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Share Name | Share Symbol | Market | Type |
---|---|---|---|
CIRCOR International Inc | NYSE:CIR | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 56.00 | 0 | 01:00:00 |
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x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
|
|
Delaware
|
|
04-3477276
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
c/o CIRCOR INTERNATIONAL, Inc.
30 Corporate Drive, Suite 200, Burlington, MA
|
|
01803-4238
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
Large accelerated filer
|
x
|
|
Accelerated filer
|
o
|
Emerging growth company
|
o
|
Non-accelerated filer
|
o
|
|
Smaller reporting company
|
o
|
|
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value $0.01 per share
|
CIR
|
New York Stock Exchange
|
|
Page
|
|
Financial Statements
(Unaudited)
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item
6.
|
||
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
73,619
|
|
|
$
|
68,517
|
|
Trade accounts receivable, less allowance for doubtful accounts of $5,048 and $6,735 at March 31, 2019 and December 31, 2018, respectively
|
188,500
|
|
|
183,552
|
|
||
Inventories
|
217,991
|
|
|
217,378
|
|
||
Prepaid expenses and other current assets
|
89,904
|
|
|
90,659
|
|
||
Assets held for sale
|
4,623
|
|
|
87,940
|
|
||
Total Current Assets
|
574,637
|
|
|
648,046
|
|
||
PROPERTY, PLANT AND EQUIPMENT, NET
|
198,148
|
|
|
201,799
|
|
||
OTHER ASSETS:
|
|
|
|
||||
Goodwill
|
460,995
|
|
|
459,205
|
|
||
Intangibles, net
|
422,302
|
|
|
441,302
|
|
||
Deferred income taxes
|
25,632
|
|
|
28,462
|
|
||
Other assets
|
37,620
|
|
|
12,798
|
|
||
TOTAL ASSETS
|
$
|
1,719,334
|
|
|
$
|
1,791,612
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
CURRENT LIABILITIES:
|
|
|
|
||||
Accounts payable
|
$
|
122,277
|
|
|
$
|
123,881
|
|
Accrued expenses and other current liabilities
|
99,591
|
|
|
107,312
|
|
||
Accrued compensation and benefits
|
27,251
|
|
|
33,878
|
|
||
Current portion of long-term debt
|
—
|
|
|
7,850
|
|
||
Liabilities held for sale
|
—
|
|
|
11,141
|
|
||
Total Current Liabilities
|
249,119
|
|
|
284,062
|
|
||
LONG-TERM DEBT
|
733,666
|
|
|
778,187
|
|
||
DEFERRED INCOME TAXES
|
33,780
|
|
|
33,932
|
|
||
PENSION LIABILITY, NET
|
148,297
|
|
|
150,623
|
|
||
OTHER NON-CURRENT LIABILITIES
|
38,295
|
|
|
15,815
|
|
||
COMMITMENTS AND CONTINGENCIES (NOTE 11)
|
|
|
|
||||
SHAREHOLDERS’ EQUITY:
|
|
|
|
||||
Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 29,000,000 shares authorized; 19,875,993
and 19,845,205 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
|
212
|
|
|
212
|
|
||
Additional paid-in capital
|
442,568
|
|
|
440,890
|
|
||
Retained earnings
|
228,582
|
|
|
232,102
|
|
||
Common treasury stock, at cost (1,372,488 shares at March 31, 2019 and December 31, 2018)
|
(74,472
|
)
|
|
(74,472
|
)
|
||
Accumulated other comprehensive loss, net of tax
|
(80,713
|
)
|
|
(69,739
|
)
|
||
Total Shareholders’ Equity
|
516,177
|
|
|
528,993
|
|
||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
1,719,334
|
|
|
$
|
1,791,612
|
|
|
Three Months Ended
|
||||||
|
March 31, 2019
|
|
April 1, 2018
|
||||
Net revenues
|
$
|
270,395
|
|
|
$
|
275,580
|
|
Cost of revenues
|
196,526
|
|
|
199,276
|
|
||
GROSS PROFIT
|
73,869
|
|
|
76,304
|
|
||
Selling, general and administrative expenses
|
69,973
|
|
|
77,238
|
|
||
Special and restructuring (recoveries) charges, net
|
(7,816
|
)
|
|
12,446
|
|
||
OPERATING INCOME (LOSS)
|
11,712
|
|
|
(13,380
|
)
|
||
Other expense (income):
|
|
|
|
||||
Interest expense, net
|
13,179
|
|
|
11,801
|
|
||
Other income, net
|
(1,913
|
)
|
|
(1,861
|
)
|
||
TOTAL OTHER EXPENSE, NET
|
11,266
|
|
|
9,940
|
|
||
INCOME (LOSS) BEFORE INCOME TAXES
|
446
|
|
|
(23,320
|
)
|
||
Provision for (benefit from) income taxes
|
5,079
|
|
|
(5,879
|
)
|
||
NET LOSS
|
$
|
(4,633
|
)
|
|
$
|
(17,441
|
)
|
Loss per common share:
|
|
|
|
||||
Basic
|
$
|
(0.23
|
)
|
|
$
|
(0.88
|
)
|
Diluted
|
$
|
(0.23
|
)
|
|
$
|
(0.88
|
)
|
Weighted average number of common shares outstanding:
|
|
|
|
||||
Basic
|
19,870
|
|
|
19,806
|
|
||
Diluted
|
19,870
|
|
|
19,806
|
|
|
Three Months Ended
|
||||||
|
March 31, 2019
|
|
April 1, 2018
|
||||
Net Loss
|
$
|
(4,633
|
)
|
|
$
|
(17,441
|
)
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
||||
Foreign currency translation adjustments
|
(8,840
|
)
|
|
8,341
|
|
||
Interest rate swap adjustments (1)
|
(2,134
|
)
|
|
—
|
|
||
Other comprehensive (loss) income, net of tax
|
(10,974
|
)
|
|
8,341
|
|
||
COMPREHENSIVE (LOSS) INCOME
|
$
|
(15,607
|
)
|
|
$
|
(9,100
|
)
|
|
|||||||
(1) Net of an income tax effect of $(0.6 million) for the three months ended March 31, 2019.
|
|
Three Months Ended
|
||||||
OPERATING ACTIVITIES
|
March 31, 2019
|
|
April 1, 2018
|
||||
Net loss
|
$
|
(4,633
|
)
|
|
$
|
(17,441
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
5,944
|
|
|
7,334
|
|
||
Amortization
|
12,836
|
|
|
12,329
|
|
||
Bad debt expense
|
109
|
|
|
261
|
|
||
Loss on write down of inventory
|
3,368
|
|
|
963
|
|
||
Amortization of inventory fair value step-up
|
—
|
|
|
6,600
|
|
||
Compensation expense for share-based plans
|
1,432
|
|
|
1,365
|
|
||
Amortization of debt issuance costs
|
1,010
|
|
|
881
|
|
||
Loss on sale or write-down of property, plant and equipment
|
96
|
|
|
1,284
|
|
||
Gain on sale of business
|
(10,282
|
)
|
|
—
|
|
||
Changes in operating assets and liabilities, net of effects of acquisition and disposition:
|
|
|
|
||||
Trade accounts receivable
|
(8,635
|
)
|
|
22,038
|
|
||
Inventories
|
(3,452
|
)
|
|
(14,850
|
)
|
||
Prepaid expenses and other assets
|
2,881
|
|
|
(11,648
|
)
|
||
Accounts payable, accrued expenses and other liabilities
|
(23,052
|
)
|
|
(9,261
|
)
|
||
Net cash used in operating activities
|
(22,378
|
)
|
|
(145
|
)
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Additions to property, plant and equipment
|
(3,717
|
)
|
|
(8,234
|
)
|
||
Proceeds from the sale of property, plant and equipment
|
28
|
|
|
93
|
|
||
Proceeds from the sale of business, net
|
83,321
|
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
79,632
|
|
|
(8,141
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Proceeds from long-term debt
|
87,400
|
|
|
71,950
|
|
||
Payments of long-term debt
|
(140,500
|
)
|
|
(44,106
|
)
|
||
Proceeds from the exercise of stock options
|
—
|
|
|
301
|
|
||
Return of cash to Fluid Handling Seller
|
—
|
|
|
(7,905
|
)
|
||
Net cash (used in) provided by financing activities
|
(53,100
|
)
|
|
20,240
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
957
|
|
|
956
|
|
||
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
|
5,111
|
|
|
12,910
|
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
69,525
|
|
|
112,293
|
|
||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD
|
$
|
74,636
|
|
|
$
|
125,203
|
|
Non-cash investing activities:
|
|
|
|
||||
Purchases of property and equipment included in accounts payable and accrued expenses
|
$
|
1,018
|
|
|
$
|
2,104
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
(Loss) Income
|
|
Treasury Stock
|
|
Total
Shareholders’
Equity
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2018
|
19,845
|
|
|
$
|
212
|
|
|
$
|
440,890
|
|
|
$
|
232,102
|
|
|
$
|
(69,739
|
)
|
|
$
|
(74,472
|
)
|
|
$
|
528,993
|
|
Net Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,633
|
)
|
|
—
|
|
|
—
|
|
|
(4,633
|
)
|
||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,974
|
)
|
|
—
|
|
|
(10,974
|
)
|
||||||
Cumulative effect adjustment related to adoption of lease standard (ASC 842)
|
—
|
|
|
—
|
|
|
—
|
|
|
1,113
|
|
|
—
|
|
|
—
|
|
|
1,113
|
|
||||||
Conversion of restricted stock units
|
31
|
|
|
—
|
|
|
246
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
246
|
|
||||||
Share-based plan compensation
|
—
|
|
|
—
|
|
|
1,432
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,432
|
|
||||||
BALANCE AS OF MARCH 31, 2019
|
19,876
|
|
|
$
|
212
|
|
|
$
|
442,568
|
|
|
$
|
228,582
|
|
|
$
|
(80,713
|
)
|
|
$
|
(74,472
|
)
|
|
$
|
516,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
(Loss) Income
|
|
Treasury Stock
|
|
Total
Shareholders’
Equity
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2017
|
19,785
|
|
|
$
|
212
|
|
|
$
|
438,721
|
|
|
$
|
274,243
|
|
|
$
|
(36,730
|
)
|
|
$
|
(74,472
|
)
|
|
$
|
601,974
|
|
Net Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,441
|
)
|
|
$
|
—
|
|
|
—
|
|
|
(17,441
|
)
|
|||||
Cumulative translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,341
|
|
|
—
|
|
|
8,341
|
|
||||||
Cumulative effect adjustment related to adoption of new revenue recognition standard (ASU 2014-09)
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,756
|
)
|
|
—
|
|
|
—
|
|
|
(2,756
|
)
|
||||||
Stock options exercised
|
8
|
|
|
—
|
|
|
301
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
301
|
|
||||||
Conversion of restricted stock units
|
37
|
|
|
—
|
|
|
312
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
312
|
|
||||||
Share-based plan compensation
|
—
|
|
|
—
|
|
|
1,365
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,365
|
|
||||||
BALANCE AS OF APRIL 1, 2018
|
19,830
|
|
|
$
|
212
|
|
|
$
|
440,699
|
|
|
$
|
254,046
|
|
|
$
|
(28,389
|
)
|
|
$
|
(74,472
|
)
|
|
$
|
592,096
|
|
|
|
March 31, 2019
|
|
April 1, 2018
|
||||
|
Three Months Ended
|
|
Three Months Ended
|
|||||
Energy Segment
|
|
|
|
|||||
|
Oil & Gas - Upstream, Midstream & Other
|
$
|
45,665
|
|
|
$
|
47,885
|
|
|
Oil & Gas - Downstream
|
52,752
|
|
|
52,087
|
|
||
|
Total
|
98,417
|
|
|
99,972
|
|
||
Aerospace & Defense Segment
|
|
|
|
|||||
|
Commercial Aerospace & Other
|
28,706
|
|
|
26,657
|
|
||
|
Defense
|
32,534
|
|
|
31,820
|
|
||
|
Total
|
61,240
|
|
|
58,477
|
|
||
Industrial Segment
|
|
|
|
|||||
|
Valves
|
28,532
|
|
|
27,679
|
|
||
|
Pumps
|
82,206
|
|
|
89,452
|
|
||
|
Total
|
110,738
|
|
|
117,131
|
|
||
Net Revenue
|
$
|
270,395
|
|
|
$
|
275,580
|
|
|
|
March 31, 2019
|
|
April 1, 2018
|
||||
|
Three Months Ended
|
|
Three Months Ended
|
|||||
Energy Segment
|
|
|
|
|||||
|
EMEA
|
$
|
34,452
|
|
|
$
|
19,898
|
|
|
North America
|
52,957
|
|
|
64,467
|
|
||
|
Other
|
11,008
|
|
|
15,607
|
|
||
|
Total
|
98,417
|
|
|
99,972
|
|
||
Aerospace & Defense Segment
|
|
|
|
|||||
|
EMEA
|
$
|
17,732
|
|
|
$
|
15,396
|
|
|
North America
|
37,393
|
|
|
37,749
|
|
||
|
Other
|
6,115
|
|
|
5,332
|
|
||
|
Total
|
61,240
|
|
|
58,477
|
|
||
Industrial Segment
|
|
|
|
|||||
|
EMEA
|
$
|
54,492
|
|
|
$
|
60,679
|
|
|
North America
|
34,547
|
|
|
32,250
|
|
||
|
Other
|
21,699
|
|
|
24,202
|
|
||
|
Total
|
110,738
|
|
|
117,131
|
|
||
Net Revenue
|
$
|
270,395
|
|
|
$
|
275,580
|
|
Maturity of Lease Liabilities
|
Operating Leases
|
Finance Leases
|
Total
|
||||||
2019
|
$
|
5,404
|
|
$
|
137
|
|
$
|
5,541
|
|
2020
|
4,996
|
|
163
|
|
5,159
|
|
|||
2021
|
4,291
|
|
161
|
|
4,452
|
|
|||
2022
|
3,539
|
|
149
|
|
3,688
|
|
|||
2023
|
2,962
|
|
149
|
|
3,111
|
|
|||
After 2023
|
8,225
|
|
473
|
|
8,698
|
|
|||
Less: Interest
|
$
|
(5,530
|
)
|
$
|
(6
|
)
|
$
|
(5,536
|
)
|
Present value of lease liabilities
|
$
|
23,887
|
|
$
|
1,226
|
|
$
|
25,113
|
|
Lease Term and Discount Rate
|
March 31, 2019
|
|
Weighted average remaining lease term (years)
|
|
|
Operating leases
|
6.3
|
|
Finance leases
|
7.7
|
|
Weighted average discount rate (percentage)
|
|
|
Operating leases
|
5.7
|
%
|
Finance leases
|
2.0
|
%
|
Other Information
|
March 31, 2019
|
|
|
Operating Activities
|
|
||
Noncash lease expense on operating ROU assets
|
$
|
(23,762
|
)
|
Amortization expense on finance ROU assets
|
3
|
|
|
Change in total operating lease liabilities
|
23,846
|
|
|
Principal paid on operating lease liabilities
|
(93
|
)
|
|
Total Operating Activities
|
$
|
(6
|
)
|
Financing Activities
|
|
||
Principal paid on finance lease liabilities
|
$
|
(8
|
)
|
Supplemental
|
|
||
Interest Paid on finance lease liabilities
|
—
|
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
||||||||||||
Minimum lease commitments
|
$
|
9,481
|
|
|
$
|
6,303
|
|
|
$
|
4,573
|
|
|
$
|
3,345
|
|
|
$
|
2,540
|
|
|
$
|
6,032
|
|
|
Special & Restructuring Charges (Recoveries), net
|
||||||
|
Three Months Ended
|
||||||
|
March 31, 2019
|
|
April 1, 2018
|
||||
Special (recoveries) charges, net
|
$
|
(8,679
|
)
|
|
$
|
2,831
|
|
Restructuring charges, net
|
863
|
|
|
9,615
|
|
||
Total special and restructuring (recoveries) charges, net
|
$
|
(7,816
|
)
|
|
$
|
12,446
|
|
|
Special (Recoveries) Charges, net
|
||||||||||||||||||
|
For the three months ended March 31, 2019
|
||||||||||||||||||
|
Energy
|
|
Aerospace & Defense
|
|
Industrial
|
|
Corporate
|
|
Total
|
||||||||||
Reliability Services divestiture
|
$
|
(10,282
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(10,282
|
)
|
Reliability Services 2019 operating expenses
|
1,450
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,450
|
|
|||||
Rosscor divestiture related charges
|
—
|
|
|
—
|
|
|
153
|
|
|
—
|
|
|
153
|
|
|||||
Total special charges, net
|
$
|
(8,832
|
)
|
|
$
|
—
|
|
|
$
|
153
|
|
|
$
|
—
|
|
|
$
|
(8,679
|
)
|
|
Special Charges (Recoveries), net
|
||||||||||||||||||
|
For the three months ended April 1, 2018
|
||||||||||||||||||
|
Energy
|
|
Aerospace & Defense
|
|
Industrial
|
|
Corporate
|
|
Total
|
||||||||||
Acquisition related charges
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,455
|
|
|
$
|
2,455
|
|
Brazil closure
|
376
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
376
|
|
|||||
Total special charges, net
|
$
|
376
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,455
|
|
|
$
|
2,831
|
|
•
|
On December 11, 2017, we acquired fluid handing business of Colfax Corporation ("FH"). In connection with our acquisition, we recorded
$2.5 million
during the three months ended April 1, 2018 related to internal and external professional fee costs to integrate the FH business into our legacy framework.
|
•
|
Brazil Closure: On November 3, 2015, our Board of Directors approved the closure and exit of our Brazil manufacturing operations due to the economic realities in Brazil and the ongoing challenges with our only significant end customer, Petrobras. CIRCOR Brazil reported substantial operating losses every year since it was acquired in 2011 while the underlying market conditions and outlook deteriorated. In connection with the closure, we recorded
$0.4 million
of charges within the Energy segment during the three months ended April 1, 2018, which relates to losses incurred subsequent to our closure of manufacturing operations during the first quarter of 2016.
|
|
Restructuring Charges
|
||||||||||||||||||
|
As of and for the three months ended March 31, 2019
|
||||||||||||||||||
|
Energy
|
|
Aerospace & Defense
|
|
Industrial
|
|
Corporate
|
|
Total
|
||||||||||
Facility related expenses
|
$
|
261
|
|
|
$
|
70
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
331
|
|
Employee related expenses, net
|
262
|
|
|
(2
|
)
|
|
272
|
|
|
—
|
|
|
532
|
|
|||||
Total restructuring charges, net
|
$
|
523
|
|
|
$
|
68
|
|
|
$
|
272
|
|
|
$
|
—
|
|
|
$
|
863
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued restructuring charges as of December 31, 2018
|
|
|
|
|
|
|
|
|
$
|
982
|
|
||||||||
Total quarter to date charges, net (shown above)
|
|
|
|
|
|
|
|
|
863
|
|
|||||||||
Charges paid / settled, net
|
|
|
|
|
|
|
|
|
(106
|
)
|
|||||||||
Accrued restructuring charges as of March 31, 2019
|
|
|
|
|
|
|
|
|
$
|
757
|
|
|
Restructuring Charges, net
|
||||||||||||||||||
|
As of and for the three months ended April 1, 2018
|
||||||||||||||||||
|
Energy
|
|
Aerospace & Defense
|
|
Industrial
|
|
Corporate
|
|
Total
|
||||||||||
Facility related expenses
|
$
|
1,481
|
|
|
$
|
82
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,563
|
|
Employee related (recoveries) expenses
|
6,843
|
|
|
—
|
|
|
1,209
|
|
|
—
|
|
|
8,052
|
|
|||||
Total restructuring charges, net
|
$
|
8,324
|
|
|
$
|
82
|
|
|
$
|
1,209
|
|
|
$
|
—
|
|
|
$
|
9,615
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued restructuring charges as of December 31, 2017
|
|
|
|
|
|
|
|
|
$
|
1,586
|
|
||||||||
Total quarter to date charges, net (shown above)
|
|
|
|
|
|
|
|
|
9,615
|
|
|||||||||
Charges paid / settled, net
|
|
|
|
|
|
|
|
|
(4,897
|
)
|
|||||||||
Accrued restructuring charges as of April 1, 2018
|
|
|
|
|
|
|
|
|
$
|
6,304
|
|
|
2018 Actions Restructuring Charges, net as of March 31, 2019
|
||||||||||||||
|
Energy
|
|
Aerospace & Defense
|
|
Industrial
|
|
Total
|
||||||||
Facility related expenses - incurred to date
|
$
|
2,448
|
|
|
$
|
70
|
|
|
$
|
—
|
|
|
$
|
2,518
|
|
Employee related expenses - incurred to date
|
7,893
|
|
|
380
|
|
|
1,808
|
|
|
10,081
|
|
||||
Total restructuring related special charges - incurred to date
|
$
|
10,341
|
|
|
$
|
450
|
|
|
$
|
1,808
|
|
|
$
|
12,599
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Raw materials
|
$
|
71,201
|
|
|
$
|
69,910
|
|
Work in process
|
115,655
|
|
|
116,088
|
|
||
Finished goods
|
31,135
|
|
|
31,380
|
|
||
Total inventories
|
$
|
217,991
|
|
|
$
|
217,378
|
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying Value
|
||||||
Patents
|
$
|
5,399
|
|
|
$
|
(5,399
|
)
|
|
$
|
—
|
|
Customer relationships
|
302,728
|
|
|
(62,696
|
)
|
|
240,032
|
|
|||
Backlog
|
22,889
|
|
|
(20,730
|
)
|
|
2,159
|
|
|||
Acquired technology
|
131,664
|
|
|
(28,176
|
)
|
|
103,488
|
|
|||
Other
|
3,783
|
|
|
(3,783
|
)
|
|
—
|
|
|||
Total Amortized Assets
|
$
|
466,463
|
|
|
$
|
(120,784
|
)
|
|
$
|
345,679
|
|
|
|
|
|
|
|
||||||
Non-amortized intangibles (primarily trademarks and trade names)
|
$
|
76,623
|
|
|
$
|
—
|
|
|
$
|
76,623
|
|
Total Non-Amortized Intangibles
|
$
|
76,623
|
|
|
$
|
—
|
|
|
$
|
76,623
|
|
|
|
|
|
|
|
||||||
Net carrying value of intangible assets
|
$
|
422,302
|
|
|
|
|
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
After 2023
|
||||||||||||
Estimated amortization expense
|
$
|
35,597
|
|
|
$
|
43,889
|
|
|
$
|
42,143
|
|
|
$
|
37,081
|
|
|
$
|
32,509
|
|
|
$
|
154,460
|
|
|
Three Months Ended
|
||||||
|
March 31, 2019
|
|
April 1, 2018
|
||||
Net revenues
|
|
|
|
||||
Energy
|
$
|
98,417
|
|
|
$
|
99,972
|
|
Aerospace & Defense
|
61,240
|
|
|
58,477
|
|
||
Industrial
|
110,738
|
|
|
117,131
|
|
||
Consolidated net revenues
|
$
|
270,395
|
|
|
$
|
275,580
|
|
Income (Loss) from operations before income taxes
|
|
|
|
||||
Energy - Segment Operating Income
|
$
|
6,783
|
|
|
$
|
5,696
|
|
Aerospace & Defense - Segment Operating Income
|
9,374
|
|
|
8,931
|
|
||
Industrial - Segment Operating Income
|
10,787
|
|
|
12,948
|
|
||
Corporate expenses
|
(6,705
|
)
|
|
(7,802
|
)
|
||
Subtotal
|
20,239
|
|
|
19,773
|
|
||
Restructuring charges, net
|
863
|
|
|
9,615
|
|
||
Special (recoveries) charges, net
|
(8,679
|
)
|
|
2,831
|
|
||
Special and restructuring (recoveries) charges, net
|
(7,816
|
)
|
|
12,446
|
|
||
Restructuring related inventory charges
|
3,141
|
|
|
473
|
|
||
Amortization of inventory step-up
|
—
|
|
|
6,600
|
|
||
Acquisition amortization
|
12,079
|
|
|
11,797
|
|
||
Acquisition depreciation
|
1,123
|
|
|
1,837
|
|
||
Acquisition amortization and other costs, net
|
16,343
|
|
|
20,707
|
|
||
Consolidated Operating Income
|
11,712
|
|
|
(13,380
|
)
|
||
Interest expense, net
|
13,179
|
|
|
11,801
|
|
||
Other income, net
|
(1,913
|
)
|
|
(1,861
|
)
|
||
Income (Loss) from operations before income taxes
|
$
|
446
|
|
|
$
|
(23,320
|
)
|
|
|
|
|
||||
|
Three Months Ended
|
||||||
|
March 31, 2019
|
|
|
April 1, 2018
|
|
||
Capital expenditures
|
|
|
|
||||
Energy
|
$
|
969
|
|
|
$
|
3,345
|
|
Aerospace & Defense
|
788
|
|
|
944
|
|
||
Industrial
|
1,141
|
|
|
3,624
|
|
||
Corporate
|
387
|
|
|
276
|
|
||
Consolidated capital expenditures
|
$
|
3,285
|
|
|
$
|
8,189
|
|
|
|
|
|
||||
Depreciation and amortization
|
|
|
|
||||
Energy
|
$
|
3,325
|
|
|
$
|
4,201
|
|
Aerospace & Defense
|
2,673
|
|
|
2,793
|
|
||
Industrial
|
12,369
|
|
|
12,440
|
|
||
Corporate
|
142
|
|
|
229
|
|
||
Consolidated depreciation and amortization
|
$
|
18,509
|
|
|
$
|
19,663
|
|
|
|
|
|
||||
Identifiable assets
|
March 31, 2019
|
|
April 1, 2018
|
||||
Energy
|
$
|
707,813
|
|
|
$
|
976,000
|
|
Aerospace & Defense
|
406,064
|
|
|
348,291
|
|
||
Industrial
|
1,408,206
|
|
|
1,327,094
|
|
||
Corporate
|
(802,749
|
)
|
|
(723,278
|
)
|
||
Consolidated identifiable assets
|
$
|
1,719,334
|
|
|
$
|
1,928,107
|
|
•
|
Level One
: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.
|
•
|
Level Two
: Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
•
|
Level Three
: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
|
Significant Other Observable Inputs
|
||
|
Level 2
|
||
Derivatives
|
$
|
(4,103
|
)
|
Balance beginning December 31, 2018
|
$
|
4,050
|
|
Provisions
|
742
|
|
|
Claims settled
|
(664
|
)
|
|
Currency translation adjustment
|
(1
|
)
|
|
Balance ending March 31, 2019
|
$
|
4,127
|
|
Term Remaining
|
Maximum Potential
Future Payments
|
||
0–12 months
|
$
|
54,661
|
|
Greater than 12 months
|
19,750
|
|
|
Total
|
$
|
74,411
|
|
|
March 31, 2019
|
|
April 1, 2018
|
||
Risk-free interest rate
|
2.6
|
%
|
|
2.5
|
%
|
Expected life (years)
|
4.4
|
|
|
4.4
|
|
Expected stock volatility
|
38.1
|
%
|
|
37.2
|
%
|
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
Foreign Currency Translation Adjustments
|
|
Pension, net
|
|
Derivative
|
|
Total
|
||||||||||
Balance as of December 31, 2018
|
$
|
(49,109
|
)
|
|
$
|
(19,114
|
)
|
|
$
|
(1,516
|
)
|
|
$
|
(69,739
|
)
|
||
Other comprehensive income
|
(8,840
|
)
|
|
—
|
|
|
(2,134
|
)
|
|
(10,974
|
)
|
||||||
Balance as of March 31, 2019
|
$
|
(57,949
|
)
|
|
$
|
(19,114
|
)
|
$
|
1
|
|
$
|
(3,650
|
)
|
|
$
|
(80,713
|
)
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
2018
|
||||||||||
Overstated (understated) comprehensive income
|
$
|
5.4
|
|
|
$
|
(5.1
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
2.1
|
|
|
$
|
2.2
|
|
(in thousands, except per share amounts)
|
Three Months Ended
|
||||||||||||||||||||
|
March 31, 2019
|
|
April 1, 2018
|
||||||||||||||||||
|
Net
Income
|
|
Shares
|
|
Per Share
Amount
|
|
Net
Income
|
|
Shares
|
|
Per Share
Amount
|
||||||||||
Basic EPS
|
$
|
(4,633
|
)
|
|
19,870
|
|
|
$
|
(0.23
|
)
|
|
$
|
(17,441
|
)
|
|
19,806
|
|
|
$
|
(0.88
|
)
|
Dilutive securities, common stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Diluted EPS
|
$
|
(4,633
|
)
|
|
19,870
|
|
|
$
|
(0.23
|
)
|
|
$
|
(17,441
|
)
|
|
19,806
|
|
|
$
|
(0.88
|
)
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
||||||||||||||
(in thousands)
|
March 31, 2019
|
|
April 1, 2018
|
|
Total
Change
|
|
Divestiture
|
|
Operations
|
|
Foreign
Exchange
|
||||||||||||
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Energy
|
$
|
98,417
|
|
|
$
|
99,972
|
|
|
$
|
(1,555
|
)
|
|
$
|
(11,649
|
)
|
|
$
|
12,130
|
|
|
$
|
(2,036
|
)
|
Aerospace & Defense
|
61,240
|
|
|
58,477
|
|
|
2,763
|
|
|
—
|
|
|
3,994
|
|
|
(1,231
|
)
|
||||||
Industrial
|
110,738
|
|
|
117,131
|
|
|
(6,393
|
)
|
|
(3,897
|
)
|
|
3,834
|
|
|
(6,330
|
)
|
||||||
Consolidated Net Revenues
|
$
|
270,395
|
|
|
$
|
275,580
|
|
|
$
|
(5,185
|
)
|
|
$
|
(15,546
|
)
|
|
$
|
19,958
|
|
|
$
|
(9,597
|
)
|
|
Three Months Ended
|
|
|
||||||||
(in thousands, except percentages)
|
March 31, 2019
|
|
April 1, 2018
|
|
Change
|
||||||
Net Revenue as reported
|
$
|
98,417
|
|
|
$
|
99,972
|
|
|
$
|
(1,555
|
)
|
Net Revenues excluding divestiture (1)
|
95,311
|
|
|
85,240
|
|
|
10,071
|
|
|||
Segment Operating Income as reported
|
6,783
|
|
|
5,696
|
|
|
1,087
|
|
|||
Segment Operating Income excluding divestiture (2)
|
6,783
|
|
|
5,688
|
|
|
1,095
|
|
|||
Segment Operating Margin
|
7.1
|
%
|
|
6.7
|
%
|
|
|
||||
(1) Adjusted for the divestiture of our Reliability Services business, which generated revenues of $3.1 million and $14.7 million for the three months ended March 31, 2019 and April 1, 2018, respectively.
|
|||||||||||
(2) Adjusted for the divestiture of our Reliability Services business, which contributed $0.0 million and $0.0 million to Segment Operating Income for the three months ended March 31, 2019 and April 1, 2018, respectively.
|
|
Three Months Ended
|
|
|
||||||||
(in thousands, except percentages)
|
March 31, 2019
|
|
April 1, 2018
|
|
Change
|
||||||
Net Revenues
|
$
|
61,240
|
|
|
$
|
58,477
|
|
|
$
|
2,763
|
|
Segment Operating Income
|
9,374
|
|
|
8,931
|
|
|
443
|
|
|||
Segment Operating Margin
|
15.3
|
%
|
|
15.3
|
%
|
|
|
|
Three Months Ended
|
|
|
|||||||
(in thousands, except percentages)
|
March 31, 2019
|
|
April 1, 2018
|
|
Change
|
|||||
Net Revenues
|
$
|
110,738
|
|
|
117,131
|
|
|
$
|
(6,393
|
)
|
Net Revenues excluding divestiture (1)
|
110,738
|
|
|
113,234
|
|
|
(2,496
|
)
|
||
Segment Operating Income
|
10,787
|
|
|
12,948
|
|
|
(2,161
|
)
|
||
Segment Operating Income excluding divestiture (2)
|
10,787
|
|
|
12,873
|
|
|
(2,086
|
)
|
||
Segment Operating Margin (adjusted)
|
9.7
|
%
|
|
11.4
|
%
|
|
|
|||
(1) Adjusted for the divestiture of our Rosscor B.V. and SES International B.V. subsidiaries (the "Delden Business"), which generated revenues of $0.0 million and $3.9 million for the three months ended March 31, 2019 and April 1, 2018, respectively.
|
||||||||||
(2) Adjusted for the divestiture of the Delden Business, which contributed $0.0 million and $0.1 million to Segment Operating Income for the three months ended March 31, 2019 and April 1, 2018, respectively.
|
|
Three months ended
|
||||||
|
March 31, 2019
|
|
April 1, 2018
|
||||
INCOME/(LOSS) BEFORE INCOME TAXES
|
$
|
446
|
|
|
$
|
(23,320
|
)
|
|
|
|
|
||||
U.S. tax rate
|
21.0
|
%
|
|
21.0
|
%
|
||
Foreign derived intangible income - US impact
|
81
|
%
|
|
—
|
%
|
||
U.S. permanent differences
|
46.5
|
%
|
|
4.0
|
%
|
||
Foreign Tax rate differential
|
(67.6
|
)%
|
|
(1.9
|
)%
|
||
Global Intangible Low-Taxed Income impact
|
(33.7
|
)%
|
|
(9.2
|
)%
|
||
Intercompany financing
|
181.5
|
%
|
|
8.6
|
%
|
||
Divestiture of Reliability Services
|
595.4
|
%
|
|
—
|
%
|
||
Other
|
316.0
|
%
|
|
2.9
|
%
|
||
Effective tax rate
|
1,140.1
|
%
|
|
25.2
|
%
|
||
|
|
|
|
||||
(Provision for)/ Benefit from income taxes
|
$
|
(5,079
|
)
|
|
$
|
5,879
|
|
|
March 31, 2019
|
|
April 1, 2018
|
||||
Cash flow provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(22,378
|
)
|
|
$
|
(145
|
)
|
Investing activities
|
79,632
|
|
|
(8,141
|
)
|
||
Financing activities
|
(53,100
|
)
|
|
20,240
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
957
|
|
|
956
|
|
||
(Decrease) / Increase in cash, cash equivalents and restricted cash
|
$
|
5,111
|
|
|
$
|
12,910
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 6.
|
EXHIBITS
|
Exhibit
No.
|
|
Description and Location
|
10.1
*
|
|
Form of Performance-Based Restricted Stock Unit Agreement for Employees under the 2014 Stock Option and Incentive Plan.
|
10.2
*
|
|
Form of Management Stock Purchase Plan Restricted Stock Unit Agreement for Employees and Directors under the 2014 Stock Option and Incentive Plan
|
10.3
*
|
|
Form of Non-Qualified Stock Option Agreement For Employees under the 2014 Stock Option And Incentive Plan
|
10.4
*
|
|
Form of Restricted Stock Unit Agreement for Employees under the 2014 Stock Option and Incentive Plan
|
10.5
*
|
|
Form of Restricted Stock Unit Agreement for Directors under the 2014 Stock Option and Incentive Plan
|
|
Executive Change of Control Agreement between the Company and Chadi Chahine, dated January 7, 2019, incorporated herein by reference to Exhibit 10.39 to the Company's Annual Report on Form 10-K (File No. 001-14962), filed with the SEC on March 1, 2019
|
|
|
Severance Agreement, dated January 7, 2019, between the Company and Chadi Chahine, incorporated herein by reference to Exhibit 10.40 to the Company's Annual Report on Form 10-K (File No. 001-14962), filed with the SEC on March 1, 2019
|
|
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101
|
|
The following financial statements (Unaudited) from CIRCOR International, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, as filed with the Securities and Exchange Commission on May 7, 2019, formatted in XBRL (eXtensible Business Reporting Language), as follows:
|
|
(i)
|
Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018
|
|
(ii)
|
Condensed Consolidated Statements of (Loss) Income for the Three Months Ended March 31, 2019 and April 1, 2018
|
|
(iii)
|
Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended March 31, 2019 and April 1, 2018
|
|
(iv)
|
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and April 1, 2018
|
|
(v)
|
Condensed Consolidated Statement of Shareholder's Equity as of Three Months Ended March 31, 2019 and December 31, 2018
|
|
(vi)
|
Notes to Condensed Consolidated Financial Statements
|
*
|
Filed with this report.
|
|
**
|
Furnished with this report.
|
|
|
|
CIRCOR INTERNATIONAL, INC.
|
|
|
May 14, 2019
|
/s/ Scott A. Buckhout
|
|
Scott A. Buckhout
|
|
President and Chief Executive Officer
|
|
Principal Executive Officer
|
|
|
May 14, 2019
|
/s/ Chadi Chahine
|
|
Chadi Chahine
|
|
Senior Vice President and Chief Financial Officer
|
|
Principal Financial Officer
|
|
|
May 14, 2019
|
/s/ David F. Mullen
|
|
David F. Mullen
|
|
Senior Vice President and Corporate Controller
|
|
Principal Accounting Officer
|
1 Year CIRCOR Chart |
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