CIRCOR Files Form 12b-25 and Announces Review of Potential Strategic Alternatives
March 14 2022 - 4:09PM
Business Wire
CIRCOR International, Inc. (NYSE: CIR) (“CIRCOR” or “the
Company”), one of the world’s leading providers of mission critical
flow control products and services for the Industrial and Aerospace
& Defense markets, today announced that it has filed a Form
12b-25 with the U.S. Securities and Exchange Commission providing
the Company a 15-day extension to file its Annual Report on Form
10-K (the “Form 10-K”) for the year ended December 31, 2021.
Separately, the Company also announced that its Board of Directors
(the “Board”) is reviewing third-party inquiries regarding
strategic alternatives to enhance value for shareholders.
Form 12b-25 Extension
In the course of completing the audit of the consolidated
financial statements to be filed as part of Form 10-K, the Company
and the Company’s independent registered public accounting firm
Ernst & Young LLP uncovered accounting irregularities in the
financial statements with respect to the Company’s Pipeline
Engineering business unit, which is a part of its Industrial
reportable segment. The operations for this business unit are
primarily located in Catterick, England. Prior to the discovery of
these irregularities, the Pipeline Engineering business unit
accounted for approximately 3% and 2% of the Company’s total
reported revenue in 2020 and 2019, respectively. The
irregularities, however, preliminarily appear to account for
balance sheet and income statement entries in the range of $35 to
$45 million of pre-tax income on a cumulative basis over a period
of at least five years. These estimates are subject to change until
the filing of our Form 10-K and are not inclusive of other direct
and indirect accounting effects of the accounting
irregularities.
The Company, together with an outside law firm and an
independent forensic accounting firm, under the oversight of the
Audit Committee of the Company’s Board of Directors is conducting a
review of the financial statements of this business unit. Although
the review is still underway, the Company expects to restate its
consolidated financial statements for 2019 through 2021. As such,
investors should not rely on the Company’s previously filed
financial statements and related disclosures for (i) the years
ended December 31, 2018, December 31, 2019 and December 31, 2020
included in its Annual Reports on Form 10-K, (ii) each of the
quarterly and year-to-date periods for 2020 and (iii) the quarterly
and year-to-date periods for the nine months ended October 3,
2021.
The Company’s management is also in the process of assessing the
effectiveness of its internal control over financial reporting and
its disclosure controls and procedures. Although the assessment is
not yet complete, the review is likely to result in one or more
material weaknesses in the Company’s internal control over
financial reporting during the applicable periods; the assessment
will be included in the Form 10-K.
The Company has dedicated significant resources to completing
its review and the filing of the Form 10-K; however, no assurance
can be given that the Company will be successful in filing the Form
10-K prior to the expiration of the extension period. The Company
assumes no duty to update the status of the review until the Form
10-K is filed with the SEC. The Company will make a subsequent
announcement to schedule the date and time of its fourth-quarter
and full-year 2021 earnings release and conference call.
Review of Strategic Alternatives
Beginning in January 2022, the Board received multiple inquiries
from third parties regarding a potential transaction with CIRCOR
and engaged in preliminary discussions with the interested parties.
As a result of those preliminary discussions, in February 2022, the
Board initiated a full review of all potential strategic
alternatives available to CIRCOR to enhance value for shareholders
including, but not limited to, a possible sale of some or all
assets of the Company (whether in whole or in parts), merger,
divestiture, or other strategic transaction. The Board remains
engaged in exploring these alternatives.
Helmuth Ludwig, Chair of the Board, said, “Our decision to
evaluate strategic alternatives reinforces the Board’s focus on
generating value for all our stakeholders, including our
shareholders, employees, customers, and suppliers. We have
successfully repositioned the CIRCOR portfolio and are confident
that continued execution of our strategic priorities will create
substantial value for our shareholders. At the same time, we
believe that there may be significant incremental value within
CIRCOR that may be unlocked through strategic alternatives. As a
result, we are evaluating all possible paths to maximize
shareholder value.”
CIRCOR does not intend to comment further on the process unless
and until the Board has determined that such disclosure is
appropriate or required. The exploration of strategic alternatives
may not result in any transaction or strategic change.
The Board has retained Evercore and JP Morgan Securities LLC as
its financial advisors, and Ropes & Gray as its legal advisor
to assist with this review process.
About CIRCOR International, Inc.
CIRCOR International is one of the world’s leading providers of
mission critical flow control products and services for the
Industrial and Aerospace & Defense markets. The Company has a
product portfolio of market-leading brands serving its customers’
most demanding applications. CIRCOR markets its solutions directly
and through various sales partners to more than 14,000 customers in
approximately 100 countries. The Company has a global presence with
approximately 3,100 employees and is headquartered in Burlington,
Massachusetts. For more information, visit the Company’s investor
relations website at http://investors.circor.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Actual results may differ
materially from the expectations the Company describes in its
forward-looking statements. Substantial 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. Important factors that could cause
actual results to differ materially from expectations include, but
are not limited to findings and conclusions of the Audit
Committee’s review; the Company’s expectations regarding
materiality or significance; the effectiveness of the Company’s
internal control over financial reporting and disclosure controls
and procedures; the potential for a material weakness in the
Company’s internal controls over financial reporting or other
potential weaknesses of which the Company is not currently aware or
which have not been detected; the risk that the completion and
filing of the Annual Report will take longer than expected;
additional information that may arise during the preparation of the
Company’s financial statements; the timing and outcome, if any, of
the Company’s strategic alternatives review; and the risks detailed
from time to time in the Company’s periodic reports filed with the
SEC. Before making any investment decisions regarding CIRCOR, the
Company strongly advises you to read the section entitled “Risk
Factors” in its most recent annual report on Form 10-K and
subsequent reports on Forms 10-Q, which can be accessed under the
“Investors” link of the Company’s website at www.circor.com. The
Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20220314005805/en/
Alex Maki Vice President - FP&A and Investor Relations
CIRCOR International (781) 270-1200
CIRCOR (NYSE:CIR)
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