UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 10, 2010
CIRCOR INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
| DELAWARE | 001-14962 | 04-3477276 | ||
| (State or other jurisdiction of incorporation) |
(Commission file number) |
(IRS employer identification no.) |
25 CORPORATE DRIVE, SUITE 130
BURLINGTON, MASSACHUSETTS 01803-4238
(Address of principal executive offices) (Zip Code)
(781) 270-1200
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition |
By press release dated May 10, 2010, the Company announced its financial results for the three months ended April 4, 2010. The full text of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Form 8-K and the Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by special reference in such filing.
In the press release and accompanying supplemental information, the Company uses the following non-GAAP financial measures: free cash flow, EBIT, EBITDA, adjusted operating income, and adjusted earnings per share (EPS). Management of the Company believes that free cash flow (defined as net cash flow from operating activities, less capital expenditures and dividends paid) is an important measure of its liquidity as well as its ability to service long-term debt, fund future growth and to provide a return to shareholders. EBIT (defined as net income plus interest expense, net plus provision for income taxes), EBITDA (defined as net income plus interest expense, net, plus provision for income taxes, plus depreciation and amortization), adjusted operating income (defined as operating income, excluding the impact of special and asbestos charges), and adjusted EPS (defined as earnings per common share, excluding special charges and the Q4 2009 five year future asbestos claim liability, net of tax) are provided because management believes these measurements are useful for investors and financial institutions to analyze and compare companies on the basis of operating performance. Free cash flow, EBIT, EBITDA, adjusted operating income, and adjusted EPS are not measurements for financial performance under GAAP and should not be construed as a substitute for cash flows, operating income, net income or earnings per share. Free cash flow, EBIT, EBITDA, adjusted operating income, and adjusted EPS as we have calculated here, may not necessarily be comparable to similarly titled measures used by other companies. A reconciliation of free cash flow, EBIT, EBITDA, adjusted operating income, and adjusted EPS to the most directly comparable GAAP financial measure is provided in the supplemental information table titled “Reconciliation of Key Performance Measures to Commonly Used Generally Accepted Accounting Principle Terms” which is included as an attachment to the press release.
| ITEM 5.07 | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
The Company held its 2010 Annual Meeting of Stockholders on May 7, 2010. The proposals before our stockholders and the results of voting on such proposals were as provided below.
(i) Election of Directors: the following persons were elected as Class II directors for three year terms, such terms to continue until the Annual Meeting of Stockholders to be held in 2013 and until each such director’s successor is duly elected and qualified or until his earlier resignation or removal:
| VOTES FOR | VOTES WITHHELD | VOTES ABSTAINED | ||||
| Jerome D. Brady |
6,032,093 | 8,793,530 | 1,302,486 | |||
| Peter M. Wilver |
14,304,049 | 521,574 | 1,302,486 |
2
(ii) Approval of the material terms of the performance goals under the Company’s Amended and Restated 1999 Stock Option and Incentive Plan for the purposes of compensation deductibility under Internal Revenue Code Section 162(m). The voting results for this matter were as follows:
| VOTES FOR |
VOTES AGAINST | VOTES ABSTAINED | VOTES NON-BROKER | |||
| 14,266,708 | 234,232 | 324,683 | 1,302,486 |
(iii) Ratification of the selection by the Audit Committee of the Company’s Board of Directors of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2010. The voting results for this matter were as follows:
| VOTES FOR | VOTES AGAINST | VOTES ABSTAINED | ||
| 15,938,202 | 188,075 | 1,832 |
3
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit No. |
Description | |
| 99.1 |
Press Release regarding Earnings, Dated May 10, 2010 | |
4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: May 11, 2010 | CIRCOR INTERNATIONAL, INC. | |||
| /s/ Frederic M. Burditt | ||||
| By: | Frederic M. Burditt | |||
| Title: | Vice President, Chief Financial Officer and Treasurer | |||
5
Exhibit 99.1
PRESS RELEASE
CIRCOR Reports First-Quarter 2010 Results
| • | EPS of $0.33 Significantly Exceeds Guidance Range as a Result of Lower Asbestos Charges |
| • | Lower-than-expected Revenue of $146.3M Reflects Delayed Shipments for International Energy Projects |
| • | Double-Digit Year-Over-Year Bookings Increases in All Segments; Order Strength Reflects Improving Demand Across Many End-Markets |
Burlington, MA – May 10, 2010 – CIRCOR International, Inc. (NYSE: CIR), a provider of valves and other highly engineered products and subsystems that control the flow of fluids safely and efficiently in the aerospace, energy and industrial markets, today announced financial results for the first quarter ended April 4, 2010.
Management Comments on First-Quarter Results
“We recorded first-quarter earnings that exceeded our guidance range due to lower-than-expected asbestos charges and a favorable asbestos related insurance adjustment,” said Chairman and Chief Executive Officer Bill Higgins. “Excluding these benefits to earnings, we still would have reported EPS in line with our guidance on lower-than-expected sales. Revenue was below our guidance range as a result of delayed shipments for large international energy projects.”
“The highlight of the quarter was the year-over-year improvements we recorded in bookings across each of our reporting segments,” Higgins said. “Our Energy segment delivered 32% year-over-year growth in bookings, driven by increased demand in our short-cycle business. Flow Technologies reported a 26% increase in bookings as a result of strengthening across many end markets. Our Aerospace segment delivered a 47% improvement in bookings compared with the year-ago quarter due to strong landing gear and other military orders.”
Consolidated Results
Revenues for the first quarter of 2010 were $146.3 million, a 17% decrease from $175.6 million generated in the first quarter of 2009. Net income for the first quarter of 2010 decreased 45% to $5.7 million, or $0.33 per diluted share, compared with $10.5 million, or $0.61 per diluted share, for the first quarter of 2009. First-quarter 2010 net income reflects $0.6 million of pre-tax asbestos recoveries related to the Company’s Leslie Controls subsidiary compared with $8.3 million in asbestos charges in the first quarter of 2009.
There were no special charges (recoveries) in the first quarter of 2010. First-quarter 2009 net income included a pre-tax gain of $1.1 million related to proceeds from the sale of land use rights, recorded as a special recovery.
Consolidated Orders and Free Cash Flow
The Company received orders totaling $161.1 million during the first quarter of 2010, an increase of 32% compared with the first quarter of 2009 and a 6% sequential decrease compared with the fourth quarter of 2009. The year-over-year increase in orders reflects stabilizing market conditions, while the sequential decrease is the result of lower-than-expected large international energy and pipeline solutions projects. In addition, the Company booked unusually high maritime orders in the fourth quarter of 2009. Backlog as of April 4, 2010 was $330.4 million, up 11% from backlog of $298.1 million at March 29, 2009 and up sequentially by 4% from December 31, 2009.
During the first quarter of 2010, the Company used $7.0 million of free cash flow (defined as net cash from operating activities, less capital expenditures and dividends paid) compared to using $7.9 million in the first quarter of 2009.
Energy
CIRCOR’s Energy segment revenues decreased by 35% to $57.7 million for the quarter ended April 4, 2010 compared with $89.3 million in the quarter ended March 29, 2009. The year-over-year decrease included organic declines of 47% across all areas, slightly offset by growth from acquisitions of 9% and favorable foreign currency adjustments of 3%.
Incoming orders for the first quarter of 2010 were $60.3 million, an increase of 32% from $45.8 million in the first quarter of 2009, and a decrease of 23% sequentially. The year-over-year increase was due to increased strength in the short-cycle business while the sequential decrease related to lower bookings of large international projects and pipeline solutions projects than the final quarter of 2009. Ending backlog totaled $135.4 million, a 6% increase compared with $127.3 million at the end of the first quarter of 2009, and a 2% increase sequentially.
The Energy segment adjusted operating margin, which excludes the impact of special charges, was 3.5% during the first quarter of 2010 compared with 18.1% for the first quarter of 2009 and 3.0% for the fourth quarter of 2009. First-quarter 2010 margins were negatively impacted year over year by organic revenue declines across the segment, the associated lost operating leverage, unfavorable pricing in large international projects, and the dilutive impact of the Pipeline Engineering acquisition. These factors were partially offset by lower commissions and increased productivity.
Aerospace
CIRCOR’s Aerospace segment revenues decreased by 4% to $27.3 million for the first quarter of 2010 from $28.3 million in the first quarter of 2009. Growth through acquisitions of 8% and favorable foreign currency adjustments of 1% were offset by organic declines of 13%. Incoming orders for the first quarter of 2010 were $33.0 million, an increase of 47% from $22.4 million in
the first quarter of 2009, and a 39% increase from $23.7 million in the final quarter of 2009. The year-over-year and sequential increases were primarily due to military orders as well as the year-over-year increase from acquisitions. Ending backlog totaled $121.0 million, a 12% increase compared with $108.2 million at the end of the first quarter of 2009, and a 5% increase sequentially.
The Aerospace segment’s adjusted operating margin, which excludes the impact of special charges, was 13.2% for the first quarter of 2010 compared with 15.4% for the first quarter of 2009 and 14.7% for the fourth quarter of 2009. First-quarter 2010 margins were affected by reduced volume and associated leverage, as well as the dilutive impact of acquisitions and investments in new programs partially offset by productivity and favorable mix.
Flow Technologies
CIRCOR’s Flow Technologies segment revenues increased 6% to $61.3 million from $58.0 million in the first quarter of 2009. First-quarter 2010 revenues reflected organic growth of 3% and favorable foreign currency adjustments of 3%. Incoming orders for this segment were $67.8 million for the first quarter of 2010, an increase of 26% from $53.6 million in the first quarter of 2009 and a decrease of 2% sequentially. The year-over-year increase was due to strengthening demand across many end markets except chemical, refining and commercial construction. Ending backlog totaled $74.0 million, an 18% increase compared with $62.6 million at the end of the first quarter of 2009, and a 9% increase sequentially.
This segment’s adjusted operating margin, which excludes the impact of special and asbestos charges, for the first quarter of 2010 was 10.2% compared with 11.6% in the first quarter of 2009, and 11.7% in the fourth quarter of 2009. First-quarter 2010 margins were affected by unfavorable product mix, partially offset by productivity enhancements.
Business and Financial Outlook
“Our positive bookings trend during the past two quarters continues to provide us with reason for cautious optimism about the remainder of the year,” continued Higgins. “In Energy, we believe that the short-cycle business has stabilized and we are hopeful that an increasing number of large international projects will be released. In Flow Technologies, we believe many of our end markets bottomed in the second quarter of 2009 and will continue to improve. In Aerospace, our outlook is improving with freight and passenger traffic increasing, and OEMs announcing higher aircraft production later in the year. The recent financial headwinds in Europe and the Gulf coast oil crisis have created some uncertainties we will watch closely. However, we believe we have seen the bottom in many of our markets and bookings are beginning to improve in these areas.”
“As our sales volumes rebound, CIRCOR’s lean cost structure will enable us to drive profitability improvement across the organization. Our balance sheet remains strong and our ability to generate cash flow allows us to complement organic growth with strategic acquisitions,” concluded Higgins.
CIRCOR currently expects revenues for the second quarter of 2010 in the range of $170 million to $180 million and earnings, excluding special charges, to be in the range of $0.28 to $0.38 per diluted share.
Conference Call Information
CIRCOR International will hold a conference call to review its financial results today, May 10, 2010, at 5:00 p.m. ET. Those who wish to listen to the conference call and view the accompanying presentation slides should visit “Webcasts & Presentations” in the “Investors” portion of the CIRCOR website. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. If you are unable to listen to the live call, the webcast will be archived for one year on the Company’s website.
Use of Non-GAAP Financial Measures
Adjusted net income, adjusted earnings per diluted share, adjusted operating margin, and free cash flow, are non-GAAP financial measures and are intended to serve as a complement to results provided in accordance with accounting principles generally accepted in the United States. CIRCOR believes that such information provides an additional measurement and consistent historical comparison of the Company’s performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in this news release.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Reliance should not be placed on forward-looking statements because they involve unknown risks, uncertainties and other factors, which are, in some cases, beyond the control of CIRCOR. Any statements in this press release that are not statements of historical fact are forward-looking statements, including, but not limited to, those relating to CIRCOR’s future performance, including second-quarter revenue and earnings guidance. Actual events, performance or results could differ materially from the anticipated events, performance or results expressed or implied by such forward-looking statements. BEFORE MAKING ANY INVESTMENT DECISIONS REGARDING OUR COMPANY, WE STRONGLY ADVISE YOU TO READ THE SECTION ENTITLED “RISK FACTORS” IN OUR MOST RECENT ANNUAL REPORT ON FORM 10-K, WHICH CAN BE ACCESSED UNDER THE “INVESTORS” LINK OF OUR WEBSITE AT WWW.CIRCOR.COM. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
About CIRCOR International, Inc. CIRCOR International, Inc. designs, manufactures and markets valves and other highly engineered products and subsystems that control the flow of fluids safely and efficiently in the aerospace, energy and industrial markets. With more than 9,000 customers in over 100 countries, CIRCOR has a diversified product portfolio with recognized, market-leading brands. CIRCOR’s culture, built on the CIRCOR Business System, is defined by the Company’s commitment to attracting, developing and retaining the best talent and pursuing continuous improvement in all aspects of its business and operations. The Company’s
strategy includes growing organically by investing in new, differentiated products; adding value to component products; and increasing the development of mission-critical subsystems and solutions. CIRCOR also plans to leverage its strong balance sheet to acquire strategically complementary businesses. For more information, visit the Company’s investor relations web site at http://investors.circor.com.
Contact:
Frederic M. Burditt
Chief Financial Officer
CIRCOR International
(781) 270-1200
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
UNAUDITED
| Three Months Ended | ||||||||
| April 4, 2010 | March 29, 2009 | |||||||
| Net revenues |
$ | 146,269 | $ | 175,647 | ||||
| Cost of revenues |
103,550 | 119,628 | ||||||
| GROSS PROFIT |
42,719 | 56,019 | ||||||
| Selling, general and administrative expenses |
35,418 | 34,099 | ||||||
| Asbestos charges (recoveries) |
(648 | ) | 8,263 | |||||
| Special charges (recoveries) |
— | (1,135 | ) | |||||
| OPERATING INCOME |
7,949 | 14,792 | ||||||
| Other (income) expense: |
||||||||
| Interest income |
(43 | ) | (146 | ) | ||||
| Interest expense |
597 | 178 | ||||||
| Other (income) expense, net |
(51 | ) | (183 | ) | ||||
| Total other expense (income) |
503 | (151 | ) | |||||
| INCOME BEFORE INCOME TAXES |
7,446 | 14,943 | ||||||
| Provision for income taxes |
1,713 | 4,483 | ||||||
| NET INCOME |
$ | 5,733 | $ | 10,460 | ||||
| Earnings per common share: |
||||||||
| Basic |
$ | 0.34 | $ | 0.62 | ||||
| Diluted |
$ | 0.33 | $ | 0.61 | ||||
| Weighted average common shares outstanding: |
||||||||
| Basic |
17,051 | 16,916 | ||||||
| Diluted |
17,193 | 17,014 | ||||||
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
| Three Months Ended | ||||||||
| April 4, 2010 | March 29, 2009 | |||||||
| OPERATING ACTIVITIES |
||||||||
| Net income |
$ | 5,733 | $ | 10,460 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation |
3,228 | 2,839 | ||||||
| Amortization |
979 | 622 | ||||||
| Compensation expense of stock-based plans |
843 | 808 | ||||||
| Tax effect of share based compensation |
112 | 290 | ||||||
| Gain on disposal of property, plant and equipment |
— | (21 | ) | |||||
| Changes in operating assets and liabilities, net of effects from business acquisitions: |
||||||||
| Trade accounts receivable |
(10,734 | ) | 7,151 | |||||
| Inventories |
(4,332 | ) | 8,998 | |||||
| Prepaid expenses and other assets |
(8,212 | ) | 3,538 | |||||
| Accounts payable, accrued expenses and other liabilities |
9,609 | (39,380 | ) | |||||
| Net cash used in operating activities |
(2,774 | ) | (4,695 | ) | ||||
| INVESTING ACTIVITIES |
||||||||
| Additions to property, plant and equipment |
(3,606 | ) | (2,576 | ) | ||||
| Proceeds from disposal of property, plant and equipment |
13 | 31 | ||||||
| Purchase of investments |
— | (85,739 | ) | |||||
| Proceeds from sale of investments |
— | 82,569 | ||||||
| Business acquisitions, net of cash acquired |
(340 | ) | (6,666 | ) | ||||
| Net cash used in investing activities |
(3,933 | ) | (12,381 | ) | ||||
| FINANCING ACTIVITIES |
||||||||
| Proceeds from long-term debt |
16,110 | 35,352 | ||||||
| Payments of long-term debt |
(15,972 | ) | (28,324 | ) | ||||
| Dividends paid |
(639 | ) | (657 | ) | ||||
| Proceeds from the exercise of stock options |
256 | — | ||||||
| Tax effect of share based compensation |
(112 | ) | (290 | ) | ||||
| Net cash (used in) provided by financing activities |
(357 | ) | 6,081 | |||||
| Effect of exchange rate changes on cash and cash equivalents |
(1,474 | ) | (365 | ) | ||||
| DECREASE IN CASH AND CASH EQUIVALENTS |
(8,538 | ) | (11,360 | ) | ||||
| Cash and cash equivalents at beginning of year |
46,350 | 47,473 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 37,812 | $ | 36,113 | ||||
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
UNAUDITED
| April 4, 2010 | December 31, 2009 | |||||
| ASSETS |
||||||
| Current Assets: |
||||||
| Cash & cash equivalents |
$ | 37,812 | $ | 46,350 | ||
| Short-term investments |
22,412 | 21,498 | ||||
| Trade accounts receivable, less allowance for doubtful accounts of $1,921 and $1,992, respectively |
122,191 | 115,260 | ||||
| Inventories |
146,907 | 145,031 | ||||
| Income taxes refundable |
2,907 | 726 | ||||
| Prepaid expenses and other current assets |
8,600 | 4,195 | ||||
| Deferred income tax asset |
13,866 | 15,847 | ||||
| Insurance receivables |
7,997 | 4,614 | ||||
| Assets held for sale |
542 | 1,167 | ||||
| Total Current Assets |
363,234 | 354,688 | ||||
| Property, Plant and Equipment, net |
92,847 | 95,167 | ||||
| Other Assets: |
||||||
| Goodwill |
47,515 | 47,893 | ||||
| Intangibles, net |
52,554 | 55,238 | ||||
| Deferred income tax asset |
5,956 | 5,676 | ||||
| Other assets |
3,284 | 3,391 | ||||
| Total Assets |
$ | 565,390 | $ | 562,053 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||
| Current Liabilities: |
||||||
| Accounts payable |
$ | 62,342 | $ | 57,239 | ||
| Accrued expenses and other current liabilities |
48,090 | 46,736 | ||||
| Accrued compensation and benefits |
17,695 | 18,617 | ||||
| Asbestos liability |
11,410 | 12,476 | ||||
| Notes payable and current portion of long-term debt |
3,733 | 5,914 | ||||
| Total Current Liabilities |
143,270 | 140,982 | ||||
| Long-Term Debt, net of current portion |
3,778 | 1,565 | ||||
| Long-Term Asbestos Liability |
48,421 | 47,785 | ||||
| Other Non-Current Liabilities |
20,677 | 21,313 | ||||
| Shareholders' Equity: |
||||||
| Preferred stock, $.01 par value; 1,000,000 shares authorized; no shares issued and outstanding |
— | — | ||||
| Common stock, $.01 par value; 29,000,000 shares authorized; and 17,050,121 and 16,991,365 issued and outstanding, respectively |
171 | 170 | ||||
| Additional paid-in capital |
251,005 | 249,960 | ||||
| Retained earnings |
91,503 | 86,408 | ||||
| Accumulated other comprehensive income |
6,565 | 13,870 | ||||
| Total Shareholders' Equity |
349,244 | 350,408 | ||||
| Total Liabilities and Shareholders' Equity |
$ | 565,390 | $ | 562,053 | ||
CIRCOR INTERNATIONAL, INC.
SUMMARY OF ORDERS AND BACKLOG
(in thousands)
UNAUDITED
| Three Months Ended | ||||||
| April 4, 2010 | March 29, 2009 | |||||
| ORDERS |
||||||
| Energy |
$ | 60,338 | $ | 45,820 | ||
| Aerospace |
33,029 | 22,418 | ||||
| Flow Technologies |
67,774 | 53,637 | ||||
| Total orders |
$ | 161,141 | $ | 121,875 | ||
| April 4, 2010 | March 29, 2009 | |||||
| BACKLOG |
||||||
| Energy |
$ | 135,401 | $ | 127,283 | ||
| Aerospace |
120,988 | 108,233 | ||||
| Flow Technologies |
73,993 | 62,627 | ||||
| Total backlog |
$ | 330,382 | $ | 298,143 | ||
Note: Backlog includes all unshipped customer orders.
CIRCOR INTERNATIONAL, INC.
SUMMARY REPORT BY SEGMENT
(in thousands, except earnings per share)
UNAUDITED
| 2009 | 2010 | |||||||||||||||||||||||
| 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | YTD | 1ST QTR | |||||||||||||||||||
| NET REVENUES |
||||||||||||||||||||||||
| Energy |
$ | 89,307 | $ | 76,814 | $ | 61,185 | $ | 66,113 | $ | 293,419 | $ | 57,722 | ||||||||||||
| Aerospace |
28,344 | 30,243 | 26,234 | 28,506 | 113,327 | 27,274 | ||||||||||||||||||
| Flow Technologies |
57,996 | 57,478 | 56,908 | 63,494 | 235,876 | 61,273 | ||||||||||||||||||
| Total |
175,647 | 164,535 | 144,327 | 158,113 | 642,622 | 146,269 | ||||||||||||||||||
| ADJUSTED OPERATING MARGIN |
||||||||||||||||||||||||
| Energy (excl. special charges) |
18.1 | % | 12.3 | % | 10.9 | % | 3.0 | % | 11.7 | % | 3.5 | % | ||||||||||||
| Aerospace (excl. special charges) |
15.4 | % | 16.2 | % | 13.2 | % | 14.7 | % | 14.9 | % | 13.2 | % | ||||||||||||
| Flow Technologies (excl. special & asbestos charges) |
11.6 | % | 9.5 | % | 10.9 | % | 11.7 | % | 11.0 | % | 10.2 | % | ||||||||||||
| Segment operating income (excl. special & asbestos charges) |
15.5 | % | 12.1 | % | 11.3 | % | 8.6 | % | 12.0 | % | 8.1 | % | ||||||||||||
| Corporate expenses (excl. special & asbestos charges) |
-3.1 | % | -3.4 | % | -3.0 | % | -3.3 | % | -3.2 | % | -3.1 | % | ||||||||||||
| Adjusted Operating Income |
12.5 | % | 8.7 | % | 8.4 | % | 5.3 | % | 8.8 | % | 5.0 | % | ||||||||||||
| Asbestos charges (recoveries) (attributable to Flow Technologies) |
4.7 | % | 2.1 | % | 1.4 | % | 25.5 | % | 8.4 | % | -0.4 | % | ||||||||||||
| Special charges (recoveries) |
-0.6 | % | 0.0 | % | -0.4 | % | 0.3 | % | -0.2 | % | 0.0 | % | ||||||||||||
| Total operating margin |
8.4 | % | 6.6 | % | 7.4 | % | -20.6 | % | 0.6 | % | 5.4 | % | ||||||||||||
| ADJUSTED OPERATING INCOME |
||||||||||||||||||||||||
| Energy (excl. special charges) |
16,169 | 9,461 | 6,696 | 1,966 | 34,292 | 2,025 | ||||||||||||||||||
| Aerospace (excl. special charges) |
4,372 | 4,905 | 3,461 | 4,195 | 16,933 | 3,607 | ||||||||||||||||||
| Flow Technologies (excl. special & asbestos charges) |
6,744 | 5,484 | 6,197 | 7,444 | 25,869 | 6,276 | ||||||||||||||||||
| Segment operating income (excl. special & asbestos charges) |
27,285 | 19,850 | 16,354 | 13,605 | 77,094 | 11,908 | ||||||||||||||||||
| Corporate expenses (excl. special & asbestos charges) |
(5,365 | ) | (5,589 | ) | (4,276 | ) | (5,267 | ) | (20,497 | ) | (4,607 | ) | ||||||||||||
| Adjusted Operating Income |
21,920 | 14,261 | 12,078 | 8,338 | 56,597 | 7,301 | ||||||||||||||||||
| Asbestos charges (recoveries) (attributable to Flow Technologies) |
8,263 | 3,442 | 1,977 | 40,397 | 54,079 | (648 | ) | |||||||||||||||||
| Special charges (recoveries) |
(1,135 | ) | — | (543 | ) | 485 | (1,193 | ) | — | |||||||||||||||
| Total operating income |
14,792 | 10,819 | 10,644 | (32,544 | ) | 3,711 | 7,949 | |||||||||||||||||
| INTEREST (EXPENSE) INCOME, NET |
(32 | ) | (41 | ) | (394 | ) | (602 | ) | (1,069 | ) | (554 | ) | ||||||||||||
| OTHER (EXPENSE) INCOME, NET |
183 | 267 | 959 | (967 | ) | 442 | 51 | |||||||||||||||||
| PRETAX INCOME (LOSS) |
14,943 | 11,045 | 11,209 | (34,113 | ) | 3,084 | 7,446 | |||||||||||||||||
| (PROVISION) BENEFIT FOR INCOME TAXES |
(4,483 | ) | (3,313 | ) | (2,804 | ) | 13,386 | 2,786 | (1,713 | ) | ||||||||||||||
| EFFECTIVE TAX RATE |
30.0 | % | 30.0 | % | 25.0 | % | 39.2 | % | -90.3 | % | 23.0 | % | ||||||||||||
| NET (LOSS) INCOME |
$ | 10,460 | $ | 7,732 | $ | 8,405 | $ | (20,727 | ) | $ | 5,870 | $ | 5,733 | |||||||||||
| Weighted Average Common Shares Outstanding (Diluted) |
17,014 | 17,066 | 17,116 | 17,033 | 17,111 | 17,193 | ||||||||||||||||||
| EARNINGS PER COMMON SHARE (Diluted) |
$ | 0.61 | $ | 0.45 | $ | 0.49 | $ | (1.22 | ) | $ | 0.34 | $ | 0.33 | |||||||||||
| EBIT |
$ | 14,975 | $ | 11,086 | $ | 11,603 | $ | (33,511 | ) | $ | 4,153 | $ | 8,000 | |||||||||||
| Depreciation |
2,839 | 3,245 | 3,536 | 3,687 | 13,307 | 3,228 | ||||||||||||||||||
| Amortization of intangibles |
622 | 627 | 707 | 1,078 | 3,034 | 862 | ||||||||||||||||||
| EBITDA |
$ | 18,436 | $ | 14,958 | $ | 15,846 | $ | (28,746 | ) | $ | 20,494 | $ | 12,090 | |||||||||||
| EBITDA AS A PERCENT OF SALES |
10.5 | % | 9.1 | % | 11.0 | % | -18.2 | % | 3.2 | % | 8.3 | % | ||||||||||||
| CAPITAL EXPENDITURES |
$ | 2,576 | $ | 1,925 | $ | 1,605 | $ | 4,926 | $ | 11,032 | $ | 3,606 | ||||||||||||
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED
GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands)
UNAUDITED
| 2009 | 2010 | |||||||||||||||||||||||
| 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | YTD | 1ST QTR | |||||||||||||||||||
| FREE CASH FLOW [NET CASH FLOW FROM OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES LESS DIVIDENDS PAID] |
$ | (7,928 | ) | $ | 17,882 | $ | 11,241 | $ | 11,757 | $ | 32,952 | $ | (7,019 | ) | ||||||||||
| ADD: Capital expenditures |
2,576 | 1,925 | 1,605 | 4,926 | 11,032 | 3,606 | ||||||||||||||||||
| Dividends paid |
657 | 637 | 636 | 638 | 2,568 | 639 | ||||||||||||||||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
$ | (4,695 | ) | $ | 20,444 | $ | 13,482 | $ | 17,321 | $ | 46,552 | $ | (2,774 | ) | ||||||||||
| NET (CASH) DEBT [TOTAL DEBT LESS CASH & CASH EQUIVALENTS LESS INVESTMENTS] |
$ | (49,519 | ) | $ | (69,331 | ) | $ | (77,081 | ) | $ | (60,369 | ) | $ | (60,369 | ) | $ | (52,713 | ) | ||||||
| ADD: |
||||||||||||||||||||||||
| Cash & cash equivalents |
36,113 | 33,038 | 83,708 | 46,350 | 46,350 | 37,812 | ||||||||||||||||||
| Investments |
36,991 | 48,344 | 3,023 | 21,498 | 21,498 | 22,412 | ||||||||||||||||||
| TOTAL DEBT |
$ | 23,585 | $ | 12,051 | $ | 9,650 | $ | 7,479 | $ | 7,479 | $ | 7,511 | ||||||||||||
| DEBT AS % OF EQUITY |
7 | % | 3 | % | 3 | % | 2 | % | 2 | % | 2 | % | ||||||||||||
| TOTAL DEBT |
23,585 | 12,051 | 9,650 | 7,479 | 7,479 | 7,511 | ||||||||||||||||||
| TOTAL SHAREHOLDERS' EQUITY |
341,860 | 357,596 | 371,728 | 350,408 | 350,408 | 349,244 | ||||||||||||||||||
| EBIT [NET INCOME LESS INCOME TAXES LESS INTEREST EXPENSE, NET] |
$ | 14,975 | $ | 11,086 | $ | 11,603 | $ | (33,511 | ) | $ | 4,153 | $ | 8,000 | |||||||||||
| LESS: |
||||||||||||||||||||||||
| Interest expense, net |
(32 | ) | (41 | ) | (394 | ) | (602 | ) | (1,069 | ) | (554 | ) | ||||||||||||
| Provision for income taxes |
(4,483 | ) | (3,313 | ) | (2,804 | ) | 13,386 | 2,786 | (1,713 | ) | ||||||||||||||
| NET INCOME |
$ | 10,460 | $ | 7,732 | $ | 8,405 | $ | (20,727 | ) | $ | 5,870 | $ | 5,733 | |||||||||||
| EBITDA [NET INCOME LESS INTEREST EXPENSE, NET LESS DEPRECIATION LESS AMORTIZATION LESS INCOME TAXES] |
$ | 18,436 | $ | 14,958 | $ | 15,846 | $ | (28,746 | ) | $ | 20,494 | $ | 12,090 | |||||||||||
| LESS: |
||||||||||||||||||||||||
| Interest expense, net |
(32 | ) | (41 | ) | (394 | ) | (602 | ) | (1,069 | ) | (554 | ) | ||||||||||||
| Depreciation |
(2,839 | ) | (3,245 | ) | (3,536 | ) | (3,687 | ) | (13,307 | ) | (3,228 | ) | ||||||||||||
| Amortization |
(622 | ) | (627 | ) | (707 | ) | (1,078 | ) | (3,034 | ) | (862 | ) | ||||||||||||
| Provision for income taxes |
(4,483 | ) | (3,313 | ) | (2,804 | ) | 13,386 | 2,786 | (1,713 | ) | ||||||||||||||
| NET INCOME |
$ | 10,460 | $ | 7,732 | $ | 8,405 | $ | (20,727 | ) | $ | 5,870 | $ | 5,733 | |||||||||||
| ADJUSTED INCOME [NET INCOME EXCLUDING SPECIAL CHARGES, NET OF TAX] |
$ | 9,666 | $ | 7,732 | $ | 8,000 | $ | (20,432 | ) | $ | 4,965 | $ | 5,733 | |||||||||||
| LESS: |
||||||||||||||||||||||||
| Special charges (recoveries), net of tax |
(794 | ) | — | (405 | ) | 295 | (905 | ) | — | |||||||||||||||
| NET INCOME |
$ | 10,460 | $ | 7,732 | $ | 8,405 | $ | (20,727 | ) | $ | 5,870 | $ | 5,733 | |||||||||||
| ADJUSTED WEIGHTED AVERAGE SHARES |
17,014 | 17,066 | 17,116 | 17,140 | 17,111 | 17,193 | ||||||||||||||||||
| Adjustment for anti-dilutive conversion of shares |
— | — | — | 107 | — | — | ||||||||||||||||||
| Weighted average common shares outstanding (diluted) |
17,014 | 17,066 | 17,116 | 17,033 | 17,111 | 17,193 | ||||||||||||||||||
| ADJUSTED EARNINGS PER SHARE [EPS EXCLUDING SPECIAL CHARGES, NET OF TAX] |
$ | 0.57 | $ | 0.45 | $ | 0.47 | $ | (1.20 | ) | $ | 0.29 | $ | 0.33 | |||||||||||
| LESS: Special charges (recoveries), net of tax impact on EPS |
$ | (0.05 | ) | $ | — | $ | (0.02 | ) | $ | 0.02 | $ | (0.05 | ) | $ | — | |||||||||
| EARNINGS PER COMMON SHARE (Diluted) |
$ | 0.61 | $ | 0.45 | $ | 0.49 | $ | (1.22 | ) | $ | 0.34 | $ | 0.33 | |||||||||||
| ADJUSTED INCOME, EXCLUDING SPECIAL CHARGES & Q4 2009 5 YEAR FUTURE ASBESTOS CLAIM LIABILITY, NET OF TAX |
$ | 5,458 | $ | 30,855 | $ | 5,733 | ||||||||||||||||||
| LESS: |
||||||||||||||||||||||||
| Special charges (recoveries), net of tax |
295 | (905 | ) | — | ||||||||||||||||||||
| 5 year future asbestos claim liability |
(25,890 | ) | (25,890 | ) | — | |||||||||||||||||||
| NET INCOME |
$ | (20,727 | ) | $ | 5,870 | $ | 5,733 | |||||||||||||||||
| ADJUSTED EARNINGS PER SHARE, EXCLUDING SPECIAL CHARGES & Q4 2009 5 YEAR FUTURE ASBESTOS CLAIM LIABILITY, NET OF TAX |
$ | 0.32 | $ | 1.80 | $ | 0.33 | ||||||||||||||||||
| LESS: Special charges (recoveries), net of tax impact on EPS |
$ | (0.05 | ) | $ | — | $ | (0.02 | ) | $ | 0.02 | $ | (0.05 | ) | $ | — | |||||||||
| 5 year future asbestos claim liability |
$ | (1.52 | ) | $ | (1.51 | ) | $ | — | ||||||||||||||||
| EARNINGS PER COMMON SHARE (Diluted) |
$ | (1.22 | ) | $ | 0.34 | $ | 0.33 | |||||||||||||||||
CIRCOR INTERNATIONAL, INC
Leslie Controls Asbestos Items
(in thousands, except case information)
| 2009 | 2010 | |||||||||||||||||||||||
| 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | YTD | 1ST QTR | |||||||||||||||||||
| Quarterly Case Rollforward |
||||||||||||||||||||||||
| Beginning open cases |
968 | 1,103 | 1,158 | 1,143 | 968 | 1,104 | ||||||||||||||||||
| Cases filed |
222 | 203 | 131 | 131 | 687 | 150 | ||||||||||||||||||
| Cases resolved and dismissed |
(87 | ) | (148 | ) | (146 | ) | (170 | ) | (551 | ) | (104 | ) | ||||||||||||
| Ending open cases |
1,103 | 1,158 | 1,143 | 1,104 | 1,104 | 1,150 | ||||||||||||||||||
| Ending open mesothelioma cases |
578 | 584 | 612 | 597 | 597 | 623 | ||||||||||||||||||
| Income Statement Amounts |
||||||||||||||||||||||||
| Indemnity costs accrued (filed cases) |
$ | 4,602 | $ | 2,109 | $ | 1,140 | $ | 10 | $ | 7,861 | $ | 699 | ||||||||||||
| 5 year future indemnity costs accrued |
— | — | — | 39,800 | 39,800 | — | ||||||||||||||||||
| Adverse verdict costs (verdicts appealed) |
90 | 97 | 95 | (1,308 | ) | (1,026 | ) | 65 | ||||||||||||||||
| Defense costs incurred |
3,166 | 3,275 | 3,009 | 2,862 | 12,312 | 3,731 | ||||||||||||||||||
| Insurance recoveries adjustment |
2,069 | — | — | — | 2,069 | (3,652 | ) | |||||||||||||||||
| Insurance recoveries accrued |
(1,664 | ) | (2,039 | ) | (2,268 | ) | (966 | ) | (6,937 | ) | (1,491 | ) | ||||||||||||
| Net pre-tax asbestos expense (recovery) |
$ | 8,263 | $ | 3,442 | $ | 1,976 | $ | 40,398 | $ | 54,079 | $ | (648 | ) | |||||||||||
| Balance Sheet Amounts |
||||||||||||||||||||||||
| Existing claim indemnity liability |
$ | 20,781 | $ | 19,849 | $ | 20,060 | $ | 17,916 | $ | 17,932 | ||||||||||||||
| Future claim indemnity liability |
— | — | — | 39,800 | 39,800 | |||||||||||||||||||
| Incurred defense cost liability |
4,212 | 5,169 | 3,615 | 2,544 | 2,099 | |||||||||||||||||||
| Insurance recoveries asset |
(9,088 | ) | (7,426 | ) | (6,485 | ) | (4,614 | ) | (7,997 | ) | ||||||||||||||
| Net asbestos liability |
$ | 15,905 | $ | 17,592 | $ | 17,190 | $ | 55,646 | $ | 51,834 | ||||||||||||||