenue growth, annual revenue, net income, organic operating income growth, future business opportunities, and 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, 2004 and subsequent reports filed with the Securities and Exchange Commission.

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

SOURCE Curtiss-Wright Corporation

CONTACT:
Alexandra M. Deignan of Curtiss-Wright Corporation,
+1-973-597-4734,
adeignan@curtisswright.com

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