EXHIBIT 99.1
CIRCOR International, Inc.
Unaudited Pro Forma Condensed Consolidated Financial Information
Introduction
On January 31, 2019, CIRCOR International, Inc. (“CIRCOR” or the “Company”) and its wholly-owned subsidiaries, CIRCOR Dovianus Holdings B.V. and CIRCOR Aerospace, Inc., completed the disposition of its Instrumentation and Sampling business (“I&S”) to Crane Co. (the “Purchaser”), pursuant to the Amended and Restated Securities Purchase Agreement dated January 31, 2020, for $172 million, in cash, subject to a working capital adjustment (the “Disposition”).
The unaudited pro forma condensed consolidated financial information has been prepared in conformity with Article 11 of Regulation S-X. In addition, this unaudited pro forma condensed consolidated financial information is based on currently available information and assumptions the Company believes are reasonable. This unaudited pro forma condensed consolidated financial information is presented for informational purposes only and neither purports to represent what the Company’s results of operations or financial position would have been had the Disposition occurred on the dates indicated, nor projects the results of operations for any future periods.
The unaudited pro forma condensed consolidated balance sheet as of September 29, 2019 and unaudited pro forma condensed consolidated statement of operations for the nine months ended September 29, 2019 are derived from and should be read in conjunction with the Company’s unaudited financial statements in its Quarterly Report on Form 10-Q for the quarterly period ended September 29, 2019, which was filed with the Securities and Exchange Commission (the "SEC") on November 13, 2019. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2018 is derived from and should be read in conjunction with the Company’s audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on March 1, 2019.
The unaudited pro forma condensed consolidated balance sheet of the Company as of September 29, 2019 is presented as if the Disposition had occurred on September 29, 2019. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 29, 2019 as well as for the year ended December 31, 2018 are presented as if the Disposition had occurred on January 1, 2018, the beginning of the earliest period presented.
The Company’s historical consolidated financial statements have been adjusted in the unaudited pro forma condensed consolidated financial information to present events that are (i) directly attributable to the Disposition, (ii) factually supportable and (iii) are expected to have a continuing impact on the Company’s consolidated results following the Disposition.
These pro forma financial statements do not purport to be indicative of the financial position or results of earnings of the Company as of such date or for such periods, nor are they necessarily indicative of future results.
CIRCOR INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 29, 2019
|
| | | | | | | | | | | | |
| (in 000's) | | As Reported | | Pro Forma Adjustments (a) | | Pro Forma |
| Cash and cash equivalents | | $ | 69,225 |
| | $ | — |
| | $ | 69,225 |
|
| Accounts receivable, less allowance | | 141,117 |
| | (11,417 | ) | | 129,700 |
|
| Inventories | | 151,744 |
| | (14,011 | ) | | 137,733 |
|
| Prepaid expenses and other current assets | | 89,854 |
| | (743 | ) | | 89,111 |
|
| Asset held for sale | | 29,935 |
| | — |
| | 29,935 |
|
| Total current assets | | 481,875 |
| | (26,170 | ) | | 455,705 |
|
| Property, plant, and equipment, net | | 177,936 |
| | (6,422 | ) | | 171,514 |
|
| Goodwill | | 360,304 |
| | (91,500 | ) | | 268,804 |
|
| Intangibles, net | | 392,515 |
| | — |
| | 392,515 |
|
| Deferred income taxes | | 24,449 |
| | (5,000 | ) | | 19,449 |
|
| Other assets | | 31,052 |
| | (6,530 | ) | | 24,522 |
|
| Total assets | | $ | 1,468,131 |
| | $ | (135,622 | ) | | $ | 1,332,509 |
|
| | | | | | | |
| Accounts payable | | $ | 90,293 |
| | $ | (5,887 | ) | | $ | 84,406 |
|
| Accrued expenses and other current liabilities | | 110,682 |
| | (1,236 | ) | | 109,446 |
|
| Accrued compensation and benefits | | 25,564 |
| | (1,362 | ) | | 24,202 |
|
| Liabilities held for sale | | 17,674 |
| | — |
| | 17,674 |
|
| Total current liabilities | | 244,213 |
| | (8,485 | ) | | 235,728 |
|
| Long Term Debt, net | | 640,884 |
| | (159,000 | ) | | 481,884 |
|
| Deferred income taxes | | 26,809 |
| | (147 | ) | | 26,662 |
|
| Pension Liability, net | | 144,809 |
| | — |
| | 144,809 |
|
| Other non-current liabilities | | 36,028 |
| | (5,966 | ) | | 30,062 |
|
| Total liabilities | | 1,092,743 |
| | (173,599 | ) | | 919,144 |
|
| Preferred stock | | — |
| | — |
| | — |
|
| Common Stock | | 212 |
| | — |
| | 212 |
|
| APIC | | 445,305 |
| | — |
| | 445,305 |
|
| Retained earnings | | 97,728 |
| | 37,977 |
| | 135,705 |
|
| Common treasury stock | | (74,472 | ) | | — |
| | (74,472 | ) |
| Accumulated OCI, net of tax | | (93,385 | ) | | — |
| | (93,385 | ) |
| Total stockholders' equity | | 375,388 |
| | (23,444 | ) | | 413,365 |
|
| Total liabilities and stockholders' equity | | $ | 1,468,131 |
| | $ | (135,622 | ) | | $ | 1,332,509 |
|
CIRCOR INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE-MONTHS ENDED SEPTEMBER 29, 2019
|
| | | | | | | | | | | | |
| (in '000s, except EPS) | | As Reported | | Pro Forma Adjustments (b) | | Pro Forma |
| Net revenues | | $ | 721,675 |
| | $ | (60,023 | ) | | $ | 661,652 |
|
| Cost of revenues | | 490,870 |
| | (41,429 | ) | | 449,441 |
|
| Gross Profit | | 230,805 |
| | (18,594 | ) | | 212,211 |
|
| Selling, general and administrative expenses | | 190,227 |
| | (7,958 | ) | | 182,269 |
|
| Impairment charges | | — |
| | — |
| | — |
|
| Special and restructuring charges, net | | 19,893 |
| | (74 | ) | | 19,819 |
|
| Operating Income | | 20,685 |
| | (10,562 | ) | | 10,123 |
|
| Interest expense, net | | 37,846 |
| | (6,559 | ) | | 31,287 |
|
| Other (income), net | | (2,755 | ) | | (91 | ) | | (2,846 | ) |
| Loss from continuing operations before income taxes | | (14,406 | ) | | (3,912 | ) | | (18,318 | ) |
| Provision for income taxes | | 13,513 |
| | (809 | ) | | 12,704 |
|
| Loss from continuing operations, net of tax | | (27,919 | ) | | (3,103 | ) | | (31,022 | ) |
| Loss from discontinued operations, net of tax | | (107,572 | ) | | — |
| | (107,572 | ) |
| Net Loss | | $ | (135,491 | ) | | $ | (3,103 | ) | | $ | (138,594 | ) |
| | |
| |
| |
|
| Basic loss per common share: | | | | | | |
| Basic from continuing operations | | $ | (1.40 | ) | | | | $ | (1.56 | ) |
| Basic from discontinued operations | | $ | (5.41 | ) | | | | $ | (5.41 | ) |
| Net Loss | | $ | (6.81 | ) | | | | $ | (6.97 | ) |
| | | | | | | |
| Diluted loss per common share: | | | | | | |
| Diluted from continuing operations | | $ | (1.40 | ) | | | | $ | (1.56 | ) |
| Diluted from discontinued operations | | $ | (5.41 | ) | | | | $ | (5.41 | ) |
| Net Loss | | $ | (6.81 | ) | | | | $ | (6.97 | ) |
| | | | | | | |
| Weighted-average shares: | | | | | |
| Basic | 19,898 |
| | — |
| | 19,898 |
|
| Diluted | 19,898 |
| | — |
| | 19,898 |
|
CIRCOR INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 2018
|
| | | | | | | | | | | | |
| (in '000s, except EPS) | | As Reported | | Pro Forma Adjustments (b) | | Pro Forma |
| Net revenues | | $ | 1,175,825 |
| | $ | (82,583 | ) | | $ | 1,093,242 |
|
| Cost of revenues | | 834,175 |
| | (56,362 | ) | | 777,813 |
|
| Gross Profit | | 341,650 |
| | (26,221 | ) | | 315,429 |
|
| Selling, general and administrative expenses | | 308,427 |
| | (11,137 | ) | | 297,290 |
|
| Special and restructuring charges, net | | 23,839 |
| | 540 |
| | 24,379 |
|
| Operating Income | | 9,384 |
| | (15,624 | ) | | (6,240 | ) |
| Other expense (income): | | | | | | |
| Interest expense, net | | 52,913 |
| | (8,745 | ) | | 44,168 |
|
| Other (income), net | | (7,435 | ) | | (44 | ) | | (7,479 | ) |
| Loss before income taxes | | (36,094 | ) | | (6,835 | ) | | (42,929 | ) |
| Provision for income taxes | | 3,290 |
| | (1,447 | ) | | 1,843 |
|
| Net Loss | | $ | (39,384 | ) | | $ | (5,387 | ) | | $ | (44,771 | ) |
| | | | | | | |
| Basic loss per share | | $ | (1.99 | ) | | | | $ | (2.26 | ) |
| Diluted loss per share | | $ | (1.99 | ) | | | | $ | (2.26 | ) |
| | | | | | | |
| Weighted-average shares: | | | | | | |
| Basic | | 19,834 |
| | — |
| | 19,834 |
|
| Diluted | | 19,834 |
| | — |
| | 19,834 |
|
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
The unaudited pro forma condensed consolidated balance sheet as of September 29, 2019 and unaudited pro forma condensed consolidated statement of operations for the nine months ended September 29, 2019 are derived from and should be read in conjunction with the Company’s unaudited financial statements in its Quarterly Report on Form 10-Q for the quarterly period ended September 29, 2019, which was filed with the SEC on November 13, 2019. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2018 is derived from and should be read in conjunction with the Company’s audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on March 1, 2019.
The unaudited pro forma condensed consolidated balance sheet of the Company as of September 29, 2019 is presented as if the Disposition had occurred on September 29, 2019. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 29, 2019 as well as for the year ended December 31, 2018, are presented as if the Disposition had occurred on January 1, 2018, the beginning of the earliest period presented.
The Company’s historical consolidated financial statements have been adjusted in the unaudited pro forma condensed consolidated financial information to present events that are (i) directly attributable to the Disposition, (ii) factually supportable and (iii) are expected to have a continuing impact on the Company’s consolidated results following the Disposition.
These unaudited pro forma condensed consolidated financial statements do not purport to be indicative of the financial position or results of earnings of the Company as of such date or for such periods, nor are they necessarily indicative of future results.
The following pro forma adjustments are included in the Company’s unaudited pro forma condensed consolidated financial information:
| |
| (a) | These adjustments reflect the disposition of CIRCOR’s I&S business for $172.0 million, in cash, $10.0 million of current taxes and $5.0 million of deferred taxes associated with the Disposition and $3.0 million of fees and expenses. This net cash of $159.0 million is shown as being used to repay long-term debt. The adjustment also includes derecognizing disposed assets and liabilities of the I&S business including $91.5 million of goodwill allocated to the I&S business. The adjustment to retained earnings reflects an estimated $38.0 million after-tax gain on the Disposition. |
| |
| (b) | These adjustments reflect the elimination of revenues and expenses associated with the I&S business. In addition, the adjustments reflect a reduction of interest expense (net of a tax) as the net proceeds are anticipated to be used to repay long-term debt. The adjustments do not reflect the anticipated gain on sale as described in (a) above as that is considered one-time in nature and not indicative of ongoing operations. |
