10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013.

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             .

Commission File Number 001-14962

CIRCOR INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	04-3477276
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

c/o CIRCOR, Inc. 30 Corporate Drive, Suite 200, Burlington, MA	01803-4238
(Address of principal executive offices)	(Zip Code)

(781) 270-1200

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  x

As of July 25, 2013, there were 17,575,362 shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.

CIRCOR INTERNATIONAL, INC.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of June 30, 2013 (Unaudited) and December 31, 2012	3
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2013 and July 1, 2012 (Unaudited)	4
	Statements of Consolidated Comprehensive Income (Loss) for the Three and Six Months ended June 30, 2013 and July 1, 2012 (Unaudited)	5
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and July 1, 2012 (Unaudited)	6
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29
PART II.	OTHER INFORMATION	29
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31
Signatures		32
Certifications

2

PART IFINANCIAL INFORMATION.

ITEM 1.  FINANCIAL STATEMENTS

CIRCOR INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

	June 30, 2013			December 31, 2012
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	60,831		$	61,738
Short-term investments	96			101
Trade accounts receivable, less allowance for doubtful accounts of $1,914 and $1,706, respectively	158,286			150,825
Inventories	199,764			198,005
Prepaid expenses and other current assets	17,661			16,510
Deferred income tax asset	15,431			15,505
Current income tax receivable	2,171			—
Assets held for sale	542			542
Total Current Assets	454,782			443,226
PROPERTY, PLANT AND EQUIPMENT, NET	104,477			105,903
OTHER ASSETS:
Goodwill	75,491			77,428
Intangibles, net	42,436			45,157
Deferred income tax asset	25,283			30,064
Other assets	6,957			8,203
TOTAL ASSETS	$	709,426		$	709,981
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	84,245		$	80,361
Accrued expenses and other current liabilities	59,240			67,235
Accrued compensation and benefits	25,596			26,540
Income taxes payable	3,996			393
Notes payable and current portion of long-term debt	7,206			7,755
Total Current Liabilities	180,283			182,284
LONG-TERM DEBT, NET OF CURRENT PORTION	52,345			62,729
DEFERRED INCOME TAXES	9,797			10,744
OTHER NON-CURRENT LIABILITIES	34,850			35,977
SHAREHOLDERS’ EQUITY:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued and outstanding	—			—
Common stock, $0.01 par value; 29,000,000 shares authorized; 17,575,362 and 17,445,687 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively	176			174
Additional paid-in capital	265,940			262,744
Retained earnings	177,748			158,509
Accumulated other comprehensive loss, net of taxes	(11,713		)	(3,180		)
Total Shareholders’ Equity	432,151			418,247
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	709,426		$	709,981

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3

CIRCOR INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2013			July 1, 2012			June 30, 2013			July 1, 2012
Net revenues	$	223,644		$	219,862		$	429,042		$	434,142
Cost of revenues	153,538			156,046			299,086			311,714
GROSS PROFIT	70,106			63,816			129,956			122,428
Selling, general and administrative expenses	47,596			45,337			93,168			90,249
Special charges	2,254			—			3,632			—
OPERATING INCOME	20,256			18,479			33,156			32,179
Other (income) expense:
Interest income	(79		)	(78		)	(122		)	(161		)
Interest expense	917			1,095			1,747			2,259
Other expense (income), net	626			184			1,239			322
TOTAL OTHER EXPENSE	1,464			1,201			2,864			2,420
INCOME BEFORE INCOME TAXES	18,792			17,278			30,292			29,759
Provision for income taxes	6,124			6,142			9,715			10,038
NET INCOME	$	12,668		$	11,136		$	20,577		$	19,721
Earnings per common share:
Basic	$	0.72		$	0.64		$	1.17		$	1.14
Diluted	$	0.72		$	0.64		$	1.17		$	1.13
Weighted average number of common shares outstanding:
Basic	17,565			17,422			17,539			17,369
Diluted	17,607			17,451			17,569			17,421
Dividends paid per common share	$	0.0375		$	0.0375		$	0.0750		$	0.0750

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4

CIRCOR INTERNATIONAL, INC.

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

	Three Months Ended					Six Months Ended
	June 30, 2013		July 1, 2012			June 30, 2013			July 1, 2012
Net income	$	12,668	$	11,136		$	20,577		$	19,721
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	112		(12,548		)	(8,531		)	(6,867		)
Other comprehensive income (loss)	112		(12,548		)	(8,531		)	(6,867		)
COMPREHENSIVE INCOME (LOSS)	$	12,780	$	(1,412	)	$	12,046		$	12,854

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5

CIRCOR INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	June 30, 2013			July 1, 2012
OPERATING ACTIVITIES
Net income	$	20,577		$	19,721
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation	8,035			7,833
Amortization	1,509			1,887
Payment for Leslie bankruptcy settlement	—			(1,000		)
Compensation expense of share-based plans	2,156			2,317
Tax effect of share-based compensation	(422		)	499
(Gain) loss on property, plant and equipment	(129		)	133
Changes in operating assets and liabilities, net of effects from business acquisitions:
Trade accounts receivable	(9,406		)	(6,312		)
Inventories	(4,059		)	(5,340		)
Prepaid expenses and other assets	(2,412		)	(1,408		)
Accounts payable, accrued expenses and other liabilities	3,583			(9,559		)
Net cash provided by operating activities	19,432			8,771
INVESTING ACTIVITIES
Additions to property, plant and equipment	(8,808		)	(10,783		)
Proceeds from the sale of property, plant and equipment	314			31
Net cash used in investing activities	(8,494		)	(10,752		)
FINANCING ACTIVITIES
Proceeds from long-term debt	74,255			108,943
Payments of long-term debt	(84,679		)	(117,944		)
Dividends paid	(1,340		)	(1,331		)
Proceeds from the exercise of stock options	1,498			94
Tax effect of share-based compensation	422			(499		)
Net cash used in financing activities	(9,844		)	(10,737		)
Effect of exchange rate changes on cash and cash equivalents	(2,002		)	(723		)
DECREASE IN CASH AND CASH EQUIVALENTS	(907		)	(13,441		)
Cash and cash equivalents at beginning of period	61,738			54,855
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	60,831		$	41,414
Supplemental Cash Flow Information:
Cash paid during the period presented for:
Income taxes	$	3,464		$	9,673
Interest	$	1,054		$	1,842

The accompanying notes are an integral part of these unaudited consolidated financial statements.

6

CIRCOR INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Basis of Presentation

The accompanying unaudited, consolidated financial statements have been prepared according to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and, in the opinion of management, reflect all adjustments, which include normal recurring adjustments, necessary for a fair presentation of the consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows of CIRCOR International, Inc. (“CIRCOR”, the “Company”, “us”, “we” or “our”) for the periods presented. We prepare our interim financial information using the same accounting principles as we use for our annual audited financial statements. Certain information and note disclosures normally included in the annual audited financial statements have been condensed or omitted in accordance with prescribed SEC rules. We believe that the disclosures made in our consolidated financial statements and the accompanying notes are adequate to make the information presented not misleading.

The consolidated balance sheet at December 31, 2012 is as reported in our audited financial statements as of that date. Our accounting policies are described in the notes to our December 31, 2012 financial statements, which were included in our Annual Report filed on Form 10-K. We recommend that the financial statements included in our Quarterly Report on Form 10-Q be read in conjunction with the financial statements and notes included in our Annual Report filed on Form 10-K for the year ended December 31, 2012.

We operate and report financial information using a 52-week fiscal year ending December 31. The data periods contained within our Quarterly Reports on Form 10-Q reflect the results of operations for the 13-week, 26-week and 39-week periods which generally end on the Sunday nearest the calendar quarter-end date. Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

(2) Summary of Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three and six months ended June 30, 2013 are consistent with those discussed in Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2012.

In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("AOCI"). The new ASU requires entities to disclose in a single location (either on the face of the financial statement that reports net income or in the notes) the effects of reclassifications out of accumulated other comprehensive income. For items reclassified out of AOCI in their entirety into net income, entities must disclose the effect of the reclassification on each affected net income item. For AOCI reclassification items that are not reclassified in their entirety into net income, entities must provide a cross reference to other required U.S. GAAP disclosures. The new disclosure requirements are effective for annual reporting after December 15, 2012, and interim periods within those years. No reclassifications out of AOCI were made by the Company for the three and six months ended June 30, 2013 or the three and six months ended July 1, 2012 and therefore no additional AOCI disclosure is presented in our Quarterly Report on Form 10-Q.

There were no additional new accounting pronouncements adopted during the six months ended June 30, 2013 that had a material impact on our financial statements.

Subsequent events - Early in the third quarter of 2012 we commenced arbitration proceedings against the individuals from whom we purchased SF Valves in Brazil for breaches of certain representations and warranties made in the Stock Purchase Agreement dated February 4, 2011. On July 12, 2013 we reached a settlement on the SF Valves arbitration and have received a refund of a portion of the purchase price which will result in a gain of approximately $3.1 million during the third quarter of 2013.

7

(3) Share-Based Compensation

As of June 30, 2013, we have one share-based compensation plan. The Amended and Restated 1999 Stock Option and Incentive Plan (the “1999 Stock Plan”), which was adopted by our Board of Directors and approved by our shareholders, permits the granting of the following types of awards to our officers, other employees and non-employee directors: incentive stock options; non-qualified stock options; deferred stock awards; restricted stock awards; unrestricted stock awards; performance share awards; cash-based awards; stock appreciation rights and dividend equivalent rights. The 1999 Stock Plan provides for the issuance of up to 3,000,000 shares of common stock (subject to adjustment for stock splits and similar events). New options granted under the 1999 Stock Plan could have varying vesting provisions and exercise periods. Options granted vest in periods ranging from one year to five years and expire ten years after the grant date. Restricted stock units granted generally vest from three years to six years. Vested restricted stock units will be settled in shares of our common stock. As of June 30, 2013, there were 291,724 stock options (including the April 9, 2013 CEO stock option award noted below) and 297,606 restricted stock units outstanding. In addition, there were 377,844 shares available for grant under the 1999 Stock Plan as of June 30, 2013. As of June 30, 2013, there were no outstanding restricted stock units that contain rights to nonforfeitable dividend equivalents and are considered participating securities that are included in our computation of basic and fully diluted earnings per share. There is no difference in the earnings per share amounts between the two class method and the treasury stock method, which is why we continue to use the treasury stock method.

For all stock options granted prior to 2013, the fair value of each grant was estimated at the date of grant using the Black-Scholes option pricing model. Black-Scholes utilizes assumptions related to volatility, the risk-free interest rate, the dividend yield and employee exercise behavior. Expected volatilities utilized in the model are based on the historic volatility of the Company’s stock price. The risk free interest rate is derived from the U.S. Treasury Yield curve in effect at the time of the grant.

On April 9, 2013, the Company granted stock options to purchase 200,000 shares of common stock to its newly appointed President and Chief Executive Officer, Scott A. Buckhout, at an exercise price of $41.17 per share. This option award was not granted under the Company's 1999 Stock Plan and includes both a service period and a market vesting condition. The stock options will vest if the following stock price targets are met based on the stock price closing at or above these targets for 60 consecutive trading days:

Stock Price Target	Cumulative Vested portion of stock options (in shares)
$50.00	50,000
$60.00	100,000
$70.00	150,000
$80.00	200,000

Vested options may be exercised 25% at the time of vesting, 50% one year from the date of vesting and 100% two years from the date of vesting. This stock option award will be expensed utilizing a graded method, is subject to forfeiture in the event of employment termination (whether voluntary or involuntary) prior to vesting. To the extent that the market conditions above (stock price targets) are not met, the option will not vest and will forfeit 5 years from grant date. The Company used a Monte Carlo simulation option pricing model to value this option award with the following assumptions: 10 year term, expected life of 5.5 years, risk-free rate of 1.2%, expected volatility of 41.2%, and fair value of $14.46 per share at grant date. No other options were granted during the first six months of 2013.

We account for Restricted Stock Unit (“RSU”) Awards by expensing the weighted average fair value to selling, general and administrative expenses ratably over vesting periods generally ranging from three years to six years. During the six months ended June 30, 2013 and July 1, 2012, we granted 130,845 and 126,552 RSU Awards with approximate fair values of $41.96 and $33.53 per RSU Award, respectively.

The CIRCOR Management Stock Purchase Plan, which is a component of the 1999 Stock Plan, provides that eligible employees may elect to receive restricted stock units in lieu of all or a portion of their pre-tax annual incentive bonus and, in some cases, make after-tax contributions in exchange for restricted stock units (“RSU MSPs”). In addition, non-employee directors may elect to receive restricted stock units in lieu of all or a portion of their annual directors’ fees. Each RSU MSP represents a right to receive one share of our common stock after a three year vesting period. RSU MSPs are granted at a discount of 33% from the fair market value of the shares of our common stock on the date of grant. This discount is amortized

8

as compensation expense, to selling, general and administrative expenses, over a four year period. A total of 28,463 and 34,534 RSUs with per unit discount amounts representing fair values of $13.90 and $10.81 were granted under the CIRCOR Management Stock Purchase Plan during the six months ended June 30, 2013 and July 1, 2012, respectively.

Compensation expense related to our share-based plans for the six month periods ended June 30, 2013, and July 1, 2012 was $2.3 million and $2.2 million, respectively, and was recorded as selling, general and administrative expense. As of June 30, 2013, there was $11.0 million of total unrecognized compensation costs related to our outstanding share-based compensation arrangements (inclusive of the April 9, 2013 CEO option award). That cost is expected to be recognized over a weighted average period of 2.5 years.

The weighted average contractual term for stock options outstanding and options exercisable as of June 30, 2013 was 9.0 years and 6.0 years, respectively. The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2013 was $0.8 million and the aggregate intrinsic value of stock options outstanding and options exercisable as of June 30, 2013 was $3.6 million and $0.8 million, respectively.

The aggregate intrinsic value of RSU Awards settled during the six months ended June 30, 2013 was $3.4 million and the aggregate intrinsic value of RSU Awards outstanding and RSU Awards vested and deferred as of June 30, 2013 was $11.4 million and $0.0 million, respectively.

The aggregate intrinsic value of RSU MSPs settled during the six months ended June 30, 2013 was $0.6 million and the aggregate intrinsic value of RSU MSPs outstanding and RSU MSPs vested and deferred as of June 30, 2013 was $1.9 million and $0.0 million respectively.

(4) Inventories

Inventories consist of the following (In thousands):

	June 30, 2013		December 31, 2012
Raw materials	$	57,073	$	63,104
Work in process	96,404		86,564
Finished goods	46,287		48,337
	$	199,764	$	198,005

(5) Goodwill and Intangible Assets

The following table shows goodwill, by segment, as of June 30, 2013 (In thousands):

	Energy			Aerospace			Flow Technologies			Consolidated Total
Goodwill as of December 31, 2012	$	51,526		$	22,121		$	3,781		$	77,428
Currency translation adjustments	(1,691		)	(23		)	(223		)	(1,937		)
Goodwill as of June 30, 2013	$	49,835		$	22,098		$	3,558		$	75,491

The table below presents gross intangible assets and the related accumulated amortization as of June 30, 2013 (In thousands):

	Gross Carrying Amount		Accumulated Amortization
Patents	$	6,075	$	(5,656	)
Non-amortized intangibles (primarily trademarks and trade names)	23,093
Customer relationships	33,186		(17,098		)
Backlog	1,074		(1,074		)
Other	7,253		(4,417		)
Total	$	70,681	$	(28,245	)
Net carrying value of intangible assets	42,436

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The table below presents estimated remaining amortization expense for intangible assets recorded as of June 30, 2013 (In thousands):

	2013		2014		2015		2016		2017		After 2017
Estimated amortization expense	$	1,506	$	2,980	$	2,958	$	2,676	$	2,541	$	6,683

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(6) Segment Information

The following table presents certain reportable segment information (In thousands):

	Energy		Aerospace		Flow Technologies		Corporate / Eliminations			Consolidated Total
Three Months Ended June 30, 2013
Net revenues	$	110,832	$	38,177	$	74,635	$	—		$	223,644
Inter-segment revenues	363		19		170		(552		)	—
Operating income (loss)	14,477		2,073		11,044		(7,338		)	20,256
Interest income										(79		)
Interest expense										917
Other expense, net										626
Income before income taxes										$	18,792
Identifiable assets	406,956		178,681		220,604		(96,815		)	709,426
Capital expenditures	2,227		753		1,029		93			4,102
Depreciation and amortization	1,657		1,204		1,557		360			4,778
Three Months Ended July 1, 2012
Net revenues	$	113,527	$	35,896	$	70,439	$	—		$	219,862
Inter-segment revenues	504		4		202		(710		)	—
Operating income (loss)	12,580		3,153		9,043		(6,297		)	18,479
Interest income										(78		)
Interest expense										1,095
Other expense, net										184
Income before income taxes										$	17,278
Identifiable assets	380,496		189,879		192,419		(50,417		)	712,377
Capital expenditures	1,020		695		3,414		1,532			6,661
Depreciation and amortization	1,845		1,190		1,373		340			4,748
Six Months Ended June 30, 2013
Net revenues	$	207,553	$	75,504	$	145,985	$	—		$	429,042
Inter-segment revenues	727		24		400		(1,151		)	—
Operating income (loss)	24,613		2,467		20,001		(13,925		)	33,156
Interest income										(122		)
Interest expense										1,747
Other expense, net										1,239
Income before income taxes										$	30,292
Identifiable assets	406,956		178,681		220,604		(96,815		)	709,426
Capital expenditures	4,077		2,242		2,301		188			8,808
Depreciation and amortization	3,293		2,421		3,091		739			9,544
Six Months Ended July 1, 2012
Net revenues	$	222,791	$	73,981	$	137,370	$	—		$	434,142
Inter-segment revenues	901		30		394		(1,325		)	—
Operating income (loss)	21,508		7,277		16,630		(13,236		)	32,179
Interest income										(161		)
Interest expense										2,259
Other expense, net										322
Income before income taxes										$	29,759
Identifiable assets	380,496		189,879		192,419		(50,417		)	712,377
Capital expenditures	1,750		1,577		5,744		1,712			10,783
Depreciation and amortization	3,833		2,439		2,804		644			9,720

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Each reporting segment is individually managed and has separate financial results that are reviewed by our chief operating decision-maker. Each segment contains related products and services particular to that segment. For further discussion of the products included in each segment refer to Note (1) of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012.

In calculating operating income for each reporting segment, substantial administrative expenses incurred at the corporate level for the benefit of other reporting segments were allocated to the segments based upon specific identification of costs, employment related information or net revenues.

Corporate / Eliminations are reported on a net “after allocations” basis. Inter-segment intercompany transactions affecting net operating profit have been eliminated within the respective operating segments.

The operating loss reported in the Corporate / Eliminations column in the preceding table consists primarily of the following corporate expenses: compensation and fringe benefit costs for executive management and other corporate staff; corporate development costs (relating to mergers and acquisitions); human resource development and benefit plan administration expenses; legal, accounting and other professional and consulting fees; facilities, equipment and maintenance costs; and travel and various other administrative costs. The above costs are incurred in the course of furthering the business prospects of the Company and relate to activities such as: implementing strategic business growth opportunities; corporate governance; risk management; treasury; investor relations and shareholder services; regulatory compliance; and stock transfer agent costs.

The total assets for each operating segment have been reported as the Identifiable Assets for that segment, including inter-segment intercompany receivables, payables and investments in other CIRCOR businesses. Identifiable assets reported in Corporate / Eliminations include both corporate assets, such as cash, deferred taxes, prepaid and other assets, fixed assets, as well as the elimination of all inter-segment intercompany assets. The elimination of intercompany assets results in negative amounts reported in Corporate / Eliminations for Identifiable Assets for the periods ended June 30, 2013 and July 1, 2012. Corporate Identifiable Assets after elimination of intercompany assets were $32.2 million and $35.6 million as of June 30, 2013 and July 1, 2012, respectively.

(7) Earnings Per Common Share (In thousands, except per share amounts):

	Three Months Ended
	June 30, 2013					July 1, 2012
	Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount
Basic Earnings Per Common Share ("EPS")	$	12,668	17,565	$	0.72	$	11,136	17,422	$	0.64
Dilutive securities, common stock options	—		42	0.00		—		29	0.00
Diluted EPS	$	12,668	17,607	$	0.72	$	11,136	17,451	$	0.64
	Six Months Ended
	June 30, 2013					July 1, 2012
	Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount
Basic EPS	$	20,577	17,539	$	1.17	$	19,721	17,369	$	1.14
Dilutive securities, common stock options	—		30	0.00		—		52	(0.01		)
Diluted EPS	$	20,577	17,569	$	1.17	$	19,721	17,421	$	1.13

There were 209,319 and 430,860 anti-dilutive stock options and RSUs for the six months ended June 30, 2013 and July 1, 2012, respectively.

(8) Financial Instruments

Fair Value

The carrying amounts of cash and cash equivalents, trade receivables and trade payables approximate fair value because of the short maturity of these financial instruments. Short-term investments (principally guaranteed investment certificates) are

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carried at cost which approximates fair value at the balance sheet date. The fair value of our variable rate debt approximates its carrying amount.

Foreign Currency Exchange Risk

The Company is exposed to certain risks relating to its ongoing business operations including foreign currency exchange rate risk and interest rate risk. The Company currently uses derivative instruments to manage foreign currency risk on certain business transactions denominated in foreign currencies. To the extent the underlying transactions hedged are completed, these forward contracts do not subject us to significant risk from exchange rate movements because they offset gains and losses on the related foreign currency denominated transactions. These forward contracts do not qualify as hedging instruments and, therefore, do not qualify for fair value or cash flow hedge treatment. Any unrealized gains and losses on our contracts are recognized as a component of other expense in our consolidated statements of income.

As of June 30, 2013, we had nineteen forward contracts with total values as follows (in thousands):

Currency	Number	Contract Amount	Currency
Canadian Dollar/Euro	2	2,755	Canadian Dollars
U.S. Dollar/Euro	8	17,942	U.S. Dollars
Brazilian Real/Euro	9	0	Brazilian Reals

This compares to twelve forward contracts as of December 31, 2012. The fair value liability of the derivative forward contracts as of June 30, 2013 was approximately $0.5 million and was included in accrued expenses and other current liabilities on our balance sheet. This compares to a fair value asset of approximately $0.5 million that was included in prepaid expenses and other current assets on our balance sheet as of December 31, 2012. The unrealized foreign exchange gain (loss) for the six month periods ended June 30, 2013 and July 1, 2012 was less than $1.0 million and $0.5 million, respectively. Unrealized foreign exchange gains (losses) are included in other (income) expense in our consolidated statements of income.

We have determined that the majority of the inputs used to value our foreign currency forward contracts fall within Level 2 of the fair value hierarchy, found under Accounting Standards Codification (“ASC”) Topic 820. The credit valuation adjustments, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties are Level 3 inputs. However, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our foreign currency forward contracts and determined that the credit valuation adjustments are not significant to the overall valuation. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

(9) Guarantees and Indemnification Obligations

As permitted under Delaware law, we have agreements whereby we indemnify certain of our officers and directors for certain events or occurrences while the officer or director is, or was, serving at our request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited. However, we have directors’ and officers’ liability insurance policies that limit our exposure for events covered under the policies and should enable us to recover a portion of any future amounts paid. As a result of the coverage under these insurance policies, we believe the estimated fair value of these indemnification agreements based on Level 3 criteria as described under ASC Topic 820 is minimal and, therefore, we have no liabilities recorded from those agreements as of June 30, 2013.

We record provisions for the estimated cost of product warranties, primarily from historical information, at the time product revenue is recognized. While we engage in extensive product quality programs and processes, our warranty obligation is affected by product failure rates, utilization levels, material usage, service delivery costs incurred in correcting a product failure, and supplier warranties on parts delivered to us. Should actual product failure rates, utilization levels, material usage, service delivery costs or supplier warranties on parts differ from our estimates, revisions to the estimated warranty liability would be required.

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The following table sets forth information related to our product warranty reserves for the six months ended June 30, 2013 (In thousands):

Balance beginning December 31, 2012	$	3,322
Provisions	1,979
Claims settled	(1,262		)
Currency translation adjustment	(30		)
Balance ending June 30, 2013	$	4,009

(10) Contingencies and Commitments

Asbestos-related product liability claims continue to be filed against two of our subsidiaries-Spence Engineering Company, Inc. (“Spence”), the stock of which we acquired in 1984; and Circor Instrumentation Technologies, Inc. (f/k/a Hoke Incorporated) (“Hoke”), the stock of which we acquired in 1998. Due to the nature of the products supplied by these entities, the markets they serve and our historical experience in resolving these claims, we do not believe that these asbestos-related claims will have a material adverse effect on the financial condition, results of operations or liquidity of Spence or Hoke, or the financial condition, consolidated results of operations or liquidity of the Company.

During the third quarter of 2011, we commenced arbitration proceedings against T.M.W. Corporation (“TMW”), the seller from which we acquired the assets of Castle Precision Industries in August 2010, seeking to recover damages from TMW for breaches of certain representations and warranties made by TMW in the Asset Purchase Agreement dated August 3, 2010 relative to such acquisition. We currently are in the discovery phase of this arbitration and expect the actual hearings to occur in the third quarter of 2013 at the earliest.

We are currently involved in various legal claims and legal proceedings, some of which may involve substantial dollar amounts. Periodically, we review the status of each significant matter and assess our potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be estimated, we accrue a liability for the estimated loss. Significant judgment is required in both the determination of probability and the determination as to whether an exposure can be reasonably estimated. Because of uncertainties related to these matters, accruals are based on the best information available at the time. As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates. Such revisions in the estimates of the potential liabilities could have a material adverse effect on our business, results of operations and financial position.

Standby Letters of Credit

We execute standby letters of credit, which include bid bonds and performance bonds, in the normal course of business to ensure our performance or payments to third parties. The aggregate notional value of these instruments was $52.4 million at June 30, 2013. Our historical experience with these types of instruments has been good and no claims have been paid in the current or past five fiscal years. We believe that the likelihood of demand for payments relating to the outstanding instruments is remote. These instruments generally have expiration dates ranging from less than 1 month to 5 years from June 30, 2013.

The following table contains information related to standby letters of credit instruments outstanding as of June 30, 2013 (In thousands):

Term Remaining	Maximum Potential Future  Payments
0–12 months	$	43,682
Greater than 12 months	8,714
Total	$	52,396

(11) Defined Pension Benefit Plans

We maintain two pension benefit plans, a qualified noncontributory defined benefit plan and a nonqualified, noncontributory defined benefit supplemental plan that provides benefits to certain retired highly compensated officers and employees. To date, the supplemental plan remains an unfunded plan. These plans include significant pension benefit obligations which are calculated based on actuarial valuations. Key assumptions are made in determining these obligations and related expenses, including expected rates of return on plan assets and discount rates. Benefits are based primarily on years of service and employees’ compensation.

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As of July 1, 2006, in connection with a revision to our retirement plan, we froze the pension benefits of our qualified noncontributory plan participants. Under the revised plan, such participants generally do not accrue any additional benefits under the defined benefit plan after July 1, 2006.

During the three and six months ended June 30, 2013, we made cash contributions of $0.4 million and $0.8 million, respectively to our qualified defined benefit pension plan. Additionally, substantially all of our U.S. employees are eligible to participate in a 401(k) savings plan. Under this plan, we make a core contribution and match a specified percentage of employee contributions, subject to certain limitations.

The components of net pension benefit expense are as follows (In thousands):

	Three Months Ended						Six Months Ended
	June 30, 2013			July 1, 2012			June 30, 2013			July 1, 2012
Service cost-benefits earned	$	—		$	52		$	—		$	105
Interest cost on benefits obligation	491			513			982			1,027
Estimated return on assets	(591		)	(531		)	(1,182		)	(1,063		)
Prior service cost amortization	—			—			—			—
Loss amortization	189			158			378			316
Net periodic cost of defined pension benefit plans	$	89		$	192		$	178		$	385

(12) Income Taxes

As required by the Income Tax Topic of the ASC, at June 30, 2013 and at December 31, 2012, we had $2.1 million and $2.0 million of unrecognized tax benefits, respectively, of which $1.3 million and $1.1 million, respectively, would affect our effective tax rate if recognized in any future period.

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of June 30, 2013, we had approximately $1.0 million of accrued interest related to uncertain tax positions.

The Company files income tax returns in the U.S. federal jurisdiction and in various state, local and foreign jurisdictions. The Company is no longer subject to examination by the Internal Revenue Service for years prior to 2009 and is no longer subject to examination by the tax authorities in foreign and state jurisdictions prior to 2006. The Company is under examination for income tax filings in various state and foreign jurisdictions.

For 2013, we expect an effective income tax rate of approximately 29.0%. Our future effective tax rates could be adversely affected by earnings being lower than anticipated in countries where we have lower statutory rates and vice versa. Changes in the valuation of our deferred tax assets or liabilities, or changes in tax laws or interpretations thereof may also adversely affect our future effective tax rate. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

The Company has a net domestic deferred income tax asset and a net foreign deferred tax asset. With regard to deferred income tax assets, we maintained a total valuation allowance of $15.0 million at June 30, 2013 and $13.5 million at December 31, 2012 due to uncertainties related to our ability to utilize certain of these assets, primarily consisting of certain foreign tax credits, foreign and state net operating losses and state tax credits carried forward. The valuation allowance is based on estimates of taxable income in each of the jurisdictions in which we operate and the period over which our deferred tax assets will be recoverable. If market conditions improve and future results of operations exceed our current expectations, our existing tax valuation allowances may be adjusted, resulting in future tax benefits. Alternatively, if market conditions deteriorate or future results of operations are less than expected, future assessments may result in a determination that some or all of the deferred tax assets are not realizable. Consequently, we may need to establish additional tax valuation allowances for all or a portion of the gross deferred tax assets, which may have a material adverse effect on our business, results of operations and financial condition. The Company has had a history of domestic and foreign taxable income, is able to avail itself of federal tax carryback provisions, has future taxable temporary differences and projects future domestic and foreign taxable income. We believe that after considering all of the available objective evidence, it is more likely than not that the results of future operations will generate sufficient taxable income to realize the remaining deferred tax assets.

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(13) Special Charges

During the third quarter of 2012 we announced restructuring actions in the Energy, Aerospace, and Flow Technologies segments ("2012 Announced Restructuring") including actions to consolidate facilities, shift expenses to lower cost regions, and exiting some non-strategic product lines.

During the three and six months ended June 30, 2013 we incurred $2.3 million and $3.6 million , respectively, in special charges associated with these 2012 Announced Restructuring actions in the Energy, Aerospace, and Flow Technologies segments. During the three and six months ended July 1, 2012 we did not record any special charges. The following table summarizes our special charges by expense type and business segment (in thousands):

	As of and for the three months ended June 30, 2013
	Energy		Aerospace		Flow Technologies		Total
Accrued special charges as of March 31, 2013							$	71
Facility and professional fee related expenses	$	455	$	1,299	$	3	1,757
Employee-related expenses	292		186		19		497
Total special charges	$	747	$	1,485	$	22	2,254
Special charges paid							1,733
Accrued special charges as of June 30, 2013							$	592
	As of and for the six months ended June 30, 2013
	Energy		Aerospace		Flow Technologies		Total
Accrued special charges as of December 31, 2012							$	800
Facility and professional fee related expenses	$	811	$	1,838	$	27	$	2,676
Employee-related expenses	$	301	$	573	$	82	$	956
Total special charges	$	1,112	$	2,411	$	109	3,632
Special charges paid							3,840
Accrued special charges as of June 30, 2013							$	592

During the three and six months ended June 30, 2013, facility and professional fee related expenses included lease termination costs, as well as write-downs of fixed assets and other equipment.

The following table summarizes our special charges incurred from the third quarter of 2012 through June 30, 2013.

	2012 Announced Restructurings Incurred as of June 30, 2013
	Energy		Aerospace		Flow Technologies		Total
Facility and professional fee related expenses - incurred to date	$	2,113	$	2,149	$	162	$	4,424
Employee-related expenses - incurred to date	$	806	$	759	$	191	$	1,756
Total special charges - incurred to date	$	2,919	$	2,908	$	353	$	6,180

On August 1, 2013 we announced additional restructuring actions ("2013 Announced Restructuring") associated with our Aerospace and Flow Technologies segments. We expect the costs associated with the 2013 Announced Restructurings will be incurred during the second half of 2013 and the first half of 2014.

We expect to record a special recovery of approximately $3.1 million during the third quarter of 2013 associated with the SF Valves settlement. In addition, we expect to incur additional restructuring related special charges between $4.5 million and $5.0 million during the second half of 2013 ($0.2 million for the Energy segment, between $1.5 million and $1.7 million for the Aerospace segment, and between $2.8 million and $3.1 million for the Flow Technologies segment). We expect to incur additional special charges between $4.3 million and $4.7 million during the first half of 2014 (between $0.3 million and $0.4 million for the Aerospace segment and between $4.0 million and $4.3 million for the Flow Technologies segment) to complete these restructuring actions. These restructuring activities are expected to be funded with cash generated from operations.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This Quarterly Report on Form 10-Q contains certain statements that are “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995 (the “Act”) and releases issued by the SEC. The words “may,” “hope,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters, identify forward-looking statements. We believe that it is important to communicate our future expectations to our stockholders, and we, therefore, make forward-looking statements in reliance upon the safe harbor provisions of the Act. However, there may be events in the future that we are not able to accurately predict or control and our actual results may differ materially from the expectations we describe in our forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the cyclicality and highly competitive nature of some of our end markets which can affect the overall demand for and pricing of our products, changes in the price of and demand for oil and gas in both domestic and international markets, any adverse changes in governmental policies, variability of raw material and component pricing, changes in our suppliers' performance, fluctuations in foreign currency exchange rates, our ability to hire and maintain key personnel, our ability to continue operating our manufacturing facilities at efficient levels including our ability to prevent cost overruns and continue to reduce costs, our ability to generate increased cash by reducing our inventories, our prevention of the accumulation of excess inventory, our ability to successfully implement our acquisition strategy, fluctuations in interest rates, our ability to continue to successfully defend product liability actions including asbestos-related claims, our ability to realize savings anticipated to result from the restructuring activities discussed herein, as well as the uncertainty associated with the current worldwide economic conditions and the continuing impact on economic and financial conditions in the United States and around the world as a result of terrorist attacks, current Middle Eastern conflicts and related matters.We advise you to read further about certain of these and other risk factors set forth in Part I, Item 1A, “Risk Factors” of our Annual Report filed on Form 10-K for the year ended December 31, 2012, together with subsequent reports we have filed with the SEC on Forms 10-Q and 8-K, which may supplement, modify, supersede, or update those risk factors.We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Company Overview

CIRCOR International, Inc. designs, manufactures and markets valves and other highly engineered products for markets including energy, oil & gas, power generation, and aerospace. Within our major product groups, we develop, manufacture, sell and service a portfolio of fluid-control products, subsystems and technologies that enable us to fulfill our customers’ unique fluid-control application needs.

We have organized our reporting structure into three segments: Energy, Aerospace, and Flow Technologies. Our Energy segment primarily serves large international energy projects, short-cycle North American energy, and the pipeline transmission equipment and services end-markets. Our Aerospace segment primarily serves the commercial and military aerospace end-markets. Our Flow Technologies segment serves our broadest variety of end-markets, including power generation, industrial and process markets, chemical and refining, and industrial and commercial HVAC/steam. The Flow Technologies segment also provides products specifically designed for U.S. and international Navy applications.

We have been enhancing both our domestic and our worldwide operations through the development of the CIRCOR Business System. The CIRCOR Business System is based on lean operating techniques designed to continuously improve product and work flow and drive waste out of our manufacturing, sales, procurement and office-related systems (“Lean”). Within the CIRCOR Business System, we are committed to attracting, developing and refining the best talent and pursuing continuous improvement in all aspects of our business and operations. The CIRCOR Business System promotes improved shareholder value through the enhancement of core competencies across all of our business units, including continuous improvement, talent acquisition, development and retention, acquisition integration and factory restructuring, global business and supply chain development and product innovation.

Our primary objective is to enhance shareholder value through improvement of operating margins on existing businesses as well as profitable growth of our diversified, multi-national company utilizing the CIRCOR Business System. We are working to accomplish these objectives by focusing on factory repositioning activities and by winning highly engineered project and product opportunities in key end-markets that have above average growth. These end-markets include the upstream and

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midstream oil and gas, power generation, process and aerospace markets. In capitalizing on these opportunities, we are using the CIRCOR Business System to excel at:

• Lean Enterprise, Six Sigma and Continuous Improvement;

• Talent Acquisition, Development and Retention;

• Acquisition and Factory Restructuring;

• Global Business and Supply Chain Development;

• Customer Relationship Development; and

• Product Innovation.

Through organic and acquisition-based growth our three to five year objectives are to gain significant market positions in our key end-markets and build a global capability in high-growth emerging markets while improving operating margins.

Basis of Presentation

All significant intercompany balances and transactions have been eliminated in consolidation. We monitor our business in three segments: Energy, Aerospace and Flow Technologies.

We operate and report financial information using a 52-week fiscal year ending December 31. The data periods contained within our Quarterly Reports on Form 10-Q reflect the results of operations for the 13-week, 26-week and 39-week periods which generally end on the Sunday nearest the calendar quarter-end date.

Critical Accounting Policies

The following discussion of accounting policies is intended to supplement the section “Summary of Significant Accounting Policies” presented in Note (2) to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012. These policies were selected because they are broadly applicable within our operating units. The expenses and accrued liabilities or allowances related to certain of these policies are initially based on our best estimates at the time of original entry in our accounting records. Adjustments are recorded when our actual experience, or new information concerning our expected experience, differs from underlying initial estimates. These adjustments could be material if our actual or expected experience were to change significantly in a short period of time. We make frequent comparisons of actual experience and expected experience in order to mitigate the likelihood of material adjustments.

There have been no significant changes from the methodology applied by management for critical accounting estimates previously disclosed in our most recent Annual Report on Form 10-K.

In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("AOCI"). The new ASU requires entities to disclose in a single location (either on the face of the financial statement that reports net income or in the notes) the effects of reclassifications out of accumulated other comprehensive income. For items reclassified out of AOCI in their entirety into net income, entities must disclose the effect of the reclassification on each affected net income item. For AOCI reclassification items that are not reclassified in their entirety into net income, entities must provide a cross reference to other required U.S. GAAP disclosures. The new disclosure requirements are effective for annual reporting after December 15, 2012, and interim periods within those years. No reclassifications out of AOCI were made by the Company for the three and six months ended June 30, 2013 or the three months and six months ended July 1, 2012 and therefore no additional AOCI disclosure is presented in our Quarterly Report on form 10Q.

Revenue Recognition

Revenue is recognized when products are delivered, title and risk of loss have passed to the customer, persuasive evidence of an arrangement exists, no significant post-delivery obligations remain, the price to the buyers is fixed or determinable and collection of the resulting receivable is reasonably assured. We have limited long-term arrangements, representing less than 2% of our revenue, requiring delivery of products or services over extended periods of time and revenue and profits on certain of these arrangements are recognized in accordance with the percentage of completion method of accounting. Shipping and handling costs invoiced to customers are recorded as components of revenues and the associated costs are recorded as cost of revenues.

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Allowance for Inventory

We typically analyze our inventory aging and projected future usage on a quarterly basis to assess the adequacy of our inventory allowances. We provide inventory allowances for excess, slow-moving, and obsolete inventories determined primarily by estimates of future demand. The allowance is measured on an item-by-item basis determined based on the difference between the cost of the inventory and estimated market value. The provision for inventory allowance is a component of our cost of revenues. Assumptions about future demand are among the primary factors utilized to estimate market value. At the point of the loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

Our net inventory balance was $199.8 million as of June 30, 2013, compared to $198.0 million as of December 31, 2012. Our inventory allowance as of June 30, 2013 was $22.0 million, compared with $22.3 million as of December 31, 2012. Our provision for inventory obsolescence was $2.4 million and $1.7 million for the first six months of 2013 and 2012, respectively.

If there were to be a sudden and significant decrease in demand for our products, significant price reductions, or if there were a higher incidence of inventory obsolescence for any reason, including a change in technology or customer requirements, we could be required to increase our inventory allowances and our gross profit could be adversely affected.

Inventory management remains an area of focus as we balance the need to maintain adequate inventory levels to ensure competitive lead times against the risk of inventory obsolescence.

Penalty Accruals

Some of our customer agreements, primarily in our project related businesses, contain late shipment penalty clauses whereby we are contractually obligated to pay consideration to our customers if we do not meet specified shipment dates. The accrual for estimated penalties is shown as a reduction of revenue and is based on several factors including historical customer settlement experience and management’s assessment of specific shipment delay information. Accruals related to these potential late shipment penalties as of June 30, 2013, and December 31, 2012 were $8.2 million and $8.6 million, respectively. As we conclude performance under these agreements, the actual amount of consideration paid to our customers may vary significantly from the amounts we currently have accrued.

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash, cash equivalents, short-term investments and trade receivables. A significant portion of our revenue and receivables are from customers who are either in or service the energy, aerospace and industrial markets. We perform ongoing credit evaluations of our customers and maintain allowances for potential credit losses. During 2012, 2011, and 2010, the Company did not experience any significant losses related to the collection of our accounts receivable. For the years ended December 31, 2012, 2011 and 2010 we had no customers from which we derived revenues that exceeded 10% of our consolidated revenues.

Acquisition Accounting

In connection with our acquisitions, we assess and formulate a plan related to the future integration of the acquired entity. This process begins during the due diligence phase and is concluded within twelve months of the acquisition. We account for business combinations under the purchase method, and accordingly, the assets and liabilities of the acquired businesses are recorded at their estimated fair value on the acquisition date with the excess of the purchase price over their estimated fair value recorded as goodwill. We determine acquisition related asset and liability fair values through established valuation techniques for industrial manufacturing companies and utilize third party valuation firms to assist in the valuation of certain tangible and intangible assets.

Legal Contingencies

We are currently involved in various legal claims and legal proceedings, some of which may involve substantial dollar amounts. Periodically, we review the status of each significant matter and assess our potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be estimated, we accrue a liability for the estimated loss. Significant judgment is required in both the determination of probability and the determination as to whether an exposure can be reasonably estimated. Because of uncertainties related to these matters, accruals are based on the best information available at the time. As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates. Such revisions in the estimates of the potential liabilities could have a material adverse effect on our business, results of operations and financial position. For more information related to our

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outstanding legal proceedings, see “Contingencies and Commitments” in Note 10 of the accompanying unaudited consolidated financial statements as well as “Legal Proceedings” in Part II, Item 1 hereof.

Impairment Analysis

As required by ASC Topic 350, “Intangibles - Goodwill and Other,” we perform an annual assessment as to whether there was an indication that goodwill and certain intangible assets are impaired. We also perform impairment analyses whenever events and circumstances indicate that goodwill or certain intangibles may be impaired. In assessing the fair value of goodwill, we use our best estimates of future cash flows of operating activities and capital expenditures of the reporting unit, the estimated terminal value for each reporting unit and a discount rate based on the weighted average cost of capital.

If our estimates or related projections change in the future due to changes in industry and market conditions, we may be required to record additional impairment charges. The goodwill recorded on the consolidated balance sheet as of June 30, 2013 decreased $1.9 million to $75.5 million compared to $77.4 million as of December 31, 2012 due to foreign currency fluctuations. There were no impairment triggering events as of June 30, 2013.

Income Taxes

See Income Taxes footnote.

Pension Benefits

We maintain two pension benefit plans, a qualified noncontributory defined benefit plan and a nonqualified, noncontributory defined benefit supplemental plan that provides benefits to certain highly compensated officers and employees. To date, the supplemental plan remains an unfunded plan. These plans include significant pension benefit obligations which are calculated based on actuarial valuations. Key assumptions are made in determining these obligations and related expenses, including expected rates of return on plan assets and discount rates. Benefits are based primarily on years of service and employees’ compensation.

As of July 1, 2006, in connection with a revision to our retirement plan, we froze the pension benefits of our qualified noncontributory plan participants. Under the revised plan, such participants generally do not accrue any additional benefits under the defined benefit plan after July 1, 2006 and instead receive enhanced benefits associated with our defined contribution 401(k) plan in which substantially all of our U.S. employees are eligible to participate.

During the three and six months ended June 30, 2013, we made cash contributions of $0.4 million and $0.8 million, respectively to our qualified defined benefit pension plan. For the remainder of 2013, we expect to make voluntary cash contributions of approximately $0.8 million to our qualified defined benefit pension plan, although global capital market and interest rate fluctuations may impact future funding requirements.

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Results of Operations for the Three Months Ended June 30, 2013 Compared to the Three Months Ended July 1, 2012

The following tables set forth the results of operations, percentage of net revenues and the period-to-period percentage change in certain financial data for the three months ended June 30, 2013 and July 1, 2012:

	Three Months Ended				Three Months Ended
	June 30, 2013				July 1, 2012				% Change
	(Dollars in thousands)
Net revenues	$	223,644	100.0	%	$	219,862	100.0	%	1.7	%
Cost of revenues	153,538		68.7	%	156,046		71.0	%	(1.6	)%
Gross profit	70,106		31.3	%	63,816		29.0	%	9.9	%
Selling, general and administrative expenses	47,596		21.3	%	45,337		20.6	%	5.0	%
Special charges	2,254		1.0	%	—		0.0	%	N/A
Operating income	20,256		9.1	%	18,479		8.4	%	9.6	%
Other expense:
Interest expense, net	838		0.4	%	1,017		0.5	%	(17.6	)%
Other expense, net	626		0.3	%	184		0.1	%	240.2	%
Total other expense	1,464		0.7	%	1,201		0.5	%	21.9	%
Income before income taxes	18,792		8.4	%	17,278		7.9	%	8.8	%
Provision for income taxes	6,124		2.7	%	6,142		2.8	%	(0.3	)%
Net income	$	12,668	5.7	%	$	11,136	5.1	%	13.8	%

Net Revenues

Net revenues for the three months ended June 30, 2013increased by $3.8 million, or 2%, to $223.6 million from $219.9 million for the three months ended July 1, 2012. The change in net revenues for the three months ended June 30, 2013 was attributable to the following:

	Three Months Ended				Total Change			Operations			Foreign Exchange
Segment	June 30, 2013		July 1, 2012
	(In thousands)
Energy	$	110,832	$	113,527	$	(2,695	)	$	(3,083	)	$	388
Aerospace	38,177		35,896		2,281			2,078			203
Flow Technologies	74,635		70,439		4,196			4,467			(271		)
Total	$	223,644	$	219,862	$	3,782		$	3,462		$	320

The Energy segment accounted for approximately 50% of net revenues for the three months ended June 30, 2013 compared to 52% for the three months ended July 1, 2012. The Aerospace segment accounted for 17% of net revenues for the three months ended June 30, 2013 compared to 16% for the three months ended July 1, 2012. The Flow Technologies segment accounted for 33% of net revenues for the three months ended June 30, 2013 compared to 32% for the three months ended July 1, 2012.

Energy segment revenues decreased by $2.7 million, or 2%, for the three months ended June 30, 2013 compared to the three months ended July 1, 2012. The decrease was driven by $3.1 million (2.7%) of organic declines primarily due to reductions in the short-cycle North American market as rig counts are down year over year partially offset by growth in large international projects. This net year over year organic decrease was also offset by favorable foreign currency fluctuations of $0.4 million. Energy segment orders decreased$21.0 million to $107.2 million for the three months ended June 30, 2013 compared to $128.2 million for the same period in 2012 primarily due to lower large international projects. Backlog for our Energy segment has increased$16.3 million to $213.7 million as of June 30, 2013 compared to $197.4 million as of July 1, 2012 primarily due to our large international project and pipeline businesses.

Aerospace segment revenues increased by $2.3 million, or 6%, for the three months ended June 30, 2013 compared to the same period in 2012. The revenue increase was due to net organic increases of $2.1 million (5.8%) primarily at to our California

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fluid control and our French businesses as well as favorable foreign currency fluctuations of $0.2 million. Orders for this segment decreased$1.6 million to $26.9 million for the three months ended June 30, 2013 compared to $28.5 million for the same period in 2012 primarily due to declines in France partially offset by growth in California fluid control orders. Order backlog increased$1.3 million to $151.9 million as of June 30, 2013 compared to $150.6 million as of July 1, 2012.

Flow Technologies segment revenues increased by $4.2 million, or 6%, for the three months ended June 30, 2013 compared to the same period in 2012. The revenue increase was due to net organic increases of $4.5 million (6.3%) with contribution from most of the markets, including power, sampling, and instrumentation, partially offset by unfavorable foreign currency fluctuations of $0.3 million. This segment’s customer orders decreased$4.5 million to $66.0 million for the three months ended June 30, 2013 compared to $70.5 million for the same period in 2012. Order backlog decreased$6.4 million to $67.9 million as of June 30, 2013 compared to $74.3 million as of July 1, 2012, driven primarily by lower maritime orders partially offset by increases in our sampling systems businesses.

Gross Profit

Consolidated gross profit increased$6.3 million, or 10%, to $70.1 million for the three months ended June 30, 2013 compared to $63.8 million for the three months ended July 1, 2012. Consolidated gross margin increased230 basis points to 31.3% for the three months ended June 30, 2013 from 29.0% for the three months ended July 1, 2012.

	Three Months Ended				Total Change		Operations		Foreign Exchange			Inventory restructuring
Segment	June 30, 2013		July 1, 2012
	(In thousands)
Energy	$	32,109	$	29,475	$	2,634	$	2,453	$	226		$	(47	)
Aerospace	11,824		10,906		918		561		69			288
Flow Technologies	26,173		23,435		2,738		2,851		(112		)	—
Total	$	70,106	$	63,816	$	6,290	$	5,865	$	183		$	241

Gross profit for the Energy segment increased$2.6 million, or 9%, for the three months ended June 30, 2013 compared to the same period in 2012. The gross profit increase was primarily due to $2.5 million (8.3%) of net organic increases and $0.2 million in favorable foreign currency fluctuations. Gross margins improved300 basis points to 29.0% for the three months ended June 30, 2013 compared to 26.0% for the same period in 2012. This increase was primarily driven by improved order mix and pricing within our large international project business, and Brazil restructuring benefits, partially offset by lower shipment volume and associated margin.

Gross profit for the Aerospace segment increased$0.9 million, or 8%, for the three months ended June 30, 2013 compared to the three months ended July 1, 2012. The gross profit increase was primarily due to organic growth of $0.6 million (5.1%), favorable inventory restructuring adjustments $0.3 million, and favorable foreign currency fluctuations of $0.1 million. Gross margins improved by 60 basis points to 31.0% for the three months ended June 30, 2013 from 30.4% for the three months ended July 1, 2012 due primarily to increased volume, savings associated with the California restructuring offset primarily by unfavorable product mix and investments and start-up costs for new programs.

Gross profit for the Flow Technologies segment increased$2.7 million, or 12%, for the three months ended June 30, 2013 compared to the three months ended July 1, 2012. The gross profit increase was primarily due to $2.9 million (12.2%) of net organic increases, partially offset by $0.1 million in unfavorable foreign currency fluctuations. Gross margins improved180 basis points to 35.1% for the three months ended June 30, 2013 from 33.3% for the three months ended July 1, 2012 primarily due to improved volume, associated margin and productivity.

Special Charges

Special charges associated with restructuring actions of $0.7 million, $1.5 million, and $0.0 million were recorded during the three months ended June 30, 2013 in our Energy, Aerospace and Flow Technologies segments, respectively. We did not record any special charges during the three months ended July 1, 2012. For additional information on the special charges, see Note 13 of the accompanying unaudited consolidated financial statements.

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Operating Income (Loss)

The change in operating income for the three months ended June 30, 2013 compared to the three months ended July 1, 2012 was as follows:

	Three Months Ended						Total Change			Operations			Foreign Exchange			Special and restructuring (1)
Segment	June 30, 2013			July 1, 2012
	(In thousands)
Energy	$	14,477		$	12,580		$	1,897		$	2,459		$	231		$	(794	)
Aerospace	2,073			3,153			(1,080		)	86			31			(1,197		)
Flow Technologies	11,044			9,043			2,001			2,085			(62		)	(21		)
Corporate	(7,338		)	(6,297		)	(1,041		)	(1,040		)	(1		)	—
Total	$	20,256		$	18,479		$	1,777		$	3,590		$	199		$	(2,012	)
(1) Includes inventory and special charges associated with restructuring activities - see table below

The restructuring related charges for the three months ended June 30, 2013 were as follows:

	Three Months Ended		Inventory restructuring			Special and restructuring
Segment	June 30, 2013
	(In thousands)
Energy	$	794	$	47		$	747
Aerospace	1,197		(288		)	1,485
Flow Technologies	21		—			21
Total	$	2,012	$	(241	)	$	2,253

Operating income increased10%, or $1.8 million, to $20.3 million for the three months ended June 30, 2013 compared to $18.5 million for the same period in 2012.

Operating income for our Energy segment increased$1.9 million, or 15%, to $14.5 million for the three months ended June 30, 2013, compared to the same period in 2012. The increase in operating income was primarily driven by net organic increases of $2.4 million (19.5%) and favorable foreign currency fluctuations $0.2 million, offset by $0.8 million of restructuring related charges. Operating margins improved200 basis points to 13.1% compared to the same period in 2012 primarily driven by improved order mix and pricing within our large international project business, as well as Brazil restructuring benefits, partially offset by special and restructuring charges and margin associated with lower shipment volume.

Operating income for the Aerospace segment decreased$1.1 million, or 34%, to $2.1 million for the three months ended June 30, 2013 compared to the same period in 2012. The decrease in operating income was primarily driven by of $1.5 million of special charges, offset by $0.3 million of favorable inventory adjustments. Operating margins declined340 basis points to 5.4% compared to the same period in 2012 due primarily to $1.5 million of special charges, unfavorable mix and start-up costs for new programs partially offset by increased volume, savings associated with the California restructuring of $0.6 million and favorable inventory restructuring.

Operating income for the Flow Technologies segment increased$2.0 million, or 22%, to $11.0 million for the three months ended June 30, 2013 compared to the same period in 2012. The increase in operating income was primarily driven by net organic increases of $2.1 million (23.1%). Operating margins improved by 200 basis points to 14.8% compared to the same period in 2012 primarily due to improved volume, associated margin and productivity.

Corporate operating expenses increased$1.0 million, or 17%, to $7.3 million for the three months ended June 30, 2013 compared to the same period in 2012, primarily due to higher variable compensation.

Interest Expense, Net

Interest expense, net, decreased$0.2 million to $0.8 million for the three months ended June 30, 2013 compared to the three months ended July 1, 2012. This change in interest expense was primarily due to lower outstanding debt balances.

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Other Expense, Net

Other expense, net, was $0.6 million for the three months ended June 30, 2013 compared to $0.2 million in the same period of 2012. The difference of $0.4 million was largely the result of higher foreign exchange losses associated with the remeasurement of foreign currency balances.

Provision for Taxes

The effective tax rate was 32.6% for the quarter ended June 30, 2013 compared to 35.6% for the same period of 2012. The primary driver of the lower 2013 tax rate was a smaller loss in 2013 versus 2012 for one of our international subsidiaries, which was not tax-benefited in either period, partially offset by discrete tax benefits recognized in the quarter ended June 30, 2012.

Net Income

Net income increased approximately $1.5 million to $12.7 million for the quarter ended June 30, 2013 compared to $11.1 million for the same period in 2012. The increase was primarily due to organic growth and savings associated with our restructuring partially offset by restructuring related charges.

Results of Operations for the Six Months EndedJune 30, 2013 Compared to the Six Months EndedJuly 1, 2012

The following tables set forth the results of operations, percentage of net revenues and the period-to-period percentage change in certain financial data for the six months ended June 30, 2013 and July 1, 2012:

	Six Months Ended				Six Months Ended
	June 30, 2013				July 1, 2012				% Change
	(Dollars in thousands)
Net revenues	$	429,042	100.0	%	$	434,142	100.0	%	(1.2	)%
Cost of revenues	299,086		69.7	%	311,714		71.8	%	(4.1	)%
Gross profit	129,956		30.3	%	122,428		28.2	%	6.1	%
Selling, general and administrative expenses	93,168		21.7	%	90,249		20.8	%	3.2	%
Special charges	3,632		0.8	%	—		0.0	%	N/A
Operating income	33,156		7.7	%	32,179		7.4	%	3.0	%
Other expense:
Interest expense, net	1,625		0.4	%	2,098		0.5	%	(22.5	)%
Other expense, net	1,239		0.3	%	322		0.1	%	284.8	%
Total other expense	2,864		0.7	%	2,420		0.6	%	18.3	%
Income before income taxes	30,292		7.1	%	29,759		6.9	%	1.8	%
Provision for income taxes	9,715		2.3	%	10,038		2.3	%	(3.2	)%
Net income	$	20,577	4.8	%	$	19,721	4.5	%	4.3	%

Net Revenues

Net revenues for the six months ended June 30, 2013decreased by $5.1 million, or 1%, to $429.0 million from $434.1 million for the six months ended July 1, 2012. The change in net revenues for the six months ended June 30, 2013 was attributable to the following:

	Six Months Ended				Total Change			Operations			Foreign Exchange
Segment	June 30, 2013		July 1, 2012
	(In thousands)
Energy	$	207,553	$	222,791	$	(15,238	)	$	(14,583	)	$	(655	)
Aerospace	75,503		73,981		1,522			1,453			69
Flow Technologies	145,986		137,370		8,616			9,404			(789		)
Total	$	429,042	$	434,142	$	(5,100	)	$	(3,726	)	$	(1,375	)

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The Energy segment accounted for 48% of net revenues for the six months ended June 30, 2013 compared to 51% for the six months ended July 1, 2012. The Aerospace segment accounted for 18% of net revenues for the six months ended June 30, 2013 compared to 17% for the six months ended July 1, 2012. The Flow Technologies segment accounted for 34% of net revenues for the six months ended June 30, 2013 compared to 32% for the six months ended July 1, 2012.

Energy segment revenues decreased by $15.2 million, or 7%, for the six months ended June 30, 2013 compared to the six months ended July 1, 2012. The decrease was primarily driven by $14.6 million (6.5%) of organic declines primarily due to reductions in the North America short-cycle markets as rig counts are down year over year and unfavorable foreign currency fluctuations of $0.7 million. Energy segment orders decreased$46.5 million to $217.4 million for the six months ended June 30, 2013 compared to $263.9 million for the same period in 2012, primarily due to lower large international projects and North American short-cycle orders.

Aerospace segment revenues increased by $1.5 million, or 2%, for the six months ended June 30, 2013 compared to the same period in 2012. The increase was due to organic growth of $1.5 million (2.0%) across most areas with the exception of California landing gear. Orders for this segment increased$0.4 million to $69.1 million for the six months ended June 30, 2013 compared to $68.7 million for the same period in 2012.

Flow Technologies segment revenues increased by $8.6 million, or 6%, for the six months ended June 30, 2013 compared to the same period in 2012. The revenue increase was due to net organic growth of $9.4 million (6.8%), offset by unfavorable foreign currency fluctuations of $0.8 million. The organic revenue growth was primarily due to increased process, power, and oil & gas areas. This segment’s customer orders decreased$3.0 million to $140.4 million for the six months ended June 30, 2013 compared to $143.4 million for the same period in 2012 driven by lower maritime orders.

Gross Profit

Consolidated gross profit increased$7.5 million, or 6%, to $130.0 million for the six months ended June 30, 2013 compared to $122.4 million for the six months ended July 1, 2012. Consolidated gross margin increased210 basis points to 30.3% for the six months ended June 30, 2013 from 28.2% for the six months ended July 1, 2012.

	Six Months Ended				Total Change			Operations			Foreign Exchange			Inventory restructuring
Segment	June 30, 2013		July 1, 2012
	(In thousands)
Energy	$	58,685	$	53,805	$	4,880		$	5,119		$	56		$	(296	)
Aerospace	20,906		22,938		(2,032		)	(2,334		)	15			287
Flow Technologies	50,365		45,686		4,679			5,019			(339		)	—
Total	$	129,956	$	122,429	$	7,527		$	7,804		$	(268	)	$	(9	)

Gross profit for the Energy segment increased$4.9 million, or 9%, for the six months ended June 30, 2013 compared to the same period in 2012. The gross profit increase was primarily due to $5.1 million (9.5%) of organic increases and $0.1 million in favorable foreign exchange rates compared to the U.S. dollar. Favorable results were partially offset by $0.3 million of inventory restructuring charges. Gross margins improved 410 basis points to 28.3% for the six months ended June 30, 2013 compared to 24.2% for the same period in 2012. This increase was primarily driven by favorable pricing and mix within our large international project business partially offset by lower North American short cycle shipment volume and associate margin.

Gross profit for the Aerospace segment decreased$2.0 million, or 9%, for the six months ended June 30, 2013 compared to the six months ended July 1, 2012. This gross profit decrease was primarily due to $2.3 million (10.2%) in organic decreases, offset by a favorable inventory restructuring adjustment of $0.3 million at our California operations. Gross margins declined by 330 basis points to 27.7% for the six months ended June 30, 2013 from 31.0% for the six months ended July 1, 2012 primarily due to the large future program expenses including those related to manufacturing capabilities and product development, partially offset by higher volume, associated margin and savings associated with the California restructuring.

Gross profit for the Flow Technologies segment increased$4.7 million, or 10%, for the six months ended June 30, 2013 compared to the six months ended July 1, 2012. The increase was primarily due to organic growth of $5.0 million (11.0%), offset by unfavorable foreign currency fluctuations of $0.3 million. Gross margins improved 120 basis points to 34.5% for the

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six months ended June 30, 2013 from 33.3% for the six months ended July 1, 2012 primarily due to improved volume and associated margin.

Special Charges

Special charges associated with restructuring actions of $1.1 million, $2.4 million, and $0.1 million were recorded during the six months ended June 30, 2013 in our Energy, Aerospace, and Flow Technologies segments, respectively. We did not record any special charges during the six months ended July 1, 2012. For additional information on the special charges, see Note 13 of the accompanying unaudited consolidated financial statements.

Operating Income (Loss)

The change in operating income for the six months ended June 30, 2013 compared to the six months ended July 1, 2012 was as follows:

	Six Months Ended						Total Change			Operations			Foreign Exchange			Special and restructuring (1)
Segment	June 30, 2013			July 1, 2012
	(Dollars In thousands)
Energy	$	24,614		$	21,508		$	3,106		$	4,237		$	276		$	(1,408	)
Aerospace	2,467			7,277			(4,810		)	(2,680		)	(6		)	(2,124		)
Flow Technologies	20,001			16,630			3,371			3,671			(191		)	(108		)
Corporate	(13,926		)	(13,235		)	(691		)	(680		)	(10		)	—
Total	$	33,156		$	32,180		$	976		$	4,548		$	69		$	(3,640	)
(1) Includes inventory and special charges associated with restructuring activities - see table below

The restructuring related charges for the six months ended June 30, 2013 were as follows:

	Six Months Ended		Inventory restructuring			Special and restructuring
Segment	June 30, 2013
	(In thousands)
Energy	$	1,408		$	296		$	1,112
Aerospace	2,124		(288		)	2,412
Flow Technologies	108		—			108
Total	$	3,640	$	8		$	3,632

Operating income increased 3%, or $1.0 million, to $33.2 million for the six months ended June 30, 2013 compared to $32.2 million for the same period in 2012.

Operating income for our Energy segment increased$3.1 million, or 14%, to $24.6 million for the six months ended June 30, 2013, compared to the same period in 2012. Operating margins improved 220 basis points to 11.9% on a revenue decrease of 7%, compared to the first six months in 2012. The increase in operating income was primarily driven by favorable pricing and mix within our large international business, partially offset by lower North American short-cycle shipment volume and restructuring related charges at our Brazil operations.

Operating income for the Aerospace segment decreased$4.8 million, or 66%, to $2.5 million for the six months ended June 30, 2013 compared to the same period in 2012. Operating income was lower primarily due to restructuring related charges, large future program expenses, partially offset by higher volume, associated margin and savings from the California restructuring.

Operating income for the Flow Technologies segment increased$3.4 million, or 20%, to $20.0 million for the six months ended June 30, 2013 compared to the same period in 2012. Operating income was higher primarily due to increased shipment volume and associated margin.

Corporate operating expenses increased$0.7 million, or 5%, to $13.9 million for the six months ended June 30, 2013 compared to the same period in 2012, primarily due to higher variable compensation.

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Interest Expense, Net

Interest expense, net, decreased$0.5 million to $1.6 million for the six months ended June 30, 2013 compared to the six months ended July 1, 2012. This change in interest expense was primarily due to lower interest charges from lower borrowings associated with our revolving credit facility and other borrowings.

Other Expense, Net

Other expense, net, was $1.2 million for the six months ended June 30, 2013 compared to $0.3 million in the same period of 2012. The difference of $0.9 million was largely the result of the remeasurement of foreign currency balances.

Provision for Taxes

The effective tax rate was 32.1% for the six months ended June 30, 2013 compared to 33.7% for the same period of 2012. The primary driver of the lower 2013 tax rate was a smaller loss for one of our international subsidiaries, which was not tax-benefited in either period.

Net Income

Net income increased$0.9 million to $20.6 million for the six months ended June 30, 2013 compared to $19.7 million for the same period in 2012.

Liquidity and Capital Resources

Our liquidity needs arise primarily from capital investment in machinery, equipment and the improvement of facilities, funding working capital requirements to support business growth initiatives, acquisitions, dividend payments, pension funding obligations and debt service costs. We have historically generated cash from operations and remain in a strong financial position, with resources available for reinvestment in existing businesses, strategic acquisitions and managing our capital structure on a short and long-term basis.

The following table summarizes our cash flow activities for the six months ended June 30, 2013 (In thousands):

Cash flow provided by (used in):
Operating activities	$	19,432
Investing activities	(8,494		)
Financing activities	(9,844		)
Effect of exchange rates on cash and cash equivalents	(2,002		)
Decrease in cash and cash equivalents	$	(907	)

During the six months ended June 30, 2013, we generated $19.4 million in operating activities compared to using $8.8 million during the same period in 2012. The higher amounts of cash provided by operating activities was primarily due to increases in accounts payable and accrued expense balances. The $8.5 million used by investing activities primarily consists of net purchases of capital equipment. Financing activities used $9.8 million, which included a net $10.4 million reduction of borrowings. As of June 30, 2013, total debt was $59.6 million compared to $70.5 million at December 31, 2012. Total debt as a percentage of total shareholders’ equity was 13.8% as of June 30, 2013 compared to 16.9% as of December 31, 2012.

On May 2, 2011, we entered into a five year unsecured credit agreement (“2011 Credit Agreement”) that provides for a $300.0 million revolving line of credit. The 2011 Credit Agreement includes a $150.0 million accordion feature for a maximum facility size of $450.0 million. The 2011 Credit Agreement also allows for additional indebtedness not to exceed $80 million. We anticipate borrowing under the 2011 Credit Agreement to fund potential acquisitions, to support our organic growth initiatives and working capital needs, and for general corporate purposes. As of June 30, 2013, we had borrowings of $51.4 million outstanding under our credit facility and $52.4 million was allocated to support outstanding letters of credit.

Certain of our loan agreements contain covenants that require, among other items, maintenance of certain financial ratios and also limit our ability to: enter into secured and unsecured borrowing arrangements; issue dividends to shareholders; acquire and dispose of businesses; invest in capital equipment; transfer assets among domestic and international entities; participate in certain higher yielding long-term investment vehicles; and issue additional shares of our stock. The two primary financial covenants are leverage ratio and interest coverage ratio. We were in compliance with all financial covenants related to our

27

existing debt obligations on June 30, 2013 and we believe it is reasonably likely that we will continue to meet such covenants in the near future.

The ratio of current assets to current liabilities was 2.52:1 as of June 30, 2013 compared to 2.43:1 at December 31, 2012.

The increase in the current ratio was primarily due to the payment of short term borrowings, which reduced our current liabilities compared to December 31, 2012. As of June 30, 2013, cash and cash equivalents totaled $60.8 million, of which approximately $49.3 million was held in foreign bank accounts. This compares to $61.7 million of cash and cash equivalents as of December 31, 2012 of which $61.7 million was held in foreign bank accounts. The cash and cash equivalents located at our foreign subsidiaries may not be repatriated to the United States or other jurisdictions without significant tax implications. We believe that our U.S. based subsidiaries, in the aggregate, will generate positive operating cash flows and in addition we may utilize our 2011 Credit Facility for U.S. based subsidiary cash needs. As a result, we believe that we will not need to repatriate cash from our foreign subsidiaries with earnings that are indefinitely reinvested.

On November 4, 2010, we filed with the SEC a shelf registration statement on Form S-3 under which we may issue up to $400 million of securities including debt securities, common stock, preferred stock, warrants to purchase any such securities and units comprised of any such securities (the “Securities”). The registration statement was declared effective by the SEC on December 17, 2010. We may offer these Securities from time to time in amounts, at prices and on terms to be determined at the time of sale. We believe that with this registration statement, we will have greater flexibility to take advantage of financing opportunities, acquisitions and other business opportunities when and if such opportunities arise. Depending on market conditions, we may issue securities under this or future registration statements or in private offerings exempt from registration requirements.

In 2013, we expect to generate positive cash flow from operating activities sufficient to support our capital expenditures and pay dividends of approximately $2.7 million based on our current dividend practice of paying $0.15 per share annually. Based on our expected cash flows from operations and contractually available borrowings under our credit facility, we expect to have sufficient liquidity to fund working capital needs and future growth. We continue to search for strategic acquisitions; a larger acquisition may require additional borrowings and/or the issuance of our common stock.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Interest Rate Sensitivity Risk

As of June 30, 2013, our primary interest rate risk is related to borrowings under our revolving credit facility. The interest rate for our revolving credit facility fluctuates with changes in short-term interest rates. We had $51.4 million borrowed under our revolving credit facility as of June 30, 2013. Based upon expected levels of borrowings under our credit facility in 2013, an increase in variable interest rates of 100 basis points would have an effect on our annual results of operations and cash flows of approximately $0.4 million.

Foreign Currency Exchange Risk

The Company is exposed to certain risks relating to its ongoing business operations including foreign currency exchange rate risk and interest rate risk. The Company currently uses derivative instruments to manage foreign currency risk on certain business transactions denominated in foreign currencies. To the extent the underlying transactions hedged are completed, these forward contracts do not subject us to significant risk from exchange rate movements because they offset gains and losses on the related foreign currency denominated transactions. These forward contracts do not qualify as hedging instruments and, therefore, do not qualify for fair value or cash flow hedge treatment. Any unrealized gains and losses on our contracts are recognized as a component of other expense in our consolidated statements of income.

As of June 30, 2013, we had nineteen forward contracts with total values as follows (in thousands):

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Currency	Number	Contract Amount	Currency
Canadian Dollar/Euro	2	2,755	Canadian Dollars
U.S. Dollar/Euro	8	17,942	U.S. Dollars
Brazilian Real/Euro	9	0	Brazilian Reals

This compares to twelve forward contracts as of December 31, 2012. The fair value liability of the derivative forward contracts as of June 30, 2013 was approximately $0.5 million and was included in accrued expenses and other current liabilities on our balance sheet. This compares to a fair value asset of approximately $0.5 million that was included in prepaid expenses and other current assets on our balance sheet as of December 31, 2012. The unrealized foreign exchange gain (loss) for the six month periods ended June 30, 2013 and July 1, 2012 was less than $1.0 million and $0.5 million, respectively. Unrealized foreign exchange gains (losses) are included in other (income) expense in our consolidated statements of income.

We have determined that the majority of the inputs used to value our foreign currency forward contracts fall within Level 2 of the fair value hierarchy, found under ASC 820. The credit valuation adjustments, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties are Level 3 inputs. However, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our foreign currency forward contracts and determined that the credit valuation adjustments are not significant to the overall valuation. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were designed and were effective to give reasonable assurance that information we disclose in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure and that such information is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Changes in Internal Controls Over Financial Reporting

We have made no changes in our internal controls over financial reporting during the quarter ended June 30, 2013 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION.

ITEM 1. LEGAL PROCEEDINGS.

Asbestos-related product liability claims continue to be filed against two of our subsidiaries-Spence Engineering Company, Inc. (“Spence”), the stock of which we acquired in 1984; and Circor Instrumentation Technologies, Inc. (f/k/a Hoke Incorporated) (“Hoke”), the stock of which we acquired in 1998. Due to the nature of the products supplied by these entities, the markets they serve and our historical experience in resolving these claims, we do not believe that these asbestos-related claims will have a material adverse effect on the financial condition, results of operations or liquidity of Spence or Hoke, or the financial condition, consolidated results of operations or liquidity of the Company.

During the third quarter of 2011, we commenced arbitration proceedings against T.M.W. Corporation (“TMW”), the seller from which we acquired the assets of Castle Precision Industries in August 2010, seeking to recover damages from TMW for breaches of certain representations and warranties made by TMW in the Asset Purchase Agreement dated August 3, 2010 relative to such acquisition. We currently are in the discovery phase of this arbitration and expect the actual hearings to occur in the third quarter of 2013 at the earliest.

We are currently involved in various legal claims and legal proceedings, some of which may involve substantial dollar amounts. Periodically, we review the status of each significant matter and assess our potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be estimated, we accrue a liability for the estimated loss. Significant judgment is required in both the determination of probability and the determination as to

29

whether an exposure can be reasonably estimated. Because of uncertainties related to these matters, accruals are based on the best information available at the time. As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates. Such revisions in the estimates of the potential liabilities could have a material adverse effect on our business, results of operations and financial position.

ITEM 1A. RISK FACTORS.

We have not identified any material changes from the risk factors as previously disclosed in Item 1A to Part I of our Annual Report on Form 10-K for the year ended December 31, 2012.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Working Capital Restrictions and Limitations upon Payment of Dividends

Certain of our loan agreements contain covenants that require, among other items, maintenance of certain financial ratios and also limit our ability to: enter into secured and unsecured borrowing arrangements; issue dividends to shareholders; acquire and dispose of businesses; invest in capital equipment; transfer assets among domestic and international entities; participate in certain higher yielding long-term investment vehicles; and issue additional shares of our stock. The two primary financial covenants are leverage ratio and interest coverage ratio. We were in compliance with all covenants related to our existing debt obligations at June 30, 2013 and December 31, 2012. We believe it is reasonably likely that we will continue to meet such covenants in the near future.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

30

ITEM 6. EXHIBITS.

Exhibit No.		Description and Location
10.1§		Form of Retention Agreement entered into between the Company and the Following Individuals: Wayne Robbins, Alan Glass, Lisa Ryan, Brian Young, Arjun Sharma, Michael Dill, Mahesh Joshi, and John F. Kober.
31.1*		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32**		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101†		The following financial statements from CIRCOR International, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission on August 1, 2013, formatted in XBRL (eXtensible Business Reporting Language), as follows:
	(i)	Consolidated Balance Sheets as of June 30, 2013 (unaudited) and December 31, 2012
	(ii)	Consolidated Statements of Income for the three and six months ended June 30, 2013 and July 1, 2012 (unaudited)
	(iii)	Statements of Consolidated Comprehensive Income (Loss) for the three and six months ended June 30, 2013 and July 1, 2012 (unaudited)
	(iv)	Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and July 1, 2012 (unaudited)
	(v)	Notes to the Consolidated Financial Statements (unaudited)
*	Filed with this report.
**	Furnished with this report.
§	Indicates management contract or compensatory plan or arrangement.
†	As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, and Section 18 of the Securities Exchange Act of 1934, as amended.

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CIRCOR INTERNATIONAL, INC.
August 1, 2013	/s/ Scott A. Buckhout
	Scott A. Buckhout
	President and Chief Executive Officer
	Principal Executive Officer
August 1, 2013	/s/ Frederic M. Burditt
	Frederic M. Burditt
	Vice President, Chief Financial Officer
	Principal Financial Officer
August 1, 2013	/s/ John F. Kober
	John F. Kober
	Vice President, Corporate Controller and Treasurer
	Principal Accounting Officer

32

EX-10.1

(Date)

(Name)

(Address)

Re:    Retention Agreement

Dear Mr. (Name):

You are an important member of CIRCOR’s senior leadership team and your continued employment with CIRCOR is considered by the Board of Directors as being important to CIRCOR’s continued success. To avoid the distraction that might otherwise result in connection with naming a permanent successor as Chief Executive Officer and to provide an incentive for you to remain with CIRCOR, the Compensation Committee has approved severance protection for you as set forth below. If you experience a Qualifying Involuntary Termination during the Transition Period, CIRCOR (the “Company”) will provide you with Severance Benefits provided that you timely execute a binding release on the terms and conditions set forth below.

1.    Transition Period. The “Transition Period” means the period beginning on the date that a permanent successor commences employment as the Company’s Chief Executive Officer and ending twelve months thereafter; provided, however, that the Transition Period shall in all events end immediately before a “Change in Control” as defined in the Executive Change of Control Agreement, as amended (if applicable) between you and the Company (the “Change of Control Agreement”).

2.    Severance Benefits. The “Severance Benefits” that may become payable under this Retention Agreement consist of the following:

(a)    Continued bi-weekly payment of your base salary for 12 months beginning upon a Qualifying Involuntary Termination. The salary to be continued to you during this period shall be your annual rate of salary as in effect on the effective date of such Qualifying Involuntary Termination.

(b)    A lump sum payment of a pro rata portion of the bonus you would have earned for the calendar year of a Qualifying Involuntary Termination based on actual performance, as reasonably determined by the Compensation Committee. The pro rata bonus shall be determined based on your days of active employment during such year. The lump sum payment shall be paid during the calendar year following the calendar year of a Qualifying Involuntary Termination, but in no event later than when active employees receive payment of their bonus.

(c)    The Company shall pay COBRA premiums for you and your spouse under the Company’s group medical and dental insurance policies for 12 months following a Qualifying Involuntary Termination or, if earlier, the date on which you are no longer entitled to such coverage under COBRA rules, if earlier, subject to being adjusted as determined reasonably necessary to comply with applicable law, including requirements for coverage proceeds to be nontaxable.

(d)    Reimbursement of up to $20,000 of outplacement assistance costs you incur during the twelve-month period immediately following a Qualifying Involuntary Termination, subject to compliance with CIRCOR’s reimbursement policies and procedures.

Your eligibility to receive the Severance Benefits shall be contingent upon your executing a form of general release agreement acceptable to the Company within 21 days after receiving it (and which is not revoked by you) and complying with its terms. The general release agreement shall include your post-employment obligations, including covenants not to non-compete or solicit our employees for one year, to protect CIRCOR’s confidential information, to return CIRCOR’s property, to reasonably assist CIRCOR in any investigation or government audit. The Company shall deliver a form of general release agreement as described above to you by hand or at your home address on the Company’s books and records within five (5) business days after a Qualifying Involuntary Termination. All Severance Benefits are contingent on the release agreement becoming effective and irrevocable by the 35th day following a Qualifying Involuntary Termination provided that the general release agreement is timely delivered to you by the Company. If the release does not become effective within 35 days, no Severance Benefits shall be made under this Retention Agreement.

3.    Qualifying Involuntary Termination. You will have experienced a “Qualifying Involuntary Termination” if the Company terminates your employment without Cause (as defined in the Change of Control Agreement) during the Transition Period or you elect to terminate your employment with the Company for Good Reason beginning as of the appointment of a new permanent Chief Executive Officer and ending on the last day of the Transition Period. Good Reason for purposes of this Retention Agreement shall have the same meaning as “Good Reason” under the Change of Control Agreement except that: (i) “material breach of this Agreement by the Company” shall mean this Retention Agreement and not the Change of Control Agreement; and (ii) no event shall constitute Good Reason unless you provide the Company with written notice of your intention to resign (the “Notice”) within 30 days after such event, you provide the Company a reasonable opportunity to cure such event and your employment with the Company actually ends in a resignation within 30 days after the date you provided such notice. For purposes of this Retention Agreement, you will also be deemed to have experienced a Qualifying Involuntary Termination during the Transition Period if either of the following apply: (i) you receive written notice from the Company during the Transition Period that your employment will be terminated without Cause after the Transition Period and your employment with the Company actually ends in a termination without Cause within 30 days following your receipt of that notice; or (ii) an event constituting Good Reason occurs during the Transition Period. Under no circumstances shall a termination of employment due to death or disability be considered a termination of your employment by the Company without Cause. In the event that the Company discovers conduct, non-action or other evidence that constituted grounds to terminate your employment for Cause, the Company shall have the right to treat your termination of employment as not being a Qualifying Involuntary Termination and recover previously paid Severance Benefits.

4.    Relation to Other Plans, Agreements and Arrangements. This Retention Agreement forms the entire agreement between the parties hereto with respect to the subject matter contained in this Retention Agreement and, except as otherwise provided herein, shall supersede all prior agreements, promises and representations regarding the payments or any other matter set forth in this Retention Agreement. For the avoidance of doubt, no Severance Benefits shall be payable under this Retention Agreement if amounts triggered due to employment termination are triggered under the Change of Control Agreement.

5.    Amendment; Waiver. The provisions of this Retention Agreement may be amended or waived only by a written agreement executed and delivered by the Chair of the Company’s Compensation Committee and you. A waiver of any term, covenant or condition contained in this Retention Agreement or the release shall not be deemed a waiver of any other term, covenant or condition, and any waiver of any default in any such term, covenant or condition shall not be deemed a waiver of any later default thereof.

6.    Taxes. The Severance Benefits are intended to be exempt from Section 409A of the Internal Revenue Code either as a short-term deferral or under the involuntary separation pay safe harbor. Each payment and benefit payable hereunder is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2). Payments and benefits under this Retention Agreement are subject to applicable tax withholding and CIRCOR may withhold without additional consent by you or otherwise require you to pay to CIRCOR the amount of any taxes that CIRCOR may be required to withhold before delivering payment of Severance Benefits to you.

7.    Miscellaneous. Nothing in this Retention Agreement shall be construed as changing your status as an employee-at-will of the Company during the Transition Period, and subject to the obligations of the Company set forth above, nothing in this Retention Agreement shall alter the rights of the Company to terminate your employment at any time for any reason or for no stated reason or your right to resign your employment with the Company for any reason or no stated reason. Nothing in this Retention Agreement shall be construed as resulting in an actual or constructive termination of your employment at the end of the Transition Period, and any continuation of your employment with the Company after the Transition Period will be at-will and be subject to plans and programs of the Company then in effect and any agreement to which you and the Company are then parties. This Retention Agreement shall be governed by the laws of the Commonwealth of Massachusetts.

Please indicate your understanding and agreement with the above by signing the attached copy of this Retention Agreement and returning it to the Company, attention of the undersigned.

CIRCOR International, Inc

By: ________________________

Its: ________________________

ACCEPTED AND AGREED:

_____________________________

Date:

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott A. Buckhout, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CIRCOR International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 1, 2013	Signature:	/s/ Scott A. Buckhout
		Scott A. Buckhout
		President and Chief Executive Officer

EX-31.2

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Fredric M. Burditt, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CIRCOR International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 1, 2013	Signature:	/s/ Frederic M. Burditt
		Frederic M. Burditt
		Vice President, Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned officers, who are the Chief Executive Officer and Chief Financial Officer of CIRCOR International, Inc. (the “Company”), each hereby certifies to the best of his knowledge, that the Company’s quarterly report on Form 10-Q to which this certification is attached (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Scott A. Buckhout	/s/ Frederic M. Burditt
Scott A. Buckhout	Frederic M. Burditt
President and Chief Executive Officer	Vice President, Chief Financial Officer
Principal Executive Officer	Principal Financial Officer
August 1, 2013	August 1, 2013

XML

Defined Pension Benefit Plans

6 Months Ended

Jun. 30, 2013

General Discussion of Pension and Other Postretirement Benefits [Abstract]

Defined Pension Benefit Plans

Defined Pension Benefit Plans

We maintain two pension benefit plans, a qualified noncontributory defined benefit plan and a nonqualified, noncontributory defined benefit supplemental plan that provides benefits to certain retired highly compensated officers and employees. To date, the supplemental plan remains an unfunded plan. These plans include significant pension benefit obligations which are calculated based on actuarial valuations. Key assumptions are made in determining these obligations and related expenses, including expected rates of return on plan assets and discount rates. Benefits are based primarily on years of service and employees’ compensation.

As of July 1, 2006, in connection with a revision to our retirement plan, we froze the pension benefits of our qualified noncontributory plan participants. Under the revised plan, such participants generally do not accrue any additional benefits under the defined benefit plan after July 1, 2006.

During the three and six months ended June 30, 2013, we made cash contributions of $0.4 million and $0.8 million, respectively to our qualified defined benefit pension plan. Additionally, substantially all of our U.S. employees are eligible to participate in a 401(k) savings plan. Under this plan, we make a core contribution and match a specified percentage of employee contributions, subject to certain limitations.

The components of net pension benefit expense are as follows (In thousands):

	Three Months Ended						Six Months Ended
	June 30, 2013			July 1, 2012			June 30, 2013			July 1, 2012
Service cost-benefits earned	$	—		$	52		$	—		$	105
Interest cost on benefits obligation	491			513			982			1,027
Estimated return on assets	(591		)	(531		)	(1,182		)	(1,063		)
Prior service cost amortization	—			—			—			—
Loss amortization	189			158			378			316
Net periodic cost of defined pension benefit plans	$	89		$	192		$	178		$	385

XML

Consolidated Statements Of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jul. 01, 2012	Jun. 30, 2013	Jul. 01, 2012
Net revenues	$ 223,644	$ 219,862	$ 429,042	$ 434,142
Cost of revenues	153,538	156,046	299,086	311,714
GROSS PROFIT	70,106	63,816	129,956	122,428
Selling, general and administrative expenses	47,596	45,337	93,168	90,249
Special charges	2,254	0	3,632	0
OPERATING INCOME	20,256	18,479	33,156	32,179
Other (income) expense:
Interest income	(79)	(78)	(122)	(161)
Interest expense	917	1,095	1,747	2,259
Other, net	626	184	1,239	322
TOTAL OTHER EXPENSE	1,464	1,201	2,864	2,420
INCOME BEFORE INCOME TAXES	18,792	17,278	30,292	29,759
Provision for income taxes	6,124	6,142	9,715	10,038
NET INCOME	$ 12,668	$ 11,136	$ 20,577	$ 19,721
Earnings per common share:
Basic	$ 0.72	$ 0.64	$ 1.17	$ 1.14
Diluted	$ 0.72	$ 0.64	$ 1.17	$ 1.13
Weighted average number of common shares outstanding:
Basic	17,565	17,422	17,539	17,369
Diluted	17,607	17,451	17,569	17,421
Dividends paid per common share	$ 0.0375	$ 0.0375	$ 0.075	$ 0.075

XML

Inventories

6 Months Ended

Jun. 30, 2013

Inventory, Net [Abstract]

Inventories

Inventories

Inventories consist of the following (In thousands):

	June 30, 2013		December 31, 2012
Raw materials	$	57,073	$	63,104
Work in process	96,404		86,564
Finished goods	46,287		48,337
	$	199,764	$	198,005

XML

Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Schedule Of Forward Contracts With Contract Values

As of June 30, 2013, we had nineteen forward contracts with total values as follows (in thousands):

Currency	Number	Contract Amount	Currency
Canadian Dollar/Euro	2	2,755	Canadian Dollars
U.S. Dollar/Euro	8	17,942	U.S. Dollars
Brazilian Real/Euro	9	0	Brazilian Reals

XML

Income Taxes

6 Months Ended

Jun. 30, 2013

Income Tax Expense (Benefit) [Abstract]

Income Taxes

Income Taxes

As required by the Income Tax Topic of the ASC, at June 30, 2013 and at December 31, 2012, we had $2.1 million and $2.0 million of unrecognized tax benefits, respectively, of which $1.3 million and $1.1 million, respectively, would affect our effective tax rate if recognized in any future period.

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of June 30, 2013, we had approximately $1.0 million of accrued interest related to uncertain tax positions.

The Company files income tax returns in the U.S. federal jurisdiction and in various state, local and foreign jurisdictions. The Company is no longer subject to examination by the Internal Revenue Service for years prior to 2009 and is no longer subject to examination by the tax authorities in foreign and state jurisdictions prior to 2006. The Company is under examination for income tax filings in various state and foreign jurisdictions.

For 2013, we expect an effective income tax rate of approximately 29.0%. Our future effective tax rates could be adversely affected by earnings being lower than anticipated in countries where we have lower statutory rates and vice versa. Changes in the valuation of our deferred tax assets or liabilities, or changes in tax laws or interpretations thereof may also adversely affect our future effective tax rate. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

The Company has a net domestic deferred income tax asset and a net foreign deferred tax asset. With regard to deferred income tax assets, we maintained a total valuation allowance of $15.0 million at June 30, 2013 and $13.5 million at December 31, 2012 due to uncertainties related to our ability to utilize certain of these assets, primarily consisting of certain foreign tax credits, foreign and state net operating losses and state tax credits carried forward. The valuation allowance is based on estimates of taxable income in each of the jurisdictions in which we operate and the period over which our deferred tax assets will be recoverable. If market conditions improve and future results of operations exceed our current expectations, our existing tax valuation allowances may be adjusted, resulting in future tax benefits. Alternatively, if market conditions deteriorate or future results of operations are less than expected, future assessments may result in a determination that some or all of the deferred tax assets are not realizable. Consequently, we may need to establish additional tax valuation allowances for all or a portion of the gross deferred tax assets, which may have a material adverse effect on our business, results of operations and financial condition. The Company has had a history of domestic and foreign taxable income, is able to avail itself of federal tax carryback provisions, has future taxable temporary differences and projects future domestic and foreign taxable income. We believe that after considering all of the available objective evidence, it is more likely than not that the results of future operations will generate sufficient taxable income to realize the remaining deferred tax assets.

XML

Financial Instruments (Narrative) (Details) (USD $)			6 Months Ended
	Jun. 30, 2013 Forward_Contracts	Dec. 31, 2012 Forward_Contracts	Jun. 30, 2013 Maximum [Member]	Jul. 01, 2012 Maximum [Member]
Derivative [Line Items]
Number of forward contracts	19	12
Fair value liability of derivative forward contracts	$ (500,000)
Fair value asset of derivative forward contracts		500,000
Foreign Currency Transaction Gain (Loss), Unrealized			$ 1,000,000	$ 500,000

XML

Defined Pension Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2013

General Discussion of Pension and Other Postretirement Benefits [Abstract]

Components Of Net Pension Benefit Expense

The components of net pension benefit expense are as follows (In thousands):

	Three Months Ended						Six Months Ended
	June 30, 2013			July 1, 2012			June 30, 2013			July 1, 2012
Service cost-benefits earned	$	—		$	52		$	—		$	105
Interest cost on benefits obligation	491			513			982			1,027
Estimated return on assets	(591		)	(531		)	(1,182		)	(1,063		)
Prior service cost amortization	—			—			—			—
Loss amortization	189			158			378			316
Net periodic cost of defined pension benefit plans	$	89		$	192		$	178		$	385

XML

Contingencies And Commitments (Tables)

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Standby Letters Of Credit Instruments

The following table contains information related to standby letters of credit instruments outstanding as of June 30, 2013 (In thousands):

Term Remaining	Maximum Potential Future  Payments
0–12 months	$	43,682
Greater than 12 months	8,714
Total	$	52,396

XML

Special Charges (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Jun. 30, 2013
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	$ 2,254	$ 3,632
Restructuring and Related Cost, Cost Incurred to Date			6,180
Restructuring Reserve [Roll Forward]
Restructuring Reserve Beginning of Period	71	800
Restructuring Reserve, Settled with Cash	1,733	3,840
Restructuring Reserve End of Period	592	592	592
Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	1,757	2,676
Restructuring and Related Cost, Cost Incurred to Date			4,424
Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	497	956
Restructuring and Related Cost, Cost Incurred to Date			1,756
Energy Segment [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	747	1,112
Restructuring and Related Cost, Cost Incurred to Date			2,919
Energy Segment [Member] | Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	455	811
Energy Segment [Member] | Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	292	301
Aerospace [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	1,485	2,411
Restructuring and Related Cost, Cost Incurred to Date			2,908
Aerospace [Member] | Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	1,299	1,838
Aerospace [Member] | Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	186	573
Flow Technologies [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	22	109
Restructuring and Related Cost, Cost Incurred to Date			353
Flow Technologies [Member] | Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	3	27
Flow Technologies [Member] | Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	19	82
Employee Severance [Member] | Energy Segment [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Cost Incurred to Date			806
Employee Severance [Member] | Aerospace [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Cost Incurred to Date			759
Employee Severance [Member] | Flow Technologies [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Cost Incurred to Date			191
Facility Closing [Member] | Energy Segment [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Cost Incurred to Date			2,113
Facility Closing [Member] | Aerospace [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Cost Incurred to Date			2,149
Facility Closing [Member] | Flow Technologies [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Cost Incurred to Date			$ 162

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Goodwill And Intangible Assets (Gross Intangible Assets And Related Accumulated Amortization) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Intangible Assets [Line Items]
Gross Carrying Amount	$ 70,681
Accumulated Amortization	(28,245)
Net carrying value of intangible assets	42,436
Patents [Member]
Intangible Assets [Line Items]
Gross Carrying Amount	6,075
Accumulated Amortization	(5,656)
Non-amortized intangibles (primarily trademarks and trade names) [Member]
Intangible Assets [Line Items]
Accumulated Amortization
Non-amortized intangibles	23,093
Customer relationships [Member]
Intangible Assets [Line Items]
Gross Carrying Amount	33,186
Accumulated Amortization	(17,098)
Backlog [Member]
Intangible Assets [Line Items]
Gross Carrying Amount	1,074
Accumulated Amortization	(1,074)
Other [Member]
Intangible Assets [Line Items]
Gross Carrying Amount	7,253
Accumulated Amortization	$ (4,417)

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Guarantees And Indemnification Obligations (Product Warranty Reserves) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Balance beginning December 31, 2012	$ 3,322
Provisions	1,979
Claims settled	(1,262)
Currency translation adjustments	(30)
Balance ending June 30, 2013	4,009
Liability for indemnification agreements	$ 0

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Share-Based Compensation CEO Inducement Stock Award (Details) (USD $)	6 Months Ended
	Jun. 30, 2013
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Deferred Compensation Arrangement with Individual, Shares Authorized for Issuance	3,000,000
Stock Options [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Deferred Compensation Arrangement with Individual, Shares Authorized for Issuance	200,000
Exercise Price of CEO Stock Option Inducement Award	$ 41.17
Award Forfeit Period	5 years
CEO Inducement Award Max Term	10 years
Expected Term	5 years 6 months
Risk-free interest rate	1.20%
Expected stock volatility	41.20%
Grant Date Fair Value (in usd per share)	$ 14.46
Award Vesting Period	60 days
Stock Options [Member] | $50.00 [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Stock Price Target	$ 50.00
Cumulative Vested portion of stock options (in shares)	50,000
Stock Options [Member] | $60.00 [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Stock Price Target	$ 60.00
Cumulative Vested portion of stock options (in shares)	100,000
Stock Options [Member] | $70.00 [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Stock Price Target	$ 70.00
Cumulative Vested portion of stock options (in shares)	150,000
Stock Options [Member] | $80.00 [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Stock Price Target	$ 80.00
Cumulative Vested portion of stock options (in shares)	200,000
Vesting Year 1 [Member] | Stock Options [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Award Vesting Percentage	25.00%
Vesting Year 2 [Member] | Stock Options [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Award Vesting Percentage	50.00%
Vesting Year 3 [Member] | Stock Options [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Award Vesting Percentage	100.00%

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Defined Pension Benefit Plans (Narrative) (Details) (Qualified Plan [Member], USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013
Qualified Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Cash contributions to defined benefit pension plan	$ 0.4	$ 0.8

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Guarantees And Indemnification Obligations (Tables)

6 Months Ended

Jun. 30, 2013

Guarantees And Indemnification Obligations [Abstract]

Product Warranty Reserves

The following table sets forth information related to our product warranty reserves for the six months ended June 30, 2013 (In thousands):

Balance beginning December 31, 2012	$	3,322
Provisions	1,979
Claims settled	(1,262		)
Currency translation adjustment	(30		)
Balance ending June 30, 2013	$	4,009

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Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jul. 01, 2012
OPERATING ACTIVITIES
Net income	$ 20,577	$ 19,721
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	8,035	7,833
Amortization	1,509	1,887
Provision Bankruptcy Settlement	0	(1,000)
Compensation expense of share-based plans	2,156	2,317
Tax effect of share-based compensation	(422)	499
Gain (Loss) on property, plant and equipment	(129)	133
Changes in operating assets and liabilities, net of effects from business acquisitions:
Trade accounts receivable	(9,406)	(6,312)
Inventories	(4,059)	(5,340)
Prepaid expenses and other assets	(2,412)	(1,408)
Accounts payable, accrued expenses and other liabilities	3,583	(9,559)
Net cash provided by (used in) operating activities	19,432	8,771
INVESTING ACTIVITIES
Additions to property, plant and equipment	(8,808)	(10,783)
Proceeds from the sale of property, plant and equipment	314	31
Net cash used in investing activities	(8,494)	(10,752)
FINANCING ACTIVITIES
Proceeds from long-term debt	74,255	108,943
Payments of long-term debt	(84,679)	(117,944)
Dividends paid	(1,340)	(1,331)
Proceeds from the exercise of stock options	1,498	94
Tax effect of share-based compensation	422	(499)
Net cash used in financing activities	(9,844)	(10,737)
Effect of exchange rate changes on cash and cash equivalents	(2,002)	(723)
DECREASE IN CASH AND CASH EQUIVALENTS	(907)	(13,441)
Cash and cash equivalents at beginning of period	61,738	54,855
CASH AND CASH EQUIVALENTS AT END OF PERIOD	60,831	41,414
Supplemental Cash Flow Information:
Income taxes	3,464	9,673
Interest	$ 1,054	$ 1,842

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Summary Of Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Summary Of Significant Accounting Policies

Summary of Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three and six months ended June 30, 2013 are consistent with those discussed in Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2012.

In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("AOCI"). The new ASU requires entities to disclose in a single location (either on the face of the financial statement that reports net income or in the notes) the effects of reclassifications out of accumulated other comprehensive income. For items reclassified out of AOCI in their entirety into net income, entities must disclose the effect of the reclassification on each affected net income item. For AOCI reclassification items that are not reclassified in their entirety into net income, entities must provide a cross reference to other required U.S. GAAP disclosures. The new disclosure requirements are effective for annual reporting after December 15, 2012, and interim periods within those years. No reclassifications out of AOCI were made by the Company for the three and six months ended June 30, 2013 or the three and six months ended July 1, 2012 and therefore no additional AOCI disclosure is presented in our Quarterly Report on Form 10-Q.

There were no additional new accounting pronouncements adopted during the six months ended June 30, 2013 that had a material impact on our financial statements.

Subsequent events - Early in the third quarter of 2012 we commenced arbitration proceedings against the individuals from whom we purchased SF Valves in Brazil for breaches of certain representations and warranties made in the Stock Purchase Agreement dated February 4, 2011. On July 12, 2013 we reached a settlement on the SF Valves arbitration and have received a refund of a portion of the purchase price which will result in a gain of approximately $3.1 million during the third quarter of 2013.

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Goodwill And Intangible Assets

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill And Intangible Assets

Goodwill and Intangible Assets

The following table shows goodwill, by segment, as of June 30, 2013 (In thousands):

	Energy			Aerospace			Flow Technologies			Consolidated Total
Goodwill as of December 31, 2012	$	51,526		$	22,121		$	3,781		$	77,428
Currency translation adjustments	(1,691		)	(23		)	(223		)	(1,937		)
Goodwill as of June 30, 2013	$	49,835		$	22,098		$	3,558		$	75,491

The table below presents gross intangible assets and the related accumulated amortization as of June 30, 2013 (In thousands):

	Gross Carrying Amount		Accumulated Amortization
Patents	$	6,075	$	(5,656	)
Non-amortized intangibles (primarily trademarks and trade names)	23,093
Customer relationships	33,186		(17,098		)
Backlog	1,074		(1,074		)
Other	7,253		(4,417		)
Total	$	70,681	$	(28,245	)
Net carrying value of intangible assets	42,436

The table below presents estimated remaining amortization expense for intangible assets recorded as of June 30, 2013 (In thousands):

	2013		2014		2015		2016		2017		After 2017
Estimated amortization expense	$	1,506	$	2,980	$	2,958	$	2,676	$	2,541	$	6,683

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Share-Based Compensation

6 Months Ended

Jun. 30, 2013

Share-based Compensation [Abstract]

Share-Based Compensation

Share-Based Compensation

As of June 30, 2013, we have one share-based compensation plan. The Amended and Restated 1999 Stock Option and Incentive Plan (the “1999 Stock Plan”), which was adopted by our Board of Directors and approved by our shareholders, permits the granting of the following types of awards to our officers, other employees and non-employee directors: incentive stock options; non-qualified stock options; deferred stock awards; restricted stock awards; unrestricted stock awards; performance share awards; cash-based awards; stock appreciation rights and dividend equivalent rights. The 1999 Stock Plan provides for the issuance of up to 3,000,000 shares of common stock (subject to adjustment for stock splits and similar events). New options granted under the 1999 Stock Plan could have varying vesting provisions and exercise periods. Options granted vest in periods ranging from one year to five years and expire ten years after the grant date. Restricted stock units granted generally vest from three years to six years. Vested restricted stock units will be settled in shares of our common stock. As of June 30, 2013, there were 291,724 stock options (including the April 9, 2013 CEO stock option award noted below) and 297,606 restricted stock units outstanding. In addition, there were 377,844 shares available for grant under the 1999 Stock Plan as of June 30, 2013. As of June 30, 2013, there were no outstanding restricted stock units that contain rights to nonforfeitable dividend equivalents and are considered participating securities that are included in our computation of basic and fully diluted earnings per share. There is no difference in the earnings per share amounts between the two class method and the treasury stock method, which is why we continue to use the treasury stock method.

For all stock options granted prior to 2013, the fair value of each grant was estimated at the date of grant using the Black-Scholes option pricing model. Black-Scholes utilizes assumptions related to volatility, the risk-free interest rate, the dividend yield and employee exercise behavior. Expected volatilities utilized in the model are based on the historic volatility of the Company’s stock price. The risk free interest rate is derived from the U.S. Treasury Yield curve in effect at the time of the grant.

On April 9, 2013, the Company granted stock options to purchase 200,000 shares of common stock to its newly appointed President and Chief Executive Officer, Scott A. Buckhout, at an exercise price of $41.17 per share. This option award was not granted under the Company's 1999 Stock Plan and includes both a service period and a market vesting condition. The stock options will vest if the following stock price targets are met based on the stock price closing at or above these targets for 60 consecutive trading days:

Stock Price Target	Cumulative Vested portion of stock options (in shares)
$50.00	50,000
$60.00	100,000
$70.00	150,000
$80.00	200,000

Vested options may be exercised 25% at the time of vesting, 50% one year from the date of vesting and 100% two years from the date of vesting. This stock option award will be expensed utilizing a graded method, is subject to forfeiture in the event of employment termination (whether voluntary or involuntary) prior to vesting. To the extent that the market conditions above (stock price targets) are not met, the option will not vest and will forfeit 5 years from grant date. The Company used a Monte Carlo simulation option pricing model to value this option award with the following assumptions: 10 year term, expected life of 5.5 years, risk-free rate of 1.2%, expected volatility of 41.2%, and fair value of $14.46 per share at grant date. No other options were granted during the first six months of 2013.

We account for Restricted Stock Unit (“RSU”) Awards by expensing the weighted average fair value to selling, general and administrative expenses ratably over vesting periods generally ranging from three years to six years. During the six months ended June 30, 2013 and July 1, 2012, we granted 130,845 and 126,552 RSU Awards with approximate fair values of $41.96 and $33.53 per RSU Award, respectively.

The CIRCOR Management Stock Purchase Plan, which is a component of the 1999 Stock Plan, provides that eligible employees may elect to receive restricted stock units in lieu of all or a portion of their pre-tax annual incentive bonus and, in some cases, make after-tax contributions in exchange for restricted stock units (“RSU MSPs”). In addition, non-employee directors may elect to receive restricted stock units in lieu of all or a portion of their annual directors’ fees. Each RSU MSP represents a right to receive one share of our common stock after a three year vesting period. RSU MSPs are granted at a discount of 33% from the fair market value of the shares of our common stock on the date of grant. This discount is amortized as compensation expense, to selling, general and administrative expenses, over a four year period. A total of 28,463 and 34,534 RSUs with per unit discount amounts representing fair values of $13.90 and $10.81 were granted under the CIRCOR Management Stock Purchase Plan during the six months ended June 30, 2013 and July 1, 2012, respectively.

Compensation expense related to our share-based plans for the six month periods ended June 30, 2013, and July 1, 2012 was $2.3 million and $2.2 million, respectively, and was recorded as selling, general and administrative expense. As of June 30, 2013, there was $11.0 million of total unrecognized compensation costs related to our outstanding share-based compensation arrangements (inclusive of the April 9, 2013 CEO option award). That cost is expected to be recognized over a weighted average period of 2.5 years.

The weighted average contractual term for stock options outstanding and options exercisable as of June 30, 2013 was 9.0 years and 6.0 years, respectively. The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2013 was $0.8 million and the aggregate intrinsic value of stock options outstanding and options exercisable as of June 30, 2013 was $3.6 million and $0.8 million, respectively.

The aggregate intrinsic value of RSU Awards settled during the six months ended June 30, 2013 was $3.4 million and the aggregate intrinsic value of RSU Awards outstanding and RSU Awards vested and deferred as of June 30, 2013 was $11.4 million and $0.0 million, respectively.

The aggregate intrinsic value of RSU MSPs settled during the six months ended June 30, 2013 was $0.6 million and the aggregate intrinsic value of RSU MSPs outstanding and RSU MSPs vested and deferred as of June 30, 2013 was $1.9 million and $0.0 million respectively.

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Contingencies And Commitments (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Contingencies, Commitments And Guarantees [Line Items]
Aggregate notional value standby letters of credit	$ 52,396
Minimum [Member]
Contingencies, Commitments And Guarantees [Line Items]
Expiration period, minimum in months and maximum in years	1 month
Maximum [Member]
Contingencies, Commitments And Guarantees [Line Items]
Expiration period, minimum in months and maximum in years	5 years

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Special Charges (Tables)

6 Months Ended

Jun. 30, 2013

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Related Costs [Table Text Block]

	As of and for the three months ended June 30, 2013
	Energy		Aerospace		Flow Technologies		Total
Accrued special charges as of March 31, 2013							$	71
Facility and professional fee related expenses	$	455	$	1,299	$	3	1,757
Employee-related expenses	292		186		19		497
Total special charges	$	747	$	1,485	$	22	2,254
Special charges paid							1,733
Accrued special charges as of June 30, 2013							$	592
	As of and for the six months ended June 30, 2013
	Energy		Aerospace		Flow Technologies		Total
Accrued special charges as of December 31, 2012							$	800
Facility and professional fee related expenses	$	811	$	1,838	$	27	$	2,676
Employee-related expenses	$	301	$	573	$	82	$	956
Total special charges	$	1,112	$	2,411	$	109	3,632
Special charges paid							3,840
Accrued special charges as of June 30, 2013							$	592

	2012 Announced Restructurings Incurred as of June 30, 2013
	Energy		Aerospace		Flow Technologies		Total
Facility and professional fee related expenses - incurred to date	$	2,113	$	2,149	$	162	$	4,424
Employee-related expenses - incurred to date	$	806	$	759	$	191	$	1,756
Total special charges - incurred to date	$	2,919	$	2,908	$	353	$	6,180

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Inventories (Components Of Inventory) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Inventory, Net [Abstract]
Raw materials	$ 57,073	$ 63,104
Work in process	96,404	86,564
Finished goods	46,287	48,337
Inventories	$ 199,764	$ 198,005

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Earnings Per Common Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jul. 01, 2012	Jun. 30, 2013	Jul. 01, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Net income	$ 12,668	$ 11,136	$ 20,577	$ 19,721
Basic Earnings Per Common Share (EPS), Shares	17,565,000	17,422,000	17,539,000	17,369,000
Basic EPS, Per Share Amount	$ 0.72	$ 0.64	$ 1.17	$ 1.14
Dilutive securities, common stock options, Shares	42,000	29,000	30,000	52,000
Dilutive securities, common stock options, Per Share Amount	$ 0.00	$ 0.00	$ 0.00	$ (0.01)
Diluted EPS, Shares	17,607,000	17,451,000	17,569,000	17,421,000
Diluted EPS, Per Share Amount	$ 0.72	$ 0.64	$ 1.17	$ 1.13
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive options and RSUs, shares			209,319
RSU Awards [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive options and RSUs, shares				430,860

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Income Taxes (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Income Tax Contingency [Line Items]
Deferred Tax Assets, Valuation Allowance	$ 15,042,000	$ 13,500,000
Unrecognized tax benefits that would impact effective tax rate	2,100,000	2,000,000
Unrecognized tax benefits that would affect the effective tax rate if recognized	1,300,000	1,100,000
Accrued interest related to uncertain tax positions	$ 1,000,000

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Trade accounts receivable, allowance for doubtful accounts	$ 1,683	$ 1,706
Preferred stock, par value	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	1,000,000	1,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common Stock, Shares Authorized	29,000,000	29,000,000
Common Stock, Shares, Issued	17,575,362	17,445,687
Common Stock, Shares, Outstanding	17,575,362	17,445,687

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Financial Instruments

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Financial Instruments

Financial Instruments

Fair Value

The carrying amounts of cash and cash equivalents, trade receivables and trade payables approximate fair value because of the short maturity of these financial instruments. Short-term investments (principally guaranteed investment certificates) are carried at cost which approximates fair value at the balance sheet date. The fair value of our variable rate debt approximates its carrying amount.

Foreign Currency Exchange Risk

The Company is exposed to certain risks relating to its ongoing business operations including foreign currency exchange rate risk and interest rate risk. The Company currently uses derivative instruments to manage foreign currency risk on certain business transactions denominated in foreign currencies. To the extent the underlying transactions hedged are completed, these forward contracts do not subject us to significant risk from exchange rate movements because they offset gains and losses on the related foreign currency denominated transactions. These forward contracts do not qualify as hedging instruments and, therefore, do not qualify for fair value or cash flow hedge treatment. Any unrealized gains and losses on our contracts are recognized as a component of other expense in our consolidated statements of income.

As of June 30, 2013, we had nineteen forward contracts with total values as follows (in thousands):

Currency	Number	Contract Amount	Currency
Canadian Dollar/Euro	2	2,755	Canadian Dollars
U.S. Dollar/Euro	8	17,942	U.S. Dollars
Brazilian Real/Euro	9	0	Brazilian Reals

This compares to twelve forward contracts as of December 31, 2012. The fair value liability of the derivative forward contracts as of June 30, 2013 was approximately $0.5 million and was included in accrued expenses and other current liabilities on our balance sheet. This compares to a fair value asset of approximately $0.5 million that was included in prepaid expenses and other current assets on our balance sheet as of December 31, 2012. The unrealized foreign exchange gain (loss) for the six month periods ended June 30, 2013 and July 1, 2012 was less than $1.0 million and $0.5 million, respectively. Unrealized foreign exchange gains (losses) are included in other (income) expense in our consolidated statements of income.

We have determined that the majority of the inputs used to value our foreign currency forward contracts fall within Level 2 of the fair value hierarchy, found under Accounting Standards Codification (“ASC”) Topic 820. The credit valuation adjustments, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties are Level 3 inputs. However, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our foreign currency forward contracts and determined that the credit valuation adjustments are not significant to the overall valuation. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

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Statements Of Consolidated Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jul. 01, 2012	Jun. 30, 2013	Jul. 01, 2012
Statement of Other Comprehensive Income [Abstract]
Net income	$ 12,668	$ 11,136	$ 20,577	$ 19,721
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	112	(12,548)	(8,531)	(6,867)
Other comprehensive income (loss)	112	(12,548)	(8,531)	(6,867)
COMPREHENSIVE INCOME (LOSS)	$ 12,780	$ (1,412)	$ 12,046	$ 12,854

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
ASSETS
Cash and cash equivalents	$ 60,831	$ 61,738
Short-term Investments	96	101
Trade accounts receivable, less allowance for doubtful accounts of $1,914 and $1,706, respectively	158,286	150,825
Inventories	199,764	198,005
Prepaid expenses and other current assets	17,661	16,510
Deferred income tax asset	15,431	15,505
Income Taxes Receivable, Current	2,171	0
Assets held for sale	542	542
Total Current Assets	454,782	443,226
PROPERTY, PLANT AND EQUIPMENT, NET	104,477	105,903
OTHER ASSETS:
Goodwill	75,491	77,428
Intangibles, net	42,436	45,157
Deferred income tax asset	25,283	30,064
Other assets	6,957	8,203
TOTAL ASSETS	709,426	709,981
CURRENT LIABILITIES:
Accounts payable	84,245	80,361
Accrued expenses and other current liabilities	59,240	67,235
Accrued compensation and benefits	25,596	26,540
Income taxes payable	3,996	393
Notes payable and current portion of long-term debt	7,206	7,755
Total Current Liabilities	180,283	182,284
LONG-TERM DEBT, NET OF CURRENT PORTION	52,345	62,729
DEFERRED INCOME TAXES	9,797	10,744
OTHER NON-CURRENT LIABILITIES	34,850	35,977
SHAREHOLDERS’ EQUITY:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued and outstanding	0	0
Common stock, $0.01 par value; 29,000,000 shares authorized; 17,575,362 and 17,445,687 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively	176	174
Additional paid-in capital	265,940	262,744
Retained earnings	177,748	158,509
Accumulated other comprehensive loss, net of taxes	(11,713)	(3,180)
Total Shareholders' Equity	432,151	418,247
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 709,426	$ 709,981

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Summary Of Significant Accounting Policies SF Litigation Settlement (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended
	Jul. 12, 2013
Subsequent Events [Abstract]
Subsequent Event, Amount	$ 3.1

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Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Schedule Of Earnings Per Share, Basic And Diluted

	Three Months Ended
	June 30, 2013					July 1, 2012
	Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount
Basic Earnings Per Common Share ("EPS")	$	12,668	17,565	$	0.72	$	11,136	17,422	$	0.64
Dilutive securities, common stock options	—		42	0.00		—		29	0.00
Diluted EPS	$	12,668	17,607	$	0.72	$	11,136	17,451	$	0.64
	Six Months Ended
	June 30, 2013					July 1, 2012
	Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount
Basic EPS	$	20,577	17,539	$	1.17	$	19,721	17,369	$	1.14
Dilutive securities, common stock options	—		30	0.00		—		52	(0.01		)
Diluted EPS	$	20,577	17,569	$	1.17	$	19,721	17,421	$	1.13

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Defined Pension Benefit Plans (Components Of Net Pension Benefit Expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jul. 01, 2012	Jun. 30, 2013	Jul. 01, 2012
General Discussion of Pension and Other Postretirement Benefits [Abstract]
Service cost-benefits earned	$ 0	$ 52	$ 0	$ 105
Interest cost on benefits obligation	491	513	982	1,027
Estimated return on assets	(591)	(531)	(1,182)	(1,063)
Prior service cost amortization	0	0	0	0
Loss amortization	189	158	378	316
Net periodic cost of defined benefit plans	$ 89	$ 192	$ 178	$ 385

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Financial Instruments (Schedule Of Forward Contracts With Contract Values) (Details) In Thousands, unless otherwise specified	Jun. 30, 2013 Forward_Contracts	Dec. 31, 2012 Forward_Contracts	Jun. 30, 2013 Canadian Dollar/Euro [Member] CAD Forward_Contracts	Jun. 30, 2013 U S Dollar/ Euro [Member] USD ($) Forward_Contracts	Jun. 30, 2013 Brazilian Real/Euro [Member] BRL Forward_Contracts
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Number	19	12	2	8	9
Contract Amount			2,755	$ 17,942	0

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Goodwill And Intangible Assets (Estimated Remaining Amortization Expense For Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
2013	$ 1,506
2014	2,980
2015	2,958
2016	2,676
2017	2,541
After 2017	$ 6,683

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Segment Information (Reportable Segment Information) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jul. 01, 2012	Jun. 30, 2013	Jul. 01, 2012	Dec. 31, 2012
Segment Reporting Information [Line Items]
Net revenues	$ 223,644	$ 219,862	$ 429,042	$ 434,142
Inter-segment revenues	0	0	0	0
Operating income (loss)	20,256	18,479	33,156	32,179
Interest income	(79)	(78)	(122)	(161)
Interest expense	917	1,095	1,747	2,259
Other income, net	626	184	1,239	322
INCOME BEFORE INCOME TAXES	18,792	17,278	30,292	29,759
Identifiable assets	709,426	712,377	709,426	712,377	709,981
Capital expenditures	4,102	6,661	8,808	10,783
Depreciation and amortization	4,778	4,748	9,544	9,720
Energy [Member]
Segment Reporting Information [Line Items]
Net revenues	110,832	113,527	207,553	222,791
Inter-segment revenues	363	504	727	901
Operating income (loss)	14,477	12,580	24,613	21,508
Identifiable assets	406,956	380,496	406,956	380,496
Capital expenditures	2,227	1,020	4,077	1,750
Depreciation and amortization	1,657	1,845	3,293	3,833
Aerospace [Member]
Segment Reporting Information [Line Items]
Net revenues	38,177	35,896	75,504	73,981
Inter-segment revenues	19	4	24	30
Operating income (loss)	2,073	3,153	2,467	7,277
Identifiable assets	178,681	189,879	178,681	189,879
Capital expenditures	753	695	2,242	1,577
Depreciation and amortization	1,204	1,190	2,421	2,439
Flow Technologies [Member]
Segment Reporting Information [Line Items]
Net revenues	74,635	70,439	145,985	137,370
Inter-segment revenues	170	202	400	394
Operating income (loss)	11,044	9,043	20,001	16,630
Identifiable assets	220,604	192,419	220,604	192,419
Capital expenditures	1,029	3,414	2,301	5,744
Depreciation and amortization	1,557	1,373	3,091	2,804
Corporate/Eliminations [Member]
Segment Reporting Information [Line Items]
Net revenues	0	0	0	0
Inter-segment revenues	(552)	(710)	(1,151)	(1,325)
Operating income (loss)	(7,338)	(6,297)	(13,925)	(13,236)
Identifiable assets	(96,815)	(50,417)	(96,815)	(50,417)
Capital expenditures	93	1,532	188	1,712
Depreciation and amortization	360	340	739	644
Corporate Identifiable Assets After Elimination Of Intercompany Assets [Member]
Segment Reporting Information [Line Items]
Identifiable assets	$ 32,200	$ 35,600	$ 32,200	$ 35,600

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Earnings Per Common Share

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Earnings Per Common Share

Earnings Per Common Share (In thousands, except per share amounts):

	Three Months Ended
	June 30, 2013					July 1, 2012
	Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount
Basic Earnings Per Common Share ("EPS")	$	12,668	17,565	$	0.72	$	11,136	17,422	$	0.64
Dilutive securities, common stock options	—		42	0.00		—		29	0.00
Diluted EPS	$	12,668	17,607	$	0.72	$	11,136	17,451	$	0.64
	Six Months Ended
	June 30, 2013					July 1, 2012
	Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount
Basic EPS	$	20,577	17,539	$	1.17	$	19,721	17,369	$	1.14
Dilutive securities, common stock options	—		30	0.00		—		52	(0.01		)
Diluted EPS	$	20,577	17,569	$	1.17	$	19,721	17,421	$	1.13

There were 209,319 and 430,860 anti-dilutive stock options and RSUs for the six months ended June 30, 2013 and July 1, 2012, respectively.

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Share-Based Compensation (Narrative) (Details) (USD $)	6 Months Ended
	Jun. 30, 2013	Jul. 01, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation shares authorized	3,000,000
RSU outstanding	297,606
Shares available for grant	377,844
Unrecognized compensation costs	$ 11,000,000
Weighted average period of recognition of compensation expense (in years)	2 years 5 months 19 days
Weighted average contractual term for stock options outstanding, years	9 years 6 days
Weighted average contractual term for stock options exercisable, years	6 years 14 days
Selling, General And Administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	2,300,000	2,200,000
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation shares authorized	200,000
Stock options outstanding	291,724
Aggregate intrinsic value of stock options exercised	800,000
Aggregate intrinsic value of stock options outstanding	3,600,000
Aggregate intrinsic value of stock options exercisable	800,000
Vesting Period, (in years)	60 days
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Date Duration	10 years
Stock Options [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Period, (in years)	1 year
Stock Options [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Period, (in years)	5 years
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Rights to nonforfeitable dividend equivalents participating securities	0
Restricted stock units granted	130,845	126,552
Granted RSU awards fair value	$ 41.96	$ 33.53
Aggregate intrinsic value of RSU Awards / RSU MSPs	3,400,000
Aggregate intrinsic value of RSU Awards outstanding	11,400,000
Aggregate intrinsic value of RSU Awards vested and deferred	0
Restricted Stock Units (RSUs) [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Period, (in years)	3 years
Restricted Stock Units (RSUs) [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Period, (in years)	6 years
Restricted Stock Units Management Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units granted	28,463	34,534
Discount rate granted for RSU MSPs	33.00%
ShareBasedCompensationArrangementByShareBasedPaymentAwardDiscountFromMarketPriceAmortizationPeriod	four
Restricted stock units discount amount	$ 13.90	$ 10.81
Aggregate intrinsic value of RSU Awards / RSU MSPs	600,000
Aggregate intrinsic value of RSU Awards outstanding	1,900,000
Aggregate intrinsic value of RSU Awards vested and deferred	$ 0

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Contingencies And Commitments (Standby Letters Of Credit Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Contingencies, Commitments And Guarantees [Line Items]
Total	$ 52,396
0-12 months [Member]
Contingencies, Commitments And Guarantees [Line Items]
Total	43,682
Greater than 12 months [Member]
Contingencies, Commitments And Guarantees [Line Items]
Total	$ 8,714

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Contingencies And Commitments

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Contingencies And Commitments

Contingencies and Commitments

Asbestos-related product liability claims continue to be filed against two of our subsidiaries-Spence Engineering Company, Inc. (“Spence”), the stock of which we acquired in 1984; and Circor Instrumentation Technologies, Inc. (f/k/a Hoke Incorporated) (“Hoke”), the stock of which we acquired in 1998. Due to the nature of the products supplied by these entities, the markets they serve and our historical experience in resolving these claims, we do not believe that these asbestos-related claims will have a material adverse effect on the financial condition, results of operations or liquidity of Spence or Hoke, or the financial condition, consolidated results of operations or liquidity of the Company.

During the third quarter of 2011, we commenced arbitration proceedings against T.M.W. Corporation (“TMW”), the seller from which we acquired the assets of Castle Precision Industries in August 2010, seeking to recover damages from TMW for breaches of certain representations and warranties made by TMW in the Asset Purchase Agreement dated August 3, 2010 relative to such acquisition. We currently are in the discovery phase of this arbitration and expect the actual hearings to occur in the third quarter of 2013 at the earliest.

We are currently involved in various legal claims and legal proceedings, some of which may involve substantial dollar amounts. Periodically, we review the status of each significant matter and assess our potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be estimated, we accrue a liability for the estimated loss. Significant judgment is required in both the determination of probability and the determination as to whether an exposure can be reasonably estimated. Because of uncertainties related to these matters, accruals are based on the best information available at the time. As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates. Such revisions in the estimates of the potential liabilities could have a material adverse effect on our business, results of operations and financial position.

Standby Letters of Credit

We execute standby letters of credit, which include bid bonds and performance bonds, in the normal course of business to ensure our performance or payments to third parties. The aggregate notional value of these instruments was $52.4 million at June 30, 2013. Our historical experience with these types of instruments has been good and no claims have been paid in the current or past five fiscal years. We believe that the likelihood of demand for payments relating to the outstanding instruments is remote. These instruments generally have expiration dates ranging from less than 1 month to 5 years from June 30, 2013.

The following table contains information related to standby letters of credit instruments outstanding as of June 30, 2013 (In thousands):

Term Remaining	Maximum Potential Future  Payments
0–12 months	$	43,682
Greater than 12 months	8,714
Total	$	52,396

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Segment Information

6 Months Ended

Jul. 01, 2012

Segment Reporting [Abstract]

Segment Information

Segment Information

The following table presents certain reportable segment information (In thousands):

	Energy		Aerospace		Flow Technologies		Corporate / Eliminations			Consolidated Total
Three Months Ended June 30, 2013
Net revenues	$	110,832	$	38,177	$	74,635	$	—		$	223,644
Inter-segment revenues	363		19		170		(552		)	—
Operating income (loss)	14,477		2,073		11,044		(7,338		)	20,256
Interest income										(79		)
Interest expense										917
Other expense, net										626
Income before income taxes										$	18,792
Identifiable assets	406,956		178,681		220,604		(96,815		)	709,426
Capital expenditures	2,227		753		1,029		93			4,102
Depreciation and amortization	1,657		1,204		1,557		360			4,778
Three Months Ended July 1, 2012
Net revenues	$	113,527	$	35,896	$	70,439	$	—		$	219,862
Inter-segment revenues	504		4		202		(710		)	—
Operating income (loss)	12,580		3,153		9,043		(6,297		)	18,479
Interest income										(78		)
Interest expense										1,095
Other expense, net										184
Income before income taxes										$	17,278
Identifiable assets	380,496		189,879		192,419		(50,417		)	712,377
Capital expenditures	1,020		695		3,414		1,532			6,661
Depreciation and amortization	1,845		1,190		1,373		340			4,748
Six Months Ended June 30, 2013
Net revenues	$	207,553	$	75,504	$	145,985	$	—		$	429,042
Inter-segment revenues	727		24		400		(1,151		)	—
Operating income (loss)	24,613		2,467		20,001		(13,925		)	33,156
Interest income										(122		)
Interest expense										1,747
Other expense, net										1,239
Income before income taxes										$	30,292
Identifiable assets	406,956		178,681		220,604		(96,815		)	709,426
Capital expenditures	4,077		2,242		2,301		188			8,808
Depreciation and amortization	3,293		2,421		3,091		739			9,544
Six Months Ended July 1, 2012
Net revenues	$	222,791	$	73,981	$	137,370	$	—		$	434,142
Inter-segment revenues	901		30		394		(1,325		)	—
Operating income (loss)	21,508		7,277		16,630		(13,236		)	32,179
Interest income										(161		)
Interest expense										2,259
Other expense, net										322
Income before income taxes										$	29,759
Identifiable assets	380,496		189,879		192,419		(50,417		)	712,377
Capital expenditures	1,750		1,577		5,744		1,712			10,783
Depreciation and amortization	3,833		2,439		2,804		644			9,720

Each reporting segment is individually managed and has separate financial results that are reviewed by our chief operating decision-maker. Each segment contains related products and services particular to that segment. For further discussion of the products included in each segment refer to Note (1) of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012.

In calculating operating income for each reporting segment, substantial administrative expenses incurred at the corporate level for the benefit of other reporting segments were allocated to the segments based upon specific identification of costs, employment related information or net revenues.

Corporate / Eliminations are reported on a net “after allocations” basis. Inter-segment intercompany transactions affecting net operating profit have been eliminated within the respective operating segments.

The operating loss reported in the Corporate / Eliminations column in the preceding table consists primarily of the following corporate expenses: compensation and fringe benefit costs for executive management and other corporate staff; corporate development costs (relating to mergers and acquisitions); human resource development and benefit plan administration expenses; legal, accounting and other professional and consulting fees; facilities, equipment and maintenance costs; and travel and various other administrative costs. The above costs are incurred in the course of furthering the business prospects of the Company and relate to activities such as: implementing strategic business growth opportunities; corporate governance; risk management; treasury; investor relations and shareholder services; regulatory compliance; and stock transfer agent costs.

The total assets for each operating segment have been reported as the Identifiable Assets for that segment, including inter-segment intercompany receivables, payables and investments in other CIRCOR businesses. Identifiable assets reported in Corporate / Eliminations include both corporate assets, such as cash, deferred taxes, prepaid and other assets, fixed assets, as well as the elimination of all inter-segment intercompany assets. The elimination of intercompany assets results in negative amounts reported in Corporate / Eliminations for Identifiable Assets for the periods ended June 30, 2013 and July 1, 2012. Corporate Identifiable Assets after elimination of intercompany assets were $32.2 million and $35.6 million as of June 30, 2013 and July 1, 2012, respectively.

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Basis Of Presentation

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis Of Presentation

Basis of Presentation

The accompanying unaudited, consolidated financial statements have been prepared according to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and, in the opinion of management, reflect all adjustments, which include normal recurring adjustments, necessary for a fair presentation of the consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows of CIRCOR International, Inc. (“CIRCOR”, the “Company”, “us”, “we” or “our”) for the periods presented. We prepare our interim financial information using the same accounting principles as we use for our annual audited financial statements. Certain information and note disclosures normally included in the annual audited financial statements have been condensed or omitted in accordance with prescribed SEC rules. We believe that the disclosures made in our consolidated financial statements and the accompanying notes are adequate to make the information presented not misleading.

The consolidated balance sheet at December 31, 2012 is as reported in our audited financial statements as of that date. Our accounting policies are described in the notes to our December 31, 2012 financial statements, which were included in our Annual Report filed on Form 10-K. We recommend that the financial statements included in our Quarterly Report on Form 10-Q be read in conjunction with the financial statements and notes included in our Annual Report filed on Form 10-K for the year ended December 31, 2012.

We operate and report financial information using a 52-week fiscal year ending December 31. The data periods contained within our Quarterly Reports on Form 10-Q reflect the results of operations for the 13-week, 26-week and 39-week periods which generally end on the Sunday nearest the calendar quarter-end date. Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

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Special Charges Narrative (Details) (USD $)	0 Months Ended	3 Months Ended	6 Months Ended
	Jul. 12, 2013	Jun. 30, 2013	Jun. 30, 2013
Effects on Future Earnings and Cash Flows Resulting from Exit Plan [Line Items]
Subsequent Event, Amount	$ 3,100,000
Restructuring Charges		2,254,000	3,632,000
Energy Segment [Member]
Effects on Future Earnings and Cash Flows Resulting from Exit Plan [Line Items]
Restructuring Charges		747,000	1,112,000
Aerospace [Member]
Effects on Future Earnings and Cash Flows Resulting from Exit Plan [Line Items]
Restructuring Charges		1,485,000	2,411,000
Flow Technologies [Member]
Effects on Future Earnings and Cash Flows Resulting from Exit Plan [Line Items]
Restructuring Charges		22,000	109,000
Minimum [Member]
Effects on Future Earnings and Cash Flows Resulting from Exit Plan [Line Items]
Restructuring and Related Cost, Expected Cost		4,500,000
Restructuring and Related Cost, Expected Cost, Year Two		4,300,000
Minimum [Member] | Energy Segment [Member]
Effects on Future Earnings and Cash Flows Resulting from Exit Plan [Line Items]
Restructuring and Related Cost, Expected Cost		200,000
Minimum [Member] | Aerospace [Member]
Effects on Future Earnings and Cash Flows Resulting from Exit Plan [Line Items]
Restructuring and Related Cost, Expected Cost		1,500,000
Restructuring and Related Cost, Expected Cost, Year Two		300,000
Minimum [Member] | Flow Technologies [Member]
Effects on Future Earnings and Cash Flows Resulting from Exit Plan [Line Items]
Restructuring and Related Cost, Expected Cost		2,800,000
Restructuring and Related Cost, Expected Cost, Year Two		4,000,000
Maximum [Member]
Effects on Future Earnings and Cash Flows Resulting from Exit Plan [Line Items]
Restructuring and Related Cost, Expected Cost		5,000,000
Restructuring and Related Cost, Expected Cost, Year Two		4,700,000
Maximum [Member] | Aerospace [Member]
Effects on Future Earnings and Cash Flows Resulting from Exit Plan [Line Items]
Restructuring and Related Cost, Expected Cost		1,700,000
Restructuring and Related Cost, Expected Cost, Year Two		400,000
Maximum [Member] | Flow Technologies [Member]
Effects on Future Earnings and Cash Flows Resulting from Exit Plan [Line Items]
Restructuring and Related Cost, Expected Cost		3,100,000
Restructuring and Related Cost, Expected Cost, Year Two		$ 4,300,000

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Goodwill And Intangible Assets (Goodwill, By Segment) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Goodwill [Line Items]
Goodwill as of December 31, 2012	$ 77,428
Currency translation adjustments	(1,937)
Goodwill as of June 30, 2013	75,491
Energy [Member]
Goodwill [Line Items]
Goodwill as of December 31, 2012	51,526
Currency translation adjustments	(1,691)
Goodwill as of June 30, 2013	49,835
Aerospace [Member]
Goodwill [Line Items]
Goodwill as of December 31, 2012	22,121
Currency translation adjustments	(23)
Goodwill as of June 30, 2013	22,098
Flow Technologies [Member]
Goodwill [Line Items]
Goodwill as of December 31, 2012	3,781
Currency translation adjustments	(223)
Goodwill as of June 30, 2013	$ 3,558

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Special Charges

6 Months Ended

Jun. 30, 2013

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

Special Charges

During the third quarter of 2012 we announced restructuring actions in the Energy, Aerospace, and Flow Technologies segments ("2012 Announced Restructuring") including actions to consolidate facilities, shift expenses to lower cost regions, and exiting some non-strategic product lines.

During the three and six months ended June 30, 2013 we incurred $2.3 million and $3.6 million , respectively, in special charges associated with these 2012 Announced Restructuring actions in the Energy, Aerospace, and Flow Technologies segments. During the three and six months ended July 1, 2012 we did not record any special charges. The following table summarizes our special charges by expense type and business segment (in thousands):

	As of and for the three months ended June 30, 2013
	Energy		Aerospace		Flow Technologies		Total
Accrued special charges as of March 31, 2013							$	71
Facility and professional fee related expenses	$	455	$	1,299	$	3	1,757
Employee-related expenses	292		186		19		497
Total special charges	$	747	$	1,485	$	22	2,254
Special charges paid							1,733
Accrued special charges as of June 30, 2013							$	592
	As of and for the six months ended June 30, 2013
	Energy		Aerospace		Flow Technologies		Total
Accrued special charges as of December 31, 2012							$	800
Facility and professional fee related expenses	$	811	$	1,838	$	27	$	2,676
Employee-related expenses	$	301	$	573	$	82	$	956
Total special charges	$	1,112	$	2,411	$	109	3,632
Special charges paid							3,840
Accrued special charges as of June 30, 2013							$	592

During the three and six months ended June 30, 2013, facility and professional fee related expenses included lease termination costs, as well as write-downs of fixed assets and other equipment.

The following table summarizes our special charges incurred from the third quarter of 2012 through June 30, 2013.

	2012 Announced Restructurings Incurred as of June 30, 2013
	Energy		Aerospace		Flow Technologies		Total
Facility and professional fee related expenses - incurred to date	$	2,113	$	2,149	$	162	$	4,424
Employee-related expenses - incurred to date	$	806	$	759	$	191	$	1,756
Total special charges - incurred to date	$	2,919	$	2,908	$	353	$	6,180

On August 1, 2013 we announced additional restructuring actions ("2013 Announced Restructuring") associated with our Aerospace and Flow Technologies segments. We expect the costs associated with the 2013 Announced Restructurings will be incurred during the second half of 2013 and the first half of 2014.

We expect to record a special recovery of approximately $3.1 million during the third quarter of 2013 associated with the SF Valves settlement. In addition, we expect to incur additional restructuring related special charges between $4.5 million and $5.0 million during the second half of 2013 ($0.2 million for the Energy segment, between $1.5 million and $1.7 million for the Aerospace segment, and between $2.8 million and $3.1 million for the Flow Technologies segment). We expect to incur additional special charges between $4.3 million and $4.7 million during the first half of 2014 (between $0.3 million and $0.4 million for the Aerospace segment and between $4.0 million and $4.3 million for the Flow Technologies segment) to complete these restructuring actions. These restructuring activities are expected to be funded with cash generated from operations.

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Guarantees And Indemnification Obligations

6 Months Ended

Jun. 30, 2013

Guarantees And Indemnification Obligations [Abstract]

Guarantees And Indemnification Obligations

Guarantees and Indemnification Obligations

As permitted under Delaware law, we have agreements whereby we indemnify certain of our officers and directors for certain events or occurrences while the officer or director is, or was, serving at our request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited. However, we have directors’ and officers’ liability insurance policies that limit our exposure for events covered under the policies and should enable us to recover a portion of any future amounts paid. As a result of the coverage under these insurance policies, we believe the estimated fair value of these indemnification agreements based on Level 3 criteria as described under ASC Topic 820 is minimal and, therefore, we have no liabilities recorded from those agreements as of June 30, 2013.

We record provisions for the estimated cost of product warranties, primarily from historical information, at the time product revenue is recognized. While we engage in extensive product quality programs and processes, our warranty obligation is affected by product failure rates, utilization levels, material usage, service delivery costs incurred in correcting a product failure, and supplier warranties on parts delivered to us. Should actual product failure rates, utilization levels, material usage, service delivery costs or supplier warranties on parts differ from our estimates, revisions to the estimated warranty liability would be required.

The following table sets forth information related to our product warranty reserves for the six months ended June 30, 2013 (In thousands):

Balance beginning December 31, 2012	$	3,322
Provisions	1,979
Claims settled	(1,262		)
Currency translation adjustment	(30		)
Balance ending June 30, 2013	$	4,009

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Reportable Segment Information

The following table presents certain reportable segment information (In thousands):

	Energy		Aerospace		Flow Technologies		Corporate / Eliminations			Consolidated Total
Three Months Ended June 30, 2013
Net revenues	$	110,832	$	38,177	$	74,635	$	—		$	223,644
Inter-segment revenues	363		19		170		(552		)	—
Operating income (loss)	14,477		2,073		11,044		(7,338		)	20,256
Interest income										(79		)
Interest expense										917
Other expense, net										626
Income before income taxes										$	18,792
Identifiable assets	406,956		178,681		220,604		(96,815		)	709,426
Capital expenditures	2,227		753		1,029		93			4,102
Depreciation and amortization	1,657		1,204		1,557		360			4,778
Three Months Ended July 1, 2012
Net revenues	$	113,527	$	35,896	$	70,439	$	—		$	219,862
Inter-segment revenues	504		4		202		(710		)	—
Operating income (loss)	12,580		3,153		9,043		(6,297		)	18,479
Interest income										(78		)
Interest expense										1,095
Other expense, net										184
Income before income taxes										$	17,278
Identifiable assets	380,496		189,879		192,419		(50,417		)	712,377
Capital expenditures	1,020		695		3,414		1,532			6,661
Depreciation and amortization	1,845		1,190		1,373		340			4,748
Six Months Ended June 30, 2013
Net revenues	$	207,553	$	75,504	$	145,985	$	—		$	429,042
Inter-segment revenues	727		24		400		(1,151		)	—
Operating income (loss)	24,613		2,467		20,001		(13,925		)	33,156
Interest income										(122		)
Interest expense										1,747
Other expense, net										1,239
Income before income taxes										$	30,292
Identifiable assets	406,956		178,681		220,604		(96,815		)	709,426
Capital expenditures	4,077		2,242		2,301		188			8,808
Depreciation and amortization	3,293		2,421		3,091		739			9,544
Six Months Ended July 1, 2012
Net revenues	$	222,791	$	73,981	$	137,370	$	—		$	434,142
Inter-segment revenues	901		30		394		(1,325		)	—
Operating income (loss)	21,508		7,277		16,630		(13,236		)	32,179
Interest income										(161		)
Interest expense										2,259
Other expense, net										322
Income before income taxes										$	29,759
Identifiable assets	380,496		189,879		192,419		(50,417		)	712,377
Capital expenditures	1,750		1,577		5,744		1,712			10,783
Depreciation and amortization	3,833		2,439		2,804		644			9,720

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Inventories (Tables)

6 Months Ended

Jun. 30, 2013

Inventory, Net [Abstract]

Components Of Inventory

Inventories consist of the following (In thousands):

	June 30, 2013		December 31, 2012
Raw materials	$	57,073	$	63,104
Work in process	96,404		86,564
Finished goods	46,287		48,337
	$	199,764	$	198,005

XML

Document And Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 25, 2013
Document And Entity Information [Abstract]
Entity Registrant Name	CIRCOR INTERNATIONAL INC
Entity Central Index Key	0001091883
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		17,575,362

XML

Goodwill And Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill, By Segment

The following table shows goodwill, by segment, as of June 30, 2013 (In thousands):

	Energy			Aerospace			Flow Technologies			Consolidated Total
Goodwill as of December 31, 2012	$	51,526		$	22,121		$	3,781		$	77,428
Currency translation adjustments	(1,691		)	(23		)	(223		)	(1,937		)
Goodwill as of June 30, 2013	$	49,835		$	22,098		$	3,558		$	75,491

Gross Intangible Assets And Related Accumulated Amortization

The table below presents gross intangible assets and the related accumulated amortization as of June 30, 2013 (In thousands):

	Gross Carrying Amount		Accumulated Amortization
Patents	$	6,075	$	(5,656	)
Non-amortized intangibles (primarily trademarks and trade names)	23,093
Customer relationships	33,186		(17,098		)
Backlog	1,074		(1,074		)
Other	7,253		(4,417		)
Total	$	70,681	$	(28,245	)
Net carrying value of intangible assets	42,436

Estimated Remaining Amortization Expense For Intangible Assets

The table below presents estimated remaining amortization expense for intangible assets recorded as of June 30, 2013 (In thousands):

	2013		2014		2015		2016		2017		After 2017
Estimated amortization expense	$	1,506	$	2,980	$	2,958	$	2,676	$	2,541	$	6,683