CIR CIRCOR International Inc

CIRCOR International, Inc. (NYSE: CIR), a leading provider of valves and other highly engineered products for markets including oil & gas, power generation and aerospace & defense, today announced financial results for the second quarter ended July 3, 2016.

Second-Quarter 2016 Highlights

• Delivered revenue of $146 million
• Achieved GAAP EPS of $0.23 and Adjusted EPS of $0.53
• Aerospace & Defense orders of $47 million, up 56% versus prior year
• Restructuring actions remain on track to deliver $15 million of savings in 2016

“CIRCOR delivered solid second-quarter financial results for both revenue and earnings,” said Scott Buckhout, President and Chief Executive Officer. “We achieved year-over-year sales growth in our engineered valves business and we are encouraged to see upstream short-cycle revenue stabilizing at current levels. The power market remains a bright spot globally and led to modest revenue growth in the quarter for our control valves business. In our Aerospace & Defense segment, we reported a 56% increase in orders, which we expect to drive top line growth in the second half of this year. Energy orders overall were down in the quarter due to a challenging oil and gas market and delayed project awards.”

“As we enter the second half of 2016, we remain focused on what we control. We are laying the foundation for long-term growth through careful investments in sales, marketing and engineering, while we continuously improve operations. We are executing well on our simplification and restructuring actions. Our California machining facility closure is complete and we expect to see the positive effect on our margins as the year progresses. Customer on time delivery averaged 91% in the quarter and we are starting to see better working capital performance,” added Buckhout.

“Finally, we remain committed to creating shareholder value through growth, margin expansion, strong cash flow, and disciplined capital deployment,” concluded Buckhout.

Third-Quarter 2016 GuidanceFor the third quarter of 2016, the Company will provide its guidance during the conference call later today.

Selected Consolidated Results (unaudited)

          ($ millions except EPS)       Q2 2016 Q2 2015 Change Revenue $ 146.4 $ 166.9     (12 )% GAAP Operating Income $ 5.3 $ 5.1 5 % Adjusted Operating Income1 $ 11.9 $ 15.0 (21 )% GAAP Operating Margin 3.7 % 3.0 % 70 bps Adjusted Operating Margin1 8.1 % 9.0 % (90) bps GAAP Earnings Per Share (Diluted) $ 0.23 $ 0.11 109 % Adjusted Earnings Per Share (Diluted)1 $ 0.53 $ 0.55 (4 )% Operating Cash Flow $ 10.1 $ 8.1 25 % Free Cash Flow2 $ 8.2 $ 4.5 82 % Orders $ 135.3 $ 141.7 (5 )%

Segment Results

        ($ millions)     Q2 2016 Q2 2015 Change Energy     Revenue $ 110.7 $ 127.2 (13 )% GAAP Operating Margin 9.1 % 7.2 % 190 bps Adjusted Operating Margin1 13.0 % 13.4 % (40) bps Orders $ 88.1 $ 111.4 (21 )%   Aerospace & Defense Revenue $ 35.7 $ 39.7 (10 )% GAAP Operating Margin 1.8 % 3.5 % (170) bps Adjusted Operating Margin1 8.4 % 8.8 % (40) bps Orders $ 47.2 $ 30.3 56 %  

1. Consolidated and Segment Results for Q2 2016 exclude special, restructuring and impairment charges totaling $6.6 million. This includes (i) $1.9 million for non-cash acquisition-related intangible amortization expense, (ii) $2.1 million related to the exit of the Company's California machine shop, (iii) $1.5 million related to the Company's Brazil exit, and (iv) $1.1 million related to the Company's suspension of manufacturing operations in China and other restructuring programs. Q2 2015 results exclude special charges of $5.8 million, restructuring-related inventory charges of $2.0 million and $2.1 million for non-cash acquisition-related intangible amortization expense.

2. Free Cash Flow is a non-GAAP financial measure and is calculated by subtracting GAAP capital expenditures, net of proceeds from asset sales, from GAAP Operating Cash Flow.

Conference Call InformationCIRCOR International will hold a conference call to review its financial results today, July 29, 2016, at 9:00 a.m. ET. To listen to the conference call and view the accompanying presentation slides, visit “Webcasts & Presentations” in the “Investors” portion of the CIRCOR website. The call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. The webcast will be archived for one year on the Company’s website.

Use of Non-GAAP Financial MeasuresAdjusted net income, adjusted earnings per share (diluted), adjusted operating income, 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 StatementThis 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 the realization of cost reductions from restructuring activities. 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 highly engineered products and sub-systems for markets including oil & gas, power generation and aerospace & defense. CIRCOR has a diversified product portfolio with recognized, market-leading brands that fulfill its customers’ unique application needs. The Company’s strategy is to grow organically and through complementary acquisitions; simplify CIRCOR’s operations; achieve world class operational excellence; and attract and retain top industry talent. For more information, visit the Company’s investor relations web site at http://investors.circor.com.

  CIRCOR INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

UNAUDITED

    Three Months Ended     Six Months Ended July 3, 2016   July 5, 2015 July 3, 2016   July 5, 2015 Net revenues $ 146,392 $ 166,906 $ 297,190 $ 332,766 Cost of revenues 99,961   116,112   205,526   229,323   GROSS PROFIT 46,431 50,794 91,664 103,443 Selling, general and administrative expenses 36,490 42,394 74,289 81,201 Special charges, net 4,594   3,310   6,533   4,821   OPERATING INCOME 5,347   5,090   10,842   17,421   Other expense (income): Interest expense, net 605 805 1,236 1,446 Other income, net (549 ) (104 ) (1,077 ) (610 ) TOTAL OTHER EXPENSE, NET 56   701   159   836   INCOME BEFORE INCOME TAXES 5,291 4,389 10,683 16,585 Provision for income taxes 1,478   2,517   2,998   5,800   NET INCOME $ 3,813   $ 1,872   $ 7,685   $ 10,785   Earnings per common share: Basic $ 0.23 $ 0.11 $ 0.47 $ 0.63 Diluted $ 0.23 $ 0.11 $ 0.46 $ 0.62 Weighted average number of common shares outstanding: Basic 16,424 16,828 16,403 17,245 Diluted 16,595 16,900 16,538 17,306 Dividends paid per common share $ 0.0375 $ 0.0375 $ 0.0750 $ 0.0750     CIRCOR INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

UNAUDITED

      Six Months Ended July 3, 2016   July 5, 2015 OPERATING ACTIVITIES Net income $ 7,685 $ 10,785 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 6,476 7,150 Amortization 5,098 3,537 Bad debt (recovery) expense (853 ) 1,469 Loss on write down of inventory 4,011 3,673 Compensation expense of share-based plans 2,909 4,122 Tax effect of share-based plan compensation 116 (287 ) Loss on sale or write down of property, plant and equipment 3,116 377 Gain on sale of business — (972 ) Changes in operating assets and liabilities, net of effects of acquisition and disposition: Trade accounts receivable 11,555 12,313 Inventories 13,281 (27,875 ) Prepaid expenses and other assets (3,480 ) (8,484 ) Accounts payable, accrued expenses and other liabilities (32,161 ) (14,174 ) Net cash provided by (used in) operating activities 17,753   (8,366 ) INVESTING ACTIVITIES Purchases of property, plant and equipment (6,998 ) (5,567 ) Proceeds from the sale of property, plant and equipment 1,138 — Proceeds from the sale of affiliate — 2,759 Business acquisition, net of cash acquired —   (79,983 ) Net cash used in investing activities (5,860 ) (82,791 ) FINANCING ACTIVITIES Proceeds from long-term debt 65,939 202,380 Payments of long-term debt (58,890 ) (100,533 ) Dividends paid (1,249 ) (1,308 ) Proceeds from the exercise of stock options 180 70 Tax effect of share-based plan compensation (116 ) 287 Purchases of common stock —   (69,517 ) Net cash provided by financing activities 5,864   31,379   Effect of exchange rate changes on cash and cash equivalents 672   (6,567 ) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 18,429 (66,345 ) Cash and cash equivalents at beginning of period 54,541   121,372   CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 72,970   $ 55,027       CIRCOR INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

UNAUDITED

      July 3, 2016   December 31, 2015 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 72,970 $ 54,541

Trade accounts receivable, less allowance for doubtful accounts of $7,811 and$8,290, respectively

115,327 125,628 Inventories 162,347 177,840 Prepaid expenses and other current assets 21,522   16,441   Total Current Assets 372,166   374,450   PROPERTY, PLANT AND EQUIPMENT, NET 81,973 87,029 OTHER ASSETS: Goodwill 117,138 115,452 Intangibles, net 43,688 48,981 Deferred income taxes 36,328 36,799 Other assets 6,183   7,204   TOTAL ASSETS $ 657,476   $ 669,915   LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 45,987 $ 64,284 Accrued expenses and other current liabilities 39,945 52,878 Accrued compensation and benefits 19,121 18,424 Income taxes payable 9,174   6,585   Total Current Liabilities 114,227   142,171   LONG-TERM DEBT 97,600 90,500 DEFERRED INCOME TAXES 9,927 10,424 OTHER NON-CURRENT LIABILITIES 24,355 26,043 SHAREHOLDERS’ EQUITY: Common stock 178 177 Additional paid-in capital 286,601 283,621 Retained earnings 264,375 257,939 Common treasury stock, at cost (74,972 ) (74,972 ) Accumulated other comprehensive loss, net of tax (64,815 ) (65,988 ) Total Shareholders’ Equity 411,367   400,777   TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 657,476   $ 669,915       CIRCOR INTERNATIONAL, INC.

SUMMARY OF ORDERS AND BACKLOG

(in millions)

UNAUDITED

    Three Months Ended   Six Months Ended July 3, 2016   July 5, 2015 July 3, 2016   July 5, 2015 ORDERS (1) Energy $ 88.1 $ 111.4 $ 187.9 $ 254.5 Aerospace & Defense 47.2   30.3   84.1   69.5 Total orders $ 135.3   $ 141.7   $ 272.0   $ 324.0   BACKLOG (2) July 3, 2016 July 5, 2015 Energy $ 142.1 $ 248.0 Aerospace & Defense 102.0   96.3   Total backlog $ 244.1   $ 344.3    

Note 1: Orders do not include the foreign exchange impact due to the re-measurement of customer order backlog amounts denominated in foreign currencies.

Note 2: Backlog includes unshipped customer orders.

  CIRCOR INTERNATIONAL, INC.

SUMMARY REPORT BY SEGMENT

(in thousands, except percentages)

UNAUDITED

   

2015

2016 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL NET REVENUES Energy $ 127,586 $ 127,230 $ 122,905 $ 124,412 $ 502,133 $ 112,620 $ 110,678 $ 223,298 Aerospace & Defense 38,274   39,676   36,353   39,832   154,134   38,178   35,714   73,892   Total $ 165,860   $ 166,906   $ 159,258   $ 164,243   $ 656,267   $ 150,798   $ 146,392   $ 297,190   OPERATING MARGIN Energy 13.8 % 13.4 % 15.4 % 13.4 % 14.0 % 12.6 % 13.0 % 12.8 % Aerospace & Defense 8.0 % 8.8 % 9.1 % 10.4 % 9.1 % 9.3 % 8.4 % 8.9 % Segment operating margin 12.4 % 12.3 % 14.0 % 12.7 % 12.8 % 11.8 % 11.9 % 11.8 % Corporate expenses (3.6 )% (3.3 )% (3.8 )% (2.5 )% (3.3 )% (4.3 )% (3.7 )% (4.0 )% Adjusted operating margin 8.8 % 9.0 % 10.1 % 10.2 % 9.5 % 7.5 % 8.1 % 7.8 % Restructuring related inventory charges — % 1.2 % 4.0 % 0.6 % 1.4 % 1.3 % 0.1 % 0.7 % Impairment charges — % — % 1.6 % — % 0.4 % — % — % — % Special restructuring charges, net 0.9 % 1.9 % 0.2 % (0.2 )% 0.7 % 0.8 % 2.2 % 1.5 % Special acquisition amortization — % 1.3 % 1.6 % 1.4 % 1.0 % 1.2 % 1.3 % 1.3 % Special other charges, net of recoveries — % 0.1 % 5.0 % 1.0 % 1.5 % 0.5 % 0.9 % 0.7 % Brazil restatement impact 0.4 % 1.5 % — % — % 0.5 % — % — % — % Total GAAP operating margin 7.4 % 3.0 % (2.2 )% 7.5 % 4.0 % 3.6 % 3.7 % 3.6 %     CIRCOR INTERNATIONAL, INC.

SUMMARY REPORT BY SEGMENT

(in thousands, except percentages)

UNAUDITED

      2015 2016 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL INCOME STATEMENT Energy $ 17,550 $ 17,008 $ 18,932 $ 16,724 $ 70,214 $ 14,186 $ 14,346 $ 28,532 Aerospace & Defense 3,045   3,494   3,298   4,146  

 

13,982   3,562   3,011   6,573   Segment operating income 20,595 20,502 22,230 20,870 84,197 17,748 17,357 35,105 Corporate expenses (6,034 ) (5,477 ) (6,078 ) (4,122 ) (21,710 ) (6,488 ) (5,431 ) (11,919 )

Adjusted operating income

14,561 15,025 16,152 16,748 62,487 11,260 11,926 23,186 Restructuring related inventory charges — 2,005 6,412 974 9,391 1,958 75 2,033 Impairment charges — — 2,502 — 2,502 — — — Special restructuring charges, net 1,512 3,127 342 (347 ) 4,634 1,163 3,259 4,422 Special acquisition amortization — 2,110 2,490 2,238 6,838 1,868 1,911 3,779 Special other charges, net of recoveries (1 ) 183 7,935 1,603 9,720 776 1,334 2,110 Brazil restatement impact 719   2,509   —   —   3,228   —   —   —   Total GAAP operating income (loss) 12,331 5,090 (3,529 ) 12,281 26,174 5,495 5,347 10,842 INTEREST EXPENSE, NET (640 ) (805 ) (828 ) (570 ) (2,844 ) (631 ) (605 ) (1,236 ) OTHER INCOME (EXPENSE), NET 506   104   587   (2,099 ) (902 ) 528   549   1,077   PRETAX INCOME (LOSS) 12,197 4,389 (3,770 ) 9,612 22,428 5,392 5,291 10,683 PROVISION FOR INCOME TAXES (3,284 ) (2,517 ) (4,308 ) (2,456 ) (12,565 ) (1,520 ) (1,478 ) (2,998 ) EFFECTIVE TAX RATE 26.9 % 57.3 % (114.3 )% 25.6 % 56.0 % 28.2 % 27.9 % 28.1 % NET INCOME (LOSS) $ 8,913   $ 1,872   $ (8,078 ) $ 7,156   $ 9,863   $ 3,872   $ 3,813   $ 7,685   Weighted Average Common Shares Outstanding (Diluted) 17,712 16,900 16,485 16,555 16,913 16,481 16,595 16,538 EARNINGS (LOSS) PER COMMON SHARE (Diluted) $ 0.50   $ 0.11   $ (0.49 ) $ 0.43   $ 0.58   $ 0.23   $ 0.23   $ 0.46       CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS

(in thousands, except percentages)

UNAUDITED

      2015 2016 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL FREE CASH FLOW AS % OF NET INCOME (LOSS) (207 )% 239 % (27 )% 397 % 169 % 96 % 214 % 155 % FREE CASH FLOW $ (18,415 ) $ 4,483 $ 2,169 $ 28,403 $ 16,640 $ 3,720 $ 8,174 $ 11,894 ADD: Capital expenditures, net of sale proceeds 1,983   3,584   2,837   2,098   10,502   3,934   1,926   5,860   NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES $ (16,432 ) $ 8,067   $ 5,006   $ 30,501   $ 27,142   $ 7,654   $ 10,100   $ 17,754   NET (CASH) DEBT $ (66,337 ) $ 59,051 $ 57,277 $ 35,959 $ 35,959 $ 31,220 $ 24,630 $ 24,630 ADD:

Cash & cash equivalents

103,883   55,027   53,822   54,541   54,541   66,580   72,970   72,970   TOTAL DEBT $ 37,546   $ 114,078   $ 111,099   $ 90,500   $ 90,500   $ 97,800   $ 97,600   $ 97,600   TOTAL SHAREHOLDERS' EQUITY $ 462,384 $ 421,070 $ 407,979 $ 400,777 $ 400,777 $ 414,107 $ 411,367 $ 411,367   DEBT AS % OF EQUITY 8 % 27 % 27 % 23 % 23 % 24 % 24 % 24 % NET DEBT AS % OF EQUITY (14 )% 14 % 14 % 9 % 9 % 8 % 6 % 6 %     CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS

(in thousands, except percentages)

UNAUDITED

    2015 2016 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL ADJUSTED NET INCOME $ 10,564 $ 9,357 $ 10,635 $ 10,512 $ 41,068 $ 8,683 $ 8,781 $ 17,464 LESS: Restructuring related inventory charges — 2,005 6,412 974 9,391 1,958 75 2,033 Impairment charges — — 2,502 — 2,502 — — — Special restructuring charges, net 1,512 3,127 342 (347 ) 4,634 1,163 3,259 4,422 Special acquisition amortization — 2,110 2,490 2,238 6,838 1,868 1,911 3,779 Special other charges, net of recoveries (1 ) 183 7,935 1,603 9,720 776 1,334 2,110 Brazil restatement impact 719 2,509 — — 3,228 — — — Income tax impact (579 ) (2,449 ) (968 ) (1,112 ) (5,108 ) (954 ) (1,611 ) (2,565 ) NET INCOME (LOSS) $ 8,913   $ 1,872   $ (8,078 ) $ 7,156   $ 9,863   $ 3,872   $ 3,813   $ 7,685     ADJUSTED EARNINGS PER SHARE (Diluted) $ 0.60 $ 0.55 $ 0.64 $ 0.63 $ 2.43 $ 0.52 $ 0.53 $ 1.05 LESS: Restructuring related inventory charges — 0.12 0.39 0.06 0.57 0.12 — 0.12 Impairment charges — — 0.15 — 0.15 — — — Special restructuring charges, net 0.09 0.19 0.02 (0.02 ) 0.28 0.07 0.20 0.27 Special acquisition amortization — 0.12 0.15 0.14 0.41 0.11 0.12 0.23 Special other charges, net of recoveries — 0.01 0.48 0.10 0.59 0.05 0.08 0.13 Brazil restatement impact 0.04 0.15 — — 0.19 — — — Income tax impact (0.03 ) (0.15 ) (0.06 ) (0.07 ) (0.31 ) (0.06 ) (0.10 ) (0.16 ) EARNINGS (LOSS) PER COMMON SHARE (Diluted) $ 0.50   $ 0.11   $ (0.49 ) $ 0.43   $ 0.58   $ 0.23   $ 0.23   $ 0.46       CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS

(in thousands, except percentages)

UNAUDITED

    2015 2016 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL ADJUSTED EBITDA $ 19,299 $ 19,474 $ 20,980 $ 18,927 $ 78,681 $ 15,712 $ 16,346 $ 32,058 LESS: Restructuring related inventory charges — (2,005 ) (6,412 ) (974 ) (9,391 ) (1,958 ) (75 ) (2,033 ) Impairment charges — — (2,502 ) — (2,502 ) — — — Special restructuring charges, net (1,512 ) (3,127 ) (342 ) 347 (4,634 ) (1,163 ) (3,259 ) (4,422 ) Special other charges, net of recoveries 1 (183 ) (7,935 ) (1,603 ) (9,720 ) (776 ) (1,334 ) (2,110 ) Brazil restatement impact (719 ) (2,509 ) —   —   (3,228 ) —   —   —   EBITDA $ 17,068   $ 11,650   $ 3,789   $ 16,698   $ 49,206   $ 11,815   $ 11,678   $ 23,493   LESS: Interest expense, net (641 ) (805 ) (828 ) (570 ) (2,844 ) (631 ) (605 ) (1,236 ) Depreciation (3,521 ) (3,629 ) (3,526 ) (3,578 ) (14,254 ) (3,263 ) (3,213 ) (6,476 ) Amortization (710 ) (2,827 ) (3,205 ) (2,939 ) (9,681 ) (2,529 ) (2,569 ) (5,098 ) Provision for income taxes (3,284 ) (2,517 ) (4,308 ) (2,456 ) (12,565 ) (1,520 ) (1,478 ) (2,998 ) NET INCOME (LOSS) $ 8,913   $ 1,872   $ (8,078 ) $ 7,156   $ 9,863   $ 3,872   $ 3,813   $ 7,685       CIRCOR INTERNATIONAL, INC.

SUPPLEMENTAL SEGMENT DATA

(in thousands, except percentages)

UNAUDITED

      2015   2016 1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR   2ND QTR   TOTAL Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D Adjusted operating margin 13.8 %   8.0 %   13.4 %   8.8 %   15.4 %   9.1 %   13.4 %   10.4 %   14.0 %   9.1 %   12.6 %   9.3 %   13.0 %   8.4 %   13.8 %   8.0 % Restructuring related inventory charges — % — % 0.1 % 4.7 % 5.2 % — % 0.4 % 1.2 % 1.4 % 1.5 % 1.7 % 0.1 % 0.1 % — % — % — % Impairment charges — % — % — % — % 2.0 % — % — % — % 0.5 % — % — % — % — % — % — % — % Special restructuring charges, net 0.3 % 3.1 % 2.2 % 0.8 % 0.2 % 0.2 % (0.3 )% 0.1 % 0.6 % 1.0 % (0.2 )% 3.8 % 0.8 % 6.6 % 0.3 % 3.1 % Special acquisition amortization — % — % 1.7 % — % 2.0 % — % 1.8 % — % 1.4 % — % 1.7 % — % 1.7 % — % — % — % Special other charges, net of recoveries 0.4 % (2.6 )% 0.2 % (0.2 )% 6.5 % — % 0.7 % — % 1.9 % (0.7 )% 0.7 % — % 1.2 % — % 0.4 % (2.6 )% Brazil restatement impact 0.6 %   — %   2.0 %   — %   — %   — %   — %   — %   0.6 %   — %   — %   — %   — %   — %   0.6 %   — % GAAP operating margin 12.5 %   7.5 %   7.2 %   3.5 %   (0.6 )%   8.9 %   10.9 %   9.1 %   7.6 %   7.2 %   8.8 %   5.5 %   9.1 %   1.8 %   12.5 %   7.5 %         2015   2016 1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR   2ND QTR   TOTAL Energy A&D   Energy A&D   Energy A&D   Energy A&D   Energy A&D   Energy A&D   Energy A&D   Energy A&D Adjusted operating income $ 17,550 $ 3,045   $ 17,008 $ 3,494   $ 18,932 $ 3,298   $ 16,724 $ 4,146   $ 70,214 $ 13,982   $ 14,186 $ 3,562   $ 14,346 $ 3,011   $ 28,532 $ 6,573 Restructuring related inventory charges — — 153 1,852 6,412 — 508 466 7,073 2,318 1,919 39 74 — 1,993 39 Impairment charges — — — — 2,502 — — — 2,502 — — — — — — — Special restructuring charges, net 343 1,169 2,818 309 279 63 (394 ) 47 3,046 1,588 (278 ) 1,441 900 2,359 622 3,800 Special acquisition amortization — — 2,110 — 2,490 — 2,238 — 6,838 — 1,868 — 1,911 — 3,779 — Special other charges, net of recoveries 556 (977 ) 248 (65 ) 7,935 — 828 — 9,567 (1,042 ) 774 — 1,335 — 2,109 — Brazil restatement impact 719   —     2,509   —     —   —     —   —     3,228   —     —   —     —   —     —   — GAAP operating income $ 15,932   $ 2,853     $ 9,170   $ 1,398     $ (686 ) $ 3,235     $ 13,544   $ 3,633     $ 37,960   $ 11,118     $ 9,903   $ 2,082     $ 10,126   $ 652     $ 20,029   $ 2,734  

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CIRCOR InternationalRajeev Bhalla, 781-270-1200Executive Vice President & Chief Financial Officer