falsedesktopCIR2020-09-27000109188320000120{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "Delaware\t\t04-3477276\n(State or Other Jurisdiction of Incorporation or Organization)\t\t(I.R.S. Employer Identification No.)\n30 Corporate Drive Suite 200\t\t\nBurlington\tMA\t01803-4238\n(Address of principal executive offices)\t\t(Zip Code)\n", "q10k_tbl_1": "Large accelerated filer\t☒\tAccelerated filer\t☐\tEmerging growth company\t☐\nNon-accelerated filer\t☐\tSmaller reporting company\t☐\t\t\n", "q10k_tbl_2": "\t\tPage\nPART I.\tFINANCIAL INFORMATION\t3\nItem 1.\tFinancial Statements (Unaudited)\t3\n\tCondensed Consolidated Balance Sheets as of September 27 2020 and December 31 2019\t3\n\tCondensed Consolidated Statements of Operations for the Three and Nine Months Ended September 27 2020 and September 29 2019\t3\n\tCondensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 27 2020 and September 29 2019\t5\n\tCondensed Consolidated Statements of Cash Flows for the Nine Months Ended September 27 2020 and September 29 2019\t6\n\tCondensed Consolidated Statements of Shareholders' Equity for the Three and Nine Months Ended September 27 2020 and September 29 2019\t7\n\tNotes to Condensed Consolidated Financial Statements\t9\nItem 2.\tManagement's Discussion and Analysis of Financial Condition and Results of Operations\t29\nItem 3.\tQuantitative and Qualitative Disclosures About Market Risk\t42\nItem 4.\tControls and Procedures\t43\nPART II.\tOTHER INFORMATION\t44\nItem 1.\tLegal Proceedings\t44\nItem 1A.\tRisk Factors\t44\nItem 6.\tExhibits\t45\nSignatures\t\t46\n", "q10k_tbl_3": "\tSeptember 27 2020\tDecember 31 2019\nASSETS\t\t\nCURRENT ASSETS:\t\t\nCash and cash equivalents\t72772\t84531\nTrade accounts receivable less allowance for doubtful accounts of $10424 and $3086 at September 27 2020 and December 31 2019 respectively\t102840\t125422\nInventories\t144476\t137309\nPrepaid expenses and other current assets\t98401\t66664\nAssets held for sale\t0\t161193\nTotal Current Assets\t418489\t575119\nPROPERTY PLANT AND EQUIPMENT NET\t167037\t172179\nOTHER ASSETS:\t\t\nGoodwill\t158117\t271893\nIntangibles net\t357038\t385542\nDeferred income taxes\t905\t30852\nOther assets\t43621\t35360\nTOTAL ASSETS\t1145207\t1470945\nLIABILITIES AND SHAREHOLDERS' EQUITY\t\t\nCURRENT LIABILITIES:\t\t\nAccounts payable\t63966\t79399\nAccrued expenses and other current liabilities\t86176\t94169\nAccrued compensation and benefits\t27570\t19518\nLiabilities held for sale\t0\t43289\nTotal Current Liabilities\t177712\t236375\nLONG-TERM DEBT\t527721\t636297\nDEFERRED INCOME TAXES\t16823\t21425\nPENSION LIABILITY NET\t143599\t146801\nOTHER NON-CURRENT LIABILITIES\t58538\t38636\nCOMMITMENTS AND CONTINGENCIES (NOTE 11)\t\t\nSHAREHOLDERS' EQUITY:\t\t\nPreferred stock $0.01 par value; 1000000 shares authorized; no shares issued and outstanding\t0\t0\nCommon stock $0.01 par value; 29000000 shares authorized; 19997931 and 19912362 outstanding at September 27 2020 and December 31 2019 respectively\t214\t213\nAdditional paid-in capital\t451351\t446657\n(Accumulated deficit) retained earnings\t(72528)\t99280\nCommon treasury stock at cost (1372488 shares at September 27 2020 and December 31 2019)\t(74472)\t(74472)\nAccumulated other comprehensive loss net of tax\t(83751)\t(80267)\nTotal Shareholders' Equity\t220814\t391411\nTOTAL LIABILITIES AND SHAREHOLDERS' EQUITY\t1145207\t1470945\n", "q10k_tbl_4": "\tThree Months Ended\t\tNine Months Ended\t\n\tSeptember 27 2020\tSeptember 29 2019\tSeptember 27 2020\tSeptember 29 2019\nNet revenues\t186640\t237052\t564920\t721675\nCost of revenues\t130630\t162578\t389905\t490870\nGross profit\t56010\t74474\t175015\t230805\nSelling general and administrative expenses\t50652\t60039\t164948\t190227\nGoodwill impairment charge\t0\t0\t116182\t0\nSpecial and restructuring charges (recoveries) net\t938\t23519\t(35747)\t19893\nOperating income (loss)\t4420\t(9084)\t(70368)\t20685\nOther expense (income):\t\t\t\t\nInterest expense net\t8202\t11804\t25699\t37846\nOther expense (income) net\t765\t(759)\t229\t(2755)\nTotal other expense net\t8967\t11045\t25928\t35091\n(Loss) income from continuing operations before income taxes\t(4547)\t(20129)\t(96296)\t(14406)\nProvision for (benefit from) income taxes\t54318\t7520\t40923\t13513\n(Loss) income from continuing operations net of tax\t(58865)\t(27649)\t(137219)\t(27919)\nIncome (loss) from discontinued operations net of tax\t341\t(84688)\t(34345)\t(107572)\nNet loss\t(58524)\t(112337)\t(171564)\t(135491)\nBasic income (loss) per common share:\t\t\t\t\nBasic from continuing operations\t(2.94)\t(1.39)\t(6.87)\t(1.40)\nBasic from discontinued operations\t0.02\t(4.25)\t(1.72)\t(5.41)\nNet loss\t(2.93)\t(5.64)\t(8.59)\t(6.81)\nDiluted income (loss) per common share:\t\t\t\t\nDiluted from continuing operations\t(2.94)\t(1.39)\t(6.87)\t(1.40)\nDiluted from discontinued operations\t0.02\t(4.25)\t(1.72)\t(5.41)\nNet loss\t(2.93)\t(5.64)\t(8.59)\t(6.81)\nWeighted average number of common shares outstanding:\t\t\t\t\nBasic\t20001\t19916\t19975\t19898\nDiluted\t20001\t19916\t19975\t19898\n", "q10k_tbl_5": "\tThree Months Ended\t\tNine Months Ended\t\n\tSeptember 27 2020\tSeptember 29 2019\tSeptember 27 2020\tSeptember 29 2019\nNet loss\t(58524)\t(112337)\t(171564)\t(135491)\nOther comprehensive income (loss) net of tax:\t\t\t\t\nForeign currency translation adjustments\t2817\t(7164)\t(3418)\t(16882)\nInterest rate swap adjustments (1)\t1373\t(1206)\t(192)\t(6371)\nPension adjustment\t44\t0\t126\t(393)\nOther comprehensive income (loss) net of tax\t4234\t(8370)\t(3484)\t(23646)\nCOMPREHENSIVE LOSS\t(54290)\t(120707)\t(175048)\t(159137)\n(1) Net of an income tax effect of $0.0 million and $(0.4) million for the three months ended September 27 2020 and September 29 2019 respectively and $(0.5) million and $1.7 million for the nine months ended September 27 2020 and September 19 2019 respectively.\t\t\t\t\n", "q10k_tbl_6": "\tNine Months Ended\t\nOPERATING ACTIVITIES\tSeptember 27 2020\tSeptember 29 2019\nNet loss\t(171564)\t(135491)\nLoss from discontinued operations net of income taxes\t(34345)\t(107572)\nLoss from continuing operations\t(137219)\t(27919)\nAdjustments to reconcile net loss to net cash (used in) provided by operating activities:\t\t\nDepreciation\t14881\t16618\nAmortization\t32418\t36023\nProvision for bad debt expense\t7219\t(469)\nWrite down of inventory\t2386\t301\nCompensation expense for share-based plans\t4076\t4200\nAmortization of debt issuance costs\t6463\t3669\nDeferred tax provision\t35582\t11812\nLoss on sale or write-down of property plant and equipment\t0\t2889\nGoodwill impairment charge\t116182\t0\n(Gain) Loss on sale of businesses\t(54253)\t2707\nChanges in operating assets and liabilities net of effects of acquisition and disposition:\t\t\nTrade accounts receivable\t18051\t17413\nInventories\t(8477)\t(11724)\nPrepaid expenses and other assets\t(39184)\t(20546)\nAccounts payable accrued expenses and other liabilities\t(30468)\t(18300)\nNet cash (used in) provided by continuing operating activities\t(32343)\t16674\nNet cash used in discontinued operating activities\t(14022)\t(17585)\nNet cash used in operating activities\t(46365)\t(911)\nINVESTING ACTIVITIES\t\t\nAdditions to property plant and equipment\t(9147)\t(9519)\nProceeds from the sale of property plant and equipment\t(122)\t99\nProceeds from the sale of business\t166210\t163056\nProceeds from beneficial interest of factored receivables\t2212\t0\nNet cash provided by continuing investing activities\t159153\t153636\nNet cash used in discontinued investing activities\t(11338)\t(2435)\nNet cash provided by investing activities\t147815\t151201\nFINANCING ACTIVITIES\t\t\nProceeds from long-term debt\t165800\t231950\nPayments of long-term debt\t(279191)\t(379897)\nProceeds from the exercise of stock options\t117\t106\nNet cash used in continuing financing activities\t(113274)\t(147841)\nNet cash used in financing activities\t(113274)\t(147841)\nEffect of exchange rate changes on cash cash equivalents and restricted cash\t29\t(1753)\n(DECREASE) INCREASE IN CASH CASH EQUIVALENTS AND RESTRICTED CASH\t(11795)\t696\nCash cash equivalents and restricted cash at beginning of period\t85727\t69525\nCASH CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD\t73932\t70221\nNon-cash investing activities:\t\t\nPurchases of property and equipment included in accounts payable and accrued expenses\t596\t1236\n", "q10k_tbl_7": "\tCommon Stock\t\tAdditional Paid-in Capital\tRetained Earnings (Accum-ulated Deficit)\tAccumulated Other Comprehensive Loss\tTreasury Stock\tTotal Shareholders' Equity\n\tShares\tAmount\nBalance as of June 28 2020\t19994\t214\t449576\t(13982)\t(87985)\t(74472)\t273351\nNet loss\t0\t0\t0\t(58524)\t0\t0\t(58524)\nOther comprehensive income net of tax\t0\t0\t0\t0\t4234\t0\t4234\nConversion of restricted stock units\t4\t0\t(11)\t0\t0\t0\t(11)\nStock options exercised\t0\t0\t0\t\t0\t0\t0\nShare-based plan compensation\t0\t0\t1786\t0\t0\t0\t1786\nOther\t0\t0\t0\t(22)\t0\t0\t(22)\nBalance as of September 27 2020\t19998\t214\t451351\t(72528)\t(83751)\t(74472)\t220814\nBalance as of June 30 2019\t19902\t212\t444109\t210065\t(85015)\t(74472)\t494899\nNet loss\t0\t0\t0\t(112337)\t0\t0\t(112337)\nOther comprehensive loss net of tax\t0\t0\t0\t0\t(8370)\t0\t(8370)\nConversion of restricted stock units\t4\t0\t(64)\t0\t0\t0\t(64)\nStock options exercised\t0\t0\t63\t0\t0\t0\t63\nShare-based plan compensation\t0\t0\t1229\t0\t0\t0\t1229\nOther\t\t\t(32)\t\t\t\t(32)\nBalance as of September 29 2019\t19906\t212\t445305\t97728\t(93385)\t(74472)\t375388\n", "q10k_tbl_8": "\tCommon Stock\t\tAdditional Paid-in Capital\tRetained Earnings (Accum-ulated Deficit)\tAccumulated Other Comprehensive Loss\tTreasury Stock\tTotal Shareholders' Equity\n\tShares\tAmount\nBalance as of December 31 2019\t19912\t213\t446657\t99280\t(80267)\t(74472)\t391411\nNet loss\t0\t0\t0\t(171564)\t0\t0\t(171564)\nOther comprehensive loss net of tax\t0\t0\t0\t0\t(3484)\t0\t(3484)\nCumulative effect adjustment related to adoption of current expected credit loss standard (ASC 326)\t0\t0\t0\t(222)\t0\t0\t(222)\nConversion of restricted stock units\t83\t1\t275\t0\t0\t0\t276\nStock options exercised\t3\t0\t117\t0\t0\t0\t117\nShare-based plan compensation\t0\t0\t4302\t0\t0\t0\t4302\nOther\t0\t0\t0\t(22)\t0\t0\t(22)\nBalance as of September 27 2020\t19998\t214\t451351\t(72528)\t(83751)\t(74472)\t220814\nBalance as of December 31 2018\t19845\t212\t440890\t232102\t(69739)\t(74472)\t528993\nNet loss\t0\t0\t0\t(135491)\t0\t0\t(135491)\nOther comprehensive loss net of tax\t0\t0\t0\t0\t(23646)\t0\t(23646)\nCumulative effect adjustment related to adoption of lease standard (ASC 842)\t\t\t\t1113\t\t\t1113\nConversion of restricted stock units\t58\t0\t(20)\t0\t0\t0\t(20)\nStock options exercised\t3\t0\t106\t0\t0\t0\t106\nShare-based plan compensation\t0\t0\t4361\t0\t0\t0\t4361\nOther\t\t\t(32)\t4\t\t\t(28)\nBalance as of September 29 2019\t19906\t212\t445305\t97728\t(93385)\t(74472)\t375388\n", "q10k_tbl_9": "\tThree Months Ended\t\tNine Months Ended\t\n\tSeptember 27 2020\tSeptember 29 2019\tSeptember 27 2020\tSeptember 29 2019\nNet revenues\t0\t15276\t10055\t70655\nCost of revenues\t0\t18533\t26399\t77846\nGross (loss) profit\t0\t(3257)\t(16344)\t(7191)\nSelling general and administrative expenses\t0\t2271\t9074\t11464\nSpecial and restructuring charges net\t(938)\t100812\t18189\t101614\nOperating (loss) income\t938\t(106340)\t(43607)\t(120269)\nOther (income) expense:\t\t\t\t\nInterest (income) net\t0\t(8)\t(14)\t(14)\nOther (income) expense net\t763\t(237)\t981\t(74)\nTotal other (income) expense net\t763\t(245)\t967\t(88)\nIncome (loss) from discontinued operations before income taxes\t175\t(106095)\t(44574)\t(120181)\nProvision for (benefit from) income tax\t(166)\t(21407)\t(10229)\t(12609)\nIncome (loss) from discontinued operations net of tax\t341\t(84688)\t(34345)\t(107572)\n", "q10k_tbl_10": "\tDecember 31 2019\t\t\n\tDV\tI&S\tTotal\nTrade accounts receivable net\t467\t9935\t10402\nInventories\t55521\t13878\t69399\nPrepaid expenses and other current assets\t2867\t616\t3483\nProperty plant and equipment net\t6742\t6409\t13151\nGoodwill\t0\t91492\t91492\nDeferred tax asset\t778\t1089\t1867\nOther assets\t4793\t6363\t11156\nValuation adjustment on classification to assets held for sale\t(39757)\t0\t(39757)\nTotal assets held for sale\t31411\t129782\t161193\nAccounts payable\t8708\t5997\t14705\nAccrued and other current liabilities\t5834\t2192\t8026\nDeferred income taxes\t638\t151\t789\nOther liabilities\t13931\t5838\t19769\nTotal liabilities held for sale\t29111\t14178\t43289\n", "q10k_tbl_11": "\t\tThree Months Ended\t\tNine Months Ended\t\n\t\tSeptember 27 2020\tSeptember 29 2019\tSeptember 27 2020\tSeptember 29 2019\nAerospace & Defense Segment\t\t\t\t\t\n\tCommercial Aerospace & Other\t19142\t28640\t70657\t86467\n\tDefense\t43107\t38981\t119326\t107088\n\tTotal\t62249\t67621\t189983\t193555\nIndustrial Segment\t\t\t\t\t\n\tValves\t49846\t85959\t153489\t275457\n\tPumps\t74545\t83472\t221448\t252663\n\tTotal\t124391\t169431\t374937\t528120\nNet Revenue\t\t186640\t237052\t564920\t721675\n", "q10k_tbl_12": "\t\tThree Months Ended\t\tNine Months Ended\t\n\t\tSeptember 27 2020\tSeptember 29 2019\tSeptember 27 2020\tSeptember 29 2019\nAerospace & Defense Segment\t\t\t\t\t\n\tEMEA\t13936\t18309\t42996\t52875\n\tNorth America\t44932\t44807\t135627\t123685\n\tOther\t3381\t4505\t11360\t16995\n\tTotal\t62249\t67621\t189983\t193555\nIndustrial Segment\t\t\t\t\t\n\tEMEA\t52146\t72343\t161572\t211352\n\tNorth America\t40765\t61997\t128610\t204793\n\tOther\t31480\t35091\t84755\t111975\n\tTotal\t124391\t169431\t374937\t528120\nNet Revenue\t\t186640\t237052\t564920\t721675\n", "q10k_tbl_13": "\tSeptember 27 2020\tDecember 31 2019\tIncrease/(Decrease)\nContract assets:\t\t\t\nRecorded within prepaid expenses and other current assets\t71918\t52781\t19137\nRecorded within other non-current assets\t9592\t0\t9592\n\t81510\t52781\t28729\nContract liabilities:\t\t\t\nRecorded within accrued expenses and other current liabilities\t30226\t35007\t(4781)\nRecorded within other non-current liabilities\t11330\t0\t11330\n\t41556\t35007\t6549\n", "q10k_tbl_14": "\tSpecial & restructuring charges (recoveries) net\t\t\t\n\tThree Months Ended\t\tNine Months Ended\t\n\tSeptember 27 2020\tSeptember 29 2019\tSeptember 27 2020\tSeptember 29 2019\nSpecial charges (recoveries) net\t436\t18481\t(39720)\t14198\nRestructuring charges net\t502\t5038\t3973\t5695\nTotal special and restructuring charges (recoveries) net\t938\t23519\t(35747)\t19893\n", "q10k_tbl_15": "\tSpecial charges net\t\t\t\t\n\tThree Months Ended September 27 2020\t\t\t\t\n\t\tAerospace & Defense\tIndustrial\tCorporate\tTotal\nI&S divestiture\t\t0\t0\t249\t249\nOther special charges\t\t0\t0\t187\t187\nTotal special charges net\t\t0\t0\t436\t436\n\t\tSpecial (recoveries) charges net\t\t\t\n\t\tNine Months Ended September 27 2020\t\t\t\n\t\tAerospace & Defense\tIndustrial\tCorporate\tTotal\nI&S divestiture\t\t0\t(53202)\t(57)\t(53259)\nProfessional fees\t\t0\t0\t6925\t6925\nAmortization of debt issuance fee\t\t0\t0\t3541\t3541\nOther special charges\t\t0\t101\t2972\t3073\nTotal special (recoveries) charges net\t\t0\t(53101)\t13381\t(39720)\n", "q10k_tbl_16": "\tSpecial charges net\t\t\t\t\n\tThree Months Ended September 29 2019\t\t\t\t\n\t\tAerospace & Defense\tIndustrial\tCorporate\tTotal\nBusiness sales\t\t0\t11644\t0\t11644\nProfessional fees\t\t0\t0\t3953\t3953\nOther cost savings initiatives\t\t0\t532\t2352\t2884\nTotal special charges net\t\t0\t12176\t6305\t18481\n\tSpecial (recoveries) charges net\t\t\t\t\n\tNine Months Ended September 29 2019\t\t\t\t\n\t\tAerospace & Defense\tIndustrial\tCorporate\tTotal\nBusiness sales\t\t0\t4070\t286\t4356\nProfessional fees\t\t0\t0\t6028\t6028\nOther cost savings initiatives\t\t0\t532\t3282\t3814\nTotal special charges net\t\t0\t4602\t9596\t14198\n", "q10k_tbl_17": "\tRestructuring charges net\t\t\t\n\tAs of and for the three months ended September 27 2020\t\t\t\n\tAerospace & Defense\tIndustrial\tCorporate\tTotal\nFacility related expenses\t7\t154\t0\t161\nEmployee related expenses net\t173\t151\t17\t341\nTotal restructuring charges net\t180\t305\t17\t502\n\tRestructuring charges net\t\t\t\n\tAs of and for the nine months ended September 27 2020\t\t\t\n\tAerospace & Defense\tIndustrial\tCorporate\tTotal\nFacility related expenses\t37\t154\t0\t191\nEmployee related expenses net\t342\t3084\t356\t3782\nTotal restructuring charges net\t379\t3238\t356\t3973\nAccrued restructuring charges as of December 31 2019\t\t\t\t5199\nTotal year to date charges net (shown above)\t\t\t\t3973\nCharges paid / settled net\t\t\t\t(6664)\nAccrued restructuring charges as of September 27 2020\t\t\t\t2508\n", "q10k_tbl_18": "\tRestructuring charges net\t\t\t\n\tAs of and for the three months ended September 29 2019\t\t\t\n\tAerospace & Defense\tIndustrial\tCorporate\tTotal\nFacility related expenses\t62\t32\t177\t271\nEmployee related expenses\t0\t4767\t0\t4767\nTotal restructuring charges net\t62\t4799\t177\t5038\n\tRestructuring charges net\t\t\t\n\tAs of and for the nine months ended September 29 2019\t\t\t\n\tAerospace & Defense\tIndustrial\tCorporate\tTotal\nFacility related expenses\t279\t32\t177\t488\nEmployee related expenses\t(3)\t5210\t0\t5207\nTotal restructuring charges net\t276\t5242\t177\t5695\nAccrued restructuring charges as of December 31 2018\t\t\t\t874\nTotal year to date charges net (shown above)\t\t\t\t5695\nCharges paid / settled net\t\t\t\t(1747)\nAccrued restructuring charges as of September 29 2019\t\t\t\t4822\n", "q10k_tbl_19": "\tSeptember 27 2020\tDecember 31 2019\nRaw materials\t73540\t65315\nWork in process\t45191\t53891\nFinished goods\t25745\t18103\nTotal inventories\t144476\t137309\n", "q10k_tbl_20": "\tAerospace & Defense\tIndustrial\tTotal\nGoodwill as of December 31 2019\t57385\t214508\t271893\nImpairment\t0\t(116182)\t(116182)\nCurrency translation adjustments\t119\t2287\t2406\nGoodwill as of September 27 2020\t57504\t100613\t158117\n", "q10k_tbl_21": "\tGross Carrying Amount\tAccumulated Amortization\tNet Carrying Value\nPatents\t5368\t(5368)\t0\nCustomer relationships\t302366\t(102410)\t199956\nBacklog\t13700\t(13182)\t518\nAcquired technology\t136256\t(55575)\t80681\nTotal Amortized Intangibles\t457690\t(176535)\t281155\nNon-amortized intangibles (primarily trademarks and trade names)\t75883\t0\t75883\nTotal Non-Amortized Intangibles\t75883\t0\t75883\nNet carrying value of intangible assets\t\t\t357038\n", "q10k_tbl_22": "\t2020\t2021\t2022\t2023\t2024\tAfter 2024\nEstimated amortization expense\t11186\t41738\t36711\t32182\t28272\t131066\n", "q10k_tbl_23": "\tThree Months Ended\t\tNine Months Ended\t\n\tSeptember 27 2020\tSeptember 29 2019\tSeptember 27 2020\tSeptember 29 2019\nNet revenues\t\t\t\t\nAerospace & Defense\t62249\t67621\t189983\t193555\nIndustrial\t124391\t169431\t374937\t528120\nConsolidated net revenues\t186640\t237052\t564920\t721675\nResults from continuing operations before income taxes\t\t\t\t\nAerospace & Defense - Segment Operating Income\t14782\t13564\t40418\t33382\nIndustrial - Segment Operating Income\t9807\t21278\t27383\t70033\nCorporate expenses\t(7244)\t(9248)\t(23496)\t(25798)\nSegment Operating Income\t17345\t25594\t44305\t77617\nRestructuring charges net\t502\t5038\t3973\t5695\nSpecial charges (recoveries) net\t436\t18481\t(39720)\t14198\nSpecial and restructuring charges (recoveries) net\t938\t23519\t(35747)\t19893\nDivestiture and inventory related restructuring charges and (recoveries) net\t351\t(1145)\t(250)\t(819)\nImpairment charges\t0\t0\t116182\t0\nAcquisition amortization\t10625\t11202\t31523\t34527\nAcquisition depreciation\t1011\t1102\t2965\t3331\nAcquisition amortization and other costs net\t11987\t11159\t150420\t37039\nConsolidated Operating Income (loss)\t4420\t(9084)\t(70368)\t20685\nInterest expense net\t8202\t11804\t25699\t37846\nOther (income) expense net\t765\t(759)\t229\t(2755)\n(Loss) income from continuing operations before income taxes\t(4547)\t(20129)\t(96296)\t(14406)\n\tThree Months Ended\t\tNine Months Ended\t\n\tSeptember 27 2020\tSeptember 29 2019\tSeptember 27 2020\tSeptember 29 2019\nCapital expenditures\t\t\t\t\nAerospace & Defense\t1236\t1826\t2562\t3204\nIndustrial\t1085\t1980\t5642\t5259\nCorporate\t31\t222\t361\t877\nConsolidated capital expenditures\t2352\t4028\t8565\t9340\nDepreciation and amortization\t\t\t\t\nAerospace & Defense\t3142\t3145\t9322\t8593\nIndustrial\t12500\t13883\t37661\t43487\nCorporate\t85\t152\t316\t483\nConsolidated depreciation and amortization\t15727\t17180\t47299\t52563\nIdentifiable assets\tSeptember 27 2020\tDecember 31 2019\t\t\nAerospace & Defense\t433922\t426405\t\t\nIndustrial\t1390523\t1943002\t\t\nCorporate\t(679238)\t(898462)\t\t\nConsolidated identifiable assets\t1145207\t1470945\t\t\n", "q10k_tbl_24": "\tThree Months Ended\tNine Months Ended\n\tSeptember 27 2020\tSeptember 27 2020\nAmount of loss recognized in OCI\t(293)\t(5081)\nAmount of loss reclassified from AOCI to earnings\t1666\t4423\n", "q10k_tbl_25": "Balance beginning December 31 2019\t1642\nProvisions\t1895\nClaims settled\t(1813)\nCurrency translation adjustment\t6\nBalance ending September 27 2020\t1730\n", "q10k_tbl_26": "\tThree Months Ended\t\tNine Months Ended\t\n\tSeptember 27 2020\tSeptember 29 2019\tSeptember 27 2020\tSeptember 29 2019\nPension Benefits - U.S. Plans\t\t\t\t\nInterest cost\t1398\t1967\t4194\t5901\nExpected return on plan assets\t(2747)\t(2742)\t(8241)\t(8226)\nAmortization\t43\t129\t129\t388\nNet periodic benefit income\t(1306)\t(646)\t(3918)\t(1937)\nPension Benefits - Non-U.S. Plans\t\t\t\t\nService cost\t692\t680\t2076\t2062\nInterest cost\t339\t539\t1017\t1643\nExpected return on plan assets\t(194)\t(235)\t(582)\t(726)\nAmortization\t31\t4\t93\t13\nNet periodic benefit cost\t868\t988\t2604\t2992\nOther Post-Retirement Benefits\t\t\t\t\nInterest cost\t66\t93\t198\t280\nNet periodic benefit cost\t66\t93\t198\t280\n", "q10k_tbl_27": "\tForeign Currency Translation Adjustments\tPension net\tDerivative\tTotal\nBalance as of December 31 2019\t(53848)\t(19513)\t(6906)\t(80267)\nReclassified to earnings\t(3625)\t0\t4423\t798\nOther comprehensive (loss) income\t207\t126\t(4615)\t(4282)\nBalance as of September 27 2020\t(57266)\t(19387)\t(7098)\t(83751)\n", "q10k_tbl_28": "\tThree Months Ended\t\t\t\t\t\n(in thousands)\tSeptember 27 2020\tSeptember 29 2019\tTotal Change\tDivestiture\tOperations\tForeign Exchange\nNet Revenues\t\t\t\t\t\t\nAerospace & Defense\t62249\t67621\t(5372)\t0\t(6005)\t632\nIndustrial\t124391\t169431\t(45040)\t(20697)\t(27034)\t2692\nConsolidated Net Revenues\t186640\t237052\t(50412)\t(20697)\t(33039)\t3324\n", "q10k_tbl_29": "(in thousands except percentages)\tThree Months Ended\t\n\tSeptember 27 2020\tSeptember 29 2019\nNet revenues\t\t\nAerospace & Defense\t62249\t67621\nIndustrial\t124391\t169431\nConsolidated net revenues\t186640\t237052\nLoss from continuing operations before income taxes\t\t\nAerospace & Defense - Segment Operating Income\t14782\t13564\nIndustrial - Segment Operating Income\t9807\t21278\nCorporate expenses\t(7244)\t(9248)\nSubtotal\t17345\t25594\nRestructuring charges net\t502\t5038\nSpecial charges net\t436\t18481\nSpecial and restructuring charges net (1)\t938\t23519\nDivestiture and inventory related restructuring charges and (recoveries) net\t351\t(1145)\nAcquisition amortization (2)\t10625\t11202\nAcquisition depreciation (2)\t1011\t1102\nAcquisition amortization and other costs net\t11987\t11159\nConsolidated operating income (loss)\t4420\t(9084)\nInterest expense net\t8202\t11804\nOther expense (income) net\t765\t(759)\nLoss from continuing operations before income taxes\t(4547)\t(20129)\nConsolidated Operating Margin\t2.4%\t(3.8)%\n(1) See Special and restructuring charges (recoveries) net in Note 5 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional details.\t\t\n(2) Acquisition amortization and depreciation is recorded in either cost of revenues or selling general and administrative expenses depending upon the nature of the underlying asset.\t\t\n", "q10k_tbl_30": "\tThree Months Ended\t\t\n(in thousands except percentages)\tSeptember 27 2020\tSeptember 29 2019\tChange\nNet Revenues\t62249\t67621\t(5372)\nSegment Operating Income\t14782\t13564\t1218\nSegment Operating Margin\t23.7%\t20.1%\t\nSegment Orders\t59105\t63968\t(4863)\n", "q10k_tbl_31": "\tThree Months Ended\t\t\n(in thousands except percentages)\tSeptember 27 2020\tSeptember 29 2019\tChange\nNet Revenues as reported\t124391\t169431\t(45040)\nNet Revenues excluding divestiture (1)\t124391\t148734\t(24343)\nSegment Operating Income as reported\t9807\t21278\t(11471)\nSegment Operating Income excluding divestiture (2)\t9807\t18601\t(8794)\nSegment Operating Margin (adjusted)\t7.9%\t12.5%\t\nSegment Orders\t107453\t158986\t(51533)\n(1) Adjusted for the January 2020 divestiture of the Instrumentation and Sampling (\"I&S\") business the August 2019 divestiture of the Spence Engineering (\"Spence\") business and the divestiture of our Reliability Services business in January 2019. The I&S business generated revenues of $17.8 million for the three months ended September 29 2019. The Spence business generated revenues of $2.9 million for the three months ended September 29 2019.\t\t\t\n(2) Adjusted for the January 2020 divestiture of the I&S business August 2019 divestiture of the Spence business and the January 2019 divestiture of the Reliability Services business. The I&S business contributed $2.5 million to segment operating income for the three months ended September 29 2019.\t\t\t\n", "q10k_tbl_32": "\tThree months ended\t\n\tSeptember 27 2020\tSeptember 29 2019\nLoss from Continuing Operations Before Income Taxes\t(4547)\t(20129)\nU.S. tax rate\t21.0%\t21.0%\nState taxes\t(35.3)%\t8.7%\nForeign derived intangible income\t-%\t7.8%\nForeign tax rate differential\t1.5%\t(3.8)%\nUnbenefited losses\t(174.3)%\t-%\nUS permanent differences\t(28.1)%\t-%\nGILTI impact\t15.6%\t(9.0)%\nIntercompany financing\t(42.4)%\t32.1%\nDispositions\t(14.5)%\t(41.0)%\nImpairment\t-%\t(55.8)%\nValuation Allowance\t(933.3)%\t-%\nOther\t(5.0)%\t2.6%\nEffective tax rate\t(1194.8)%\t(37.4)%\nProvision for/(benefit from) income taxes\t54318\t7520\n", "q10k_tbl_33": "\tNine Months Ended\t\t\t\t\t\n(in thousands)\tSeptember 27 2020\tSeptember 29 2019\tTotal Change\tDivestiture\tOperations\tForeign Exchange\nNet Revenues\t\t\t\t\t\t\nAerospace & Defense\t189983\t193555\t(3572)\t0\t(3464)\t(108)\nIndustrial\t374937\t528120\t(153183)\t(71670)\t(79246)\t(2266)\nConsolidated Net Revenues\t564920\t721675\t(156755)\t(71670)\t(82710)\t(2374)\n", "q10k_tbl_34": "(in thousands except percentages)\tNine Months Ended\t\n\tSeptember 27 2020\tSeptember 29 2019\nNet revenues\t\t\nAerospace & Defense\t189983\t193555\nIndustrial\t374937\t528120\nConsolidated net revenues\t564920\t721675\nLoss from continuing operations before income taxes\t\t\nAerospace & Defense - Segment Operating Income\t40418\t33382\nIndustrial - Segment Operating Income\t27383\t70033\nCorporate expenses\t(23496)\t(25798)\nSubtotal\t44305\t77617\nRestructuring charges net\t3973\t5695\nSpecial charges (recoveries) net\t(39720)\t14198\nSpecial and restructuring charges (recoveries) net (1)\t(35747)\t19893\nDivestiture and inventory related restructuring charges and (recoveries) net\t(250)\t(819)\nImpairment charges\t116182\t0\nAcquisition amortization (2)\t31523\t34527\nAcquisition depreciation (2)\t2965\t3331\nAcquisition amortization and other costs net\t150420\t37039\nConsolidated operating (loss) income\t(70368)\t20685\nInterest expense net\t25699\t37846\nOther expense (income) net\t229\t(2755)\nLoss from continuing operations before income taxes\t(96296)\t(14406)\nConsolidated Operating Margin\t(12.5)%\t2.9%\n(1) See Special and restructuring charges (recoveries) net in Note 5 to the condensed consolidated financial statements for additional details.\t\t\n(2) Acquisition amortization and depreciation is recorded in either cost of revenues or selling general and administrative expenses depending upon the nature of the underlying asset.\t\t\n", "q10k_tbl_35": "\tNine Months Ended\t\t\n(in thousands except percentages)\tSeptember 27 2020\tSeptember 29 2019\tChange\nNet Revenues\t189983\t193555\t(3572)\nSegment Operating Income\t40418\t33382\t7036\nSegment Operating Margin\t21.3%\t17.2%\t\nSegment Orders\t207752\t245480\t(37728)\n", "q10k_tbl_36": "\tNine Months Ended\t\t\n(in thousands except percentages)\tSeptember 27 2020\tSeptember 29 2019\tChange\nNet Revenues as reported\t374937\t528120\t(153183)\nNet Revenues excluding divestiture (1)\t370037\t451534\t(81497)\nSegment Operating Income as reported\t27383\t70033\t(42650)\nSegment Operating Income excluding divestiture (2)\t27383\t55909\t(28526)\nSegment Operating Margin (adjusted)\t7.4%\t12.4%\t\nSegment Orders\t359919\t495462\t(135543)\n(1) Adjusted for the January 2020 divestiture of the Instrumentation and Sampling (\"I&S\") business the August 2019 divestiture of the Spence Engineering (\"Spence\") business and the divestiture of our Reliability Services business in January 2019. The I&S business generated revenues of $4.9 million and $60.0 million for the nine months ended September 27 2020 and September 29 2019 respectively. The Spence business generated revenues of $13.5 million for the nine months ended September 29 2019. The Reliability Services business generated revenues of $3.1 million for the nine months ended September 29 2019.\t\t\t\n(2) Adjusted for the January 2020 divestiture of the I&S business August 2019 divestiture of the Spence business and the January 2019 divestiture of the Reliability Services business. The I&S business contributed $10.6 million to segment operating income for the nine months ended September 29 2019. The Spence business contributed $3.3 million to segment operating income for the nine months ended September 29 2019.\t\t\t\n", "q10k_tbl_37": "\tNine Months Ended\t\n\tSeptember 27 2020\tSeptember 29 2019\nLoss from Continuing Operations Before Income Taxes\t(96296)\t(14406)\nU.S. tax rate\t21.0%\t21.0%\nState taxes\t-%\t12.2%\nGlobal Intangible Low-Taxed Income Impact\t-%\t(11.9)%\nForeign derived intangible income\t-%\t9.5%\nForeign tax rate differential\t(0.2)%\t(5.0)%\nDispositions\t(7.5)%\t(77.4)%\nImpairment\t(4.7)%\t(78.0)%\nIntercompany financing\t1.8%\t40.1%\nValuation Allowance\t(44.1)%\t-%\nOther\t(8.8)%\t(4.3)%\nEffective tax rate\t(42.5)%\t(93.8)%\nProvision for/(benefit from) income taxes\t40923\t13513\n", "q10k_tbl_38": "\tSeptember 27 2020\tSeptember 29 2019\nCash flow provided by (used in):\t\t\nOperating activities\t(46365)\t(911)\nInvesting activities\t147815\t151201\nFinancing activities\t(113274)\t(147841)\nEffect of exchange rate changes on cash cash equivalents and restricted cash\t29\t(1753)\nIncrease / (decrease) in cash cash equivalents and restricted cash\t(11795)\t696\n", "q10k_tbl_39": "Exhibit No.\t\tDescription and Location\n3.1\t\tAmended and Restated Certificate of Incorporation of the Company incorporated herein by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 7 2020.\n3.2\t\tSecond Amended and Restated By-laws of the Company incorporated herein by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed with the SEC on June 17 2020.\n31.1*\t\tCertification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.\n31.2*\t\tCertification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.\n32**\t\tCertification 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.\n101\t\tThe following financial statements (Unaudited) from CIRCOR International Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 27 2020 as filed with the Securities and Exchange Commission on November 5 2020 formatted in XBRL (eXtensible Business Reporting Language) as follows:\n\t(i)\tCondensed Consolidated Balance Sheets as of September 27 2020 and December 31 2019\n\t(ii)\tCondensed Consolidated Statements of Operations for the Three and Nine Months Ended September 27 2020 and September 29 2019\n\t(iii)\tCondensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 27 2020 and September 29 2019\n\t(iv)\tCondensed Consolidated Statements of Cash Flows for the Nine Months Ended September 27 2020 and September 29 2019\n\t(v)\tCondensed Consolidated Statements of Shareholders' Equity for the Three and Nine Months Ended September 27 2020 and September 29 2019\n\t(vi)\tNotes to Condensed Consolidated Financial Statements\n104\t\tCover Page Interactive Date File (formatted as inline XBRL and contained in Exhibit 101)\n*\tFiled with this report.\t\n**\tFurnished with this report.\t\n"}{"bs": "q10k_tbl_3", "is": "q10k_tbl_4", "cf": "q10k_tbl_6"}None
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 2020
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-14962
CIRCOR INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware
04-3477276
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
30 Corporate Drive, Suite 200
Burlington,
MA
01803-4238
(Address of principal executive offices)
(Zip Code)
(781) 270-1200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
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
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer," “smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Emerging growth company
☐
Non-accelerated filer
☐
Smaller reporting company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐ No ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 1, 2020, there were 19,998,097 shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.
Trade accounts receivable, less allowance for doubtful accounts of $10,424 and $3,086 at September 27, 2020 and December 31, 2019, respectively
102,840
125,422
Inventories
144,476
137,309
Prepaid expenses and other current assets
98,401
66,664
Assets held for sale
—
161,193
Total Current Assets
418,489
575,119
PROPERTY, PLANT AND EQUIPMENT, NET
167,037
172,179
OTHER ASSETS:
Goodwill
158,117
271,893
Intangibles, net
357,038
385,542
Deferred income taxes
905
30,852
Other assets
43,621
35,360
TOTAL ASSETS
$
1,145,207
$
1,470,945
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
$
63,966
$
79,399
Accrued expenses and other current liabilities
86,176
94,169
Accrued compensation and benefits
27,570
19,518
Liabilities held for sale
—
43,289
Total Current Liabilities
177,712
236,375
LONG-TERM DEBT
527,721
636,297
DEFERRED INCOME TAXES
16,823
21,425
PENSION LIABILITY, NET
143,599
146,801
OTHER NON-CURRENT LIABILITIES
58,538
38,636
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; 19,997,931 and 19,912,362 outstanding at September 27, 2020 and December 31, 2019 respectively
214
213
Additional paid-in capital
451,351
446,657
(Accumulated deficit) retained earnings
(72,528)
99,280
Common treasury stock, at cost (1,372,488 shares at September 27, 2020 and December 31, 2019)
(74,472)
(74,472)
Accumulated other comprehensive loss, net of tax
(83,751)
(80,267)
Total Shareholders’ Equity
220,814
391,411
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
1,145,207
$
1,470,945
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
CIRCOR INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(UNAUDITED)
Three Months Ended
Nine Months Ended
September 27, 2020
September 29, 2019
September 27, 2020
September 29, 2019
Net revenues
$
186,640
$
237,052
$
564,920
$
721,675
Cost of revenues
130,630
162,578
389,905
490,870
Gross profit
56,010
74,474
175,015
230,805
Selling, general and administrative expenses
50,652
60,039
164,948
190,227
Goodwill impairment charge
—
—
116,182
—
Special and restructuring charges (recoveries), net
938
23,519
(35,747)
19,893
Operating income, (loss)
4,420
(9,084)
(70,368)
20,685
Other expense (income):
Interest expense, net
8,202
11,804
25,699
37,846
Other expense (income), net
765
(759)
229
(2,755)
Total other expense, net
8,967
11,045
25,928
35,091
(Loss) income from continuing operations before income taxes
(4,547)
(20,129)
(96,296)
(14,406)
Provision for (benefit from) income taxes
54,318
7,520
40,923
13,513
(Loss) income from continuing operations, net of tax
(58,865)
(27,649)
(137,219)
(27,919)
Income (loss) from discontinued operations, net of tax
341
(84,688)
(34,345)
(107,572)
Net loss
$
(58,524)
$
(112,337)
$
(171,564)
$
(135,491)
Basic income (loss) per common share:
Basic from continuing operations
$
(2.94)
$
(1.39)
$
(6.87)
$
(1.40)
Basic from discontinued operations
$
0.02
$
(4.25)
$
(1.72)
$
(5.41)
Net loss
$
(2.93)
$
(5.64)
$
(8.59)
$
(6.81)
Diluted income (loss) per common share:
Diluted from continuing operations
$
(2.94)
$
(1.39)
$
(6.87)
$
(1.40)
Diluted from discontinued operations
$
0.02
$
(4.25)
$
(1.72)
$
(5.41)
Net loss
$
(2.93)
$
(5.64)
$
(8.59)
$
(6.81)
Weighted average number of common shares outstanding:
Basic
20,001
19,916
19,975
19,898
Diluted
20,001
19,916
19,975
19,898
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
CIRCOR INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(UNAUDITED)
Three Months Ended
Nine Months Ended
September 27, 2020
September 29, 2019
September 27, 2020
September 29, 2019
Net loss
$
(58,524)
$
(112,337)
$
(171,564)
$
(135,491)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
2,817
(7,164)
(3,418)
(16,882)
Interest rate swap adjustments (1)
1,373
(1,206)
(192)
(6,371)
Pension adjustment
44
—
126
(393)
Other comprehensive income (loss), net of tax
4,234
(8,370)
(3,484)
(23,646)
COMPREHENSIVE LOSS
$
(54,290)
$
(120,707)
$
(175,048)
$
(159,137)
(1) Net of an income tax effect of $0.0 million and $(0.4) million for the three months ended September 27, 2020 and September 29, 2019, respectively, and $(0.5) million and $1.7 million for the nine months ended September 27, 2020 and September 19, 2019, respectively.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
CIRCOR INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(UNAUDITED)
Nine Months Ended
OPERATING ACTIVITIES
September 27, 2020
September 29, 2019
Net loss
$
(171,564)
$
(135,491)
Loss from discontinued operations, net of income taxes
(34,345)
(107,572)
Loss from continuing operations
(137,219)
(27,919)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation
14,881
16,618
Amortization
32,418
36,023
Provision for bad debt expense
7,219
(469)
Write down of inventory
2,386
301
Compensation expense for share-based plans
4,076
4,200
Amortization of debt issuance costs
6,463
3,669
Deferred tax provision
35,582
11,812
Loss on sale or write-down of property, plant and equipment
—
2,889
Goodwill impairment charge
116,182
—
(Gain) Loss on sale of businesses
(54,253)
2,707
Changes in operating assets and liabilities, net of effects of acquisition and disposition:
Trade accounts receivable
18,051
17,413
Inventories
(8,477)
(11,724)
Prepaid expenses and other assets
(39,184)
(20,546)
Accounts payable, accrued expenses and other liabilities
(30,468)
(18,300)
Net cash (used in) provided by continuing operating activities
(32,343)
16,674
Net cash used in discontinued operating activities
(14,022)
(17,585)
Net cash used in operating activities
(46,365)
(911)
INVESTING ACTIVITIES
Additions to property, plant and equipment
(9,147)
(9,519)
Proceeds from the sale of property, plant and equipment
(122)
99
Proceeds from the sale of business
166,210
163,056
Proceeds from beneficial interest of factored receivables
2,212
—
Net cash provided by continuing investing activities
159,153
153,636
Net cash used in discontinued investing activities
(11,338)
(2,435)
Net cash provided by investing activities
147,815
151,201
FINANCING ACTIVITIES
Proceeds from long-term debt
165,800
231,950
Payments of long-term debt
(279,191)
(379,897)
Proceeds from the exercise of stock options
117
106
Net cash used in continuing financing activities
(113,274)
(147,841)
Net cash used in financing activities
(113,274)
(147,841)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
29
(1,753)
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
(11,795)
696
Cash, cash equivalents, and restricted cash at beginning of period
85,727
69,525
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD
$
73,932
$
70,221
Non-cash investing activities:
Purchases of property and equipment included in accounts payable and accrued expenses
$
596
$
1,236
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
CIRCOR INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE QUARTERS ENDED SEPTEMBER 27, 2020 AND SEPTEMBER 29, 2019
(in thousands)
(UNAUDITED)
Common Stock
Additional Paid-in Capital
Retained Earnings (Accum-ulated Deficit)
Accumulated Other Comprehensive Loss
Treasury Stock
Total Shareholders’ Equity
Shares
Amount
Balance as of June 28, 2020
19,994
$
214
$
449,576
$
(13,982)
$
(87,985)
$
(74,472)
$
273,351
Net loss
—
—
—
(58,524)
—
—
(58,524)
Other comprehensive income, net of tax
—
—
—
—
4,234
—
4,234
Conversion of restricted stock units
4
—
(11)
—
—
—
(11)
Stock options exercised
—
—
—
—
—
—
Share-based plan compensation
—
—
1,786
—
—
—
1,786
Other
—
—
—
(22)
—
—
(22)
Balance as of September 27, 2020
19,998
$
214
$
451,351
$
(72,528)
$
(83,751)
$
(74,472)
$
220,814
Balance as of June 30, 2019
19,902
$
212
$
444,109
$
210,065
$
(85,015)
$
(74,472)
$
494,899
Net loss
—
—
—
(112,337)
—
—
(112,337)
Other comprehensive loss, net of tax
—
—
—
—
(8,370)
—
(8,370)
Conversion of restricted stock units
4
—
(64)
—
—
—
(64)
Stock options exercised
—
—
63
$
—
$
—
$
—
$
63
Share-based plan compensation
—
—
1,229
—
—
—
1,229
Other
(32)
(32)
Balance as of September 29, 2019
19,906
$
212
$
445,305
$
97,728
$
(93,385)
$
(74,472)
$
375,388
7
CIRCOR INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 27, 2020 AND SEPTEMBER 29, 2019
(in thousands)
(UNAUDITED)
Common Stock
Additional Paid-in Capital
Retained Earnings (Accum-ulated Deficit)
Accumulated Other Comprehensive Loss
Treasury Stock
Total Shareholders’ Equity
Shares
Amount
Balance as of December 31, 2019
19,912
$
213
$
446,657
$
99,280
$
(80,267)
$
(74,472)
$
391,411
Net loss
—
—
—
(171,564)
—
—
(171,564)
Other comprehensive loss, net of tax
—
—
—
—
(3,484)
—
(3,484)
Cumulative effect adjustment related to adoption of current expected credit loss standard (ASC 326)
—
—
—
(222)
—
—
(222)
Conversion of restricted stock units
83
1
275
—
—
—
276
Stock options exercised
3
—
117
—
—
—
117
Share-based plan compensation
—
—
4,302
—
—
—
4,302
Other
—
—
—
(22)
—
—
(22)
Balance as of September 27, 2020
19,998
$
214
$
451,351
$
(72,528)
$
(83,751)
$
(74,472)
$
220,814
Balance as of December 31, 2018
19,845
$
212
$
440,890
$
232,102
$
(69,739)
$
(74,472)
$
528,993
Net loss
—
—
—
(135,491)
—
—
(135,491)
Other comprehensive loss, net of tax
—
—
—
—
(23,646)
—
(23,646)
Cumulative effect adjustment related to adoption of lease standard (ASC 842)
1,113
1,113
Conversion of restricted stock units
58
—
(20)
—
—
—
(20)
Stock options exercised
3
—
106
—
—
—
106
Share-based plan compensation
—
—
4,361
—
—
—
4,361
Other
$
(32)
$
4
(28)
Balance as of September 29, 2019
19,906
$
212
$
445,305
$
97,728
$
(93,385)
$
(74,472)
$
375,388
8
CIRCOR INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of CIRCOR International, Inc. ("CIRCOR", the "Company", "us", "we" or "our") have been prepared according to the rules and regulations of the United States ("U.S.") Securities and Exchange Commission (“SEC”) for interim reporting, along with accounting principles generally accepted in the U.S ("GAAP"). In the opinion of management, the unaudited, condensed consolidated financial statements reflect all adjustments (consisting only of normal and recurring items) necessary for a fair presentation of the Company’s results of operations, financial position and cash flows for the periods presented. We prepare our interim financial information using the same accounting principles we use for our annual audited consolidated financial statements. Certain information and note disclosures normally included in the annual audited consolidated financial statements have been condensed or omitted in accordance with SEC rules. We believe that the disclosures made in our condensed consolidated financial statements and the accompanying notes are adequate to make the information presented not misleading.
The condensed consolidated balance sheet as of December 31, 2019 was derived from our audited consolidated financial statements as of that date but does not contain all of the footnote disclosures from the annual financial statements. We recommend that the financial statements included in our Quarterly Report on Form 10-Q be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2019.
We operate and report financial information using a fiscal year ending December 31. The data periods contained within our Quarterly Reports on Form 10-Q reflect the results of operations for the 13-week, 26-week and 39-week periods which generally end on the Sunday nearest the calendar quarter-end date. Operating results for the nine months ended September 27, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or any future quarter.
We have reclassified certain prior year amounts, including the results of discontinued operations and reportable segment information, to conform to the current year presentation. Unless otherwise indicated, all financial information and statistical data included in these notes to our condensed consolidated financial statements relate to our continuing operations, with dollar amounts expressed in thousands (except share and per-share data).
COVID-19
In March 2020, the World Health Organization declared the outbreak of COVID-19, which continues to spread throughout the U.S. and the world, as a pandemic. The pandemic is having an impact on the global economy, resulting in rapidly changing market and economic conditions. As of March 29, 2020, the Company experienced a significant decline in its market capitalization below its consolidated book value. As a result, management concluded that there was a goodwill and an intangible asset impairment triggering event for the Company in the first quarter of 2020. Through its impairment analysis, the Company determined that goodwill in its Industrial segment was impaired and recognized a $116.2 million impairment. See Note 7, Goodwill and Intangibles, net, for additional information on the goodwill impairment.
The Company expects the effects of the COVID-19 pandemic to continue to negatively impact its results of operations, cash flows and financial position. The Company’s condensed consolidated financial statements presented herein reflect management's estimates and assumptions regarding the effects of COVID-19 as of the date of the condensed consolidated financial statements.
(2) Summary of Significant Accounting Policies
The significant accounting policies used in preparation of these condensed consolidated financial statements for the three and nine months ended September 27, 2020 are consistent with those discussed in Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019, except as updated below with respect to newly adopted accounting standards.
The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying disclosures. Some of the more significant estimates, which are impacted by management's estimates and assumptions regarding the effects
9
of COVID-19, relate to recoverability of goodwill and indefinite-lived trade names, estimated total costs for ongoing long-term revenue contracts where transfer of control occurs over time, inventory valuation, share-based compensation, amortization and impairment of long-lived assets, income taxes (including valuation allowance), penalty accruals for late shipments, other asset valuations, and product warranties. While management believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ materially from those estimates.
New Accounting Standards - Adopted
In December 2019, the FASB issued Accounting Standards Update ("ASU")No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, as part of its initiative to reduce complexity in the accounting standards. The amendments in ASU 2019-12 eliminate certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes. The amendments in ASU 2019-12 are effective for the fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in any interim period. The Company has early adopted this amendment as of June 28, 2020. The adoption of the standard did not have a material impact to the Company’s condensed consolidated financial position and results of operations as well as related income tax disclosures
In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments - Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments. The new guidance, referred to as the current expected credit loss (“CECL”) model, requires the measurement of expected credit losses for financial assets (e.g., accounts receivable) held at the reporting date based on historical experience, current economic conditions, and reasonable and supportable forecasts which generally result in the more timely recognition of losses. The adoption of this new guidance on January 1, 2020 did not have a material impact on our condensed consolidated financial statements.
(3) Discontinued Operations
Discontinued Operations
During the quarter ended September 29, 2019, the Company completed the disposition of its long-cycle upstream oil & gas Engineered Valves ("EV") business and received approval from its Board of Directors to dispose of the Company’s Distributed Valves ("DV") business in a transaction or transfer to a third-party purchaser or purchasers. These actions were consistent with the Company's strategic shift away from upstream oil and gas to focus on more attractive end markets. The EV and DV businesses met the criteria of discontinued operations and are presented as such in the condensed consolidated financial statements for all periods presented.
During the quarter ended June 28, 2020, the Company’s wholly-owned subsidiary, CIRCOR Energy Products LLC ("CEP"), completed the disposition of the DV business to MS Valves GmbH (the “Purchaser”) pursuant to the Securities Purchase Agreement dated June 5, 2020 (the “Purchase Agreement”), for negative $8.25 million and a working capital adjustment of negative $2.0 million at the time of closing. The transaction is subject to an earnout of 50% of net profit (only if positive) from closing through December 31, 2022. The Company has agreed to provide certain transition services for six to twelve months, depending on the nature of the services. As part of the transaction, CEP retained certain supplier liabilities and responsibility for closing CEP's Mexico manufacturing facility. As a result of completing the disposition, the Company recognized an additional loss on disposal of $0.4 million during the three months ended September 27, 2020 resulting from the finalization of the working capital adjustment, and a loss on disposal of $21.4 million during the nine months ended September 27, 2020, within discontinued operations. In addition, the Company recognized $0.3 million of net income in the three months ended September 27, 2020 from the continuing wind down of the DV business.
10
The following table presents the summarized components of income (loss) from discontinued operations for the three and nine months ended September 27, 2020 and September 29, 2019 (in thousands):
Three Months Ended
Nine Months Ended
September 27, 2020
September 29, 2019
September 27, 2020
September 29, 2019
Net revenues
$
—
$
15,276
$
10,055
$
70,655
Cost of revenues
—
18,533
26,399
77,846
Gross (loss) profit
—
(3,257)
(16,344)
(7,191)
Selling, general and administrative expenses
—
2,271
9,074
11,464
Special and restructuring charges, net
(938)
100,812
18,189
101,614
Operating (loss) income
938
(106,340)
(43,607)
(120,269)
Other (income) expense:
Interest (income), net
—
(8)
(14)
(14)
Other (income) expense, net
763
(237)
981
(74)
Total other (income) expense, net
763
(245)
967
(88)
Income (loss) from discontinued operations, before income taxes
175
(106,095)
(44,574)
(120,181)
Provision for (benefit from) income tax
(166)
(21,407)
(10,229)
(12,609)
Income (loss) from discontinued operations, net of tax
$
341
$
(84,688)
$
(34,345)
$
(107,572)
11
Assets Held for Sale
The Company completed the sale of the DV business during the quarter ended June 28, 2020. The Company completed the sale of its non-core Instrumentation and Sampling ("I&S") business during the first quarter of 2020. See Note 5, Special and Restructuring Charges (Recoveries), net for additional information on the I&S business divestiture. As of December 31, 2019, the DV and I&S businesses are reported as "held for sale" within the current assets and current liabilities section of our condensed consolidated balance sheet.
The following table presents the balance sheet information for assets and liabilities held for sale as of December 31, 2019 (in thousands):
December 31, 2019
DV
I&S
Total
Trade accounts receivable, net
$
467
$
9,935
$
10,402
Inventories
55,521
13,878
69,399
Prepaid expenses and other current assets
2,867
616
3,483
Property, plant, and equipment, net
6,742
6,409
13,151
Goodwill
—
91,492
91,492
Deferred tax asset
778
1,089
1,867
Other assets
4,793
6,363
11,156
Valuation adjustment on classification to assets held for sale
(39,757)
—
(39,757)
Total assets held for sale
$
31,411
$
129,782
$
161,193
Accounts payable
$
8,708
$
5,997
$
14,705
Accrued and other current liabilities
5,834
2,192
8,026
Deferred income taxes
638
151
789
Other liabilities
13,931
5,838
19,769
Total liabilities held for sale
$
29,111
$
14,178
$
43,289
(4) Revenue Recognition
The Company's revenue is derived from a variety of contracts. A significant portion of revenues are from contracts associated with the design, development, manufacture or modification of highly engineered, complex and severe environment products with customers who are either in or service the aerospace, defense and industrial markets. Contracts within the defense markets are primarily with U.S. military customers. These contracts typically are subject to the Federal Acquisition Regulations (FAR). The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Contracts may be modified to account for changes in contract specifications and requirements. Contract modifications exist when the modification either creates new, or changes the existing, enforceable rights and obligations. Contract modifications for goods or services that are not distinct from the existing contract are accounted for as if they were part of that existing contract.
For revenue that is recognized from products and services transferred to customers over-time, the Company uses an input measure (e.g., costs incurred to date relative to total estimated costs at completion, known as the “cost-to-cost” method) to measure progress. The Company uses the cost-to-cost measure of progress because it best depicts the transfer of control to the customer which occurs as it incurs costs on its contracts. Under the cost-to-cost measure of progress, revenues are recorded proportionally as costs are incurred. Contract costs include labor, materials and subcontractors’ costs, other direct costs and an allocation of overhead, as appropriate.
As of September 27, 2020, the Company had $415.4 million of revenue related to remaining unfulfilled performance obligations from order backlog. The Company expects to recognize approximately