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CIRCOR Reports Fourth Quarter and 2009 Results

CIRCOR International, Inc. (NYSE: CIR), a leading provider of valves and other highly engineered products for the instrumentation, aerospace, thermal fluid and energy markets, today announced results for the fourth quarter and full year ended December 31, 2009. Beginning in the fourth quarter of 2009, the Company is reporting its Aerospace business as a separate operating segment to better reflect the way management now makes operating decisions and manages the growth and profitability of the business.

Management Comments on Fourth Quarter Results

“We continued to execute well in a difficult market environment in the final quarter of 2009 and met our guidance for both revenue and adjusted earnings per share, excluding the favorable fourth-quarter asbestos charges compared to guidance, and a non-cash pretax asbestos charge of $39.8 million to establish a five-year reserve for future asbestos claims,” said Chairman and Chief Executive Officer Bill Higgins.

“Company-wide fourth-quarter bookings were up 19% both year-over-year and sequentially, reflecting what we believe are signs of stability in certain of our end-markets,” said Higgins. “Our Energy group delivered strong year-over-year and sequential bookings growth in long-cycle international projects business. We continued to experience a significant year-over-year decrease in short-cycle bookings due to the decline in rig counts but experienced some stabilization as short-cycle bookings increased over the third quarter of 2009. Within our Aerospace group, we experienced lower year-over-year and sequential bookings due to softness in commercial aerospace and the timing of lumpy military-related orders. At Flow Technologies, strong year-over-year and sequential bookings were due to navy and semiconductor end-market strength, offset by continued weakness within our industrial end-markets.”

“Our commitment to improving our operations through Lean, global sourcing and aggressive cost controls resulted in improvements in adjusted operating income margin on a sequential basis at both our Aerospace and Flow Technologies groups,” Higgins continued. “We are optimistic that cost-reduction measures we took in the fourth quarter to improve margins within the Energy group, including the consolidation of multiple facilities in Oklahoma as well as the transfer of most of our short-cycle machining to China, will improve the group’s future margin performance.”

Consolidated Results Fourth Quarter 2009

Revenues for the fourth quarter of 2009 were $158.1 million, a 22% decrease from $202.0 million reported in the fourth quarter of 2008. The Company recorded a net loss of $20.7 million, or $1.22 per share, in the fourth quarter of 2009, compared with a net loss of $110.1 million, or $6.52 per share, in the corresponding quarter of 2008.

Fourth-quarter 2009 net income includes $40.4 million of pretax asbestos charges (consisting of an estimated five-year future asbestos indemnity claim reserve of $39.8 million and $0.6 million of other asbestos charges) and a $0.5 million non-cash intangible trade name impairment charge related to product trade names recorded as a special charge. Fourth-quarter 2008 net income includes $1.4 million in pre-tax asbestos charges and a pre-tax, non-cash goodwill and intangible impairment charge of $141.3 million recorded as a special charge.

On an adjusted basis, excluding the after-tax effect of special charges in both periods mentioned above, the net loss would have been $20.4 million, or $1.20 per diluted share, compared with net income of $19.0 million, or $1.12 per diluted share, for the fourth quarter of fiscal 2008. Excluding the after-tax effect of the special charges and the non-cash five-year asbestos reserve estimate, adjusted net income would have been $5.5 million, or $0.32 per diluted share, for the fourth quarter of 2009.

Consolidated Results Full Year 2009

Revenues for the full year ended December 31, 2009 decreased 19% to $642.6 million compared with $793.8 million for full year 2008. In full year 2009, the Company reported net income of $5.9 million, or $0.34 per diluted share, compared to a net loss of $59.0 million, or $3.51 per share, in 2008. Full year 2009 net income includes pre-tax special recoveries of $1.2 million, which include a pre-tax gain of $1.7 million related to proceeds from the sale of land use rights and a benefit related to an acquisition completed earlier in the year, partially offset by the $0.5 million non-cash trade name impairment charge. Full year 2008 results include pre-tax special charges of $141.5 million, primarily related to goodwill and trade name impairment charges.

Excluding the after-tax effect of the special charges as well as the estimated five-year future asbestos indemnity claim reserve in the fourth quarter, but including other cash asbestos charges, adjusted net income for full year 2009 would have been $30.9 million, or $1.80 per diluted share.

Consolidated Orders and Free Cash Flow

The Company received orders totaling $170.9 million during the fourth quarter of 2009, up 19% year-over-year and sequentially. The Company believes the year-over-year and sequential increase in order activity reflects stabilizing market conditions. Orders for full year 2009 totaled $605.7 million and backlog totaled $316.7 million, compared with $742.3 million and $342.7 million, respectively, in 2008.

During the fourth quarter of 2009, the Company generated $11.8 million of free cash flow, defined as net cash from operating activities, less capital expenditures and dividends paid, compared with $23.2 million in the fourth quarter of 2008. For full year 2009, the Company had free cash flow of $33.0 million compared with $47.3 million in 2008. The decline in free cash flow from 2008 largely resulted from the lower operating profit, partially offset by working capital improvements and a decrease in capital spending.

Energy

CIRCOR’s Energy segment revenues decreased by 39% to $66.1 million for the fourth quarter of 2009, from $107.5 million in the fourth quarter of 2008. The year-over-year decrease included volume declines of 48%, slightly offset by growth from acquisitions of 6% and favorable foreign currency adjustments of 4%.

Incoming orders for the fourth quarter of 2009 were $78.2 million, an increase of 62% from $48.3 million in the fourth quarter of 2008, and a 42% increase from $55.1 million in the third quarter of 2009. The significant year-over-year increase was primarily the result of several large international project orders booked in the fourth quarter of 2009 as well as the lack of any large international project orders booked in the fourth quarter of 2008. Ending backlog totaled $133.3 million, a 23% decrease compared with $172.9 million at the end of the fourth quarter of 2008, and a 17% increase sequentially.

The Energy segment adjusted operating margin, which excludes the impact of special charges, was 3.0% during the fourth quarter of 2009 compared to 20.1% for the fourth quarter of 2008. Fourth quarter 2009 margins were negatively impacted by organic revenue declines across the segment, the associated lost operating leverage, unfavorable pricing in large international projects and costs to reduce the segment’s workforce plus facility relocation expenses. These were partially offset by lower commissions and increased productivity.

Aerospace

CIRCOR’s Aerospace segment revenues increased by 4% to $28.5 million for the fourth quarter of 2009, from $27.5 million in the fourth quarter of 2008. Growth through acquisitions of 13% and favorable foreign currency adjustments of 3%, offset organic growth decline of 12%.

Incoming orders for the fourth quarter of 2009 were $23.7 million, a decrease of 45% from $43.1 million in the fourth quarter of 2008, and a 17% decrease from $28.6 million in the third quarter of 2009. The year-over-year decrease was due to order timing in military-related projects and ongoing softness in the commercial OEM business. Ending backlog totaled $115.3 million, a 13% increase compared with $102.0 million at the end of the fourth quarter of 2008, and a 4% decrease sequentially.

The Aerospace segment’s adjusted operating margin, which excludes the impact of special charges, was flat year-over-year at 14.7% during the fourth quarter of 2009. Fourth quarter 2009 margins benefited from improved pricing as well as lean and sourcing productivity gains, offset primarily by reduced volume and associated leverage as well the dilutive impact of acquisitions.

Flow Technologies

CIRCOR’s Flow Technologies segment revenues decreased 5% to $63.5 million from $67.0 million in the fourth quarter of 2008. Favorable foreign exchange adjustments of 4% were more than offset by volume declines of 10%. Incoming orders for this segment were $69.0 million for the fourth quarter of 2009, an increase of 33% from the fourth quarter of 2008 and an increase of 15% from the third quarter of 2009. Ending backlog was $68.0 million, approximately flat from the fourth quarter of fiscal 2008 and a 7% increase from the third quarter of fiscal 2009.

This segment’s adjusted operating margin, which excludes the impact of special and asbestos charges, for the fourth quarter of 2009 was 11.7% compared with 9.7% in the fourth quarter of 2008. The year-over-year increase was the result of improved productivity from lean, sourcing and facility consolidations, as well as ongoing cost control programs.

Business and Financial Outlook

“Although we began to see some market stability in the fourth quarter, especially at our Flow Technologies and Energy Groups, we continue to have limited visibility,” said Higgins. “In Energy, the short-cycle business improved slightly in the fourth quarter as rig counts have strengthened and we expect distributors to work through inventory destocking within the first quarter. Quoting activity continues on large international product orders, although pricing pressure continues to challenge margins. We believe industrial end markets in Flow Technologies bottomed in the second quarter of 2009 and on balance we expect them to remain stable through the first half of 2010. We expect the commercial aerospace business will likely remain soft while the military aerospace market should continue to benefit from prior orders.”

“The quality of earnings initiatives CIRCOR implemented in 2009 have enabled the company to enter 2010 a much leaner and stronger organization,” Higgins said. “Overall headcount is down 21% year-over-year, excluding acquisitions, and we have taken significant costs out of our businesses. We are confident that our lower cost structure, which is more closely aligned with near-term demand, will enable us to deliver significant profitability improvement when sales volumes rebound to more normalized levels. Our balance sheet remains strong and our ability to generate strong cash flow will enable us to complement organic growth with strategic acquisitions in 2010.”

The Company currently expects revenues for the first quarter of 2010 in the range of $148 million to $154 million and earnings, excluding special charges, to be in the range of $0.10 to $0.15 per diluted share.

“We anticipate that the sequential decline in revenues compared with the 2009 fourth-quarter will impact all of our segments, and that consolidated first quarter 2010 adjusted operating margins will be in line with the 2009 fourth quarter. As we work our way through the remainder of 2010, we expect to have sequential improvements in adjusted operating margins,” concluded Higgins.

Conference Call Information

CIRCOR’s Chief Executive Officer, Bill Higgins, and Chief Financial Officer, Fred Burditt, will host a conference call live on Thursday, February 25, 2010 at 9:00 a.m. ET to discuss the financial results. Those who wish to listen to the conference call and view the accompanying presentation slides should visit “Webcasts & Presentations” in the “Investor Relations” portion of the CIRCOR website. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. If you are unable to listen to the live call, the webcast will be archived on the Company’s website.

Use of Non-GAAP Financial Measures

Adjusted net income, adjusted earnings per diluted share, adjusted operating margin, and free cash flow, are non-GAAP financial measures and are intended to serve as a complement to results provided in accordance with accounting principles generally accepted in the United States. CIRCOR believes that such information provides an additional measurement and consistent historical comparison of the Company’s performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in this news release.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Reliance should not be placed on forward-looking statements because they involve both known and unknown risks, uncertainties and other factors, which are, in some cases, beyond the control of CIRCOR. Any statements in this press release that are not statements of historical fact are forward-looking statements, including, but not limited to, those relating to the Company’s commitment to improving operations through Lean, global sourcing and aggressive cost controls; efforts to improve the Energy group’s future margin performance; expectations regarding distributors working through inventory destocking in the first quarter; pricing for large international orders; expectations for industrial end markets in Flow Technologies to remain stable on balance through the first half of 2010; the commercial aerospace business to likely remain soft; the military aerospace market to continue to benefit from prior orders; the ability to deliver significant profitability improvement when sales volumes rebound to more normalized levels; the ability to generate strong cash flow and complement organic growth with acquisitions in 2010; and the Company’s revenue and EPS guidance, excluding special charges, for the first quarter of 2010. 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.

About CIRCOR International, Inc. CIRCOR International, Inc. designs, manufactures and markets valves and other highly engineered products and subsystems that control the flow of fluids safely and efficiently in the aerospace, energy and industrial markets. With more than 9,000 customers in over 100 countries, CIRCOR has a diversified product portfolio with recognized, market-leading brands. CIRCOR’s culture, built on the CIRCOR Business System, is defined by the Company’s commitment to attracting, developing and retaining the best talent and pursuing continuous improvement in all aspects of its business and operations. The Company’s strategy includes growing organically by investing in new, differentiated products; adding value to component products; and increasing the development of mission-critical subsystems and solutions. CIRCOR also plans to leverage its strong balance sheet to acquire strategically complementary businesses. For more information, visit the Company’s investor relations web site at http://investors.circor.com.

CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
UNAUDITED
Three Months EndedTwelve Months Ended

December 31,
2009

December 31,
2008

December 31,
2009

December 31,
2008

Net revenues $ 158,113 $ 201,956 $ 642,622 $ 793,816
Cost of revenues 109,920 138,766 448,043 541,519
GROSS PROFIT 48,193 63,190 194,579 252,297
Selling, general and administrative expenses 39,855 37,118 137,982 143,157
Asbestos charges, net 40,397 1,417 54,079 8,311
Special charges (recoveries) 485 141,297 (1,193 ) 141,457
OPERATING (LOSS) INCOME (32,544 ) (116,642 ) 3,711 (40,628 )
Other (income) expense:
Interest expense (income), net 602 (120 ) 1,068 (180 )
Other expense (income), net 967 (390 ) (441 ) 270
Total other expense (income) 1,569 (510 ) 627 90
(LOSS) INCOME BEFORE INCOME TAXES (34,113 ) (116,132 ) 3,084 (40,718 )
Benefit (Provision) for income taxes 13,386 6,024 2,786 (18,297 )
NET (LOSS) INCOME $ (20,727 ) $ (110,108 ) $ 5,870 $ (59,015 )
(Loss) Earnings per common share:
Basic $ (1.22 ) $ (6.52 ) $ 0.35 $ (3.51 )
Diluted $ (1.22 ) $ (6.52 ) $ 0.34 $ (3.51 )
Weighted average common shares outstanding:
Basic 17,033 16,897 17,008 16,817
Diluted 17,033 16,897 17,111 16,817
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
Twelve Months Ended

December 31,
2009

December 31,
2008

OPERATING ACTIVITIES
Net income (loss) $ 5,870 $ (59,015 )
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation 13,307 11,548
Amortization 3,034 2,625
Goodwill and intangible impairment charges 485 141,297
Provision for future asbestos claims 39,800 -
Compensation expense of stock-based plans 2,717 3,632
Tax effect of share based compensation 493 (2,242 )
Deferred income taxes (benefit) (18,237 ) (15,757 )
(Gain) loss on disposal of property, plant and equipment (91 ) 231
Changes in operating assets and liabilities, net of
effects from business acquisitions:
Trade accounts receivable 35,936 (10,068 )
Inventories 49,157 (8,965 )
Prepaid expenses and other assets 509 329
Accounts payable, accrued expenses and other liabilities (86,428 ) 1,203
Net cash provided by operating activities 46,552 64,818
INVESTING ACTIVITIES
Additions to property, plant and equipment (11,032 ) (14,972 )
Proceeds from disposal of property, plant and equipment 485 186
Proceeds from the sale of assets held for sale 311
Purchase of investments (300,431 ) (254,965 )
Proceeds from sale of investments 315,917 227,783
Business acquisitions, net of cash acquired (37,516 ) (7,263 )
Net cash used in investing activities (32,577 ) (48,920 )
FINANCING ACTIVITIES
Proceeds from long-term debt 60,051 124,521
Payments of long-term debt (73,336 ) (133,701 )
Debt issuance costs (1,935 ) -
Dividends paid (2,568 ) (2,523 )
Proceeds from the exercise of stock options 240 2,392
Tax effect of share based compensation (493 ) 2,242
Net cash used in financing activities (18,041 ) (7,069 )
Effect of exchange rate changes on cash and cash equivalents 2,943 3,982
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,123 ) 12,811
Cash and cash equivalents at beginning of year 47,473 34,662
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 46,350 $ 47,473
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
UNAUDITED
December 31, 2009December 31, 2008
ASSETS
Current Assets:
Cash and cash equivalents $ 46,350 $ 47,473
Short-term investments 21,498 34,872
Trade accounts receivable, less allowance
for doubtful accounts of $ 1,992 and $1,968, respectively 115,260 134,731
Inventories 145,031 183,291
Income taxes refundable 726 -
Prepaid expenses and other current assets 4,195 3,825
Deferred income tax asset 15,847 12,396
Insurance receivables 4,614 6,081
Assets held for sale 1,167 1,015
Total Current Assets 354,688 423,684
Property, Plant and Equipment, net 95,167 82,843
Other Assets:
Goodwill 47,893 32,092
Intangibles, net 55,238 42,123
Non-current insurance receivable - 4,684
Deferred income tax asset 5,676 -
Other assets 3,391 2,597
Total Assets $ 562,053 $ 588,023
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 57,239 $ 94,421
Accrued expenses and other current liabilities 46,736 69,948
Accrued compensation and benefits 18,617 22,604
Asbestos liability 12,476 9,310
Income taxes payable - 9,873
Notes payable and current portion of long-term debt 5,914 622
Total Current Liabilities 140,982 206,778
Long-Term Debt, net of current portion 1,565 12,528
Deferred Income Taxes - 3,496
Long-Term Asbestos Liability 47,785 9,935
Other Non-Current Liabilities 21,313 21,664
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 16,991,365 and 16,898,497 issued and
outstanding, respectively 170 169
Additional paid-in capital 249,960 247,196
Retained earnings 86,408 83,106
Accumulated other comprehensive income 13,870 3,151
Total Shareholders' Equity 350,408 333,622
Total Liabilities and Shareholders' Equity $ 562,053 $ 588,023
CIRCOR INTERNATIONAL, INC.
SUMMARY OF ORDERS AND BACKLOG
(in thousands)
UNAUDITED
Three Months EndedTwelve Months Ended

December 31,
2009

December 31,
2008

December 31,
2009

December 31,
2008

ORDERS
Energy $ 78,169 $ 48,349 $ 251,978 $ 333,775
Aerospace 23,714 43,055 114,830 124,125
Flow Technologies 69,009 51,677 238,867 284,368
Total orders $ 170,892 $ 143,081 $ 605,675 $ 742,268

December 31,
2009

December 31,
2008

BACKLOG
Energy $ 133,323 $ 172,914
Aerospace 115,321 101,953
Flow Technologies 68,013 67,834
Total backlog $ 316,657 $ 342,701
Note: Backlog includes all unshipped customer orders.
CIRCOR INTERNATIONAL, INC.
SUMMARY REPORT BY SEGMENT
(in thousands, except earnings per share)
UNAUDITED
20082009
1ST QTR2ND QTR3RD QTR4TH QTRYTD1ST QTR2ND QTR3RD QTR4TH QTRYTD
NET REVENUES
Energy $ 88,125 $ 107,738 $ 112,382 $ 107,457 $ 415,702 $ 89,307 $ 76,814 $ 61,185 $ 66,113 $ 293,419
Aerospace 24,357 27,466 26,535 27,522 105,880 28,344 30,243 26,234 28,506 113,327
Flow Technologies 64,093 71,401 69,763 66,977 272,234 57,996 57,478 56,908 63,494 235,876
Total 176,575 206,605 208,680 201,956 793,816 175,647 164,535 144,327 158,113 642,622

ADJUSTED OPERATING MARGIN
Energy (excl. special charges) 16.2 % 20.4 % 23.2 % 20.1 % 20.2 % 18.1 % 12.3 % 10.9 % 3.0 % 11.7 %
Aerospace (excl. special charges) 15.8 % 16.6 % 16.8 % 14.7 % 15.9 % 15.4 % 16.2 % 13.2 % 14.7 % 14.9 %
Flow Technologies (excl. special & asbestos charges) 11.3 % 11.1 % 10.5 % 9.7 % 10.7 % 11.6 % 9.5 % 10.9 % 11.7 % 11.0 %
Segment operating income (excl. special & asbestos charges) 14.4 % 16.6 % 18.1 % 15.9 % 16.3 % 15.5 % 12.1 % 11.3 % 8.6 % 12.0 %
Corporate expenses (excl. special & asbestos charges) -2.6 % -2.4 % -2.4 % -3.0 % -2.6 % -3.1 % -3.4 % -3.0 % -3.3 % -3.2 %
Adjusted Operating Income 11.7 % 14.3 % 15.7 % 12.9 % 13.7 % 12.5 % 8.7 % 8.4 % 5.3 % 8.8 %
Asbestos charges (attributable to Flow Technologies) -0.6 % -1.0 % -1.8 % -0.7 % -1.0 % -4.7 % -2.1 % -1.4 % -25.5 % -8.4 %
Special (charges) recoveries -0.1 % 0.0 % 0.0 % -70.0 % -17.8 % 0.6 % 0.0 % 0.4 % -0.3 % 0.2 %
Total operating margin 11.0 % 13.3 % 13.9 % -57.8 % -5.1 % 8.4 % 6.6 % 7.4 % -20.6 % 0.6 %
ADJUSTED OPERATING INCOME
Energy (excl. special charges) 14,303 21,938 26,023 21,556 83,820 16,169 9,461 6,696 1,966 34,292
Aerospace (excl. special charges) 3,837 4,547 4,458 4,038 16,880 4,372 4,905 3,461 4,195 16,933

Flow Technologies (excl. special & asbestos charges)

7,232 7,904 7,345 6,520 29,001 6,744 5,484 6,197 7,444 25,869
Segment operating income (excl. special & asbestos charges) 25,372 34,389 37,826 32,114 129,701 27,285

19,850 16,354 13,605 77,094
Corporate expenses (excl. special & asbestos charges) (4,628 ) (4,890 ) (5,001 ) (6,042 ) (20,561 ) (5,365 ) (5,589 ) (4,276 ) (5,267 ) (20,497 )
Adjusted Operating Income 20,744 29,499 32,825 26,072 109,140 21,920 14,261 12,078 8,338 56,597

Asbestos charges (attributable to Flow Technologies)

(1,075 ) (2,009 ) (3,810 ) (1,417 ) (8,311 ) (8,263 ) (3,442 ) (1,977 ) (40,397 ) (54,079 )
Special (charges) recoveries (160 ) - - (141,297 ) (141,457 ) 1,135 - 543 (485 ) 1,193
Total operating income 19,509 27,490 29,015 (116,642 ) (40,628 ) 14,792 10,819 10,644 (32,544 ) 3,711
INTEREST (EXPENSE) INCOME, NET (145 ) 23 182 120 180 (32 ) (41 ) (394 ) (602 ) (1,069 )
OTHER (EXPENSE) INCOME, NET (401 ) (248 ) (11 ) 390 (270 ) 183 267 959 (967 ) 442
PRETAX INCOME (LOSS) 18,963 27,265 29,186 (116,132 ) (40,718 ) 14,943 11,045 11,209 (34,113 ) 3,084
(PROVISION) BENEFIT FOR INCOME TAXES (6,068 ) (8,840 ) (9,413 ) 6,024 (18,297 ) (4,483 ) (3,313 ) (2,804 ) 13,386 2,786
EFFECTIVE TAX RATE 32.0 % 32.4 % 32.3 % 5.2 % -44.9 % 30.0 % 30.0 % 25.0 % 39.2 % -90.3 %
NET (LOSS) INCOME $ 12,895 $ 18,425 $ 19,773 $ (110,108 ) $ (59,015 ) $ 10,460 $ 7,732 $ 8,405 $ (20,727 ) $ 5,870
Weighted Average Common Shares Outstanding (Diluted) 16,872 17,053 17,068 16,897 16,817 17,014 17,066 17,116 17,033 17,111
EARNINGS PER COMMON SHARE (Diluted) $ 0.76 $ 1.08 $ 1.16 $ (6.52 ) $ (3.51 ) $ 0.61 $ 0.45 $ 0.49 $ (1.22 ) $ 0.34
EBIT $ 19,108 $ 27,242 $ 29,004 $ (116,252 ) $ (40,898 ) $ 14,975 $ 11,086 $ 11,603 $ (33,511 ) $ 4,153
Depreciation 2,874 2,977 3,001 2,696 11,548 2,839 3,245 3,536 3,687 13,307
Amortization of intangibles 656 676 680 613 2,625 622 627 707 1,078 3,034
EBITDA $ 22,638 $ 30,895 $ 32,685 $ (112,943 ) $ (26,725 ) $ 18,436 $ 14,958 $ 15,846 $ (28,746 ) $ 20,494
EBITDA AS A PERCENT OF SALES 12.8 % 15.0 % 15.7 % -55.9 % -3.4 % 10.5 % 9.1 % 11.0 % -18.2 % 3.2 %
CAPITAL EXPENDITURES $ 2,851 $ 3,433 $ 3,878 $ 4,810 $ 14,972 $ 2,576 $ 1,925 $ 1,605 $ 4,926 $ 11,032

CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED

GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS

(in thousands)

UNAUDITED
20082009
1ST QTR2ND QTR3RD QTR4TH QTRYTD1ST QTR2ND QTR3RD QTR4TH QTRYTD
FREE CASH FLOW [NET CASH FLOW FROM OPERATING ACTIVITIES
LESS CAPITAL EXPENDITURES LESS DIVIDENDS PAID]$(5,366)$31,536$(2,062)$23,216$47,324$(7,928)$17,882$11,241$11,757$32,952
ADD: Capital expenditures 2,851 3,433 3,878 4,810 14,972 2,576 1,925 1,605 4,926 11,032
Dividends paid 626 631 631 634 2,522 657 637 636 638 2,568
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ (1,889 ) $ 35,600 $ 2,447 $ 28,660 $ 64,818 $ (4,695 ) $ 20,444 $ 13,482 $ 17,321 $ 46,552

NET (CASH) DEBT [TOTAL DEBT LESS CASH & CASH EQUIVALENTS
LESS INVESTMENTS]$(21,709)$(46,796)$(42,029)$(69,195)$(69,195)$(49,519)$(69,331)$(77,081)$(60,369)$(60,369)
ADD:
Cash & cash equivalents 42,690 38,835 35,177 47,473 47,473 36,113 33,038 83,708 46,350 46,350
Investments 4,036 31,590 29,376 34,872 34,872 36,991 48,344 3,023 21,498 21,498
TOTAL DEBT $ 25,017 $ 23,629 $ 22,524 $ 13,150 $ 13,150 $ 23,585 $ 12,051 $ 9,650 $ 7,479 $ 7,479
DEBT AS % OF EQUITY6%5%5%4%4%7%3%3%2%2%
TOTAL DEBT 25,017 23,629 22,524 13,150 13,150 23,585 12,051 9,650 7,479 7,479
TOTAL SHAREHOLDERS' EQUITY 446,379 465,958 470,888 333,622 333,622 341,860 357,596 371,728 350,408 350,408
EBIT [NET INCOME LESS INTEREST EXPENSE, NET]$19,108$27,242$29,004$(116,252)$(40,898)$14,975$11,086$11,603$(33,511)$4,153
LESS:
Interest expense, net (145 ) 23 182 120 180 (32 ) (41 ) (394 ) (602 ) (1,069 )
Provision for income taxes (6,068 ) (8,840 ) (9,413 ) 6,024 (18,297 ) (4,483 ) (3,313 ) (2,804 ) 13,386 2,786
NET INCOME $ 12,895 $ 18,425 $ 19,773 $ (110,108 ) $ (59,015 ) $ 10,460 $ 7,732 $ 8,405 $ (20,727 ) $ 5,870
EBITDA [NET INCOME LESS INTEREST EXPENSE, NET
LESS DEPRECIATION LESS AMORTIZATION LESS TAXES]$22,638$30,895$32,685$(112,943)$(26,725)$18,436$14,958$15,846$(28,746)$20,494
LESS:
Interest expense, net (145 ) 23 182 120 180 (32 ) (41 ) (394 ) (602 ) (1,069 )
Depreciation (2,874 ) (2,977 ) (3,001 ) (2,696 ) (11,548 ) (2,839 ) (3,245 ) (3,536 ) (3,687 ) (13,307 )
Amortization (656 ) (676 ) (680 ) (613 ) (2,625 ) (622 ) (627 ) (707 ) (1,078 ) (3,034 )
Provision for income taxes (6,068 ) (8,840 ) (9,413 ) 6,024 (18,297 ) (4,483 ) (3,313 ) (2,804 ) 13,386 2,786
NET INCOME $ 12,895 $ 18,425 $ 19,773 $ (110,108 ) $ (59,015 ) $ 10,460 $ 7,732 $ 8,405 $ (20,727 ) $ 5,870
ADJUSTED INCOME, EXCLUDING SPECIAL CHARGES, NET OF TAX
$13,004$18,425$19,773$19,026$70,228$9,666$7,732$8,000$(20,432)$4,965
LESS:
Special (charges) recoveries, net of tax (109 ) - - (129,134 ) (129,243 ) 794 - 405 (295 ) 905
NET INCOME $ 12,895 $ 18,425 $ 19,773 $ (110,108 ) $ (59,015 ) $ 10,460 $ 7,732 $ 8,405 $ (20,727 ) $ 5,870
ADJUSTED WEIGHTED AVERAGE SHARES
16,87217,05317,06817,01017,00517,01417,06617,11617,14017,111
Adjustment for anti-dilutive conversion of shares - - - 113 188 - - - 107 -
Weighted average common shares outstanding (diluted) 16,872 17,053 17,068 16,897 16,817 17,014 17,066 17,116 17,033 17,111
ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL CHARGES, NET OF TAX
$0.77$1.08$1.16$1.12$4.13$0.57$0.45$0.47$(1.20)$0.29
LESS: Special (charges) recoveries, net of tax impact on EPS $ (0.01 ) $ - $ - $ (7.64 ) $ (7.64 ) $ 0.05 $ - $ 0.02 $ (0.02 ) $ 0.05
EARNINGS PER COMMON SHARE (Diluted) $ 0.76 $ 1.08 $ 1.16 $ (6.52 ) $ (3.51 ) $ 0.61 $ 0.45 $ 0.49 $ (1.22 ) $ 0.34
ADJUSTED INCOME, EXCLUDING SPECIAL CHARGES & Q4 2009
5 YEAR FUTURE ASBESTOS CLAIM LIABILITY, NET OF TAX$5,458$30,855
LESS:
Special (charges) recoveries, net of tax (295 ) 905
5 year future asbestos claim liability (25,890 ) (25,890 )
NET INCOME $ (20,727 ) $ 5,870

ADJUSTED EARNINGS PER SHARE, EXCLUDING SPECIAL CHARGES & Q4 2009

5 YEAR FUTURE ASBESTOS CLAIM LIABILITY, NET OF TAX$0.32$1.80
LESS: Special (charges) recoveries, net of tax impact on EPS $ (0.01 ) $ - $ - $ (7.64 ) $ (7.64 ) $ 0.05 $ - $ 0.02 $ (0.02 ) $ 0.05
5 year future asbestos claim liability $ (1.52 ) $ (1.51 )
EARNINGS PER COMMON SHARE (Diluted) $ (1.22 ) $ 0.34

CIRCOR INTERNATIONAL, INC

Leslie Controls Asbestos Items
(in thousands, except case information)
20082009
1ST QTR

2ND QTR

3RD QTR4TH QTRYTD1ST QTR

2ND QTR

3RD QTR4TH QTRYTD
Quarterly Case Rollforward
Beginning open cases 707 756 846 972 707 968 1,103 1,158 1,143 968
Cases filed 138 168 267 115 688 222 203 131 131 687
Cases resolved and dismissed (89 ) (78 ) (141 ) (119 ) (427 ) (87 ) (148 ) (146 ) (170 ) (551 )
Ending open cases 756 846 972 968 968 1,103 1,158 1,143 1,104 1,104
Ending open mesothelioma cases 374 413 474 502 502 578 584 612 597 597
Income Statement Amounts
Indemnity costs accrued (filed cases) $ 1,283 $ 2,576 $ 3,182 $ 275 $ 7,316 $ 4,602 $ 2,109 $ 1,140 $ 10 $ 7,861
5 year future indemnity costs accrued - - - - - - - - 39,800 39,800
Adverse verdict costs (verdicts appealed) - 90 316 98 504 90 97 95 (1,308 ) (1,026 )
Defense costs incurred 2,426 2,729 2,650 2,353 10,158 3,166 3,275 3,009 2,862 12,312
AR adj - insurance exhaustion - 2,069 - - - 2,069
Insurance recoveries accrued (2,633 ) (3,386 ) (2,339 ) (1,309 ) (9,667 ) (1,664 ) (2,039 ) (2,268 ) (966 ) (6,937 )
Net pre-tax asbestos expense 1,076 2,009 3,809 1,417 8,311 8,263 3,442 1,976 40,398 54,079
Balance Sheet Amounts
Existing claim indemnity liability $ 13,366 $ 14,914 $ 17,569 $ 16,661 $ 20,781 $ 19,849 $ 20,060 $ 17,916
Future claim indemnity liability - - - - - - - 39,800
Incurred defense cost liability 3,734 3,583 2,216 2,584 4,212 5,169 3,615 2,544
Insurance recoveries asset (12,145 ) (12,760 ) (11,367 ) (10,765 ) (9,088 ) (7,426 ) (6,485 ) (4,614 )
Net asbestos liability $ 4,955 $ 5,737 $ 8,418 $ 8,480 $ 15,905 $ 17,592 $ 17,190 $ 55,646

Contacts:

CIRCOR International
Frederic M. Burditt, 781-270-1200
Chief Financial Officer

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