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 second quarter ended July 4, 2010.

Management Comments on Second-Quarter Results

“CIRCOR performed well from an operational perspective during the second quarter of 2010,” said Chairman and Chief Executive Officer Bill Higgins. “Our segments reported sequential improvements in adjusted operating income as we continue to focus on our lean manufacturing, global sourcing and productivity initiatives. Revenues and EPS were within our guidance range if you exclude the negative effect of foreign currency and Leslie Controls’ bankruptcy and asbestos charges from our actual results and our guidance.”

“Strong bookings in early-cycle industries, such as short-cycle oil and gas, semiconductor and instrumentation, are encouraging,” said Higgins. “The markets served by our Aerospace business seem to be forming a bottom with an improving outlook in the commercial sector. Optimism is growing in later-cycle end markets as quotation activity continues to grow, and orders appear to be building off a base.”

“On July 12 th we announced that our Leslie Controls subsidiary filed a pre-negotiated Chapter 11 plan of reorganization intended to permanently resolve Leslie’s asbestos liability through the creation of a trust pursuant to Section 524(g) of the U.S. Bankruptcy Code,” said Higgins. “We believe that such a plan is the best solution for our shareholders, as it will equitably resolve all pending and future Leslie asbestos claims and provide CIRCOR with permanent protection from derivative claims. Additionally, once the legal process is completed, Leslie Controls will be positioned to grow and contribute to CIRCOR’s profitability.”

Consolidated Results

Revenues for the second quarter of 2010 were $168.0 million, a 2% increase from $164.5 million generated in the second quarter of 2009. As a result of charges associated with the Leslie bankruptcy filing, CIRCOR reported a net loss for the second quarter of 2010 of $11.2 million, or $0.66 per share, compared with net income of $7.7 million, or $0.45 per diluted share, for the second quarter of 2009.

Pre-tax Leslie bankruptcy and asbestos charges were $28.9 million for the three months ended July 4, 2010, compared with $3.4 million of non-bankruptcy asbestos charges for the year-earlier period. Excluding special charges and Leslie bankruptcy and asbestos charges net of tax, adjusted earnings per diluted share were $0.44 for the second quarter of 2010 compared with $0.58 in the second quarter of 2009. Excluding $0.16, or $4.0 million pre-tax, for ongoing Leslie asbestos charges, CIRCOR’s guidance for the second quarter of 2010 was $0.44 to $0.55 earnings per diluted share.

Consolidated Orders and Free Cash Flow

The Company received orders totaling $170.7 million during the second quarter of 2010, an increase of 4% compared with the second quarter of 2009 and flat compared with the first quarter of 2010. The year-over-year increase in orders primarily results from acquisitions and strength in many of our short-cycle businesses offset by declines in late-cycle businesses, such as large international and pipeline projects. Backlog as of July 4, 2010 was $317.6 million, up 6% from backlog of $300.4 million at June 28, 2009 and down sequentially by 4% from April 4, 2010.

During the second quarter of 2010, the Company generated $11.9 million of free cash flow (defined as net cash from operating activities, less capital expenditures and dividends paid) compared with generating $17.9 million in the second quarter of 2009.

Energy

CIRCOR’s Energy segment revenues of $77.3 million for the quarter ended July 4, 2010 were slightly higher than revenues of $76.8 million for the quarter ended June 28, 2009. The increase included 10% growth from acquisitions, which was offset by an organic decline of 6% and a negative foreign currency adjustment of 4%.

Incoming orders for the second quarter of 2010 were $79.4 million, an increase of 13% year over year and 20% sequentially. The year-over-year growth was due to strength in North American short-cycle partially offset by fewer bookings of large international oil and gas and pipeline solutions projects than the second quarter of 2009. On a sequential basis, orders for large international oil and gas and pipeline projects improved. Ending backlog totaled $124.7 million, a 3% increase compared with $121.5 million at the end of the second quarter of 2009, and an 8% decrease sequentially due entirely to foreign currency impact.

The Energy segment adjusted operating margin, which excludes the impact of special charges, was 8.3% during the second quarter of 2010 compared with 12.3% for the second quarter of 2009 and 3.5% for the first quarter of 2010. Second-quarter 2010 margins were negatively affected 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 higher North American short-cycle business volume, as well as increased productivity and lower severance costs.

Aerospace

CIRCOR’s Aerospace segment revenues decreased by 8% to $27.8 million for the second quarter of 2010 from $30.2 million in the second quarter of 2009. The decrease in revenues was driven by an organic decline of 6% as a result of the soft commercial aerospace market and the timing of military and defense shipments, and a 2% decline from foreign currency adjustments. Incoming orders for the second quarter of 2010 were $27.0 million, a decrease of 31% from $39.2 million in the second quarter of 2009, and a 22% decrease from $34.8 million in the first quarter of 2010. The year-over-year and sequential decreases were primarily due to the timing of booking large military landing gear orders in the earlier periods. Ending backlog totaled $117.2 million, which was relatively flat with the second quarter of 2009, and down 3% sequentially.

The Aerospace segment’s adjusted operating margin, which excludes the impact of special charges, was 14.6% for the second quarter of 2010 compared with 16.2% for the second quarter of 2009 and 13.2% for the first quarter of 2010. Second-quarter 2010 margins were negatively affected by a decline in organic revenue and associated lost operating leverage as well as increased expenses for engineering and product development supporting future programs, which was partially offset by favorable product mix and productivity gains.

Flow Technologies

CIRCOR’s Flow Technologies segment revenues increased 9% to $62.9 million from $57.5 million in the second quarter of 2009. Second-quarter 2010 revenues reflected organic growth of 12%, primarily due to semiconductor strength, which was partially offset by foreign currency adjustments of 3%. Incoming orders for this segment were $64.3 million for the second quarter of 2010, an increase of 19% from $54.3 million in the second quarter of 2009 and a decrease of 7% sequentially. The year-over-year increase was due to strengthening demand in semiconductors and instrumentation, but was partially offset by weakness in commercial construction and petrochemical and refining. Ending backlog totaled $75.7 million, a 24% increase compared with $61.0 million at the end of the second quarter of 2009, and a 2% increase sequentially.

This segment’s adjusted operating margin, which excludes the impact of special and Leslie asbestos and bankruptcy charges, for the second quarter of 2010 was 10.1% compared with 9.5% in the second quarter of 2009, and 10.2% in the first quarter of 2010. The second-quarter 2010 margin year-over-year increase was due to higher volumes and productivity partially offset by unfavorable product mix.

Business and Financial Outlook

“We are cautiously optimistic as we enter the second half of 2010 and look toward 2011,” said Higgins. “Our sales are rebounding in certain markets, beginning with early-cycle businesses, and we are seeing the benefit of our lean cost structure in improving adjusted operating margins. Approval of the Leslie Controls’ pre-negotiated plan of reorganization would enhance CIRCOR’s overall profitability going forward. We continue to maintain a strong balance sheet that will enable us to fund the Leslie plan and continue to invest in organic growth and strategic acquisitions.”

Beginning this third quarter 2010, CIRCOR’s guidance for adjusted earnings per share will exclude any special or Leslie asbestos and bankruptcy charges, as management believes this measure will be more useful for investors and financial institutions to analyze and compare companies on the basis of operating performance.

CIRCOR currently expects revenues for the third quarter of 2010 in the range of $170 million to $180 million and earnings, excluding special charges and Leslie asbestos and bankruptcy charges, to be in the range of $0.50 to $0.60 per diluted share. CIRCOR’s guidance assumes that exchange rates remain at present levels.

Conference Call Information

CIRCOR International will hold a conference call to review its financial results today, August 2, 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 third-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 AND SUBSEQUENT REPORTS ON FORMS 10-Q, 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.
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
UNAUDITED
                   
 
Three Months Ended   Six Months Ended
July 4, 2010   June 28, 2009   July 4, 2010   June 28, 2009
 
 
Net revenues $ 168,005 $ 164,535 $ 314,274 $ 340,182
Cost of revenues   118,463     116,032     222,013     235,660  
GROSS PROFIT 49,542 48,503 92,261 104,522
Selling, general and administrative expenses 37,959 34,242 73,376 68,340
Leslie asbestos and bankruptcy charges 28,908 3,442 28,260 11,705
Special (recoveries) charges   -     -     -     (1,135 )
OPERATING (LOSS) INCOME   (17,325 )   10,819     (9,375 )   25,612  
Other (income) expense:
Interest income (50 ) (167 ) (92 ) (314 )
Interest expense 636 208 1,233 386
Other expense (income), net   258     (267 )   207     (449 )
Total other expense (income)   844     (226 )   1,348     (377 )
(LOSS) INCOME BEFORE INCOME TAXES (18,169 ) 11,045 (10,723 ) 25,989
Benefit (Provision) for income taxes   6,928     (3,313 )   5,216     (7,797 )
NET (LOSS) INCOME $ (11,241 ) $ 7,732   $ (5,507 ) $ 18,192  
 
Earnings per common share:
Basic $ (0.66 ) $ 0.46 $ (0.32 ) $ 1.07
Diluted $ (0.66 ) $ 0.45 $ (0.32 ) $ 1.07
 
Weighted average common shares outstanding:
Basic 17,108 16,970 17,080 16,944
Diluted 17,108 17,066 17,080 17,040
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
           
 
Six Months Ended
July 4, 2010   June 28, 2009
 
 
OPERATING ACTIVITIES
Net (loss) income $ (5,507 ) $ 18,192
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
Depreciation 6,343 6,084
Amortization 1,942 1,249
Provision for Leslie bankruptcy settlement 24,974 -
Compensation expense of stock-based plans 1,814 1,585
Tax effect of share based compensation (90 ) 403
Gain on disposal of property, plant and equipment 275 (33 )
 
Changes in operating assets and liabilities, net of effects from business acquisitions:
 
Trade accounts receivable (19,247 ) 16,791
Inventories (14,850 ) 27,371
Prepaid expenses and other assets 3,228 701
Accounts payable, accrued expenses and other liabilities   15,511     (56,594 )
Net cash provided by operating activities   14,393     15,749  
 
INVESTING ACTIVITIES
Additions to property, plant and equipment (8,187 ) (4,501 )
Proceeds (purchases) from disposal of property, plant and equipment (233 ) 43
Purchase of investments - (214,925 )
Proceeds from sale of investments 21,427 201,826
Business acquisitions, net of cash acquired   (5,210 )   (7,510 )
Net cash provided by (used in) investing activities   7,797     (25,067 )
 
FINANCING ACTIVITIES
Proceeds from long-term debt 32,458 64,187
Payments of long-term debt (34,645 ) (68,545 )
Dividends paid (1,279 ) (1,294 )
Proceeds from the exercise of stock options 293 36
Tax effect of share based compensation   90     (403 )
Net cash used in financing activities   (3,083 )   (6,019 )
Effect of exchange rate changes on cash and cash equivalents   (4,600 )   902  
 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 14,507 (14,435 )
Cash and cash equivalents at beginning of year   46,350     47,473  
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 60,857   $ 33,038  
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
UNAUDITED
         
 
         
July 4, 2010   December 31, 2009
 
ASSETS
Current Assets:
Cash & cash equivalents $ 60,857 $ 46,350
Short-term investments 94 21,498
Trade accounts receivable, less allowance for doubtful accounts of $1,432 and $1,992, respectively
125,468 115,260
Inventories 152,996 145,031
Income taxes refundable - 726
Prepaid expenses and other current assets 7,697 4,195
Deferred income tax asset 42,187 15,847
Insurance receivables 1,180 4,614
Assets held for sale   542     1,167
Total Current Assets   391,021     354,688
 
Property, Plant and Equipment, net 91,426 95,167
 
Other Assets:
Goodwill 50,580 47,893
Intangibles, net 50,310 55,238
Deferred income tax asset - 5,676
Other assets   3,058     3,391
Total Assets $ 586,395   $ 562,053
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 77,900 $ 57,239
Accrued expenses and other current liabilities 46,379 46,736
Accrued compensation and benefits 18,444 18,617
Leslie asbestos and bankruptcy related liabilities 82,431 12,476
Income taxes payable 417 -
Notes payable and current portion of long-term debt   696     5,914
Total Current Liabilities   226,267     140,982
 
Long-Term Debt, net of current portion 4,279 1,565
Deferred income taxes 11,512 -
Long-Term Leslie asbestos liability - 47,785
Other Non-Current Liabilities 20,209 21,313
Shareholders' Equity:

Preferred stock, $.01 par value; 1,000,000 sharesauthorized; no shares issued and outstanding
- -

Common stock, $.01 par value; 29,000,000 sharesauthorized; and 17,050,121 and 16,991,365 issued andoutstanding, respectively
171 170
Additional paid-in capital 252,098 249,960
Retained earnings 79,620 86,408
Accumulated other comprehensive (loss) income   (7,761 )   13,870
Total Shareholders' Equity   324,128     350,408
Total Liabilities and Shareholders' Equity $ 586,395   $ 562,053
CIRCOR INTERNATIONAL, INC.
SUMMARY OF ORDERS AND BACKLOG
(in thousands)
UNAUDITED
                 
 
Three Months Ended Six Months Ended
July 4, 2010 June 28, 2009 July 4, 2010 June 28, 2009
 
ORDERS 1
Energy $ 79,411 $ 70,555 $ 145,614 $ 119,527
 
Aerospace 27,023 39,233 61,829 62,184
 
Flow Technologies   64,295   54,254   133,421   108,214
 
Total orders $ 170,729 $ 164,042 $ 340,864 $ 289,925
 
 
           
July 4, 2010 June 28, 2009
 
BACKLOG 2
Energy $ 124,733 $ 121,531
 
Aerospace 117,194 117,795
 
Flow Technologies   75,672   61,046
 
Total backlog $ 317,599 $ 300,372
 

Note 1: Beginning in Q2 2010, orders have been adjusted to exclude the foreign exchange impact from backlog remeasurement of $5.3 million for the three months ended June 28, 2009, and ($23.6) million and $1.3 million for the six month periods ended July 4, 2010 and June 28, 2009, respectively.
 
Note 2: 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   2ND QTR   YTD
 
NET REVENUES
 
Energy $ 89,307 $ 76,814 $ 61,185 $ 66,113 $ 293,419 $ 57,722 $ 77,305 $ 135,027
Aerospace 28,344 30,243 26,234 28,506 113,327 27,274 27,811 55,085
Flow Technologies   57,996     57,478     56,908     63,494     235,876     61,273     62,889     124,162  
Total   175,647     164,535     144,327     158,113     642,622     146,269     168,005     314,274  

 
* ADJUSTED OPERATING MARGIN
 
Energy 18.1 % 12.3 % 10.9 % 3.0 % 11.7 % 3.5 % 8.3 % 6.3 %
Aerospace 15.4 % 16.2 % 13.2 % 14.7 % 14.9 % 13.2 % 14.6 % 13.9 %
Flow Technologies 11.6 % 9.5 % 10.9 % 11.7 % 11.0 % 10.2 % 10.1 % 10.2 %
Segment operating margin 15.5 % 12.1 % 11.3 % 8.6 % 12.0 % 8.1 % 10.0 % 9.2 %
Corporate expenses -3.1 % -3.4 % -3.0 % -3.3 % -3.2 % -3.1 % -3.1 % -3.1 %
* Adjusted operating margin 12.5 % 8.7 % 8.4 % 5.3 % 8.8 % 5.0 % 6.9 % 6.0 %
Leslie asbestos and bankruptcy charges (recoveries) 4.7 % 2.1 % 1.4 % 25.5 % 8.4 % -0.4 % 17.2 % 9.0 %
Special charges (recoveries) -0.6 % 0.0 % -0.4 % 0.3 % -0.2 % 0.0 % 0.0 % 0.0 %
Total operating margin 8.4 % 6.6 % 7.4 % -20.6 % 0.6 % 5.4 % -10.3 % -3.0 %
 
* ADJUSTED OPERATING INCOME
 
Energy 16,169 9,461 6,696 1,966 34,292 2,025 6,424 8,449
Aerospace 4,372 4,905 3,461 4,195 16,933 3,607 4,067 7,674
Flow Technologies   6,744       5,484       6,197     7,444     25,869     6,276       6,367     12,643  
Segment operating income 27,285

 
19,850

 
16,354 13,605 77,094 11,908

 
16,858 28,766
Corporate expenses   (5,365 )   (5,589 )   (4,276 )   (5,267 )   (20,497 )   (4,607 )   (5,274 )   (9,881 )
* Adjusted operating income   21,920     14,261     12,078     8,338     56,597     7,301     11,584     18,885  
Leslie asbestos and bankruptcy charges (recoveries) 8,263 3,442 1,977 40,397 54,079 (648 ) 28,908 28,260
Special charges (recoveries) (1,135 ) - (543 ) 485 (1,193 ) - - -
               
Total operating income 14,792 10,819 10,644 (32,544 ) 3,711 7,949 (17,325 ) (9,375 )
 
INTEREST (EXPENSE) INCOME, NET (32 ) (41 ) (394 ) (602 ) (1,069 ) (554 ) (586 ) (1,140 )
OTHER (EXPENSE) INCOME, NET   183     267     959     (967 )   442     51     (258 )   (207 )
 
PRETAX INCOME (LOSS) 14,943 11,045 11,209 (34,113 ) 3,084 7,446 (18,169 ) (10,723 )
(PROVISION) BENEFIT FOR INCOME TAXES   (4,483 )   (3,313 )   (2,804 )   13,386     2,786     (1,713 )   6,928     5,216  
EFFECTIVE TAX RATE 30.0 % 30.0 % 25.0 % 39.2 % -90.3 % 23.0 % 38.1 % 48.6 %
NET (LOSS) INCOME $ 10,460   $ 7,732   $ 8,405   $ (20,727 ) $ 5,870   $ 5,733   $ (11,241 ) $ (5,507 )
 
Weighted Average Common Shares Outstanding (Diluted) 17,014 17,066 17,116 17,033 17,111 17,193 17,109 17,080
 
EARNINGS PER COMMON SHARE (Diluted) $ 0.61   $ 0.45   $ 0.49   $ (1.22 ) $ 0.34   $ 0.33   $ (0.66 ) $ (0.32 )
 
EBIT $ 14,975 $ 11,086 $ 11,603 $ (33,511 ) $ 4,153 $ 8,000 $ (17,583 ) $ (9,582 )
Depreciation 2,839 3,245 3,536 3,687 13,307 3,228 3,115 6,343
Amortization of intangibles   622     627     707     1,078     3,034     979     964     1,942  
EBITDA $ 18,436   $ 14,958   $ 15,846   $ (28,746 ) $ 20,494   $ 12,207   $ (13,504 ) $ (1,297 )
 
EBITDA AS A PERCENT OF SALES   10.5 %   9.1 %   11.0 %   -18.2 %   3.2 %   8.3 %   -8.0 %   -0.4 %
 
CAPITAL EXPENDITURES $ 2,576   $ 1,925   $ 1,605   $ 4,926   $ 11,032   $ 3,606   $ 4,580   $ 8,187  
 
* Adjusted Operating Income & Margin excludes special and Leslie asbestos and bankruptcy charges
                             
 
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   2ND QTR   YTD
                                             

FREE CASH FLOW [NET CASH FLOW FROM OPERATINGACTIVITIES LESS CAPITAL EXPENDITURES LESSDIVIDENDS PAID]
 
        $ (7,928 )   $ 17,882     $ 11,241     $ 11,757     $ 32,952       $ (7,019 )   $ 11,947     $ 4,928  
ADD: Capital expenditures 2,576 1,925 1,605 4,926 11,032 3,606 4,580 8,186
Dividends paid   657     637     636     638     2,568     639     640     1,279  
 
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ (4,695 ) $ 20,444   $ 13,482   $ 17,321   $ 46,552   $ (2,774 ) $ 17,167   $ 14,393  
     

 
                                     

NET (CASH) DEBT [TOTAL DEBT LESS CASH & CASHEQUIVALENTS LESS INVESTMENTS]
        $ (49,519 )   $ (69,331 )   $ (77,081 )   $ (60,369 )   $ (60,369 )     $ (52,713 )   $ (55,976 )   $ (55,976 )
ADD:

 
Cash & cash equivalents 36,113 33,038 83,708 46,350 46,350 37,812 60,857 60,857
Investments   36,991     48,344     3,023     21,498     21,498     22,412     94     94  
 
TOTAL DEBT $ 23,585   $ 12,051   $ 9,650   $ 7,479   $ 7,479   $ 7,511   $ 4,975   $ 4,975  
                                             
  DEBT AS % OF EQUITY         7 %     3 %     3 %     2 %     2 %       2 %     2 %     2 %
 
TOTAL DEBT 23,585 12,051 9,650 7,479 7,479 7,511 4,975 4,975
 
TOTAL SHAREHOLDERS' EQUITY 341,860 357,596 371,728 350,408 350,408 349,244 324,128 324,128
                                             

EBIT [NET INCOME LESS INCOME TAXES LESSINTEREST EXPENSE, NET]
        $ 14,975     $ 11,086     $ 11,603     $ (33,511 )   $ 4,153       $ 8,000     $ (17,583 )   $ (9,583 )
LESS:
Interest expense, net (32 ) (41 ) (394 ) (602 ) (1,069 ) (554 ) (586 ) (1,140 )
Provision for income taxes   (4,483 )   (3,313 )   (2,804 )   13,386     2,786     (1,713 )   6,928     5,215  
 
NET INCOME $ 10,460   $ 7,732   $ 8,405   $ (20,727 ) $ 5,870   $ 5,733   $ (11,241 ) $ (5,508 )
                                             
 

EBITDA [NET INCOME LESS INTEREST EXPENSE, NET,LESS DEPRECIATION LESS AMORTIZATION LESS INCOMETAXES]
      $ 18,436     $ 14,958     $ 15,846     $ (28,746 )   $ 20,494       $ 12,207     $ (13,504 )   $ (1,297 )
LESS:
Interest expense, net (32 ) (41 ) (394 ) (602 ) (1,069 ) (554 ) (586 ) (1,140 )
Depreciation (2,839 ) (3,245 ) (3,536 ) (3,687 ) (13,307 ) (3,228 ) (3,115 ) (6,343 )
Amortization (622 ) (627 ) (707 ) (1,078 ) (3,034 ) (979 ) (964 ) (1,943 )
Provision for income taxes   (4,483 )   (3,313 )   (2,804 )   13,386     2,786     (1,713 )   6,928     5,215  
 
NET INCOME $ 10,460   $ 7,732   $ 8,405   $ (20,727 ) $ 5,870   $ 5,733   $ (11,241 ) $ (5,508 )
                                             
 

ADJUSTED INCOME [NET INCOME EXCLUDING SPECIALCHARGES AND LESLIE ASBESTOS AND BANKRUPTCYCHARGES, NET OF TAX]
      $ 15,037     $ 9,969     $ 9,285     $ 5,826     $ 40,117       $ 5,312     $ 7,549     $ 12,861  
LESS:
Special charges (recoveries), net of tax (794 ) - (405 ) 295 (905 ) - - -
Leslie asbestos and bankruptcy charges(recoveries), net of tax 5,371 2,237 1,285 26,258 35,151 (421 ) 18,790 18,369
 
NET INCOME $ 10,460   $ 7,732   $ 8,405   $ (20,727 ) $ 5,870   $ 5,733   $ (11,241 ) $ (5,508 )
 
                                             
  ADJUSTED WEIGHTED AVERAGE SHARES         N/A       N/A       N/A       17,140       N/A         N/A       17,109       17,080  
 
Adjustment for anti-dilutive conversion of shares - - - 107 - - 153 147
               
Weighted average common shares outstanding

17,014

17,066

17,116
  17,033  

17,111

17,193
  17,262     17,227  
                                             
 

ADJUSTED EARNINGS PER SHARE [EPS EXCLUDING SPECIALCHARGES AND LESLIE ASBESTOS AND BANKRUPTCYCHARGES, NET OF TAX]
      $ 0.88     $ 0.58     $ 0.54     $ 0.34     $ 2.34       $ 0.31     $ 0.44     $ 0.75  
 
LESS: Special charges (recoveries), net of tax impact on EPS $ (0.05 ) $ - $ (0.02 ) $ 0.02 $ (0.01 ) $ - $ - $ -
Leslie asbestos and bankruptcy charges
(recoveries), net of tax impact on EPS $ 0.32 $ 0.13 $ 0.08 $ 1.54 $ 2.05 $ (0.02 ) $ 1.10 $ 1.08
               
EARNINGS PER COMMON SHARE (Diluted) $ 0.61   $ 0.45   $ 0.49   $ (1.22 ) $ 0.34   $ 0.33   $ (0.66 ) $ (0.32 )

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   2ND QTR     YTD
 

Quarterly Case Rollforward
 
Beginning open cases 968 1,103 1,158 1,143 968 1,104 1,150 1,104
Cases filed 222 203 131 131 687 150 169 319
Cases resolved and dismissed (87) (148) (146) (170) (551) (104) (105) (209)
               
Ending open cases 1,103 1,158 1,143 1,104 1,104 1,150 1,214 1,214
 

Ending open mesothelioma cases
578 584 612 597 597 623 672 672
 

Income Statement Amounts
 
Indemnity costs accrued (cases filed) $ 4,602 $ 2,109 $ 1,140 $ 39,810 $ 47,661 $ 699 $ 1,797 $ 2,496
Adverse verdict costs (recoveries) 90 97 95 (1,308) (1,026) 65 (2,455) (2,390)
Defense costs incurred 3,166 3,275 3,009 2,862 12,312 3,731 3,435 7,166
Insurance recoveries adjustment 2,069 - - - 2,069 (3,652) - (3,652)
Insurance recoveries accrued (1,664) (2,039) (2,268) (966) (6,937) (1,491) (1,135) (2,626)
Bankruptcy related charges, net - - - - - - 27,266 27,266
 

Net pre-tax Leslie asbestos and
                   
bankruptcy expense (recovery) $ 8,263 $ 3,442 $ 1,976 $ 40,398 $ 54,079 $ (648)   $ 28,908   $ 28,260
 

Balance Sheet Amounts
 
Bankruptcy and indemnity liability $ 20,781 $ 19,849 $ 20,060 $ 57,716 $ 57,732 $ 78,976
Incurred defense cost liability 4,212 5,169 3,615 2,544 2,099 3,455
Insurance recoveries asset (9,088) (7,426) (6,485) (4,614) (7,997) (1,180)
Net Leslie asbestos and bankruptcy liabilities $ 15,905 $ 17,592 $ 17,190 $ 55,646 $ 51,834 $ 81,251

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