Company Quick10K Filing
Circor
Price36.69 EPS-8
Shares20 P/E-5
MCap731 P/FCF-802
Net Debt571 EBIT-96
TEV1,301 TEV/EBIT-14
TTM 2019-09-29, in MM, except price, ratios
10-Q 2020-09-27 Filed 2020-11-05
10-Q 2020-06-28 Filed 2020-08-07
10-Q 2020-03-29 Filed 2020-06-01
10-K 2019-12-31 Filed 2020-03-31
10-Q 2019-09-29 Filed 2019-11-13
10-Q 2019-06-30 Filed 2019-08-01
10-Q 2019-03-31 Filed 2019-05-14
10-K 2018-12-31 Filed 2019-03-01
10-Q 2018-09-30 Filed 2018-11-06
10-Q 2018-07-01 Filed 2018-08-07
10-Q 2018-04-01 Filed 2018-05-10
10-K 2017-12-31 Filed 2018-03-01
10-Q 2017-10-01 Filed 2017-10-27
10-Q 2017-07-02 Filed 2017-07-28
10-Q 2017-04-02 Filed 2017-04-28
10-K 2016-12-31 Filed 2017-02-21
10-Q 2016-10-02 Filed 2016-10-28
10-Q 2016-07-03 Filed 2016-07-29
10-Q 2016-04-03 Filed 2016-04-29
10-K 2015-12-31 Filed 2016-02-23
10-Q 2015-10-04 Filed 2015-11-09
10-Q 2015-07-28 Filed 2015-07-29
10-Q 2015-04-05 Filed 2015-04-28
10-K 2014-12-31 Filed 2015-02-18
10-Q 2014-09-28 Filed 2014-10-31
10-Q 2014-06-29 Filed 2014-08-01
10-Q 2014-03-30 Filed 2014-04-22
10-K 2013-12-31 Filed 2014-02-27
10-Q 2013-09-29 Filed 2013-10-31
10-Q 2013-06-30 Filed 2013-08-01
10-Q 2013-03-31 Filed 2013-05-02
10-K 2012-12-31 Filed 2013-02-28
10-Q 2012-09-30 Filed 2012-11-01
10-Q 2012-07-01 Filed 2012-08-02
10-Q 2012-04-01 Filed 2012-05-03
10-K 2011-12-31 Filed 2012-02-23
10-Q 2011-10-02 Filed 2011-11-03
10-Q 2011-07-03 Filed 2011-08-04
10-Q 2011-04-03 Filed 2011-05-05
10-K 2010-12-31 Filed 2011-02-24
10-Q 2010-10-03 Filed 2010-11-04
10-Q 2010-07-04 Filed 2010-08-02
10-Q 2010-04-04 Filed 2010-05-10
10-K 2009-12-31 Filed 2010-02-25
8-K 2020-11-05
8-K 2020-09-10
8-K 2020-08-07
8-K 2020-07-17
8-K 2020-06-19
8-K 2020-06-12
8-K 2020-06-05
8-K 2020-06-04
8-K 2020-05-29
8-K 2020-05-22
8-K 2020-04-29
8-K 2020-04-21
8-K 2020-04-07
8-K 2020-03-17
8-K 2020-03-09
8-K 2020-03-02
8-K 2020-02-26
8-K 2020-02-10
8-K 2020-02-06
8-K 2020-01-31
8-K 2020-01-31
8-K 2020-01-13
8-K 2019-11-18
8-K 2019-11-06
8-K 2019-11-06
8-K 2019-09-26
8-K 2019-08-30
8-K 2019-08-29
8-K 2019-08-01
8-K 2019-08-01
8-K 2019-07-13
8-K 2019-06-24
8-K 2019-06-17
8-K 2019-06-04
8-K 2019-05-21
8-K 2019-05-09
8-K 2019-04-25
8-K 2019-02-26
8-K 2019-01-02
8-K 2018-12-13
8-K 2018-11-05
8-K 2018-08-14
8-K 2018-07-26
8-K 2018-06-12
8-K 2018-05-25
8-K 2018-05-10
8-K 2018-05-01
8-K 2018-04-25
8-K 2018-04-12
8-K 2018-03-16
8-K 2018-02-22

CIR 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Item 4.Controls and Procedures
Part II. Other Information
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 6.Exhibits
EX-31.1 cirq309302020ex311.htm
EX-31.2 cirq309302020ex312.htm
EX-32 cirq309302020ex32.htm

Circor Earnings 2020-09-27

Balance SheetIncome StatementCash Flow
2.01.61.20.80.40.02012201420172020
Assets, Equity
0.40.30.20.0-0.1-0.22012201420172020
Rev, G Profit, Net Income
0.60.40.2-0.1-0.3-0.52012201420172020
Ops, Inv, Fin

cir-20200927
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
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
cir-20200927_g1.jpg
CIRCOR INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter) 
Delaware04-3477276
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareCIRNew 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 filerAccelerated filerEmerging growth company
Non-accelerated filerSmaller 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.



CIRCOR INTERNATIONAL, INC.
TABLE OF CONTENTS
 Page
Condensed Consolidated Balance Sheets as of September 27, 2020 and December 31, 2019
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 27, 2020 and September 29, 2019
Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 27, 2020 and September 29, 2019
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 27, 2020 and September 29, 2019
Condensed Consolidated Statements of Shareholders' Equity for the Three and Nine Months Ended September 27, 2020 and September 29, 2019
2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
CIRCOR INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(UNAUDITED)
September 27, 2020December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$72,772 $84,531 
Trade accounts receivable, less allowance for doubtful accounts of $10,424 and $3,086 at September 27, 2020 and December 31, 2019, respectively102,840 125,422 
Inventories144,476 137,309 
Prepaid expenses and other current assets98,401 66,664 
Assets held for sale 161,193 
Total Current Assets418,489 575,119 
PROPERTY, PLANT AND EQUIPMENT, NET167,037 172,179 
OTHER ASSETS:
Goodwill158,117 271,893 
Intangibles, net357,038 385,542 
Deferred income taxes905 30,852 
Other assets43,621 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 liabilities86,176 94,169 
Accrued compensation and benefits27,570 19,518 
Liabilities held for sale 43,289 
Total Current Liabilities177,712 236,375 
LONG-TERM DEBT527,721 636,297 
DEFERRED INCOME TAXES16,823 21,425 
PENSION LIABILITY, NET143,599 146,801 
OTHER NON-CURRENT LIABILITIES58,538 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 respectively214 213 
Additional paid-in capital451,351 446,657 
(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’ Equity220,814 391,411 
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 EndedNine Months Ended
September 27, 2020September 29, 2019September 27, 2020September 29, 2019
Net revenues$186,640 $237,052 $564,920 $721,675 
Cost of revenues130,630 162,578 389,905 490,870 
     Gross profit 56,010 74,474 175,015 230,805 
Selling, general and administrative expenses50,652 60,039 164,948 190,227 
Goodwill impairment charge  116,182  
Special and restructuring charges (recoveries), net938 23,519 (35,747)19,893 
     Operating income, (loss)4,420 (9,084)(70,368)20,685 
Other expense (income):
Interest expense, net8,202 11,804 25,699 37,846 
Other expense (income), net765 (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 tax341 (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:
Basic20,001 19,916 19,975 19,898 
Diluted20,001 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 EndedNine Months Ended
 September 27, 2020September 29, 2019September 27, 2020September 29, 2019
Net loss$(58,524)$(112,337)$(171,564)$(135,491)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments2,817 (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 tax4,234 (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 ACTIVITIESSeptember 27, 2020September 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:
Depreciation14,881 16,618 
Amortization32,418 36,023 
Provision for bad debt expense7,219 (469)
Write down of inventory 2,386 301 
Compensation expense for share-based plans4,076 4,200 
Amortization of debt issuance costs6,463 3,669 
Deferred tax provision35,582 11,812 
Loss on sale or write-down of property, plant and equipment 2,889 
Goodwill impairment charge116,182  
(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 receivable18,051 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 business166,210 163,056 
Proceeds from beneficial interest of factored receivables2,212  
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 activities147,815 151,201 
FINANCING ACTIVITIES
Proceeds from long-term debt165,800 231,950 
Payments of long-term debt(279,191)(379,897)
Proceeds from the exercise of stock options117 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 cash29 (1,753)
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH(11,795)696 
Cash, cash equivalents, and restricted cash at beginning of period85,727 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 StockAdditional
Paid-in
Capital
Retained Earnings (Accum-ulated Deficit)Accumulated
Other
Comprehensive
Loss
Treasury StockTotal
Shareholders’
Equity
SharesAmount
Balance as of June 28, 202019,994 $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, 202019,998 $214 $451,351 $(72,528)$(83,751)$(74,472)$220,814 
Balance as of June 30, 201919,902 $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 units4 — (64)— — — (64)
Stock options exercised — 63 $— $— $— $63 
Share-based plan compensation— — 1,229 — — — 1,229 
Other(32)(32)
Balance as of September 29, 201919,906 $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 StockAdditional
Paid-in
Capital
Retained
Earnings (Accum-ulated Deficit)
Accumulated
Other
Comprehensive
Loss
Treasury StockTotal
Shareholders’
Equity
SharesAmount
Balance as of December 31, 201919,912 $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 units83 1 275 — — — 276 
Stock options exercised3 — 117 — — — 117 
Share-based plan compensation — — 4,302 — — — 4,302 
Other— — — (22)— — (22)
Balance as of September 27, 202019,998 $214 $451,351 $(72,528)$(83,751)$(74,472)$220,814 
Balance as of December 31, 201819,845 $212 $440,890 $232,102 $(69,739)$(74,472)$528,993 
Net loss— — — (135,491)— — (135,491)
Other comprehensive loss, net of tax— — — — (23,646)— (23,646)
Cumulative effect adjustment related to adoption of lease standard (ASC 842)1,113 1,113 
Conversion of restricted stock units58 — (20)— — — (20)
Stock options exercised3 — 106 — — — 106 
Share-based plan compensation— — 4,361 — — — 4,361 
Other$(32)$4 (28)
Balance as of September 29, 201919,906 $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 EndedNine Months Ended
September 27, 2020September 29, 2019September 27, 2020September 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) income938 (106,340)(43,607)(120,269)
Other (income) expense:
     Interest (income), net (8)(14)(14)
     Other (income) expense, net763 (237)981 (74)
     Total other (income) expense, net763 (245)967 (88)
Income (loss) from discontinued operations, before income taxes175 (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
DVI&STotal
Trade accounts receivable, net$467 $9,935 $10,402 
Inventories55,521 13,878 69,399 
Prepaid expenses and other current assets2,867 616 3,483 
Property, plant, and equipment, net6,742 6,409 13,151 
Goodwill  91,492 91,492 
Deferred tax asset778 1,089 1,867 
Other assets4,793 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 liabilities5,834 2,192 8,026 
Deferred income taxes638 151 789 
Other liabilities13,931 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