CIR CIRCOR International Inc

CIRCOR International, Inc. (NYSE: CIR), a provider of valves and other highly engineered products and subsystems that control the flow of fluids safely and efficiently in the aerospace, energy and industrial markets, today announced financial results for the third quarter ended October 3, 2010.

Management Comments on Third-Quarter Results

“Our third-quarter financial results demonstrate continuing improvements on the top and bottom line,” said Chairman and Chief Executive Officer Bill Higgins. “Revenues came in at the high end of our guidance, while earnings, exclusive of Leslie bankruptcy and asbestos charges, surpassed our expectations. Revenue growth was primarily driven by continued strength at the short cycle Energy business and earlier-cycle Flow Technologies end markets. Earnings benefited from segment performance, currency impacts and a reduced tax rate.”

“We are particularly pleased with our bookings performance, with orders up 51% year-over-year, which includes 17% from acquisitions,” said Higgins. “We achieved order growth across all three business segments, but saw particular strength in our short-cycle Energy business. While we had expected further sequential pick up in Energy’s longer cycle international project businesses, orders remained essentially flat. Flow Technologies experienced increased orders across most end markets. The increase in orders at Aerospace was primarily driven by the acquisition of Castle Precision Industries.”

“As previously announced, we have obtained the asbestos claimant votes necessary for approval of Leslie Controls’ pre-negotiated Chapter 11 reorganization and the U.S. Bankruptcy Court has entered an order confirming the plan,” said Higgins. “We are now focused on obtaining district court approval and then winning any appeals that may be pursued.”

Leslie’s final emergence from bankruptcy would not occur until any appeals are favorably resolved, although CIRCOR and Leslie believe that any such appeals would be without merit. Leslie is continuing to conduct business as usual during the Chapter 11 process.

Consolidated Results

Revenues for the third quarter of 2010 were $177.6 million, a 23% increase from $144.3 million generated in the third quarter of 2009. CIRCOR reported net income for the third quarter of 2010 of $10.4 million, or $0.60 per diluted share, compared with net income of $8.4 million, or $0.49 per diluted share, for the third quarter of 2009.

Pre-tax Leslie bankruptcy and asbestos charges were $2.3 million for the three months ended October 3, 2010, compared with $2.0 million of non-bankruptcy asbestos charges for the year-earlier period. Excluding special charges and Leslie bankruptcy and asbestos charges net of tax, adjusted earnings per diluted share were $0.70 for the third quarter of 2010, an increase of 27% compared with $0.54 in the third quarter of 2009.

Consolidated Orders and Free Cash Flow

The Company received orders totaling $207.1 million during the third quarter of 2010, an increase of 51% compared with the third quarter of 2009 and a 21% increase compared with the second quarter of 2010. Backlog as of October 3, 2010 was $391.6 million, up 32% from backlog of $297.9 million at September 27, 2009 and up 23% from $317.6 million at July 4, 2010.

During the third quarter of 2010, the Company used $3.3 million of free cash flow (defined as net cash from operating activities, less capital expenditures and dividends paid) compared with generating $11.2 million in the third quarter of 2009 due primarily to changes in working capital and increased capital expenditures.

Energy

CIRCOR’s Energy segment revenues of $80.6 million for the quarter ended October 3, 2010 represent a 32% increase from $61.2 million for the quarter ended September 27, 2009. The increase included 24% organic growth and 12% from acquisitions, which was partially offset by a negative foreign currency adjustment of 4%. The organic growth was the result of a strong year-over-year rebound in the North American short-cycle business.

Incoming orders for the third quarter of 2010 were $98.5 million, an increase of 95% year over year and 24.0% sequentially. The year-over-year growth was due to strength in the North American short-cycle business and the acquisition of Pipeline Engineering in the fourth quarter of 2009. Ending backlog totaled $153.0 million, a 34% increase year over year and a 23% increase sequentially.

The Energy segment adjusted operating margin, which excludes the impact of special charges, was 11.1% during the third quarter of 2010 compared with 10.9% for the third quarter of 2009 and 8.3% for the second quarter of 2010. The increase in third-quarter 2010 operating margin was primarily driven by organic growth, associated operating leverage, favorable penalty reserve adjustments and productivity improvements. This was partially offset by continued pricing pressures - especially for large international projects - unfavorable mix and acquisition impacts.

Aerospace

CIRCOR’s Aerospace segment revenues increased by 8% to $28.3 million for the third quarter of 2010 from $26.2 million in the third quarter of 2009. The increase in revenues was driven by 9% growth from acquisitions and 2% organic growth, which was partially offset by a 2% decline from foreign currency adjustments. The organic growth was from sales of military landing gear, which offset small declines in other end markets.

Incoming orders for the third quarter of 2010 were $31.3 million, an increase of 15% year over year and 16% sequentially. The majority of the increase in orders was due to the acquisition of Castle in August. Ending backlog totaled $152.8 million, an increase of 27% year over year and 30% sequentially.

The Aerospace segment’s adjusted operating margin, which excludes the impact of special charges, was 9.6% for the third quarter of 2010 compared with 13.2% for the third quarter of 2009 and 14.6% for the second quarter of 2010. Third-quarter 2010 margins decreased primarily due to higher operating expenses related to support of new programs and acquisition transaction costs, partially offset by productivity gains and favorable pricing.

Flow Technologies

CIRCOR’s Flow Technologies segment revenues increased 21% to $68.6 million from $56.9 million in the third quarter of 2009. Third-quarter 2010 revenues reflected organic growth of 22%, primarily due to semiconductor, maritime, instrumentation and process strength, and growth from acquisitions of 2%, which was partially offset by foreign currency adjustments of 3%.

Incoming orders for this segment were $77.4 million for the third quarter of 2010, an increase of 30% year over year and 20% sequentially. The year-over-year increase was due to strength in all markets, with the exception of petrochemical and refining. Ending backlog totaled $85.9 million, an increase of 36% year over year and 14% sequentially.

This segment’s adjusted operating margin, which excludes the impact of special and Leslie asbestos and bankruptcy charges, for the third quarter of 2010 was 13.1% compared with 10.9% in the third quarter of 2009, and 10.1% in the second quarter of 2010. The third-quarter year-over-year margin increase was due to higher volumes, productivity and favorable mix.

Business and Financial Outlook

“Our sales and bookings trends are both positive, led by the short-cycle Energy and early-cycle Flow Technologies businesses,” said Higgins. “While the long-cycle businesses have recently stabilized, we have not seen a meaningful pick up at this point. Our balance sheet remains strong and will enable us to fund the Leslie reorganization plan and continue to invest in organic growth and strategic acquisitions.”

CIRCOR currently expects revenues for the fourth quarter of 2010 in the range of $192 million to $202 million and adjusted earnings in the range of $0.50 to $0.63 per diluted share. CIRCOR’s guidance for adjusted earnings per share excludes $0.06 per diluted share in Leslie asbestos and bankruptcy charges and assumes that exchange rates remain at present levels.

Conference Call Information

CIRCOR International will hold a conference call to review its financial results today, November 4, 2010, at 10:00 a.m. ET. Those who wish to listen to the conference call and view the accompanying presentation slides should visit “Webcasts & Presentations” in the “Investors” portion of the CIRCOR website. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. If you are unable to listen to the live call, the webcast will be archived for one year on the Company’s website.

Use of Non-GAAP Financial Measures

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

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Reliance should not be placed on forward-looking statements because they involve unknown risks, uncertainties and other factors, which are, in some cases, beyond the control of CIRCOR. Any statements in this press release that are not statements of historical fact are forward-looking statements, including, but not limited to, those relating to CIRCOR’s future performance, including fourth-quarter revenue and earnings guidance; and the Company's expectations related to the process for Leslie Controls' emergence from bankruptcy. Actual events, performance or results could differ materially from the anticipated events, performance or results expressed or implied by such forward-looking statements. BEFORE MAKING ANY INVESTMENT DECISIONS REGARDING OUR COMPANY, WE STRONGLY ADVISE YOU TO READ THE SECTION ENTITLED "RISK FACTORS" IN OUR MOST RECENT ANNUAL REPORT ON FORM 10-K AND SUBSEQUENT REPORTS ON FORMS 10-Q, WHICH CAN BE ACCESSED UNDER THE "INVESTORS" LINK OF OUR WEBSITE AT WWW.CIRCOR.COM. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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

  CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) UNAUDITED                 Three Months Ended Nine Months Ended October 3, 2010 September 27, 2009 October 3, 2010 September 27, 2009     Net revenues $ 177,577 $ 144,327 $ 491,851 $ 484,509 Cost of revenues   126,096     102,462     348,109     338,123   GROSS PROFIT 51,481 41,865 143,742 146,386 Selling, general and administrative expenses 35,648 29,787 109,024 98,127 Leslie asbestos and bankruptcy charges 2,343 1,977 30,603 13,682 Special recoveries   -     (543 )   -     (1,678 ) OPERATING INCOME   13,490     10,644     4,115     36,255   Other (income) expense: Interest income (69 ) (77 ) (162 ) (391 ) Interest expense 803 471 2,036 857 Other income, net   (853 )   (959 )   (646 )   (1,409 ) Total other (income) expense   (119 )   (565 )   1,228     (943 ) INCOME BEFORE INCOME TAXES 13,609 11,209 2,887 37,198 Provision (benefit) for income taxes   3,210     2,804     (2,005 )   10,601   NET INCOME $ 10,399   $ 8,405   $ 4,892   $ 26,597     Earnings per common share: Basic $ 0.61 $ 0.49 $ 0.29 $ 1.56 Diluted $ 0.60 $ 0.49 $ 0.28 $ 1.56   Weighted average common shares outstanding: Basic 17,123 17,023 17,095 17,003 Diluted 17,258 17,116 17,238 17,050           CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) UNAUDITED     Nine Months Ended October 3, 2010 September 27, 2009     OPERATING ACTIVITIES Net income $ 4,892 $ 26,597 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 9,509 9,620 Amortization 3,065 1,956 Provision for Leslie bankruptcy settlement 24,974 - Compensation expense of stock-based plans 2,445 2,351 Tax effect of share based compensation (114 ) 412 Loss (gain) on disposal of property, plant and equipment 248 (60 )   Changes in operating assets and liabilities, net of effects from business acquisitions: Trade accounts receivable (13,734 ) 30,690 Inventories (20,727 ) 40,836 Prepaid expenses and other assets 5,368 8,546 Accounts payable, accrued expenses and other liabilities   (1,183 )   (91,717 ) Net cash provided by operating activities   14,743     29,231     INVESTING ACTIVITIES Additions to property, plant and equipment (11,400 ) (6,106 ) Proceeds from the sale of property, plant and equipment 75 95 Purchase of investments - (278,916 ) Proceeds from sale of investments 21,427 312,918 Business acquisitions, net of cash acquired   (34,401 )   (10,428 ) Net cash (used in) provided by investing activities   (24,299 )   17,563     FINANCING ACTIVITIES Proceeds from long-term debt 91,750 57,372 Payments of long-term debt (60,202 ) (64,703 ) Debt issuance costs (2,814 ) Dividends paid (1,982 ) (1,930 ) Proceeds from the exercise of stock options 329 37 Tax effect of share based compensation   114     (412 ) Net cash provided by (used in) financing activities   30,009     (12,450 ) Effect of exchange rate changes on cash and cash equivalents   1,723     1,891     INCREASE IN CASH AND CASH EQUIVALENTS 22,176 36,235 Cash and cash equivalents at beginning of year   46,350     47,473   CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 68,526   $ 83,708     CIRCOR INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) UNAUDITED                         October 3, 2010 December 31, 2009   ASSETS Current Assets: Cash & cash equivalents $ 68,526 $ 46,350 Short-term investments 97 21,498 Trade accounts receivable, less allowance for doubtful accounts of $1,208 and $1,992, respectively 135,199 115,260 Inventories 172,543 145,031 Income taxes refundable - 726 Prepaid expenses and other current assets 8,324 4,195 Deferred income tax asset 43,177 15,847 Insurance receivables 194 4,614 Assets held for sale   542   1,167 Total Current Assets   428,602   354,688   Property, Plant and Equipment, net 96,547 95,167   Other Assets: Goodwill 60,437 47,893 Intangibles, net 63,943 55,238 Deferred income tax asset - 5,676 Other assets   5,351   3,391 Total Assets $ 654,880 $ 562,053   LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 80,841 $ 57,239 Accrued expenses and other current liabilities 44,694 46,736 Accrued compensation and benefits 21,658 18,617 Leslie asbestos and bankruptcy related liabilities 80,064 12,476 Income taxes payable 1,471 - Notes payable and current portion of long-term debt   10,613   5,914 Total Current Liabilities   239,341   140,982   Long-Term Debt, net of current portion 31,785 1,565 Deferred income taxes 11,786 - Long-Term Leslie asbestos liability - 47,785 Other Non-Current Liabilities 20,249 21,313 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 17,098,925 and 16,991,365 issued and outstanding, respectively 171 170 Additional paid-in capital 252,471 249,960 Retained earnings 89,328 86,408 Accumulated other comprehensive income   9,749   13,870 Total Shareholders' Equity   351,719   350,408 Total Liabilities and Shareholders' Equity $ 654,880 $ 562,053   CIRCOR INTERNATIONAL, INC. SUMMARY OF ORDERS AND BACKLOG (in thousands) UNAUDITED                 Three Months Ended Nine Months Ended October 3, 2010 September 27, 2009 October 3, 2010 September 27, 2009   ORDERS 1 Energy $ 98,456 $ 50,574 $ 244,070 $ 170,100   Aerospace 31,280 27,231 93,109 89,415   Flow Technologies   77,367   59,688   210,787   167,902   Total orders $ 207,103 $ 137,493 $ 547,966 $ 427,417                     October 3, 2010 September 27, 2009   BACKLOG 2 Energy $ 152,968 $ 114,139   Aerospace 152,790 120,453   Flow Technologies   85,859   63,280   Total backlog $ 391,617 $ 297,872  

Note 1: Beginning in Q2 2010, orders have been adjusted to exclude the foreign exchange impact from backlog remeasurement.

The three and nine months ended September 27, 2009 reflect a decrease of $6.1 million and $7.4 million, respectively.

  Note 2: Backlog includes all unshipped customer orders.     CIRCOR INTERNATIONAL, INC. SUMMARY REPORT BY SEGMENT (in thousands, except earnings per share) UNAUDITED                                       2009 2010 1ST QTR   2ND QTR     3RD QTR   4TH QTR     YTD 1ST QTR   2ND QTR     3RD QTR     YTD   NET REVENUES   Energy $ 89,307 $ 76,814 $ 61,185 $ 66,113 $ 293,419 $ 57,722 $ 77,305 $ 80,613 $ 215,640 Aerospace 28,344 30,243 26,234 28,506 113,327 27,274 27,811 28,316 83,401 Flow Technologies   57,996     57,478     56,908     63,494     235,876     61,273     62,889     68,648     192,810   Total   175,647     164,535     144,327     158,113     642,622     146,269     168,005     177,577     491,851  

 

* ADJUSTED OPERATING MARGIN   Energy 18.1 % 12.3 % 10.9 % 3.0 % 11.7 % 3.5 % 8.3 % 11.1 % 8.1 % Aerospace 15.4 % 16.2 % 13.2 % 14.7 % 14.9 % 13.2 % 14.6 % 9.6 % 12.5 % Flow Technologies 11.6 % 9.5 % 10.9 % 11.7 % 11.0 % 10.2 % 10.1 % 13.1 % 11.2 % Segment operating margin 15.5 % 12.1 % 11.3 % 8.6 % 12.0 % 8.1 % 10.0 % 11.7 % 10.1 % Corporate expenses -3.1 % -3.4 % -3.0 % -3.3 % -3.2 % -3.1 % -3.1 % -2.7 % -3.0 % * Adjusted operating margin 12.5 % 8.7 % 8.4 % 5.3 % 8.8 % 5.0 % 6.9 % 8.9 % 7.1 % Leslie asbestos and bankruptcy charges (recoveries) 4.7 % 2.1 % 1.4 % 25.5 % 8.4 % -0.4 % 17.2 % 1.3 % 6.2 % Impairment charges 0.0 % 0.0 % 0.0 % 0.3 % 0.1 % 0.0 % 0.0 % 0.0 % 0.0 % Special charges (recoveries) -0.6 % 0.0 % -0.4 % 0.0 % -0.3 % 0.0 % 0.0 % 0.0 % 0.0 % Total operating margin 8.4 % 6.6 % 7.4 % -20.6 % 0.6 % 5.4 % -10.3 % 7.6 % 0.8 %   * ADJUSTED OPERATING INCOME   Energy 16,169 9,461 6,696 1,966 34,292 2,025 6,424 8,968 17,417 Aerospace 4,372 4,905 3,461 4,195 16,933 3,607 4,067 2,726 10,400 Flow Technologies   6,744       5,484       6,197     7,444     25,869     6,276       6,367       8,997     21,640   Segment operating income 27,285

 

19,850

 

16,354 13,605 77,094 11,908 16,858 20,691 49,457 Corporate expenses   (5,365 )   (5,589 )   (4,276 )   (5,267 )   (20,497 )   (4,607 )   (5,274 )   (4,859 )   (14,740 ) * Adjusted operating income   21,920     14,261     12,078     8,338     56,597     7,301     11,584     15,832     34,717   Leslie asbestos and bankruptcy charges (recoveries) 8,263 3,442 1,977 40,397 54,079 (648 ) 28,908 2,343 30,603 Impairment charges - - - 485 485 - - - - Special charges (recoveries) (1,135 ) - (543 ) - (1,678 ) - - - -                                                       Total operating income 14,792 10,819 10,644 (32,544 ) 3,711 7,949 (17,325 ) 13,490 4,115   INTEREST EXPENSE, NET (32 ) (41 ) (394 ) (602 ) (1,069 ) (554 ) (586 ) (734 ) (1,874 ) OTHER (EXPENSE) INCOME, NET   183     267     959     (967 )   442     51     (258 )   853     646     PRETAX INCOME (LOSS) 14,943 11,045 11,209 (34,113 ) 3,084 7,446 (18,169 ) 13,609 2,886 (PROVISION) BENEFIT FOR INCOME TAXES   (4,483 )   (3,313 )   (2,804 )   13,386     2,786     (1,713 )   6,928     (3,210 )   2,005   EFFECTIVE TAX RATE 30.0 % 30.0 % 25.0 % 39.2 % -90.3 % 23.0 % 38.1 % 23.6 % -69.5 % NET (LOSS) INCOME $ 10,460   $ 7,732   $ 8,405   $ (20,727 ) $ 5,870   $ 5,733   $ (11,241 ) $ 10,399   $ 4,892     Weighted Average Common Shares Outstanding (Diluted) 17,014 17,066 17,116 17,033 17,111 17,193 17,109 17,258 17,238   EARNINGS PER COMMON SHARE (Diluted) $ 0.61   $ 0.45   $ 0.49   $ (1.22 ) $ 0.34   $ 0.33   $ (0.66 ) $ 0.60   $ 0.28     EBIT $ 14,975 $ 11,086 $ 11,603 $ (33,511 ) $ 4,153 $ 8,000 $ (17,583 ) $ 14,343 $ 4,761 Depreciation 2,839 3,245 3,536 3,687 13,307 3,228 3,115 3,166 9,509 Amortization of intangibles   622     627     707     1,078     3,034     979     964     1,122     3,064   EBITDA $ 18,436   $ 14,958   $ 15,846   $ (28,746 ) $ 20,494   $ 12,207   $ (13,504 ) $ 18,631   $ 17,334     EBITDA AS A PERCENT OF SALES   10.5 %   9.1 %   11.0 %   -18.2 %   3.2 %   8.3 %   -8.0 %   10.5 %   3.5 %   CAPITAL EXPENDITURES $ 2,576   $ 1,925   $ 1,605   $ 4,926   $ 11,032   $ 3,606   $ 4,580   $ 3,213   $ 11,400     * Adjusted Operating Income & Margin excludes Special, Impairment, and Leslie asbestos and bankruptcy charges   CIRCOR INTERNATIONAL, INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS (in thousands) UNAUDITED                         2009 2010 1ST QTR   2ND QTR   3RD QTR   4TH QTR   YTD 1ST QTR   2ND QTR   3RD QTR   YTD                                                                               FREE CASH FLOW [NET CASH FLOW FROM OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES LESS DIVIDENDS PAID]     $ (7,928 )   $ 17,882     $ 11,241     $ 11,757     $ 32,952       $ (7,019 )   $ 11,947     $ (3,566 )   $ 1,361   ADD:Capital expenditures 2,576 1,925 1,605 4,926 11,032 3,606 4,580 3,213 11,400

Dividends paid

  657     637     636     638     2,568     639     640     703     1,982     NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ (4,695 ) $ 20,444   $ 13,482   $ 17,321   $ 46,552   $ (2,774 ) $ 17,167   $ 350   $ 14,743  

 

                                                                            NET (CASH) DEBT [TOTAL DEBT LESS CASH & CASH EQUIVALENTS LESS INVESTMENTS]     $ (49,519 )   $ (69,331 )   $ (77,081 )   $ (60,369 )   $ (60,369 )     $ (52,713 )   $ (55,976 )   $ (26,225 )   $ (26,225 ) ADD: Cash & cash equivalents 36,113 33,038 83,708 46,350 46,350 37,812 60,857 68,526 68,526 Investments   36,991     48,344     3,023     21,498     21,498     22,412     94     97     97     TOTAL DEBT $ 23,585   $ 12,051   $ 9,650   $ 7,479   $ 7,479   $ 7,511   $ 4,975   $ 42,398   $ 42,398                                                                                 DEBT AS % OF EQUITY       7 %     3 %     3 %     2 %     2 %       2 %     2 %     12 %     12 %   TOTAL DEBT 23,585 12,051 9,650 7,479 7,479 7,511 4,975 42,398 42,398   TOTAL SHAREHOLDERS' EQUITY 341,860 357,596 371,728 350,408 350,408 349,244 324,128 351,719 351,719                                                                               EBIT [NET INCOME LESS INCOME TAXES LESS INTEREST EXPENSE, NET]     $ 14,975     $ 11,086     $ 11,603     $ (33,511 )   $ 4,153       $ 8,000     $ (17,583 )   $ 14,343     $ 4,760   LESS: Interest expense, net (32 ) (41 ) (394 ) (602 ) (1,069 ) (554 ) (586 ) (734 ) (1,874 ) Provision for income taxes   (4,483 )   (3,313 )   (2,804 )   13,386     2,786     (1,713 )   6,928     (3,210 )   2,005     NET INCOME $ 10,460   $ 7,732   $ 8,405   $ (20,727 ) $ 5,870   $ 5,733   $ (11,241 ) $ 10,399   $ 4,892                                                                                 EBITDA [NET INCOME LESS INTEREST EXPENSE, NET, LESS DEPRECIATION LESS AMORTIZATION LESS INCOME

TAXES]

    $ 18,436     $ 14,958     $ 15,846     $ (28,746 )   $ 20,494       $ 12,207     $ (13,504 )   $ 18,631     $ 17,334   LESS: Interest expense, net (32 ) (41 ) (394 ) (602 ) (1,069 ) (554 ) (586 ) (734 ) (1,874 ) Depreciation (2,839 ) (3,245 ) (3,536 ) (3,687 ) (13,307 ) (3,228 ) (3,115 ) (3,166 ) (9,509 ) Amortization (622 ) (627 ) (707 ) (1,078 ) (3,034 ) (979 ) (964 ) (1,122 ) (3,065 ) Provision for income taxes   (4,483 )   (3,313 )   (2,804 )   13,386     2,786     (1,713 )   6,928     (3,210 )   2,005     NET INCOME $ 10,460   $ 7,732   $ 8,405   $ (20,727 ) $ 5,870   $ 5,733   $ (11,241 ) $ 10,399   $ 4,891                                                                                 ADJUSTED INCOME [NET INCOME EXCLUDING SPECIAL, IMPAIRMENT, AND LESLIE ASBESTOS AND BANKRUPTCY CHARGES, NET OF TAX]     $ 15,037     $ 9,969     $ 9,285     $ 5,826     $ 40,117       $ 5,312     $ 7,549     $ 11,922     $ 24,784   LESS: Special charges (recoveries), net of tax (794 ) - (405 ) - (1,199 ) - - - - Impairment charges - - - 295 295 Leslie asbestos and bankruptcy charges (recoveries), net of tax 5,371 2,237 1,285 26,258 35,151 (421 ) 18,790 1,523 19,892   NET INCOME $ 10,460   $ 7,732   $ 8,405   $ (20,727 ) $ 5,870   $ 5,733   $ (11,241 ) $ 10,399   $ 4,892                                                                                   ADJUSTED WEIGHTED AVERAGE SHARES         N/A       N/A       N/A       17,140       N/A         N/A       17,109       N/A       17,095     Adjustment for anti-dilutive conversion of shares - - - 107 - - 153 - 143                                                       Weighted average common shares outstanding (diluted)   17,014     17,066     17,116     17,033     17,111     17,193     17,262     17,258     17,238                                                                                 ADJUSTED EARNINGS PER SHARE [EPS EXCLUDING SPECIAL, IMPAIRMENT, AND LESLIE ASBESTOS AND BANKRUPTCY CHARGES, NET OF TAX]     $ 0.88     $ 0.58     $ 0.54     $ 0.34     $ 2.34       $ 0.31     $ 0.44     $ 0.69     $ 1.45    

LESS: Special charges (recoveries), net of tax impact on EPS

$ (0.05 ) $ - $ (0.02 ) $ - $ (0.07 ) $ - $ - $ - $ - Impairment charges $ - $ - $ - $ 0.02 $ 0.02 Leslie asbestos and bankruptcy charges (recoveries), net of tax impact on EPS $ 0.32 $ 0.13 $ 0.08 $ 1.54 $ 2.05 $ (0.02 ) $ 1.10 $ 0.09 $ 1.16                                                       EARNINGS PER COMMON SHARE (Diluted) $ 0.61   $ 0.45   $ 0.49   $ (1.22 ) $ 0.34   $ 0.33   $ (0.66 ) $ 0.60   $ 0.28     CIRCOR INTERNATIONAL, INC Leslie Controls Asbestos Items (in thousands, except case information)                                       2009 2010 1ST QTR   2ND QTR   3RD QTR   4TH QTR   YTD 1ST QTR   2ND QTR     3RD QTR     YTD   Quarterly Case Rollforward   Beginning open cases 968 1,103 1,158 1,143 968 1,104 1,150 1,214 1,104 Cases filed 222 203 131 131 687 150 169 132 451 Cases resolved and dismissed (87 ) (148 ) (146 ) (170 ) (551 ) (104 ) (105 ) (6 ) (215 )                                                       Ending open cases   1,103     1,158     1,143     1,104     1,104     1,150     1,214     1,340     1,340     Ending open mesothelioma cases   578     584     612     597     597     623     672     713     713     Income Statement Amounts   Indemnity costs accrued (cases filed) $ 4,602 $ 2,109 $ 1,140 $ 39,810 $ 47,661 $ 699 $ 1,797 $ - $ 2,496 Adverse verdict costs (recoveries) 90 97 95 (1,308 ) (1,026 ) 65 (2,455 ) - (2,390 ) Defense costs incurred 3,166 3,275 3,009 2,862 12,312 3,731 3,435 16 7,182 Insurance recoveries adjustment 2,069 - - - 2,069 (3,652 ) - - (3,652 ) Insurance recoveries accrued (1,664 ) (2,039 ) (2,268 ) (966 ) (6,937 ) (1,491 ) (1,135 ) - (2,626 ) Leslie Bankruptcy related charges, net - - - - - - 27,266 2,327 29,593   Net pre-tax Leslie asbestos and                                                             bankruptcy expense (recovery) $ 8,263   $ 3,442   $ 1,976   $ 40,398   $ 54,079   $ (648 )   $ 28,908     $ 2,343     $ 30,603     Balance Sheet Amounts   Bankruptcy and indemnity liability $ 20,781 $ 19,849 $ 20,060 $ 57,716 $ 57,732 $ 78,976 $ 78,067 Incurred defense cost liability 4,212 5,169 3,615 2,544 2,099 3,455 1,997 Insurance recoveries receivable   (9,088 )   (7,426 )   (6,485 )   (4,614 )   (7,997 )   (1,180 )   (194 ) Net Leslie asbestos liability $ 15,905   $ 17,592   $ 17,190   $ 55,646   $ 51,834   $ 81,251   $ 79,870     CIRCOR INTERNATIONAL, INC. RECONCILIATION OF FUTURE PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS UNAUDITED       4TH QTR 2010 Low   High               EXPECTED ADJUSTED EARNINGS PER SHARE [EPS EXCLUDING SPECIAL, IMPAIRMENT, AND LESLIE ASBESTOS AND BANKRUPTCY CHARGES, NET OF TAX]   $ 0.50   $ 0.63 LESS: Expected special charges (recoveries), net of tax impact on EPS $ - $ - Expected impairment charges, net of tax impact on EPS $ - $ - Expected Leslie asbestos and bankruptcy charges, net of tax impact on EPS $ 0.06 $ 0.06           EXPECTED EARNINGS PER COMMON SHARE (Diluted) $ 0.44   $ 0.57