CIRCOR International, Inc. was incorporated under the laws of Delaware on July 1, 1999. As used in this report, the terms “we,” “us,” “our,” the “Company” and “CIRCOR” mean CIRCOR International, Inc. and its subsidiaries (unless the context indicates another meaning). The term “common stock” means our common stock, par value $0.01 per share.

We design, manufactureCIRCOR designs, manufactures and marketmarkets differentiated technology products and sub-systems for markets includingthe industrial oil & gas,and aerospace and defense and commercial marine. CIRCOR hasmarkets. We have a diversified flow and motion control product portfolio with recognized, market-leading brands that fulfill itsour customers’ mission critical and severe service needs. The Company’s strategy is to grow organically through innovative product development (including growth in the digital space), aftermarket growth, penetrating new regions, margin expansion and through complementary acquisitions; simplify CIRCOR’s operations; achieve world class operational excellence; and attractbuild an inclusive, growth-oriented culture that attracts and retain top industryretains a diverse group of talent. We have a global presence and operate 2821 major manufacturing facilities that are located in North America, Western Europe, Morocco, China and India. The Company has the following reportable business segments: CIRCOR Energy ("Energy segment" or "Energy"Industrial segment (“Industrial”), CIRCOR Advanced Flow Solutions ("Advanced Flow Solutions segment" or "AFS"), and CIRCOR Fluid Handling ("Fluid Handling"Aerospace & Defense segment (“Aerospace & Defense”). We sell our products directly to end-user customers and original equipment manufacturers (“OEMs”), as well as through distributors or representatives, Engineering, Procurement and Construction ("EPC"(“EPC”) companies as well as directlyand our channel partner network.

In 2020, we completed the divestiture of our loss-making Distributed Valves (“DV”) business. This action stemmed from our strategic decision to end-user customers.exit the upstream oil and gas valves market. This business and the associated loss on disposal were reported within discontinued operations in our consolidated financial statements. The following discussion in this Item 1 relates only to our continuing operations unless otherwise noted. Refer to Note 1, Description of Business along with Note 3, Discontinued Operations and Assets Held for Sale, to the consolidated financial statements included in this Annual Report for additional information.

Our objective is to enhance shareholderstockholder value by focusing on growth, margin expansion, strong free cash flow and disciplined capital deployment. We have a four-pointOur strategy to achieve these objectives.objectives is to:

In addition to organic growth, we expect to acquire businesses over time. We are primarily focused on companies with differentiated technologies in complementary markets that we already understand and where we expect substantial growth.adjacent markets. In addition to strategic fit and differentiated technology, the main criterion for an acquisition is return on invested capital.

EnergyIndustrial is a global providerportfolio of highly engineered integratedand differentiated flow control solutions,solutions. Our primary products are positive displacement pumps, specialty centrifugal pumps, metering pumps, automatic recirculating valves, control and servicesactuators valves for the Oil & Gas and Process Instrumentation markets.mission critical applications.

We areOur technology is focused on satisfying our customers’ mission-critical application needs by utilizing advanced technologies. Our flow control solutions can withstand extreme temperatures and pressures, and as such are usedmoving the most difficult fluids with extremely high efficiency for critical applications in the most criticalgeneral industrial, power, process, energy, and severe service applications. Our installations include land-based, topside, and sub-sea oil and gas production, refining and petrochemical process control, oil sand processing, critical pressure control and cryogenic applications.commercial marine end markets.

We plan to grow Energythe Industrial segment by expandingproviding innovative new products, including digital products, in multiple product lines that address our capabilities in Oil & Gas both organicallycustomers' severe service and inorganically across the Oil & Gasmission critical needs. We are driving growth regionally and Petrochemical markets.developing products in-region, for-region. Growing our share of aftermarket business is a key element of our organic growth. We are using digitization, including a new CIRCOR app, to make it easier for our customers to order parts from us. The Industrial segment is also focused on pricing initiatives to drive value-pricing for our products. We believe margin expansion can be achieved through use of COS at our sites.

EnergyIndustrial is headquartered in Houston, Texas and hasRadolfzell, Germany, with primary manufacturing facilitiescenters in the North America, United Kingdom, Italy,England, Germany, India and the Netherlands.China.

Industrial's products and services are sold directly to end-user customers, such as major oil companies,end-users, original equipment manufacturers (“OEMs”) that supply specialized systems in their respective end markets, and EPC companies and distributors, through a global network of indirect sales channels that include direct sales, sales representatives, and agents.channels.

Aerospace & Defense produces diversified and innovative flow control technology platform.products. Our primary product focus areas are valves, pumps, actuation, motors, switches and high pressure pneumatic systems, and steam and process loop flow management solutions.

We plan to grow Advanced Flow SolutionsAerospace & Defense by increasing market share in existing and new markets through exceptional sales and customer service and with new products enabled by innovative, reliable and high quality solutions. Product portfolio expansion through acquisitions of differentiated technologies in current and adjacent applications is also aA key part of our strategy is the development of a strong technology team that can use our core technology to accelerate new product development. We are exploring adjacency applications for our core technology and opportunities to increase our aftermarket sales. Our growth strategywill also be driven by margin expansion, through increased manufacturing capabilities at our lower cost facility in Morocco, adoption of the COS by our sites and value pricing initiatives.

We have Advanced Flow SolutionsAerospace & Defense facilities in North America, the United Kingdom, France, Germany, Morocco, and India. Our Advanced Flow SolutionsAerospace & Defense headquarters is in Corona, California.

AFSAerospace & Defense manufactures and markets control valves, automatic recirculation valves,pumps, regulators, fluid controls, actuation systems, landing gear components, pneumatic valves and controls, electro-mechanical controls, motors and other flow control products and systems. Advanced Flow SolutionsAerospace & Defense provides actuation and fluid control systems and services through the following brands: CIRCOR Aerospace, CPC Cryolab, Aerodyne Controls, CIRCOR Bodet, CIRCOR Industria, CIRCOR Motors, Hale Hamilton, Laurence, Leslie Controls, Nicholson Steam Trap, Rockwood Swendeman, RTK, Schroedahl,Portland Valve, and Spence Engineering.Warren Pumps.

In the manufacture of our products, we must comply with certain certification standards, such as AS9100C, ISO 9001:2008, National Aerospace & Defense Contractors Accreditation Program, Federal Aviation Administration Certification and European Aviation Safety Agency as well as other customer qualification standards. Currently all of our manufacturing facilities comply with the applicable standards.

Advanced Flow SolutionsAerospace & Defense products and services are used bysold directly and indirectly to a range of customers, including those in the military and defense, commercial aerospace, business and general aviation process industries, and power generationgeneral industrial markets. Our customers include aircraft manufacturers (OEM's)(OEMs) and Tier 1 suppliers to these manufacturers, power companies and their contractors and other industrial customers.

The domestic and international markets for our products are highly competitive. Some of our competitors have substantially greater financial, marketing, personnel and other resources than us. We consider product brand, quality, performance, on-time delivery, customer service, price, distribution capabilities and breadth of product offerings to be the primary competitive factors in these markets. We believe that new product development and product engineering also are important to our success and that our position in the industry is attributable, in significant part, to our ability to develop innovative products and to adapt existing products to specific customer applications. Our ability to leverage our large installed base of equipment to drive repairs and spares growth is a competitive advantage.

The primary competitors of our EnergyIndustrial segment include: BalonLeistritz AG, Curtiss-Wright Corporation, Crane Co., Emerson Electric Company, FlowserveNetzsch GmbH, ITT Corporation, IMI plc, P.e.r.a.r S.p.A, PetrolValves S.p.A, Cameron division of Schlumberger Limited, SPX Flow,TD Williamson Inc., Seepex GmbH, and Valvitalia S.p.A.Naniwa Ltd.

The primary competitors of our AFSAerospace & Defense segment include: Transdigm, Crane Co., Curtiss-Wright Corporation, Marrotta Controls, Moog, Inc., Parker Hannifin Corp., and Woodward Inc.

Our engineering differentiation comes from our ability to offer products, solutions and services that address high pressure, high temperature, and caustic flow. Our solutions offer high standards of reliability, safety and durability in applications requiring precision movement and zero leakage.

We continue to develop new and innovative products to enhance our market positions.positions and drive growth. Our product development capabilities include designing and manufacturing custom applicationssolutions to meet high tolerance or close precision requirements. For example, our Energy segment operation can meet the tolerance requirements of sub-sea, cryogenic environments as well as critical service steam applications. Our Advanced Flow SolutionsAerospace & Defense segment continues to expand its integrated systems design and testing capability to support bundled sub-systems for aeronautics applications, as well as acoustically superior pumps for marine applications. These testing and manufacturing capabilities enable us to develop customer-specified applications. In many cases, the unique characteristics of our customer-specified technologies have been subsequently used in broader product offerings. The Fluid HandlingIndustrial segment provides unique fluid handlingflow control products for viscous and critical fluids with specific design and engineering capabilities.

We maintain a Global Engineering Center of Excellence in India with a capable technology and engineering team that complements the engineering resources in a business unit. Our research, development and engineering expenditures for the years ended December 31, 2017, 2016 and 2015 were $5.5 million, $5.9 million, and $5.9 million, respectively.

For the years ended December 31, 2017, 2016,2020 and 2015, we had2019, no customers from which we derive revenues that exceedaccounted for more than 10% of the Company’s consolidated revenues. Our businesses sell into both long-term capital projects as well as short-cycle demand. As a result, we tend to experience fluctuations in orders, revenues and operating results at various points across economic and business cycles. Our businesses, particularly those in the Energy segment, are cyclical in nature due to the fluctuation of the worldwide price, supply and demand for oil and gas. When the worldwide demand for oil and gas is depressed, the demand for our products used in those markets decreases as our customers with higher production costs will cut back investment and reduce purchases from us. The number of active rigs and wells drilled in North American short-cycle Oil & Gas market is a strong indicator of demand especially for our distributed valves products. In addition, the level of capital expenditures by national oil companies or the oil majors in exploration and production activities drive demand for our long cycle, engineered valves products. Maintenance expenditures during refinery turnarounds drive demand for our refinery valve products. Similarly, although not to the same extent as the Oil & Gas markets, the aerospace, military and maritime markets have historically experienced cyclical fluctuations in demand.

Across our businesses we utilize a variety of channels to market our products and solutions. Those channels include direct sales, distributors and commissioned representatives, and our service centers.representatives. Our distribution and representative networkschannel partner network typically offeroffers technically trained sales forces with strong relationships in key markets.

We ownThe Company relies upon a combination of trade secrets and patent and trademark registrations to protect its intellectual property. Our patents that are scheduled to expire between 20182021 and 2030, and our trademarks that can be renewed as long as we continue to use them. We do not believe the vitality and competitiveness of any of our business segments as a whole depends

The raw materials used most often in our production processes are castings, forgings and bar stock of various materials, including stainless steel, carbon steel, bronze, copper, brass, titanium and aluminum. These materials are subject to price fluctuations that may adversely affect our results of operations. We purchase these materials from numerous suppliers and at times experience constraints on the supply of certain raw material as well as the inability of certain suppliers to respond to our needs. Historically, increases in the prices of raw materials have been partially offset by higher sales prices, active materials management, project engineering programs and the diversity of materials used in our production processes.

As of JanuaryDecember 31, 2018,2020, CIRCOR had 3,138, employees, of which approximately 80% are full-time. 48% of this workforce was in Europe, 41% in the United States, 9% in India and the rest spread across the rest of Asia, the Middle East and Latin America.

39% of our worldwide operations directly employed approximately 4,400 people.workforce is composed of skilled direct labor working in our factories across the globe. 28% is indirect labor in support of this direct labor. 33% are SG&A staff (including engineering, sales, finance, human resources and legal personnel). 6% of the Company’s U.S. employees are unionized. Outside the United States, we have employees in Europe that are represented by an employee representative organization, such as a union, works council or employee association.

We are committed to creating a strong employee value proposition, and our retention strategy centers on building an inclusive, growth-oriented culture that is attractive to our employees. We have 91regular communications from our senior leaders to employees throughout the organization and provide channels for feedback.

In addition, we offer competitive compensation and benefits packages that are designed to retain, motivate and reward our employees. CIRCOR has a Pay for Performance philosophy, and we align our compensation practices with reference to external benchmarks, internal comparisons and the relationship between management and non-management remuneration. Some of our employees participate in North Americaour short-term and/or long-term incentive program connecting payouts to achievement of key financial and other metrics and the employee’s contribution to those results.

CIRCOR is committed to cultivating a workplace that makes diversity, equity, inclusion and transparency priorities in everything we do. In furtherance of that commitment, we have established active D&I initiatives in the followingareas of talent acquisition, talent development, total rewards, employee engagement and communications, which impact employees covered by governmental regulations or workers' councils:at all levels of the organization. In addition, we appointed our first D&I Leader, who is driving our D&I initiatives and goals. Our goal is to increase gender and racial/ethnic representation throughout the organization, including senior management, and our initiatives are focused on that goal.

We file reports on Form 10-Q with the Securities and Exchange Commission (“SEC”) on a quarterly basis, additional reports on Form 8-K from time to time, and a Definitive Proxy Statement and an annual report on Form 10-K on an annual basis. These and other reports filed by us, or furnished by us, to the SEC in accordance with section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge from the SEC on its website at http://www.sec.gov. Additionally, our Form 10-Q, Form 8-K, Definitive Proxy StatementForm 10-K and Form 10-Kamendments to those reports are available without charge, as soon as reasonably practicable after they have been filed with, or furnished to, the SEC, fromon our Investor Relations website at http://investors.CIRCOR.com. The information on our website is not part of, or incorporated by reference in, this Annual Report.

We operate in a highly competitive environment in each of the markets we serve, and we face significant competition from a variety of competitors in each of our markets. Some of our competitors have substantially greater financial, marketing, personnel and other resources than we do. New competitors also could enter our markets.segments from numerous competitors. We consider product innovation, product quality, performance, customer service, on-time delivery, price, distribution capabilities and breadth of product offerings to be the primary competitive factors in our markets. Our competitors may be able to offer more attractive pricing, duplicate our strategies, or develop enhancements to products that could offer performance features that are superior to our products. Competitive pressures, including those described above, and other factors could adversely affect our competitive position, resulting in a loss of market share or decreases in prices, either of which could have a material adverse effect on our business, financial condition, cash flows or results of operations. In addition, some of our competitors are based in foreign countries and have cost structures and prices based on foreign currencies.

We operate a number of manufacturing facilities for the production of our products. The equipment and management systems necessary for such operations may break down, perform poorly or fail, resulting in fluctuations in manufacturing efficiencies. Such fluctuations may affect our ability to deliver products to our customers on a timely basis, which could have a material adverse effect on our business, financial condition, cash flows or results of operations. We haveare working to continuously enhancedenhance and improvedimprove Lean manufacturing techniques as part of the CIRCOR Operating System. We believe that this process produces meaningful reductions in manufacturing costs. However, continuous improvement of these techniques may cause short-term inefficiencies in production. If we ultimately are unable tonot successful in continuously improveimproving our processes, our results of operations may suffer.

One of the ways we attempt to manage the risk of higher raw material and manufacturing costs is to increase selling prices to our customers. The markets we serve are extremely competitive and customers may not accept price increases or may look to alternative suppliers, which may negatively impact our profitability and revenues.

Some of our customer contracts require us to compensate those customers if we do not meet specified delivery obligations. We rely on numerous suppliers to provide us with our required materials and in many instances these materials must meet certain specifications. In addition, we continue to increase our dependence on lower cost foreign sources of raw materials, components, and, in some cases, completed products. ManagingWhile we actively manage our supply chain, having a geographically diverse supply base inherently poses significant logistical challenges. While we believe that we also have improved our ability to effectively manage a global supply base, a risk nevertheless exists thatchallenges, and we could experience diminished supplier performance resulting in longer than expected lead times and/or product quality issues. In addition, the potential physical effects of climate change, such as increased frequency and severity of storms, floods and other climatic events, could disrupt our supply chain, and cause our suppliers to incur significant costs in preparing for or responding to these effects. These or other meteorological changes could lead to increased costs. The occurrence of such factors could have a negative impact on our ability to deliver products to customers within our committed time frames and could adversely impact our results of operations, financial conditions and cash flows.

Our industries are characterized by: intense competition; changes in end-user requirements; technically complex products; and evolving product offerings and introductions.

We believe our future success depends, in part, on our ability to anticipate or adapt to these factors and to offer, on a timely basis, mission-critical products that meet customer demands. Failure to develop new and innovative products or to custom design existing products could result in the loss of existing customers to competitors or the inability to attract new business, either of which may adversely affect our revenues. The development of new or enhanced products is a complex and uncertain process requiring the anticipation of technological and market trends. We may experience design, manufacturing, marketing or other difficulties, such as an inability to attract a sufficient number of qualified engineers, which could delay or prevent our development, introduction or marketing of new products or enhancements and result in unexpected expenses.

Product quality and performance are a priority for our customers since many of our product applications involve caustic or volatile chemicals and, in many cases, involve processes that require precise control of fluids. Our products are used in the aerospace, military, commercial aircraft, analytical equipment, Oiloil & Gas exploration, transmission andgas refining, power generation, chemical processing and maritime industries. These industries require products that meet stringent performance and safety standards, such as the standards of the American Petroleum Institute, International Organization for Standardization, Underwriters’ Laboratory, American National Standards Institute, American Society of Mechanical Engineers and the European Pressure Equipment Directive. If we fail to maintain and enforce quality control and testing procedures, our products will not meet these stringent performance and safety standards whichthat are required by many of our customers. Non-compliance with the standards could result in a loss of current customers and damage our ability to attract new customers, which could have a material adverse effect on our business, financial condition, cash flows or results of operations.

If Company, personal or otherwise protected information is improperly accessed, tampered with or distributed, we may face significant financial exposure, including incurring significant costs to remediate possible injury to the affected parties. We may also be subject to sanctions and civil or criminal penalties if we are found to be in violation of the privacy or security rules under federal, state, or international laws protecting confidential information. Any failure to maintain proper functionality and security of our information systems could results in the loss of their services maytrade secrets or other proprietary or competitively sensitive information, compromise personally identifiable information regarding customers or employees, interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties. The costs associated with maintaining robust information security mechanisms and controls are also increasing and are likely to increase further in the future. We continuously seek to maintain a robust program of information security and controls, but the impact of a material information technology event could have a material adverse effect on our competitive position, reputation, results of operations, financial condition and cash flows.

In the past, terrorist attacks have negatively impacted general economic, market and political conditions. Terrorist acts, acts of war or political instability (wherever located around the world) could cause damage or disruption to our business, our facilities or our employees which could significantly impact our business, financial condition or results of operations. The potential for future terrorist attacks, the national and international responses to terrorist attacks, political instability, and other acts of war or hostility , have created many economic and political uncertainties, which could adversely affect our business.business and results of operations in ways that cannot presently be predicted. In addition, with manufacturing facilities located worldwide, including facilities located in North America, Western Europe, Morocco, and India, we may be impacted by terrorist actions not only

We believederive a significant portion of our revenue from sales outside the United States. In addition, one of our key growth strategies is to sell our products in international markets not significantly served by us in portions of Europe, Latin America and Asia. We market our products and services outside of the United States through direct sales, distributors, and technically trained commissioned representatives. We may not succeed in our efforts to further penetrate these markets. Moreover, conducting business outside the United States is subject to risks, including currency exchange rate fluctuations; changes in regional, political or economic conditions, trade protection measures such as tariffs or import or export restrictions; and complex, varying and changing government regulations and legal standards and requirements, particularly with respect to price protection, competition practices, export control regulations and restrictions, customs and tax requirements, immigration, anti-boycott regulations, data privacy, intellectual property, anti-corruption and environmental compliance, including U.S. customs and export regulations and restrictions and the Foreign Corrupt Practices Act, and the occurrence of any of these factors could materially and adversely affect our operations.

Our continued success depends, in part, on our ability to hire new talentidentify, attract, motivate, train and the continued employment of our senior management teamretain qualified personnel in key functions and other key personnel. If one or moregeographic areas, including the members of our senior management teamteam. In particular, we are dependent on our ability to recruit and retain qualified engineers with the requisite education, background and industry experience to assist in the development, enhancement, introduction and manufacture of our products.

Failure to attract, train and retain qualified personnel, whether as a result of an insufficient number of qualified candidates or other key personnel were unable or unwillingthe allocation of inadequate resources to continue in their present positions,training, integration and retention, could impair our ability to execute our business strategy and could be seriously harmed. In addition, if anyhave an adverse effect on our business prospects. Our success also depends to a large extent upon our ability to attract and retain key executives. The loss of our key personnel joins a competitor or forms a competing company, some of our customers might choose to use the services of that competitorone or thosemore of a new company insteadthese key employees could have an adverse effect, at least in the short to medium term, on significant aspects of our own. Other companies seekingbusiness, including the ability to develop capabilitiesmanage our business effectively and products similar to ours may hire away some of our key personnel. If we are unable to maintain our key personnel and attract new employees, the successful execution of our business strategy may be hinderedstrategies. If certain of these employees decide to leave us, we could incur disruptions to the completion of certain initiatives and our growth limited.we could incur significant costs in hiring, training, developing and retaining their replacements.

We, like other manufacturers, face an inherent risk of exposure to product liability claims in the event that the use of our products results in personal injury, property damage or business interruption to our customers. We may be subjected to various product liability claims, including, among others, asbestos-related claims, claims that our products include inadequate or improper instructions for use or installation, or inadequate warnings concerning the effects of the failure of our products. Although we maintain strict quality controls and procedures, including the testing of raw materials and safety testing of selected finished products, we cannot be certain that our products will be completely free from defect. In addition, in certain cases, we rely on third-party manufacturers for our products or components of our products. Although we have liability insurance coverage, we cannot be certain that this insurance coverage will continue to be available to us at a reasonable cost or, if available, will be adequate to cover any such liabilities. For example, liability insurance typically does not afford coverage for a design or manufacturing defect unless such defect results in injury to person or property. We generally attempt to contractually limit liability to our customers to risks that are insurable but are not always successful in doing so. Similarly, we generally seek to obtain contractual indemnification from our third-party suppliers, and for us to be added as an additional insured party under such parties’ insurance policies. Any such indemnification or insurance is limited by its terms and, as a practical matter, is limited to the credit worthiness of the indemnifying or insuring party. In the event that we do not have adequate insurance or contractual indemnification, product liabilities could have a material adverse effect on our business, financial condition, cash flows or results of operations.

We rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business, financial condition, cash flows and results of operations.

There is currently significant uncertainty about the future relationship between the United States and China, including with respect to trade policies, treaties, government regulations and tariffs. The past U.S. presidential administration had called for substantial changes to U.S. foreign trade policy and had implemented greater restrictions on whominternational trade and significant changes in tariffs on goods imported into the U.S. Under the current administration, we expect that tariff increases will primarily impact our systems depend.Industrial segment. We rely on commercially available systems, software, toolsare unable to predict whether or when additional tariffs will be imposed or the impact of any such future tariff changes.

We are subject to provide security fora variety of environmental laws relating to the processing, transmissionstorage, discharge, handling, emission, generation, use and storagedisposal of companychemicals, solid and customer information.hazardous waste and other toxic and hazardous materials used to manufacture, or resulting from the process of manufacturing, our products. We cannot predict the nature, scope or effect of future regulatory requirements to which our operations might be subject or the manner in which existing or future laws will be administered or interpreted. Future regulations could be applied to materials, products or activities that have not been subject to regulation previously. The costs of complying with new or more stringent regulations, or with more vigorous enforcement of these or existing regulations, could be significant.

Environmental laws require us to maintain and comply with a number of permits, authorizations and approvals and to maintain and update training programs and safety data regarding materials used in our processes. Violations of these requirements could result in financial penalties and other enforcement actions. We also could be required to halt one or more portions of our operations until a violation is cured. Although we have taken stepsattempt to protect the security of our information systems and the data maintainedoperate in those systems, it is possible that our safety and security measures will not prevent the systems' improper functioning or the improper access or disclosure of confidential or personally identifiable information such as in the event of cyber-attacks. Security breaches, including physical or electronic break-ins, computer viruses, ransomware, attacks by hackers and similar breaches can create system disruptions or shutdowns or the unauthorized disclosure of confidential information. If company, personal or otherwise protected information is improperly accessed, tamperedcompliance with or distributed,these environmental laws, we may incur significantnot succeed in this effort at all times. The costs of curing violations or resolving enforcement actions that might be initiated by government authorities could be substantial.

In 2020 we remediated material weaknesses in our internal control over financial condition, cash flowsreporting identified as of December 31, 2019. If our remediation or other controls do not continue to operate effectively, we may not be able to rely on the integrity of our financial results, which could result in inaccurate or late reporting of our financial results, as well as delays or the inability to meet our reporting obligations or to comply with SEC rules and resultsregulations. If we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare consolidated financial statements within required time periods could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of operations.legal and other expenses, negatively affect investor confidence in our consolidated financial statements and adversely impact our stock price.

The trading price of our common stock may be, and, in the past, has been volatile. Our common stock could decline or fluctuate in response to a variety of factors, including, but not limited to: our failure to meet our performance estimates or performance estimates of securities analysts; changes in financial estimates of our revenues and operating results or buy/sell recommendations by securities analysts; the timing of announcements by us or our competitors concerning significant product line developments, contracts or acquisitions or publicity regarding actual or potential results or performance; fluctuation in our quarterly operating results caused by fluctuations in revenue and expenses; substantial sales of our common stock by our existing shareholders;stockholders; general stock market conditions; and fluctuations in oil and gas prices or other economic or external factors. While we attempt in our public disclosures to provide forward-looking information in order to enable investors to anticipate our future performance, such information by its nature represents our good-faith forecasting efforts. In recent years, the unprecedented nature of oil prices, credit and financial crises and economic recessions, together with the uncertain depth and duration of these crises, has rendered such forecasting more difficult. As a result, our actual results have differed materially, and going forward could differ materially, from our forecasts, which could cause further volatility in the value of our common stock.

In recent years the stock market as a whole has experienced dramatic price and volume fluctuations. In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of their securities. This type of litigation could result in substantial costs and a diversion of management attention and resources.

Our ability to make payments of principal and interest on our indebtedness when due, including the significant indebtedness that we have incurred in connection with theour acquisition of FH,Colfax Corporation's Fluid Handling business ("FH"), depends upon our future performance, which will be subject to

Such measures might not be sufficient to enable us to service our debt, which could negatively impact our financial results. In addition, we may not be able to obtain any such financing, refinancing or complete a sale of assets on economically favorable terms. In the case of financing or refinancing, favorable interest rates will be dependent on the health of the debt capital markets.markets and our credit rating.

Our significant existing indebtedness could also have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions, reducing funds available for working capital, capital expenditures, acquisitions and other general corporate purposes or creating competitive disadvantages relative to other companies with lower debt levels.

Our credit agreement, dated December 11, 2017, as amended, governs our indebtedness. This agreement includes provisions which place limitations on certain activities, including our ability to: issue shares of our common stock;issue; incur additional indebtedness; create any liens or encumbrances on our assets or make any guarantees; make certain investments; pay cash dividends above certain limits; or dispose of or sell assets or enter into a merger or a similar transaction. These restrictions may limit our ability to operate our business and may prohibit or limit our ability to execute our business strategy, compete, enhance our operations, take advantage of potential business opportunities as they arise or meet our capital needs. Furthermore, future debt instruments or other contracts could contain more restrictive financial or other covenants. The breach of any of these covenants by us or the failure by us to meet any of these conditions or requirements could result in a default under any or all of our indebtedness. If we are unable to service our indebtedness, our business, financial condition, cash flows and results of operations would be materially adversely affected.

We maintain 2821 major manufacturing facilities worldwide, including operations located in North America, Western Europe, Morocco, China and India. We also maintain sales offices or warehouses from which we ship finished goods to customers, distributors and commissioned representative organizations. Our executive office is located in Burlington, Massachusetts and is leased.

Our Energy segment has major manufacturing facilities located in North America, Italy, United Kingdom, and the Netherlands. Properties in Nerviano, Italy and Spartanburg, South Carolina are leased. Our Advanced Flow SolutionsAerospace & Defense segment has major manufacturing facilities located in North America, United Kingdom, Germany, France India and Morocco. Properties in Hauppauge, New York and Corona, California are leased. Our Fluid HandlingIndustrial segment has major facilities located in North America, Germany, India and Netherlands.China. Properties in Germany, India and IndiaChina are leased.

In general, we believe that our properties, including machinery, tools and equipment, are in good condition, are well maintained, and are adequate and suitable for their intended uses. Our manufacturing facilities generally operate five days per week on one or two shifts. We believe our manufacturing capacity could be increased by working additional shifts and weekends and by successful implementation of our CIRCOR Operating System. We also have low-cost sources for manufacturing in Mexico, India and Morocco which have capacity to fulfill our manufacturing needs. We believe that our current facilities will meet our near-term production requirements without the need for additional facilities.

 

Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “CIR.” Quarterly share prices and dividends declared and paid are incorporated herein by reference to Note 18, “Quarterly Financial Information”, of the consolidated financial statements included in this Annual Report.

Our Board of Directors is responsible for determining our dividend policy. The timing and level of any dividends will necessarily depend on our Board of Directors’ assessments of earnings, financial condition, capital requirements and other factors, including restrictions, if any, imposed by our lenders. On February 28, 2018, we announced the suspension of our nominal dividend, as part of our capital deployment strategy.

 

As of February 21, 2018,March 10, 2021, there were 19,793,16020,155,251 shares of our common stock outstanding and we had 6050 holders of record of our common stock. We believe the number of beneficial owners of our common stock was substantially greater on that date.

The graph below compares the cumulative 5-Year total return provided shareholdersstockholders on CIRCOR International, Inc.'s common stock relative to the cumulative total returns of the S&P 500 index, the Russell 2000 index, our historicalprevious peer group (“20162018 Peer Group”) and our updated peer group (“20172019 Peer Group”). The companies included in the 20162018 Peer Group and the 20172019 Peer Group are listed in footnotes 1 and 2 below.below, respectively. We revised our peer group to incorporate peers relevant to ourthe businesses we acquired in the Fluid Handling business.acquisition along with divestitures of non-core businesses. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock, in each index and in each of the peer groups on 12/31/2012December 31, 2015 and its relative performance is tracked through 12/31/2017.December 31, 2020.

 

CIRCOR designs, manufactures and marketsInternational is one of the world’s leading providers of mission critical flow control solutions and other highly engineered products and sub-systemsservices for markets including Oilthe Industrial and Aerospace & Gas, aerospace, power and process, pumps and industrial solutions. CIRCORDefense markets. The Company has a diversified product portfolio with recognized,of market-leading brands that fulfillserving its customers’ unique application needs.most demanding applications. CIRCOR markets its solutions directly and through various sales partners to more than 14,000 customers in approximately 100 countries. The Company has a global presence with approximately 3,100 employees and is headquartered in Burlington, Massachusetts. See Part 1, Item 1, Business, for additional information regarding the description of our business.

The COVID-19 pandemic adversely impacted our end markets, operations, and financial condition in 2020. Throughout this continued time of unprecedented uncertainty, the acquisitionCompany's top priority remains the health and safety of our employees, customers, and suppliers. Because of the fluid handling business of Colfax Corporation (FH). The total consideration paid to acquire FH consisted of $542.0 in cash, 3,283,424 unregistered sharesend markets we serve, the majority of our common stockfacilities are deemed 'essential operations' in the countries in which we operate. Throughout 2020 and continuing in 2021, we implemented significant measures in an effort to ensure our employees around the world have the necessary protection and our business continues to operate with as little disruption as possible. These measures include but are not limited to:

Throughout 2020 and into 2021, the Company also took prudent action to ensure it maintained its financial flexibility including the cessation of all non-critical business expenses, permanent employee reductions, employee furloughs, and pay cuts for senior management and board of directors. We believe that these actions along with the Company's continued focus on new product innovation, cost productivity, and the assumptionCIRCOR Operating System ("COS") serve to best position the Company for potential end market recovery across our Industrial and Aerospace & Defense business segments. The situation relating to the COVID-19 pandemic and its potential effects on our business and financial results remains dynamic, and the broader implications for our business and results of net pensionoperations remain uncertain and post-retirement liabilities of FH. We financedwill depend on many factors outside our control. Please see Part 1, Item 1A - "Risk Factors" for more detail.

The Company's Aerospace & Defense segment has been and continues to be significantly impacted by the cash consideration through a combination of debt financing and cash on hand.

The Company's Industrial reporting segment has been and continues to be significantly impacted by the COVID-19 pandemic. In 2021, we expect modest growth in other marketsthe General Industrial sector led by chemical and machinery applications with a weaker recovery in construction and mining. While our commercial marine sector continues to be constrained, we serve includingdo expect to experience growth as the short-cycle on-shore North American distributed valves marketregulatory environment could cause demand for our products. We expect that our mid-stream and petrochemical processing market. We received a number of large orders in December 2017 for refinery valves, however, it is uncertain whether this trenddownstream oil and gas customers will continue in 2018. Capitalto prioritize spending on critical safety and maintenance, but we expect that larger capital expenditures in the industrial end markets that we serve is expectedwill continue to grow modestly.be delayed. We expect to experience lowerhigher demand for our products that serve the power generation markets. Aerospacemarkets with particular strength in Asia and defense end markets are expected to grow as demand for commercial air travel continues to increase and funding on military programs in the U.S. improves in 2018. We do not expect an improvement in the commercial marine sector asour global shipbuilding continues to be constrained.aftermarket.

We continue to implement actions to mitigate the impact on our earnings with thefrom lower demand and an increasingly competitive environment. In addition, we are investing in products and technologies thatdesigned to help solve our customers’ most difficult problems.  We expect to further simplify CIRCOR by standardizing technology, reducingrationalizing facilities, consolidating suppliers and achieving world class operational excellence, including working capital management. We believe our cash flow from

operations and financing capacity is adequate to support these activities. Finally, continuing to attract and retain talented personnel, including the enhancement of our global sales, operations, product management and engineering organizations, remains an important part of our strategy during 2018.2021.

All significant intercompany balances and transactions have been eliminated in consolidation. For 2017, we managed our businesses in three segments: Energy, Advanced Flow Solutions and Fluid Handling. For 2018, we expect to reorganize our segments by end market: Energy, Aerospace & Defense and Industrial. Prior year financial statements will be adjusted to reflect this new organization basis beginning in the first quarter of 2018.

The Company’s discussion and analysis of its financial condition and results of operations is based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.America ("GAAP"). The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure of contingent liabilities. On an on-going basis, management evaluates its significant estimates, including those related to contracts accounted for under the percentage of completion method, bad debts, inventories, intangible assets and goodwill, purchase accounting, delivery penalties, income taxes, and contingencies including litigation. Management believes the most complex and sensitive judgments, because of their significance to the consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Management bases its estimates on historical experience, current market and economic conditions and other assumptions that management believes are reasonable. The results of these estimates form the basis for judgments about the carrying value of assets and liabilities where the values are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no significant changes from the methodology applied by management for critical accounting estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2019.

For goodwill, we perform an impairment assessment at the reporting unit level on an annual basis as of the end of our October month end or more frequently if circumstances warrant. On March 29, 2020, the Company reorganized its reporting units and had its stock price drop below book value, which the Company determined were triggering events requiring an assessment of its goodwill and indefinite-lived trade names. Based on our impairment assessment as of March 29, 2020, we concluded that our goodwill in the Industrial reporting unit was impaired and, accordingly, recorded a goodwill impairment charge of $116.2 million in the quarterly period ended March 29, 2020.

In fiscal year 2017October 2020 when we performed our analysis,annual goodwill impairment assessment, the fair value of each of our reporting units exceeded the respective carrying amount, and no goodwill impairments were recorded. The fair values utilized for our 20172020 goodwill assessment exceeded the carrying amounts by more than 20% and 10% for our Energy, Aerospace & Defense and Power, Process, & Industrial reporting units, respectively. The growth rate assumptions utilized were consistent with growth rates within the markets that we serve.

The Chief Operating Decision Maker ("CODM") is the function that allocates the resources of the enterprise and assesses the performance of the Company's reportable operating segments. CIRCOR has determined that the CODM is solely comprised of its CEO,Chief Executive Officer ("CEO"), as the CEO has the ultimate responsibility for CIRCOR strategic decision-making and resource allocation.

Our CODM evaluates segment operating performance using segment operating income. SegmentWe define segment operating income is defined as GAAP operating income excluding intangible amortization and amortization of fair value step-ups of inventory and fixed assets from acquisitions completed subsequent to December 31, 2011, the impact of restructuring relatedrestructuring-related inventory write-offs, impairment charges and special charges or gains. The Company also refers to this measure as adjusted operating income. The Company uses this measure because it helps management understand and evaluate the segments’ core operating results and facilitatefacilitates a comparison of performance for determining incentive compensation achievement.

For information regarding our segment determination refer to Note 17, “Business18, Business Segment and Geographical Information."Information, of the consolidated financial statements included in this Annual Report.

Industrial segment operating income decreased $51.0 million, or 8%56%, in 20172020 compared to 2016.2019. Segment operating income excluding divestitures decreased $33.7 million, or 46%, to $39.8 million for 2020 compared to $73.5 million for 2019, driven by decreases in the Pumps businesses of 31% and the Valves businesses of 49% partially offset by operational efficiencies in headquarters.

Industrial segment orders decreased $181.9 million, or 27%, in 2020 compared to 2019. The increasedecrease was primarily driven by the impact from divestitures of $90.3 million and reductions in the Valves businesses of 17% and the Pumps businesses of 11%.

Aerospace & Defense segment net revenues decreased by $4.8 million, or 2% in 2020 as compared to 2019. The decrease was driven by our October 2016 acquisition of CFS (+13%) and our North American short-cycle business (+12%)Aerospace businesses 28%, partially offset by declines in our large international projects business (-20%).

Segment operating income increased $3.8$6.6 million, or 11%13%, to $37.2$59.1 million for 20172020 compared to $33.5$52.5 million for 2016.2019. The increase in operating income was primarily as a result ofdriven by improved value pricing and operational efficiencies within our aerospace and defense businesses (+29%) and operational improvements within our industrial solutions business (+3%)cost actions taken to mitigate the impact of the COVID-19 pandemic.

Aerospace & Defense segment orders decreased $59.4 million, or 18.9%, which were partially offsetto $254.5 million in 2020 compared to $313.9 million in 2019, driven by declines due to operational inefficienciesdecreases in our powerDefense businesses of 5% and processour Aerospace businesses (-20%)of 36%.