As we look to the future, it is essential that we leverage the critical mass of One Curtiss-Wright to remain competitive, sustain our technological leadership and improve our efficiency. Over the last few years, we refined our approach to market as a single, aligned company, increasing value to our customers, employees and shareholders. We implemented aggressive cost reduction actions and achieved savings that would not have been possible without unifying the entire business.

We are dedicated to achieving and maintaining our status in the top quartile of our peer group — for all of our key financial metrics. As we continue that journey, we will seek strategic acquisitions to supplement our organic growth while ensuring that we do not undermine the team’s strong operational achievements.

Key to Our Future: Growing the Core

Curtiss-Wright is a leading provider of state-of-the-art critical solutions and advanced technologies to the commercial aerospace, defense, general industrial and power generation markets. Sustained innovation and new product development are among Curtiss-Wright’s key hallmarks as exemplified by our numerous scientists, engineers and technical teams.

It is crucial that we continue to expand our core technological offering, and accordingly, we are dedicated to reinvesting in our business to drive organic growth. Further, the reliability of Curtiss-Wright’s products and services has led to decades-long customer relationships. Through additional investments in Research and Development, we will ensure our technology endures well into the future.

Leverage the Scale of a Global Diversified Industrial Company

Curtiss-Wright has maintained its strategic plan despite challenging economic conditions. With a highly diversified technology portfolio, we manage an extensive suite of advanced engineered products and services, with critical technologies and applications.

We will continue to grow our global footprint, significantly expanding the geographic diversity and competitiveness of our business into key markets throughout Asia, Europe and South America. With 30% of our sales to international customers, it is critical we leverage our relationships and enter new markets to further diversify our business and provide opportunities to expand our overall market share.

Key Achievements in 2015

We highlight several of Curtiss-Wright’s key accomplishments on the following pages.

One of the most noteworthy achievements involved our reactor coolant pumps (RCPs) on the AP1000 nuclear program. We successfully completed testing, made final design modifications and reached full qualification of our RCP, which led to the receipt of the long-awaited order from China. The China AP1000 RCP order, worth more than $450 million, is the largest single order ever received by Curtiss-Wright.

We also completed necessary portfolio rationalization, most notably through the divestiture of several oil & gas operations, significantly reducing our direct exposure to the volatile oil industry.

Financial Performance

We were pleased with our operating performance in 2015, producing solid operating margin expansion and strong free cash flow generation despite lower sales. Net sales of $2.2 billion decreased 2% from the prior year, driven by weaker economic and market conditions in several of our industrial businesses. We generated a 10% increase in operating income and drove operating margin up 150 basis points on a continuing operations basis to 14.1%, reflecting the benefits of our ongoing operating margin improvement initiatives as well as the new China AP1000 RCP order. Our net earnings from continuing operations grew 13% to $192 million, or $4.04 per diluted share.

Our free cash flow was $272 million, adjusted to remove the $145 million contribution to the Company’s corporate defined benefit pension plan, which equated to 141% free cash flow conversion. Our strong cash flow position was aided by lower capital expenditures and our efforts to steadily reduce working capital. Our balance sheet remains healthy and provides a solid base of financial flexibility to continue the pursuit of our growth strategies. Additionally, our Return on Invested Capital increased 110 basis points to 11.5% due to improved operating performance and stringent capital management.

As a sign of our continued financial success, Curtiss-Wright was added to the S&P MidCap 400 stock market index in early 2016, where previously a constituent in the SmallCap 600 Index.

Disciplined Capital Allocation Strategy

Curtiss-Wright remains committed to a disciplined and balanced capital allocation strategy that consists of reinvesting in our business, supplementing our organic growth with acquisitions and providing steady distributions to our shareholders in the form of share repurchases and dividends in order to maximize shareholder value.

During 2015, we maintained an active share repurchase program and by early 2016, we completed the previously authorized $300 million share repurchase program. We also maintained a steady annual dividend payout of $0.52 per share. In December 2015, we announced our intent to repurchase at least $100 million in shares in 2016, under a new $200 million authorization, which is expected to more than offset the dilution from our compensation plans and also supplement our long-term earnings growth objectives.

Together, these actions reflect the Board of Directors’ continued confidence in our ability to deliver solid, profitable growth and strong free cash flow.

In Recognition

We were pleased with our operating performance in 2015, producing solid operating margin expansion and strong free cash flow generation despite lower sales. Net sales of $2.2 billion decreased 2% from the prior year, driven by weaker economic and market conditions in several of our industrial businesses. We generated a 10% increase in operating income and drove operating margin up 150 basis points on a continuing operations basis to 14.1%, reflecting the benefits of our ongoing operating margin improvement initiatives as well as the new China AP1000 RCP order. Our net earnings from continuing operations grew 13% to $192 million, or $4.04 per diluted share.

Our free cash flow was $272 million, adjusted to remove the $145 million contribution to the Company’s corporate defined benefit pension plan, which equated to 141% free cash flow conversion. Our strong cash flow position was aided by lower capital expenditures and our efforts to steadily reduce working capital. Our balance sheet remains healthy and provides a solid base of financial flexibility to continue the pursuit of our growth strategies. Additionally, our Return on Invested Capital increased 110 basis points to 11.5% due to improved operating performance and stringent capital management.

As a sign of our continued financial success, Curtiss-Wright was added to the S&P MidCap 400 stock market index in early 2016, where previously a constituent in the SmallCap 600 Index.