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): October 31, 2007
CIRCOR INTERNATIONAL, INC.
(Exact name of registrant as specified in 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 CFR240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition
By press release dated October 31, 2007, the Company announced its financial results for the three and nine months ended September 30, 2007. 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, and earnings per share excluding special charges. 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) and earnings per share excluding special charges (defined as earnings per common share, excluding the impact of special charges, net of tax) is provided because management believes these measurements are commonly used by investors and financial institutions to analyze and compare companies on the basis of operating performance. Free cash flow, EBIT, EBITDA, and earnings per share excluding special charges 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, and earnings per share excluding special charges, 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, and earnings per share excluding special charges, 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 5.02. Election of Director
On October 31, 2007, the Company’s Board of Directors accepted the recommendation of the Nominating and Corporate Governance Committee and appointed C. William Zadel to the Company’s Board of Directors, thereby increasing the size of its Board from 6 to 7 members. Mr. Zadel, who is serving as a Class III director, also has been appointed to the Board’s Compensation and Audit Committees.
In connection with Mr. Zadel’s appointment he was awarded 1,250 Restricted Stock Units and entered into an Indemnification Agreement. The Indemnification Agreement is identical to the form of Indemnification Agreement previously entered into between the Company and each of its directors and executive officers.
2
The Company announced by press release dated October 31, 2007 Mr. Zadel’s appointment to the Board of Directors. The full text of the press release is attached as Exhibit 99.2 to this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits
| (d) | Exhibits |
| Exhibit No. | Description | |
| 99.1 | Press Release regarding Earnings, Dated October 31, 2007 | |
| 99.2 | Press Release regarding C. William Zadel joining Circor Board of Directors Dated, October 31, 2007 |
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: November 6, 2007 | CIRCOR INTERNATIONAL, INC. | |||||
| By: | /s/ Kenneth W. Smith | |||||
| By: | Kenneth W. Smith Senior Vice President, Chief Financial Officer and Treasurer | |||||
4
Exhibit 99.1
PRESS RELEASE
| Contact: | Kenneth W. Smith |
| Chief Financial Officer |
| CIRCOR International, Inc. |
| (781) 270-1200 |
CIRCOR Announces Third Quarter Earnings of $0.62 per share
| • | Earnings excluding special charges, gain on sale of affiliate and tax benefits were $0.59 per share, up 26% over last year. |
| • | Orders increase 33% and backlogs 39% to reach another record on strong energy project activity |
Burlington, MA, October 31, 2007
CIRCOR International, Inc. (NYSE: CIR), a leading provider of valves and other fluid control devices for the instrumentation, aerospace, thermal fluid and energy markets, today announced results for the third quarter and nine months ended September 30, 2007.
Revenues for the 2007 third quarter were $164.0 million, an increase of 9% from $150.4 million for the third quarter 2006 period. Net income for the third quarter of 2007 increased 42% to $10.4 million, or $0.62 per diluted share compared to $7.3 million or $0.45 per diluted share for the third quarter of 2006. Net income for the third quarter of 2007 includes three transactions: $0.09 per diluted share for special charges primarily related to accelerated vesting of equity awards for retiring executives; $0.06 per share for a gain on sale of the Company’s interest in an unrelated business; plus a $0.06 per share benefit from lower income tax expense resulting from tax law changes and lower rates in Germany and the United Kingdom.
For the nine months ended September 30, 2007, revenues were $491.2 million, an increase of 16% from $422.1 million for the comparable period in 2006. Net income for the first nine months of 2007 was $27.8 million, or $1.67 per diluted share, an increase of 47% from $18.9 million, or $1.16 per diluted share, in the same period last year. Results for the first nine months of 2007 include $0.14 per diluted share of special charges for facility consolidation and accelerated vesting of equity awards for the Company’s retiring executives, partially offset by a $0.06 per share for a gain on sale of the Company’s interest in an unrelated business and the $0.06 per share benefit from German and UK tax law and rate changes.
The Company received orders totaling $186.0 million during the third quarter of 2007, increasing 33% over the third quarter of 2006, and a 19% decrease from the second quarter of 2007. For the first nine months of 2007, orders totaled $601.2 million with September 30, 2007, backlog reaching another record level of $395.7 million, representing increases of 12% and 39%, respectively, over the same periods in 2006.
During the third quarter of 2007, the Company generated $11.5 million of free cash flow (defined as net cash from operating activities, less capital expenditures and dividends paid) and, for the first nine months of 2007, the Company had positive free cash flow of $11.5 million
despite higher working capital needed to support the Company’s record orders and backlog. This compares favorably to the first nine months of 2006 during which the Company generated $4.1 million of free cash flow. The improvement from 2006 largely resulted from the sharp increase in profitability.
Circor’s Instrumentation and Thermal Fluid Controls Products segment revenues increased 7% to $85.1 million from $79.2 million in the third quarter of 2006. Incoming orders for this segment were $90.0 million, up 8%, while this segment’s backlog at September 30, 2007, reached a record $135.1 million, a 13% increase from one year ago, and a 4% increase from the end of the second quarter of 2007. This segment’s operating margin for the third quarter was 7.1% compared to the 9.5% operating margin achieved in the third quarter of 2006. The third quarter margin represented a 160 basis point decrease from the second quarter of 2007, excluding special charges, reflecting cost/price pressures continuing within the Instrumentation market and higher legal costs associated with asbestos claims within one of the Company’s Thermal Fluid Products businesses.
Circor’s Energy Products segment revenues increased 11% to $78.9 million from $71.2 million in the third quarter of last year. Incoming orders for the quarter were $96.0 million and ending backlog totaled another record at $260.6 million compared to incoming orders of $57.0 million and ending backlog of $164.9 million in the same periods last year. This segment’s operating margin reached 17.4% during the third quarter of 2007 compared to 13.2% for the third quarter of 2006, reflecting shipments of higher-margin products.
David A. Bloss, Sr., Circor’s Chairman and Chief Executive Officer, said, “As expected, we witnessed some sequential softening in market activities this quarter within our energy products businesses from their record levels as distributor inventories caught up with demand and project awards returned to more normal levels. Prospects into 2008 remain healthy as this segment’s profitability and backlogs remain at record levels.”
Mr. Bloss continued, “Results for our Instrumentation and Thermal Fluid Control Products segment were mixed. Incoming order rates improved in all primary markets including steam, instrumentation and general aerospace, except for our military landing gear market where large annual orders were received in the previous quarter. We continue to make progress on our profit improvement initiatives within this segment, but will not fully recognize cost reduction benefits from component sourcing until the first half 2008. Some selective pricing increases have been successfully instituted as well. These improvements have been offset by higher legal costs associated with asbestos claims filed against a subsidiary of the company within this segment.”
Circor provided guidance for its fourth quarter 2007 results, indicating it expects earnings to be in the range of $0.54 to $0.59 per diluted share, excluding any special charges. The guidance compares to earnings in the fourth quarter of 2006 of $0.63 per diluted share, which included $0.01 per share for a facility consolidation.
CIRCOR International has scheduled a conference call to review its results for the third quarter of 2007 tomorrow, November 1, 2007, at 10:30 am ET. Interested parties may access the call by dialing (888) 599-8691 from the US and Canada and (913) 981-5543 from international locations. A replay of the call will be available from 1:30 pm ET on November 1, 2007, through 1:30 pm ET on November 8, 2007. To access the replay, interested parties should dial (888) 203-1112 or (719) 457-0820 and enter confirmation code # 4311438 when prompted. The presentation slides that will be discussed in the conference call are expected to be available on Wednesday, October 31, 2007, by 6:00 pm ET. The presentation slides may be downloaded from the quarterly earnings page of the investor section on the CIRCOR website: http://www.circor.com/quarterlyearnings/. An audio recording of the conference call also is expected to be posted on the company’s website by November 5, 2007.
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. 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.
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
UNAUDITED
| Three Months Ended | Nine Months Ended | |||||||||||||||
| Sep 30, 2007 | Oct 1, 2006 | Sep 30, 2007 | Oct 1, 2006 | |||||||||||||
| Net revenues |
$ | 164,017 | $ | 150,412 | $ | 491,217 | $ | 422,096 | ||||||||
| Cost of revenues |
116,465 | 106,934 | 349,052 | 298,159 | ||||||||||||
| GROSS PROFIT |
47,552 | 43,478 | 142,165 | 123,937 | ||||||||||||
| Selling, general and administrative expenses |
32,672 | 30,819 | 98,136 | 92,079 | ||||||||||||
| Special charges |
2,131 | 479 | 3,436 | 479 | ||||||||||||
| OPERATING INCOME |
12,749 | 12,180 | 40,593 | 31,379 | ||||||||||||
| Other (income) expense: |
||||||||||||||||
| Interest income |
(129 | ) | (134 | ) | (259 | ) | (332 | ) | ||||||||
| Interest expense |
873 | 1,517 | 3,105 | 4,203 | ||||||||||||
| Other (income) expense, net |
(1,508 | ) | 27 | (1,390 | ) | (352 | ) | |||||||||
| Total other expense |
(764 | ) | 1,410 | 1,456 | 3,519 | |||||||||||
| INCOME BEFORE INCOME TAXES |
13,513 | 10,770 | 39,137 | 27,860 | ||||||||||||
| Provision for income taxes |
3,148 | 3,446 | 11,347 | 8,915 | ||||||||||||
| NET INCOME |
$ | 10,365 | $ | 7,324 | $ | 27,790 | $ | 18,945 | ||||||||
| Earnings per common share: |
||||||||||||||||
| Basic |
$ | 0.63 | $ | 0.46 | $ | 1.70 | $ | 1.19 | ||||||||
| Diluted |
$ | 0.62 | $ | 0.45 | $ | 1.67 | $ | 1.16 | ||||||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
16,509 | 16,007 | 16,369 | 15,943 | ||||||||||||
| Diluted |
16,768 | 16,368 | 16,660 | 16,302 | ||||||||||||
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
| Nine Months Ended | ||||||||
| Sep 30, 2007 | Oct 1, 2006 | |||||||
| OPERATING ACTIVITIES |
||||||||
| Net income |
$ | 27,790 | $ | 18,945 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation |
8,282 | 8,689 | ||||||
| Amortization |
1,917 | 1,791 | ||||||
| Compensation expense of stock-based plans |
4,769 | 2,476 | ||||||
| Tax effect of share based compensation |
(3,570 | ) | — | |||||
| Loss on sale of assets held for sale |
210 | 36 | ||||||
| Gain on sale of property, plant and equipment |
(50 | ) | (18 | ) | ||||
| Gain on sale of affiliate |
(1,605 | ) | — | |||||
| Equity earnings and paid dividends of affiliate, net |
452 | (15 | ) | |||||
| Changes in operating assets and liabilities, net of effects from business acquisitions: |
||||||||
| Trade accounts receivable |
(680 | ) | (9,812 | ) | ||||
| Inventories |
(14,037 | ) | (31,730 | ) | ||||
| Prepaid expenses and other assets |
(8,031 | ) | 97 | |||||
| Accounts payable, accrued expenses and other liabilities |
4,759 | 22,533 | ||||||
| Net cash provided by operating activities |
20,206 | 12,992 | ||||||
| INVESTING ACTIVITIES |
||||||||
| Additions to property, plant and equipment |
(6,886 | ) | (7,143 | ) | ||||
| Proceeds from disposal or sale of property, plant and equipment |
435 | 364 | ||||||
| Proceeds from sale of assets held for sale |
2,259 | 100 | ||||||
| Business acquisitions, net of cash acquired |
(2,704 | ) | (61,121 | ) | ||||
| Proceeds from sale of affiliate |
1,605 | — | ||||||
| Purchase of investments |
— | (9,561 | ) | |||||
| Proceeds from sale of investments |
— | 9,537 | ||||||
| Net cash used in investing activities |
(5,291 | ) | (67,824 | ) | ||||
| FINANCING ACTIVITIES |
||||||||
| Proceeds from debt borrowings |
70,359 | 65,565 | ||||||
| Payments of debt |
(93,415 | ) | (11,483 | ) | ||||
| Dividends paid |
(1,840 | ) | (1,795 | ) | ||||
| Proceeds from the exercise of stock options |
6,296 | 2,066 | ||||||
| Tax effect of share based compensation |
3,570 | 1,046 | ||||||
| Net cash (used in) provided by financing activities |
(15,030 | ) | 55,399 | |||||
| Effect of exchange rate changes on cash and cash equivalents |
1,637 | 1,586 | ||||||
| INCREASE IN CASH AND CASH EQUIVALENTS |
1,522 | 2,153 | ||||||
| Cash and cash equivalents at beginning of year |
28,652 | 31,112 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 30,174 | $ | 33,265 | ||||
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
UNAUDITED
| Sep 30, 2007 |
December 31, 2006 | |||||
| ASSETS |
||||||
| Current Assets: |
||||||
| Cash & cash equivalents |
$ | 30,174 | $ | 28,652 | ||
| Investments |
100 | 86 | ||||
| Trade accounts receivable, less allowance for doubtful accounts of $ 2,732 and $2,523, respectively |
113,470 | 108,689 | ||||
| Inventories |
169,615 | 150,160 | ||||
| Prepaid expenses and other current assets |
11,215 | 2,926 | ||||
| Deferred income taxes |
6,794 | 7,305 | ||||
| Assets held for sale |
914 | 3,132 | ||||
| Total Current Assets |
332,282 | 300,950 | ||||
| Property, Plant and Equipment, net |
79,732 | 79,039 | ||||
| Other Assets: |
||||||
| Goodwill |
168,858 | 163,720 | ||||
| Intangibles, net |
48,493 | 49,226 | ||||
| Other assets |
12,612 | 12,740 | ||||
| Total Assets |
$ | 641,977 | $ | 605,675 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||
| Current Liabilities: |
||||||
| Accounts payable |
$ | 72,617 | $ | 71,788 | ||
| Accrued expenses and other current liabilities |
62,224 | 54,359 | ||||
| Accrued compensation and benefits |
17,822 | 15,325 | ||||
| Income taxes payable |
2,063 | 6,027 | ||||
| Notes payable and current portion of long-term debt |
2,245 | 415 | ||||
| Total Current Liabilities |
156,971 | 147,914 | ||||
| Long-Term Debt, net of current portion |
39,844 | 64,411 | ||||
| Deferred Income Taxes |
21,494 | 21,674 | ||||
| Other Non-Current Liabilities |
14,532 | 14,375 | ||||
| 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 16,645,414 and 16,181,070 issued and outstanding, respectively |
167 | 162 | ||||
| Additional paid-in capital |
238,753 | 224,508 | ||||
| Retained earnings |
135,146 | 109,251 | ||||
| Accumulated other comprehensive income |
35,070 | 23,380 | ||||
| Total Shareholders' Equity |
409,136 | 357,301 | ||||
| Total Liabilities and Shareholders' Equity |
$ | 641,977 | $ | 605,675 | ||
6
CIRCOR INTERNATIONAL, INC.
SUMMARY OF ORDERS AND BACKLOG
(in thousands)
UNAUDITED
| Three Months Ended | Nine Months Ended | |||||||||||||
| Sep 30, 2007 |
Oct 1, 2006 |
Sep 30, 2007 |
Oct 1, 2006 |
|||||||||||
| ORDERS |
||||||||||||||
| Instrumentation & Thermal Fluid Controls |
$ | 90,014 | $ | 83,397 | * | $ | 273,842 | $ | 249,103 | * | ||||
| Energy Products |
95,998 | 56,975 | 327,404 | 286,394 | ||||||||||
| Total orders |
$ | 186,012 | $ | 140,372 | $ | 601,246 | $ | 535,497 | ||||||
| Sep 30, 2007 |
Oct 1, 2006 |
|||||||||||||
| BACKLOG |
||||||||||||||
| Instrumentation & Thermal Fluid Controls |
$ | 135,146 | $ | 119,203 | * | |||||||||
| Energy Products |
260,555 | 164,892 | ||||||||||||
| Total backlog |
$ | 395,701 | $ | 284,095 | ||||||||||
Note: Backlog includes all unshipped customer orders.
| *— | Orders for the Instrumentation & Thermal Fluid Controls Products segment have been reduced by $2,165 and $6,430 for the three and nine months ended October 1, 2006, respectively, for the sale in December 2006 of the small, French business, Societe Alsacienne Regulaves Thermiques von Rohr (“Sart”), |
| — | Backlog as of October 1, 2006 was reduced by $1,128 for the December 2006 sale of Sart. |
7
CIRCOR INTERNATIONAL, INC.
SUMMARY REPORT BY SEGMENT
(in thousands, except earnings per share)
UNAUDITED
| 2006 | 2007 | |||||||||||||||||||||||||||||||||||
| 1ST QTR | 2ND QTR |
3RD QTR |
4TH QTR |
Full Year | 1ST QTR | 2ND QTR |
3RD QTR |
YTD | ||||||||||||||||||||||||||||
| NET REVENUES |
||||||||||||||||||||||||||||||||||||
| Instrumentation & Thermal Fluid Controls (TFC) |
$ | 72,434 | $ | 79,470 | $ | 79,205 | $ | 81,591 | $ | 312,700 | $ | 81,296 | $ | 85,740 | $ | 85,094 | $ | 252,130 | ||||||||||||||||||
| Energy Products |
54,861 | 64,919 | 71,207 | 88,024 | 279,011 | 79,967 | 80,197 | 78,923 | 239,087 | |||||||||||||||||||||||||||
| Total |
127,295 | 144,389 | 150,412 | 169,615 | 591,711 | 161,263 | 165,937 | 164,017 | 491,217 | |||||||||||||||||||||||||||
| OPERATING MARGIN |
||||||||||||||||||||||||||||||||||||
| Instrumentation & TFC |
9.1 | % | 8.6 | % | 9.5 | % | 8.2 | % | 8.8 | % | 7.9 | % | 8.7 | % | 7.1 | % | 7.9 | % | ||||||||||||||||||
| Energy Products |
10.4 | % | 11.4 | % | 13.2 | % | 15.7 | % | 13.0 | % | 12.7 | % | 16.3 | % | 17.4 | % | 15.4 | % | ||||||||||||||||||
| Segment operating margin |
9.7 | % | 9.9 | % | 11.3 | % | 12.1 | % | 10.8 | % | 10.3 | % | 12.4 | % | 12.1 | % | 11.6 | % | ||||||||||||||||||
| Corporate expenses |
-3.0 | % | -2.5 | % | -2.8 | % | -2.4 | % | -2.7 | % | -2.4 | % | -2.4 | % | -3.0 | % | -2.6 | % | ||||||||||||||||||
| Special charges |
0.0 | % | 0.0 | % | -0.3 | % | -0.1 | % | -0.1 | % | -0.4 | % | -0.4 | % | -1.3 | % | -0.7 | % | ||||||||||||||||||
| Total operating margin |
6.7 | % | 7.4 | % | 8.1 | % | 9.5 | % | 8.0 | % | 7.4 | % | 9.5 | % | 7.8 | % | 8.3 | % | ||||||||||||||||||
| OPERATING INCOME |
||||||||||||||||||||||||||||||||||||
| Instrumentation & TFC (excl. special & unusual charges) |
6,595 | 6,861 | 7,522 | 6,680 | 27,658 | 6,433 | 7,438 | 6,076 | 19,947 | |||||||||||||||||||||||||||
| Energy Products (excl. special & unusual charges) |
5,702 | 7,429 | 9,420 | 13,797 | 36,348 | 10,125 | 13,063 | 13,745 | 36,933 | |||||||||||||||||||||||||||
| Segment operating income (excl. special & unusual charges) |
12,297 | 14,290 | 16,942 | 20,477 | 64,006 | 16,558 | 20,501 | 19,821 | 56,880 | |||||||||||||||||||||||||||
| Corporate expenses (excl. special & unusual charges) |
(3,809 | ) | (3,578 | ) | (4,284 | ) | (4,146 | ) | (15,817 | ) | (3,853 | ) | (4,056 | ) | (4,941 | ) | (12,850 | ) | ||||||||||||||||||
| Special charges |
— | (479 | ) | (200 | ) | (679 | ) | (691 | ) | (615 | ) | (2,131 | ) | (3,437 | ) | |||||||||||||||||||||
| Total operating income |
8,488 | 10,712 | 12,179 | 16,131 | 47,510 | 12,014 | 15,830 | 12,749 | 40,593 | |||||||||||||||||||||||||||
| INTEREST EXPENSE, NET |
(1,024 | ) | (1,464 | ) | (1,383 | ) | (1,246 | ) | (5,117 | ) | (1,218 | ) | (884 | ) | (744 | ) | (2,846 | ) | ||||||||||||||||||
| OTHER (EXPENSE) INCOME, NET |
131 | 248 | (27 | ) | (486 | ) | (134 | ) | 97 | (215 | ) | 1,508 | 1,390 | |||||||||||||||||||||||
| PRETAX INCOME |
7,595 | 9,496 | 10,769 | 14,399 | 42,259 | 10,893 | 14,731 | 13,513 | 39,137 | |||||||||||||||||||||||||||
| PROVISION FOR INCOME TAXES |
(2,431 | ) | (3,038 | ) | (3,446 | ) | (4,016 | ) | (12,931 | ) | (3,486 | ) | (4,713 | ) | (3,148 | ) | (11,347 | ) | ||||||||||||||||||
| EFFECTIVE TAX RATE |
32.0 | % | 32.0 | % | 32.0 | % | 27.9 | % | 30.6 | % | 32.0 | % | 32.0 | % | 23.3 | % | 29.0 | % | ||||||||||||||||||
| NET INCOME |
$ | 5,164 | $ | 6,458 | $ | 7,323 | $ | 10,383 | $ | 29,328 | $ | 7,407 | $ | 10,018 | $ | 10,365 | $ | 27,790 | ||||||||||||||||||
| Weighted Average Common Shares Outstanding (Diluted) |
16,197 | 16,332 | 16,368 | 16,438 | 16,291 | 16,533 | 16,679 | 16,768 | 16,660 | |||||||||||||||||||||||||||
| EARNINGS PER COMMON SHARE (Diluted) |
$ | 0.32 | $ | 0.40 | $ | 0.45 | $ | 0.63 | $ | 1.80 | $ | 0.45 | $ | 0.60 | $ | 0.62 | $ | 1.67 | ||||||||||||||||||
| EBIT |
$ | 8,619 | $ | 10,960 | $ | 12,152 | $ | 15,645 | $ | 47,376 | $ | 12,111 | $ | 15,615 | $ | 14,257 | $ | 41,983 | ||||||||||||||||||
| Depreciation |
2,619 | 3,169 | 2,901 | 2,517 | 11,206 | 2,808 | 2,812 | 2,662 | 8,282 | |||||||||||||||||||||||||||
| Amortization of intangibles |
515 | 567 | 709 | 603 | 2,394 | 626 | 632 | 659 | 1,917 | |||||||||||||||||||||||||||
| EBITDA |
$ | 11,753 | $ | 14,696 | $ | 15,762 | $ | 18,765 | $ | 60,976 | $ | 15,545 | $ | 19,059 | $ | 17,578 | $ | 52,182 | ||||||||||||||||||
| EBITDA AS A PERCENT OF SALES |
9.2 | % | 10.2 | % | 10.5 | % | 11.1 | % | 10.3 | % | 9.6 | % | 11.5 | % | 10.7 | % | 10.6 | % | ||||||||||||||||||
| CAPITAL EXPENDITURES |
$ | 1,578 | $ | 1,742 | $ | 3,823 | $ | 2,790 | $ | 9,933 | $ | 1,776 | $ | 2,266 | $ | 2,844 | $ | 6,886 | ||||||||||||||||||
8
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED
GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands)
UNAUDITED
| 2006 | 2007 | |||||||||||||||||||||||||||||||||||
| 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | Full Year | 1ST QTR | 2ND QTR | 3RD QTR | YTD | ||||||||||||||||||||||||||||
| FREE CASH FLOW [NET CASH FLOW FROM OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES LESS DIVIDENDS PAID] |
$ | (5,213 | ) | $ | 402 | $ | 8,865 | $ | 13,476 | $ | 17,530 | $ | (5,429 | ) | $ | 5,439 | $ | 11,470 | $ | 11,480 | ||||||||||||||||
| ADD: Capital expenditures |
1,578 | 1,742 | 3,823 | 2,790 | 9,933 | 1,776 | 2,266 | 2,844 | 6,886 | |||||||||||||||||||||||||||
| Dividends paid |
595 | 600 | 600 | 600 | 2,395 | 609 | 614 | 617 | 1,840 | |||||||||||||||||||||||||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
$ | (3,040 | ) | $ | 2,744 | $ | 13,288 | $ | 16,866 | $ | 29,858 | $ | (3,044 | ) | $ | 8,319 | $ | 14,931 | $ | 20,206 | ||||||||||||||||
| NET (CASH) DEBT [TOTAL DEBT LESS CASH & CASH EQUIVALENTS LESS INVESTMENTS] |
$ | 68,271 | $ | 64,336 | $ | 55,157 | $ | 36,088 | $ | 36,088 | $ | 39,366 | $ | 29,848 | $ | 11,815 | $ | 11,815 | ||||||||||||||||||
| ADD: Cash & cash equivalents |
27,069 | 25,966 | 33,265 | 28,652 | 28,652 | 27,050 | 25,281 | 30,174 | 30,174 | |||||||||||||||||||||||||||
| Investments |
— | 2,639 | 90 | 86 | 86 | 87 | 94 | 100 | 100 | |||||||||||||||||||||||||||
| TOTAL DEBT |
$ | 95,340 | $ | 92,941 | $ | 88,512 | $ | 64,826 | $ | 64,826 | $ | 66,503 | $ | 55,223 | $ | 42,089 | $ | 42,089 | ||||||||||||||||||
| NET DEBT AS % OF NET CAPITALIZATION |
17.7 | % | 16.2 | % | 13.9 | % | 9.2 | % | 9.2 | % | 9.6 | % | 7.2 | % | 2.8 | % | 2.8 | % | ||||||||||||||||||
| NET CAPITALIZATION [TOTAL DEBT PLUS SHAREHOLDERS EQUITY LESS CASH & CASH EQUIVALENTS, LESS INVESTMENTS] |
$ | 385,659 | $ | 397,814 | $ | 397,012 | $ | 393,389 | $ | 393,389 | $ | 408,944 | $ | 415,386 | $ | 420,951 | $ | 420,951 | ||||||||||||||||||
| LESS: Total debt |
(95,340 | ) | (92,941 | ) | (88,512 | ) | (64,826 | ) | (64,826 | ) | (66,503 | ) | (55,223 | ) | (42,089 | ) | (42,089 | ) | ||||||||||||||||||
| ADD: Cash & cash equivalents |
27,069 | 25,966 | 33,265 | 28,652 | 28,652 | 27,050 | 25,281 | 30,174 | 30,174 | |||||||||||||||||||||||||||
| Investments |
— | 2,639 | 90 | 86 | 86 | 87 | 94 | 100 | 100 | |||||||||||||||||||||||||||
| TOTAL SHAREHOLDERS EQUITY |
317,388 | 333,478 | 341,855 | 357,301 | 357,301 | 369,578 | 385,538 | 409,136 | 409,136 | |||||||||||||||||||||||||||
| ADD: Total debt |
95,340 | 92,941 | 88,512 | 64,826 | 64,826 | 66,503 | 55,223 | 42,089 | 42,089 | |||||||||||||||||||||||||||
| TOTAL CAPITAL |
$ | 412,728 | $ | 426,419 | $ | 430,367 | $ | 422,127 | $ | 422,127 | $ | 436,081 | $ | 440,761 | $ | 451,225 | $ | 451,225 | ||||||||||||||||||
| TOTAL DEBT / TOTAL CAPITAL |
23.1 | % | 21.8 | % | 20.6 | % | 15.4 | % | 15.4 | % | 15.3 | % | 12.5 | % | 9.3 | % | 9.3 | % | ||||||||||||||||||
| EBIT [NET INCOME LESS INTEREST EXPENSE, NET] |
$ | 8,619 | $ | 10,960 | $ | 12,152 | $ | 15,645 | $ | 47,376 | $ | 12,111 | $ | 15,615 | $ | 14,257 | $ | 41,983 | ||||||||||||||||||
| LESS: Interest expense, net |
(1,024 | ) | (1,464 | ) | (1,383 | ) | (1,246 | ) | (5,117 | ) | (1,218 | ) | (884 | ) | (744 | ) | (2,846 | ) | ||||||||||||||||||
| Provision for income taxes |
(2,431 | ) | (3,038 | ) | (3,446 | ) | (4,016 | ) | (12,931 | ) | (3,486 | ) | (4,713 | ) | (3,148 | ) | (11,347 | ) | ||||||||||||||||||
| NET INCOME |
$ | 5,164 | $ | 6,458 | $ | 7,323 | $ | 10,383 | $ | 29,328 | $ | 7,407 | $ | 10,018 | $ | 10,365 | $ | 27,790 | ||||||||||||||||||
| EBITDA [NET INCOME LESS INTEREST EXPENSE, NET LESS DEPRECIATION LESS AMORTIZATION LESS TAXES] |
$ | 11,753 | $ | 14,696 | $ | 15,762 | $ | 18,765 | $ | 60,976 | $ | 15,545 | $ | 19,059 | $ | 17,578 | $ | 52,182 | ||||||||||||||||||
| LESS: |
||||||||||||||||||||||||||||||||||||
| Interest expense, net |
(1,024 | ) | (1,464 | ) | (1,383 | ) | (1,246 | ) | (5,117 | ) | (1,218 | ) | (884 | ) | (744 | ) | (2,846 | ) | ||||||||||||||||||
| Depreciation |
(2,619 | ) | (3,169 | ) | (2,901 | ) | (2,517 | ) | (11,206 | ) | (2,808 | ) | (2,812 | ) | (2,662 | ) | (8,282 | ) | ||||||||||||||||||
| Amortization of intangibles |
(515 | ) | (567 | ) | (709 | ) | (603 | ) | (2,394 | ) | (626 | ) | (632 | ) | (659 | ) | (1,917 | ) | ||||||||||||||||||
| Provision for income taxes |
(2,431 | ) | (3,038 | ) | (3,446 | ) | (4,016 | ) | (12,931 | ) | (3,486 | ) | (4,713 | ) | (3,148 | ) | (11,347 | ) | ||||||||||||||||||
| NET INCOME |
$ | 5,164 | $ | 6,458 | $ | 7,323 | $ | 10,383 | $ | 29,328 | $ | 7,407 | $ | 10,018 | $ | 10,365 | $ | 27,790 | ||||||||||||||||||
| ADJUSTED INCOME EXCLUDING SPECIAL CHARGES, GAIN ON SALE of AFFILIATE, NET OF TAX and INCOME TAX BENEFIT |
$ | 5,164 | $ | 6,458 | $ | 7,649 | $ | 10,527 | $ | 29,799 | $ | 7,877 | $ | 10,436 | $ | 9,811 | $ | 28,124 | ||||||||||||||||||
| LESS: Special charges, net of tax |
— | — | (326 | ) | (144 | ) | (471 | ) | (470 | ) | (418 | ) | (1,449 | ) | (2,337 | ) | ||||||||||||||||||||
| LESS: Gain on sale of affiliate, net of tax |
— | — | — | — | — | — | — | 1,043 | 1,043 | |||||||||||||||||||||||||||
| LESS: Benefit from income tax changes |
— | — | — | — | — | — | — | 960 | 960 | |||||||||||||||||||||||||||
| NET INCOME |
$ | 5,164 | $ | 6,458 | $ | 7,323 | $ | 10,383 | $ | 29,328 | $ | 7,407 | $ | 10,018 | $ | 10,365 | $ | 27,790 | ||||||||||||||||||
| Weighted average common shares outstanding (diluted) |
16,197 | 16,332 | 16,368 | 16,438 | 16,291 | 16,533 | 16,679 | 16,768 | 16,660 | |||||||||||||||||||||||||||
| ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL CHARGES, GAIN ON SALE of AFFILIATE, and INCOME TAX BENEFIT |
$ | 0.32 | $ | 0.40 | $ | 0.47 | $ | 0.64 | $ | 1.83 | $ | 0.48 | $ | 0.63 | $ | 0.59 | $ | 1.70 | ||||||||||||||||||
9
Exhibit 99.2
FOR IMMEDIATE RELEASE
| Contact: | Kenneth W. Smith |
| Chief Financial Officer |
| CIRCOR International, Inc. |
| (781) 270-1200 |
C. William Zadel Joins CIRCOR International Board of Directors
Burlington, MA, October 31, 2007
CIRCOR International, Inc. (NYSE:CIR) a leading provider of valves and fluid control products for the instrumentation, aerospace, thermal fluid and energy markets, today announced the appointment of C. William Zadel to the company’s Board of Directors, thereby increasing the size of its Board from 6 to 7 members. Mr. Zadel also has been appointed to the Board’s Compensation and Audit Committees.
Mr. Zadel retired in 2004 after serving for eight years as the Chairman and Chief Executive Officer of NYSE listed manufacturing companies: first, with Millipore Corporation and then Mykrolis Corporation which was spun-off from Millipore. Prior to that, Mr. Zadel had served as President and Chief Executive Officer of Ciba Corning Diagnostics Corp. and held senior management positions with Corning, Inc. Mr. Zadel is currently a member of the Board of Directors of Kulicke and Soffa Industries, a NASDAQ listed manufacturer of products for the semiconductor assembly and Matritech, Inc., an AMEX listed manufacturer of cancer diagnostic products.
David A. Bloss, Sr., CIRCOR’s Chairman and Chief Executive Officer commented, “We are pleased to welcome Bill to the CIRCOR Board. His background as a Chief Executive in a variety of public company manufacturing environments will complement the Board’s composition and we are confident that his experience will benefit our shareholders.”
CIRCOR International, Inc. is a leading provider of valves and fluid control products that allow customers around the world to use fluid safely and efficiently in the instrumentation, fluid regulation and petrochemical markets. CIRCOR’s executive headquarters is located at 25 Corporate Drive, Burlington, MA 01803. The Company can be found on the World Wide Web at www.circor.com.