Item 2.02. Results of Operations and Financial Condition.
On May 23, 2022, CIRCOR International, Inc. (the "Company") issued a press
release providing selected preliminary financial information for the first
quarter ended April 3, 2022. A copy of the press release is furnished as Exhibit
99.1 to this Current Report on Form 8-K. The selected preliminary financial
information for the quarterly period has not been reviewed by the Company's
independent registered public accounting firm.
Item 2.06. Material Impairments
On May 20, 2022, the Company determined that an incremental non-cash goodwill
impairment charge is required for the quarter ended March 31, 2020 (the "Q1 2020
Impairment"). Additionally, the Company will take a non-cash goodwill impairment
charge for the quarter ended December 31, 2021 (the "Q4 2021 Impairment"). The
preliminary unaudited estimates of impairment charges disclosed herein were
identified during impairment testing in connection with the preparation of the
Company's Annual Report on Form 10-K for the year ended 2021 (the "2021 Annual
Report"), which will include restated financial statements for (i) the years
ended December 31, 2019 and December 31, 2020, (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.
Our preliminary unaudited estimate of the non-cash Q1 2020 Impairment is a $20
million charge to goodwill in our Industrial reporting segment. This Q1 2020
Impairment relates to a $116 million goodwill impairment charge recorded in Q1
2020, as addressed in the Company's Annual Report on Form 10-K for the year
ended 2020, due to a decline in the company's market capitalization relative to
its consolidated book value at the beginning of the COVID-19 pandemic. The
current incremental impairment is the result of a revised estimate of the
original Q1 2020 impairment charge as a part of the Company's restatement
procedures. The revised estimate resulted from the correction of the Pipeline
Engineering matters in the restatement of the financial statements referred to
above. We do not expect the Q1 2020 Impairment to result in any future cash
charges.
Our preliminary unaudited estimate of the non-cash Q4 2021 Impairment is a $10
million charge to goodwill relating to the Company's Refinery Valves business,
included in our Industrial reporting segment. The Q4 2021 Impairment is
triggered by the Company's reassessment of its reporting unit aggregation
criteria as part of its annual goodwill impairment assessment. Refinery Valves
was determined to be a separate reporting unit and the reassigned goodwill on a
relative fair value basis was impaired. We do not expect the Q4 2021 Impairment
to result in any future cash charges.
These amounts of the non-cash Q1 2020 Impairment and the non-cash Q4 2021
Impairment reflect our best estimate of the impairment charges at this time. We
continue to evaluate the amount of the impairments, and until we file our 2021
Annual Report we can make no assurances these estimates will not change.
Item 7.01. Regulation FD Disclosure.
Information in Items 2.02 and the press release attached as Exhibit 99.1 are
incorporated herein by reference.
The information in Items 2.02 and 7.01 of this Current Report on Form 8-K and
the information related to those items in the attached Exhibit 99.1 shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liabilities of that section or
Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The
information contained in Items 2.02 and 7.01 shall not be incorporated by
reference into any filing with the SEC made by the Company, whether made before
or after the date hereof, regardless of any general incorporation language in
such filing. Any further disclosures about the Company's financial results or
the results of the accounting review are currently expected only in the
Company's 2021 Annual Report on Form 10-K when filed.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K 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 accounting review; the Company's
expectations regarding materiality or significance; changes to the Company's
preliminary unaudited estimates of the Q1 2020 Impairment and the Q4 2021
Impairment; 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
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completion and filing of the 2021 Annual Report will take longer than expected;
additional information that may arise during the preparation of the Company's
financial statements; the timing of the Company regaining compliance with the
NYSE's continued listing standards; the timing and outcome, if any, of the
Company's strategic alternatives review and its potential exit from the Pipeline
Engineering business unit; the impact on the Company of the situation in Russia
and Ukraine; 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.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
CIRCOR Announces Selected Preliminary Financial Information for First-Quarter
99.1 2022, Provides Update On Accounting Review, and Files 12b-25 for 10-Q
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as inline XBRL and contained in
104 Exhibit 101)
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