10-Q 1 cw-20210930.htm 10-Q cw-20210930
CURTISS WRIGHT 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2021

or

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)
Delaware13-0612970
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
 130 Harbour Place Drive, Suite 300
Davidson,North Carolina28036
(Address of principal executive offices)(Zip Code)

(704) 869-4600
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockCWNew York Stock Exchange

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                          No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes                          No  

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

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




Yes     No  

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: 39,239,706 shares as of October 31, 2021.



CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

TABLE of CONTENTS

PART I – FINANCIAL INFORMATIONPAGE
Item 1.
Item 2.
Item 3.
Item 4.
PART II – OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



Page 3


PART 1- FINANCIAL INFORMATION
Item 1. Financial Statements

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Three Months EndedNine Months Ended
September 30,September 30,
(In thousands, except per share data)2021202020212020
Net sales
Product sales$528,339 $493,398 $1,552,706 $1,457,772 
Service sales92,280 78,216 286,467 265,120 
Total net sales620,619 571,614 1,839,173 1,722,892 
Cost of sales
Cost of product sales328,424 305,921 989,759 945,886 
Cost of service sales55,187 52,872 177,930 177,580 
Total cost of sales383,611 358,793 1,167,689 1,123,466 
Gross profit237,008 212,821 671,484 599,426 
Research and development expenses21,618 17,587 66,675 54,163 
Selling expenses30,067 24,869 89,227 81,650 
General and administrative expenses78,998 77,251 229,608 230,515 
Impairment of assets held for sale8,656  8,656  
Restructuring expenses 8,541  20,730 
Operating income97,669 84,573 277,318 212,368 
Interest expense9,955 9,055 30,094 25,059 
Other income, net3,627 5,417 8,910 6,844 
Earnings before income taxes91,341 80,935 256,134 194,153 
Provision for income taxes(21,638)(16,315)(65,554)(46,754)
Net earnings$69,703 $64,620 $190,580 $147,399 
Net earnings per share:
Basic earnings per share$1.71 $1.56 $4.66 $3.52 
Diluted earnings per share$1.70 $1.55 $4.64 $3.49 
Dividends per share0.18 0.17 0.53 0.51 
Weighted-average shares outstanding:
Basic40,769 41,545 40,865 41,926 
Diluted40,950 41,797 41,040 42,190 
See notes to condensed consolidated financial statements

Page 4


CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(In thousands)

Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Net earnings$69,703 $64,620 $190,580 $147,399 
Other comprehensive income (loss)
Foreign currency translation adjustments, net of tax (1)
$(16,273)$28,229 $(12,990)$2,139 
Pension and postretirement adjustments, net of tax (2)
4,994 3,561 15,036 12,244 
Other comprehensive income (loss), net of tax(11,279)31,790 2,046 14,383 
Comprehensive income$58,424 $96,410 $192,626 $161,782 

(1) The tax benefit included in foreign currency translation adjustments for the three and nine months ended September 30, 2021 and September 30, 2020 was immaterial.

(2) The tax expense included in pension and postretirement adjustments for the three and nine months ended September 30, 2021 was $2.0 million and $5.1 million, respectively. The tax expense included in pension and postretirement adjustments for the three and nine months ended September 30, 2020 was $1.3 million and $4.0 million, respectively.

 
See notes to condensed consolidated financial statements
Page 5


CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except per share data)
September 30, 2021December 31, 2020
Assets
Current assets:
Cash and cash equivalents$234,416 $198,248 
Receivables, net670,867 588,718 
Inventories, net433,140 428,879 
Assets held for sale20,215 27,584 
Other current assets65,171 57,395 
Total current assets1,423,809 1,300,824 
Property, plant, and equipment, net360,314 378,200 
Goodwill1,461,313 1,455,137 
Other intangible assets, net552,514 609,630 
Operating lease right-of-use assets, net140,524 150,898 
Prepaid pension asset111,906 92,531 
Other assets32,921 34,114 
Total assets$4,083,301 $4,021,334 
Liabilities  
Current liabilities:
Current portion of long-term debt100,000 100,000 
Accounts payable158,196 201,237 
Accrued expenses142,169 146,833 
Deferred revenue249,671 253,411 
Liabilities held for sale13,215 10,141 
Other current liabilities101,892 98,755 
Total current liabilities765,143 810,377 
Long-term debt957,101 958,292 
Deferred tax liabilities, net121,491 115,007 
Accrued pension and other postretirement benefit costs98,122 98,345 
Long-term operating lease liability124,362 133,069 
Long-term portion of environmental reserves15,096 15,422 
Other liabilities101,926 103,248 
Total liabilities2,183,241 2,233,760 
Contingencies and commitments (Note 14)
Stockholders’ equity
Common stock, $1 par value, 100,000,000 shares authorized as of September 30, 2021 and December 31, 2020; 49,187,378 shares issued as of September 30, 2021 and December 31, 2020; outstanding shares were 40,473,516 as of September 30, 2021 and 40,916,429 as of December 31, 2020
49,187 49,187 
Additional paid in capital124,532 122,535 
Retained earnings2,839,294 2,670,328 
Accumulated other comprehensive loss(308,810)(310,856)
Common treasury stock, at cost (8,713,862 shares as of September 30, 2021 and 8,270,949 shares as of December 31, 2020)
(804,143)(743,620)
Total stockholders’ equity1,900,060 1,787,574 
Total liabilities and stockholders’ equity$4,083,301 $4,021,334 
See notes to condensed consolidated financial statements

Page 6


CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
(In thousands)20212020
Cash flows from operating activities:
Net earnings$190,580 $147,399 
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization86,240 84,769 
Gain on sale/disposal of long-lived assets(604)(370)
Deferred income taxes4,480 4,258 
Share-based compensation10,861 11,777 
Impairment of assets held for sale8,656  
Foreign exchange loss on substantial liquidation of subsidiary 9,498 
Non-cash restructuring charges— 10,254 
Change in operating assets and liabilities, net of businesses acquired:
Receivables, net(81,498)1,987 
Inventories, net(5,045)(33,322)
Progress payments(3,960)(3,036)
Accounts payable and accrued expenses(51,702)(81,535)
Deferred revenue115 (8,841)
Pension and postretirement liabilities, net2,406 (150,674)
Other current and long-term assets and liabilities(4,768)11,620 
Net cash provided by operating activities155,761 3,784 
Cash flows from investing activities:
Proceeds from sale/disposal of long-lived assets3,389 2,476 
Additions to property, plant, and equipment(27,858)(36,341)
Acquisition of businesses, net of cash acquired (82,053)
Additional consideration paid on prior year acquisitions(5,340) 
Net cash used for investing activities(29,809)(115,918)
Cash flows from financing activities:
Borrowings under revolving credit facility166,771 389,398 
Payment of revolving credit facility(166,771)(389,398)
Borrowings on debt 300,000 
Repurchases of common stock(79,092)(137,155)
Proceeds from share-based compensation9,705 9,908 
Dividends paid(14,320)(14,160)
Other(699)(648)
Net cash (used for)/provided by financing activities(84,406)157,945 
Effect of exchange-rate changes on cash(5,378)(10,023)
Net increase in cash and cash equivalents36,168 35,788 
Cash and cash equivalents at beginning of period198,248 391,033 
Cash and cash equivalents at end of period$234,416 $426,821 
See notes to condensed consolidated financial statements

Page 7



CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(In thousands)
For the nine months ended September 30, 2021
Common StockAdditional Paid in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury Stock
December 31, 2020$49,187 $122,535 $2,670,328 $(310,856)$(743,620)
Net earnings— — 190,580 — — 
Other comprehensive income, net of tax— — — 2,046 — 
Dividends declared— — (21,614)— — 
Restricted stock— (9,007)— — 9,007 
Employee stock purchase plan and stock options exercised— 877 — — 8,828 
Share-based compensation— 10,724 — — 137 
Repurchase of common stock (1)
— — — — (79,092)
Other— (597)— — 597 
September 30, 2021$49,187 $124,532 $2,839,294 $(308,810)$(804,143)

For the three months ended September 30, 2021
Common StockAdditional Paid in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury Stock
June 30, 2021$49,187 $119,946 $2,776,884 $(297,531)$(753,782)
Net earnings— — 69,703 — — 
Other comprehensive income, net of tax— — — (11,279)— 
Dividends declared— — (7,293)— — 
Employee stock purchase plan— 466 — — 4,320 
Share-based compensation— 4,120 — — 16 
Repurchase of common stock (1)
— — — — (54,697)
September 30, 2021$49,187 $124,532 $2,839,294 $(308,810)$(804,143)
Page 8



CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(In thousands)
For the nine months ended September 30, 2020
Common StockAdditional Paid in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury Stock
December 31, 2019$49,187 $116,070 $2,497,111 $(325,274)$(562,722)
Net earnings— — 147,399 — — 
Other comprehensive income, net of tax— — — 14,383 — 
Dividends declared— — (21,221)— — 
Restricted stock— (4,115)— — 4,115 
Employee stock purchase plan and stock options exercised— (1,364)— — 11,272 
Share-based compensation— 11,723 — — 54 
Repurchase of common stock (1)
— — — — (137,155)
Other— (517)— — 517 
September 30, 2020$49,187 $121,797 $2,623,289 $(310,891)$(683,919)

For the three months ended September 30, 2020
Common StockAdditional Paid in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury Stock
June 30, 2020$49,187 $118,467 $2,565,727 $(342,681)$(677,405)
Net earnings— — 64,620 — — 
Other comprehensive income, net of tax— — — 31,790 — 
Dividends declared— — (7,058)— — 
Employee stock purchase plan and stock options exercised— (1,470)— — 6,191 
Share-based compensation— 4,800 — — (163)
Repurchase of common stock (1)
— — — — (12,542)
September 30, 2020$49,187 $121,797 $2,623,289 $(310,891)$(683,919)
See notes to condensed consolidated financial statements
(1) For the three and nine months ended September 30, 2021, the Corporation repurchased approximately 0.4 million and 0.6 million shares of its common stock, respectively. For the three and nine months ended September 30, 2020, the Corporation repurchased approximately 0.1 million and 1.4 million shares of its common stock, respectively.

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1.           BASIS OF PRESENTATION

Curtiss-Wright Corporation and its subsidiaries (the "Corporation" or the "Company") is a global, diversified manufacturing and service company that designs, manufactures, and overhauls precision components and provides highly engineered products and services to the aerospace, defense, power & process, 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 using the over-time revenue recognition accounting method, pension plan and postretirement obligation assumptions, estimates for inventory obsolescence, fair value estimates around assets and assumed liabilities from acquisitions, 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 the three and nine months ended September 30, 2021 and 2020, there were no 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 2020 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.

On January 1, 2021, the Corporation implemented an organizational change to simplify its reportable segments and align its product sales with its end market structure. As a result, the Corporation now operates under the following three reportable segments: Aerospace & Industrial, Defense Electronics, and Naval & Power. This change resulted in the transfer of the Corporation's valve-related operations into the new Naval & Power segment. While this organizational change resulted in the recasting of previously reported amounts across all reportable segments, it did not impact the Corporation’s previously reported consolidated financial statements.

2.           REVENUE

The Corporation recognizes revenue 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. Typically, over-time revenue recognition is based on the utilization of an input measure used to measure progress, such as costs incurred to date
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relative to total estimated costs. If a performance obligation does not qualify for over-time revenue recognition, revenue is then recognized at the point-in-time in which control of the distinct good or service is transferred to the customer, typically based upon the terms of delivery.

The following table illustrates the approximate percentage of revenue recognized for performance obligations satisfied over-time versus at a point-in-time for the three and nine months ended September 30, 2021 and 2020:

Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Over-time48 %50 %51 %52 %
Point-in-time52 %50 %49 %48 %

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 $2.2 billion as of September 30, 2021, of which the Corporation expects to recognize approximately 84% as net sales over the next 36 months. The remainder will be recognized thereafter.

Disaggregation of Revenue

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

Total Net Sales by End Market and Customer TypeThree Months EndedNine Months Ended
September 30,September 30,
(In thousands)2021202020212020
Aerospace & Defense
Aerospace Defense$116,853 $121,987 $327,846 $333,120 
Ground Defense55,124 20,519 159,091 63,205 
Naval Defense175,800 165,524 531,429 496,157 
Commercial Aerospace67,461 70,943 196,285 242,708 
Total Aerospace & Defense$415,238 $378,973 $1,214,651 $1,135,190 
Commercial
Power & Process$112,736 $113,919 $343,573 $350,632 
General Industrial92,645 78,722 280,949 237,070 
Total Commercial$205,381 $192,641 $624,522 $587,702 
Total$620,619 $571,614 $1,839,173 $1,722,892 

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 and nine months ended September 30, 2021 included in the contract liabilities balance as of January 1, 2021 was approximately $46 million and $188 million, respectively. Revenue recognized during the three and nine months ended September 30, 2020 included in the contract liabilities balance as of January 1, 2020 was approximately $37 million and $197 million, respectively. Contract assets and contract liabilities are reported in the "Receivables, net" and "Deferred revenue" lines, respectively, within the Condensed Consolidated Balance Sheet.

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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 numerous 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 acquisition purchase price reflects 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. 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.

During the nine months ended September 30, 2021, the Corporation did not complete any acquisitions. However, the Corporation paid $5 million during the nine months ended September 30, 2021 in regard to prior period acquisitions, which included a working capital adjustment on the acquisition of Pacific Star Communications, Inc. (PacStar), as well as a portion of the purchase price on the acquisition of Dyna-Flo Control Valve Services Ltd. (Dyna-Flo), which was initially held back as security for potential indemnification claims against the seller in accordance with the terms of the Purchase Agreement.

During the nine months ended September 30, 2020, the Corporation acquired two businesses for an aggregate purchase price of $90 million, which are described in more detail below. The Condensed Consolidated Statement of Earnings for the nine months ended September 30, 2020 included $12 million of total net sales and $1 million of net losses from the Corporation's 2020 acquisitions.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the acquisitions consummated during the nine months ended September 30, 2020.

(In thousands)2020
Accounts receivable$3,204 
Inventory10,233 
Property, plant, and equipment1,332 
Other current and non-current assets188 
Intangible assets39,384 
Operating lease right-of-use assets, net1,992 
Current and non-current liabilities(10,590)
Net tangible and intangible assets45,743 
Goodwill43,912 
Total purchase price$89,655 
Goodwill deductible for tax purposes$38,519 

2020 Acquisitions

PacStar

On October 30, 2020, the Corporation acquired 100% of the issued and outstanding stock of PacStar for $406 million. The 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. PacStar is a provider of tactical communications solutions for battlefield network management. The
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acquired business operates within the Defense Electronics segment. The acquisition is subject to post-closing adjustments with the purchase price allocation not yet complete.

IADS

On April 20, 2020, the Corporation acquired the IADS product line for approximately $29 million. The Asset Purchase Agreement contains representations and warranties customary for a transaction of this type. IADS is a real-time display and post-test analysis product for flight tests. The acquired product line operates within the Defense Electronics segment.

Dyna-Flo

On February 28, 2020, the Corporation acquired 100% of the issued and outstanding share capital of Dyna-Flo for $60 million, net of cash acquired. The Purchase Agreement contains 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. Dyna-Flo specializes in control valves, actuators, and control systems for the chemical, petrochemical, and oil and gas markets. The acquired business operates within the Naval & Power segment.

4. ASSETS HELD FOR SALE

During the fourth quarter of 2020, the Corporation committed to a plan to sell its industrial valve business in Germany, which is reported within its Naval & Power segment. The business met the criteria to be classified as held for sale in the fourth quarter of 2020. Accordingly, the assets and liabilities of the business are presented as held for sale in the Corporation's Condensed Consolidated Balance Sheet. The aforementioned assets and liabilities classified as held for sale have been measured at the lower of carrying value or fair value less costs to sell, which resulted in an impairment loss of $33 million in the fourth quarter of 2020. An additional impairment loss of $9 million was recorded during the three and nine months ended September 30, 2021.
The aggregate components of assets and liabilities classified as held for sale are as follows:
(In thousands)September 30, 2021December 31, 2020
Assets held for sale:
Receivables, net$9,632 $9,902 
Inventories, net18,141 16,401 
Other current assets1,663 1,798 
Property, plant, and equipment, net4,357 4,821 
Reserve for assets held for sale(13,578)(5,338)
Total assets held for sale, current$20,215 $27,584 
Liabilities held for sale:
Accounts payable$(3,046)$(2,654)
Accrued expenses(1,208)(1,375)
Other current liabilities(3,975)(748)
Accrued pension and other postretirement benefit costs(4,986)(5,364)
Total liabilities held for sale, current$(13,215)$(10,141)

5.           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:
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(In thousands)September 30, 2021December 31, 2020
Billed receivables:
Trade and other receivables$381,628 $361,460 
Unbilled receivables (contract assets):
Recoverable costs and estimated earnings not billed296,500 238,309 
Less: Progress payments applied
(734)(3,291)
Net unbilled receivables295,766 235,018 
Less: Allowance for doubtful accounts
(6,527)(7,760)
Receivables, net$670,867 $588,718 

6.           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 net realizable value.

The composition of inventories is as follows:

(In thousands)September 30, 2021December 31, 2020
Raw materials$194,887 $177,828 
Work-in-process81,781 80,729 
Finished goods111,914 120,767 
Inventoried costs related to U.S. Government and other long-term contracts (1)
50,086 56,599 
Inventories, net of reserves438,668 435,923 
Less:  Progress payments applied(5,528)(7,044)
Inventories, net$433,140 $428,879 

(1) As of September 30, 2021 and December 31, 2020, this caption also includes capitalized development costs of $26.3 million and $29.7 million, respectively, related to certain aerospace and defense programs. These capitalized costs will be liquidated as units are produced under contract. As of September 30, 2021 and December 31, 2020, capitalized development costs of $12.1 million and $13.0 million, respectively, are not currently supported by existing firm orders.

7.           GOODWILL

In connection with the change in reportable segments on January 1, 2021, the Corporation recast its previously reported goodwill balances as of December 31, 2020 on a relative fair value basis. As a result, the Corporation performed an interim quantitative impairment assessment as of March 31, 2021 on each of its reporting units, and concluded that no impairment exists. Refer to Note 12 to the Condensed Consolidated Financial Statements for additional information on the Corporation’s reportable segments.

The changes in the carrying amount of goodwill for the nine months ended September 30, 2021 are as follows:
(In thousands)Aerospace & IndustrialDefense ElectronicsNaval & PowerConsolidated
December 31, 2020$316,921 $703,915 $434,301 $1,455,137 
Adjustments (1)
— 11,608 — 11,608 
Foreign currency translation adjustment(967)(3,293)(1,172)(5,432)
September 30, 2021$315,954 $712,230 $433,129 $1,461,313 

(1) Amount primarily relates to post-closing adjustments on the Corporation's acquisition of PacStar in October 2020. 

8.           OTHER INTANGIBLE ASSETS, NET
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The following tables present the cumulative composition of the Corporation’s intangible assets:

September 30, 2021December 31, 2020
(In thousands)GrossAccumulated AmortizationNetGrossAccumulated AmortizationNet
Technology$274,522 $(160,020)$114,502 $280,595 $(148,064)$132,531 
Customer related intangibles568,566 (263,098)305,468 573,722 (239,798)333,924 
Programs (1)
144,000 (25,200)118,800 144,000 (19,800)124,200 
Other intangible assets49,543 (35,799)13,744 51,493 (32,518)18,975 
Total$1,036,631 $(484,117)$552,514 $1,049,810 $(440,180)$609,630 
(1) Programs include values assigned to major programs of acquired businesses and represent the aggregate value associated with the customer relationships, contracts, technology, and trademarks underlying the associated program. 

Total intangible amortization expense for the nine months ended September 30, 2021 was $45 million, as compared to $43 million in the comparable prior year period.  The estimated amortization expense for the five years ending December 31, 2021 through 2025 is $59 million, $55 million, $51 million, $48 million, and $45 million, respectively.

9.           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 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.

Effects on Condensed Consolidated Balance Sheets

As of September 30, 2021 and December 31, 2020, the fair values of the asset and liability derivative instruments were immaterial.

Effects on Condensed Consolidated Statements of Earnings
 
Undesignated hedges

The gains and losses on forward exchange derivative contracts not designated for hedge accounting are recognized to general and administrative expenses within the Condensed Consolidated Statements of Earnings. The (losses) for the three and nine months ended September 30, 2021 were ($2.2) million and ($1.7) million, respectively. The gains and (losses) for the three and nine months ended September 30, 2020 were $1.7 million and ($5.7) million, respectively.

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 issuances as of September 30, 2021. Accordingly, all of the Corporation’s debt is valued as a Level 2 financial instrument. 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.
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September 30, 2021December 31, 2020
(In thousands)Carrying ValueEstimated Fair ValueCarrying ValueEstimated Fair Value
3.84% Senior notes due 2021
$100,000 $100,473 $100,000 $102,173 
3.70% Senior notes due 2023
202,500 209,499 202,500 211,790 
3.85% Senior notes due 2025
90,000 96,193 90,000 97,429 
4.24% Senior notes due 2026
200,000 219,908 200,000 224,390 
4.05% Senior notes due 2028
67,500 73,903 67,500 75,440 
4.11% Senior notes due 2028
90,000 98,723 90,000 101,047 
3.10% Senior notes due 2030
150,000 153,306 150,000 155,805 
3.20% Senior notes due 2032
150,000 152,240 150,000 155,048 
Total debt1,050,000 1,104,245 1,050,000 1,123,122 
Debt issuance costs, net(993)(993)(1,147)(1,147)
Unamortized interest rate swap proceeds8,094 8,094 9,439 9,439 
Total debt, net$1,057,101 $1,111,346 $1,058,292 $1,131,414 

10.           PENSION PLANS

Defined Benefit Pension Plans

The following table is a consolidated disclosure of all domestic and foreign defined pension plans as described in the Corporation’s 2020 Annual Report on Form 10-K.  

The components of net periodic pension cost for the three and nine months ended September 30, 2021 and 2020 were as follows:

Three Months EndedNine Months Ended
September 30,September 30,
(In thousands)2021202020212020
Service cost$6,931 $6,285 $20,921 $19,507 
Interest cost4,585 5,772 13,402 17,888 
Expected return on plan assets(15,177)(16,602)(45,548)(50,394)
Amortization of prior service cost(216)178 (648)36 
Amortization of unrecognized actuarial loss6,988 5,539 21,705 17,038 
Cost of settlements235  3,310  
Net periodic pension cost$3,346 $1,172 $13,142 $4,075 

The Corporation does not expect to make any contributions to the Curtiss-Wright Pension Plan in 2021. Contributions to the foreign benefit plans are not expected to be material in 2021. During the nine months ended September 30, 2020, the Corporation made a $150 million voluntary contribution to the Curtiss-Wright Pension Plan.

During the three and nine months ended September 30, 2021, the Company recognized settlement charges related to the retirement of former executives. The settlement charges represent events that are accounted for under guidance on employers’ accounting for settlements and curtailments of defined benefit pension plans.

Defined Contribution Retirement Plan

The Company also maintains a defined contribution plan for all non-union employees who are not currently receiving final or career average pay benefits for its U.S. subsidiaries. The employer contributions include both employer match and non-elective contribution components up to a maximum employer contribution of 7% of eligible compensation. During the three and nine months ended September 30, 2021, the expense relating to the plan was $4.6 million and $14.2 million, respectively. During the three and nine months ended September 30, 2020, the expense relating to the plan was $4.5 million and $14.8 million,
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respectively. The Corporation made $16.4 million in contributions to the plan during the nine months ended September 30, 2021, and expects to make total contributions of approximately $19.0 million in 2021.

11.           EARNINGS PER SHARE
 
Diluted earnings per share was 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 EndedNine Months Ended
September 30,September 30,
(In thousands)2021202020212020
Basic weighted-average shares outstanding40,769 41,545 40,865 41,926 
Dilutive effect of stock options and deferred stock compensation181 252 175 264 
Diluted weighted-average shares outstanding40,950 41,797 41,040 42,190 

There were no anti-dilutive equity-based awards for the three months ended September 30, 2021. For the nine months ended September 30, 2021, approximately 41,000 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. There were no anti-dilutive equity-based awards for three and nine months ended September 30, 2020.

12.           SEGMENT INFORMATION
 
Prior to the first quarter of 2021, the Corporation reported its results of operations through three reportable segments: Commercial/Industrial, Defense, and Power. On January 1, 2021, the Corporation implemented an organizational change to simplify its reportable segments and align its product sales with its end market structure. As a result, the Corporation now reports its results of operations through the following reportable segments: Aerospace & Industrial, Defense Electronics, and Naval & Power. While this organizational change resulted in the recasting of previously reported amounts across all reportable segments, it did not impact the Corporation’s previously reported consolidated financial statements.

The 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 EndedNine Months Ended
September 30,September 30,
(In thousands)2021202020212020
Net sales
Aerospace & Industrial$197,060 $189,021 $578,452 $593,654 
Defense Electronics182,314 148,674