|
|
|
☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Delaware
|
|
34-1712937
|
State or other jurisdiction of
incorporation or organization
|
|
(I.R.S. Employer
Identification No.)
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Common Stock, par value $0.01
|
|
GTLS
|
|
The NASDAQ Stock Market LLC
|
|
Large accelerated filer
|
|
☒
|
|
Accelerated filer
|
|
☐
|
Non-accelerated filer
|
|
☐
|
|
Smaller reporting company
|
|
☐
|
|
|
|
|
Emerging growth company
|
|
☐
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 1.
|
Business
|
•
|
Cryogenic bulk storage systems (including LNG cryogenic systems and after market services) accounted for 17.3%, 16.4% and 18.0% of consolidated sales for the years ended December 31, 2019, 2018 and 2017 respectively.
|
•
|
Cryogenic bulk storage systems, which include LNG cryogenic systems and after market services, accounted for 13.0%, 15.0% and 18.8% of consolidated sales for the years ended December 31, 2019, 2018 and 2017 respectively.
|
•
|
Cryogenic packaged gas systems, which include LNG cryogenic systems and after market services accounted for 16.1%, 19.5% and 19.6% of consolidated sales for the years ended December 31, 2019, 2018 and 2017 respectively.
|
•
|
We design, manufacture, install, service and maintain bulk and packaged gas cryogenic solutions for the storage, distribution, vaporization, and application of industrial gases, which accounted for 23.5%, 27.8% and 31.5% of consolidated sales for the years ended December 31, 2019, 2018 and 2017 respectively.
|
Item 1A.
|
Risk Factors
|
•
|
Any business acquired may not be integrated successfully and may not prove profitable;
|
•
|
The price we pay for any business acquired may overstate the value of that business or otherwise be too high;
|
•
|
Liabilities we take on through the acquisition may prove to be higher than we expected;
|
•
|
We may fail to achieve acquisition synergies; or
|
•
|
The focus on the integration of operations of acquired entities may divert management’s attention from the day-to-day operation of our businesses.
|
•
|
changes in foreign currency exchange rates;
|
•
|
exchange controls and currency restrictions;
|
•
|
changes in a specific country’s or region’s political, social or economic conditions, particularly in emerging markets;
|
•
|
civil unrest, turmoil or outbreak of disease or illness, such as the novel coronavirus, in any of the countries in which we sell our products or in which we or our suppliers operate;
|
•
|
tariffs, other trade protection measures, as discussed in more detail below, and import or export licensing requirements;
|
•
|
potential adverse changes in trade agreements between the United States and foreign countries, including the recently enacted United States-Mexico-Canada Agreement (USMCA), among the United States, Canada and Mexico;
|
•
|
uncertainty and potentially negative consequences relating to the implementation of the United Kingdom’s decision to leave the European Union (“Brexit”);
|
•
|
potentially negative consequences from changes in U.S. and international tax laws;
|
•
|
difficulty in staffing and managing geographically widespread operations;
|
•
|
differing labor regulations;
|
•
|
requirements relating to withholding taxes on remittances and other payments by subsidiaries;
|
•
|
different regulatory regimes controlling the protection of our intellectual property;
|
•
|
restrictions on our ability to own or operate subsidiaries, make investments or acquire new businesses in these jurisdictions;
|
•
|
restrictions on our ability to repatriate dividends from our foreign subsidiaries;
|
•
|
difficulty in collecting international accounts receivable;
|
•
|
difficulty in enforcement of contractual obligations under non-U.S. law;
|
•
|
transportation delays or interruptions;
|
•
|
changes in regulatory requirements; and
|
•
|
the burden of complying with multiple and potentially conflicting laws.
|
•
|
difficulty in generating sufficient cash flow and reduced availability of cash for our operations and other business activities;
|
•
|
difficulty in obtaining financing in the future;
|
•
|
exposure to risk of increased interest rates due to variable rates of interest under our senior secured revolving credit facility;
|
•
|
vulnerability to general economic downturns and adverse industry conditions;
|
•
|
increased competitive disadvantage due to our debt service obligations;
|
•
|
adverse customer reaction to our debt levels;
|
•
|
inability to comply with covenants in, and potential for default under, our debt instruments; and
|
•
|
failure to refinance any of our debt. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”
|
•
|
incur or guarantee additional indebtedness;
|
•
|
create liens;
|
•
|
pay dividends based on our leverage ratio and make other distributions in respect of our capital stock;
|
•
|
redeem or buy back our capital stock based on our leverage ratio;
|
•
|
make certain investments or certain other restricted payments;
|
•
|
enter into a new line of business;
|
•
|
sell or transfer certain kinds of assets;
|
•
|
enter into certain types of transactions with affiliates; and
|
•
|
effect mergers or consolidations.
|
•
|
limit our ability to plan for or react to market or economic conditions or meet capital needs or otherwise restrict our activities or business plans; and
|
•
|
adversely affect our ability to finance our operations, acquisitions, investments or strategic alliances or other capital needs or to engage in other business activities that would be in our interest.
|
•
|
declare all borrowings outstanding, together with accrued and unpaid interest, to be immediately due and payable; or
|
•
|
require us to apply all of our available cash to repay the borrowings,
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Location
|
|
Segment
|
|
Ownership
|
|
Use
|
Ball Ground, Georgia, U.S.
|
|
Corporate
|
|
Leased
|
|
Office
|
Luxembourg, Luxembourg
|
|
Corporate
|
|
Leased
|
|
Office
|
Chennai, India
|
|
D&S East
|
|
Owned
|
|
Manufacturing/Office
|
Decin, Czech Republic
|
|
D&S East
|
|
Owned
|
|
Manufacturing/Office
|
Goch, Germany
|
|
D&S East
|
|
Owned
|
|
Manufacturing/Office
|
Kuala Lumpur, Malaysia
|
|
D&S East
|
|
Leased
|
|
Marketing & Sales/Office
|
Lery, France
|
|
D&S East
|
|
Owned
|
|
Manufacturing/Office
|
Changzhou, China
|
|
D&S East
|
|
Owned
|
|
Manufacturing/Office
|
Milan, Italy
|
|
D&S East and E&C Cryogenics
|
|
Leased/Owned
|
|
Manufacturing/Office
|
Canton, Georgia, U.S.
|
|
D&S West
|
|
Leased/Owned
|
|
Manufacturing/Office/Service
|
Chengdu, China
|
|
D&S West
|
|
Owned
|
|
Manufacturing/Office
|
New Prague, Minnesota, U.S.
|
|
D&S West
|
|
Leased/Owned
|
|
Manufacturing/Office/Service
|
Houston, Texas, U.S.
|
|
D&S West and E&C Cryogenics
|
|
Leased/Owned
|
|
Manufacturing/Office/Service
|
Franklin, Indiana, U.S.
|
|
E&C Cryogenics
|
|
Leased
|
|
Manufacturing/Office/Service
|
La Crosse, Wisconsin, U.S.
|
|
E&C Cryogenics
|
|
Owned
|
|
Manufacturing/Office
|
New Iberia, Louisiana, U.S.
|
|
E&C Cryogenics
|
|
Leased
|
|
Manufacturing
|
The Woodlands, Texas, U.S.
|
|
E&C Cryogenics
|
|
Leased
|
|
Office
|
Beasley, Texas, U.S.
|
|
E&C FinFans
|
|
Owned
|
|
Manufacturing/Office
|
Changshu, China (1)
|
|
E&C FinFans
|
|
Leased
|
|
Manufacturing/Office
|
Monterey, Mexico
|
|
E&C FinFans
|
|
Owned
|
|
Manufacturing/Office
|
Pombia, Italy
|
|
E&C FinFans
|
|
Leased
|
|
Manufacturing/Office
|
Tulsa, Oklahoma, U.S.
|
|
E&C FinFans
|
|
Leased/Owned
|
|
Manufacturing/Office
|
(1)
|
This facility is designated for closure April 30, 2020.
|
Item 3.
|
Legal Proceedings
|
Item 4A.
|
Executive Officers of the Registrant*
|
Name
|
|
Age
|
|
Position
|
Jillian C. (Jill) Evanko
|
|
42
|
|
Chief Executive Officer, President, Chief Financial Officer and Treasurer
|
John Bishop
|
|
46
|
|
Chief Operating Officer
|
Gerald F. (Gerry) Vinci
|
|
54
|
|
Vice President, Chief Human Resources Officer
|
Herbert G. Hotchkiss
|
|
49
|
|
Vice President, General Counsel and Secretary
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
December 31,
|
||||||||||||||||||||||
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||||
Chart Industries, Inc.
|
$
|
100.00
|
|
|
$
|
52.51
|
|
|
$
|
105.32
|
|
|
$
|
137.02
|
|
|
$
|
190.15
|
|
|
$
|
197.34
|
|
S&P SmallCap 600 Index
|
100.00
|
|
|
98.03
|
|
|
124.06
|
|
|
140.48
|
|
|
128.56
|
|
|
157.85
|
|
||||||
Peer Group Index
|
100.00
|
|
|
89.67
|
|
|
117.14
|
|
|
139.30
|
|
|
114.40
|
|
|
154.09
|
|
|
|
Issuer Purchases of Equity Securities
|
||||||||||||
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||
October 1 — 31, 2019
|
|
138
|
|
|
$
|
59.99
|
|
|
—
|
|
|
$
|
—
|
|
November 1 — 30, 2019
|
|
154
|
|
|
57.56
|
|
|
—
|
|
|
—
|
|
||
December 1 — 31, 2019
|
|
166
|
|
|
55.85
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
458
|
|
|
$
|
57.67
|
|
|
—
|
|
|
$
|
—
|
|
Item 6.
|
Selected Financial Data
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales (1) (2) (3)
|
$
|
1,299.1
|
|
|
$
|
1,084.3
|
|
|
$
|
842.9
|
|
|
$
|
722.0
|
|
|
$
|
883.2
|
|
Cost of sales (4)
|
962.3
|
|
|
788.4
|
|
|
611.3
|
|
|
512.3
|
|
|
631.1
|
|
|||||
Gross profit
|
336.8
|
|
|
295.9
|
|
|
231.6
|
|
|
209.7
|
|
|
252.1
|
|
|||||
Operating expenses (5) (6) (7) (8) (9) (10)
|
255.9
|
|
|
203.8
|
|
|
193.1
|
|
|
167.5
|
|
|
174.8
|
|
|||||
Asset impairments
|
—
|
|
|
—
|
|
|
—
|
|
|
1.2
|
|
|
151.8
|
|
|||||
Operating income (loss) (1) (2) (3)
|
80.9
|
|
|
92.1
|
|
|
38.5
|
|
|
41.0
|
|
|
(74.5
|
)
|
|||||
Interest expense, net (including deferred financing costs amortization)
|
28.3
|
|
|
22.7
|
|
|
18.6
|
|
|
16.4
|
|
|
13.9
|
|
|||||
Loss on extinguishment of debt (11)
|
—
|
|
|
—
|
|
|
4.9
|
|
|
—
|
|
|
—
|
|
|||||
Foreign currency (gain) loss
|
(0.2
|
)
|
|
0.4
|
|
|
3.9
|
|
|
0.5
|
|
|
2.0
|
|
|||||
Other expenses, net
|
28.1
|
|
|
23.1
|
|
|
27.4
|
|
|
16.9
|
|
|
15.9
|
|
|||||
Income (loss) before income taxes
|
52.8
|
|
|
69.0
|
|
|
11.1
|
|
|
24.1
|
|
|
(90.4
|
)
|
|||||
Income tax expense (benefit), net (12)
|
6.0
|
|
|
13.4
|
|
|
(16.6
|
)
|
|
10.6
|
|
|
8.3
|
|
|||||
Net income (loss) from continuing operations
|
46.8
|
|
|
55.6
|
|
|
27.7
|
|
|
13.5
|
|
|
(98.7
|
)
|
|||||
Income (loss) from discontinued operations,
net of tax (13)
|
—
|
|
|
34.4
|
|
|
1.8
|
|
|
11.2
|
|
|
(105.8
|
)
|
|||||
Net income (loss)
|
46.8
|
|
|
90.0
|
|
|
29.5
|
|
|
24.7
|
|
|
(204.5
|
)
|
|||||
Less: Income (loss) attributable to noncontrolling interests, net of taxes
|
0.4
|
|
|
2.0
|
|
|
1.5
|
|
|
(3.5
|
)
|
|
(1.5
|
)
|
|||||
Net income (loss) attributable to Chart Industries, Inc.
|
$
|
46.4
|
|
|
$
|
88.0
|
|
|
$
|
28.0
|
|
|
$
|
28.2
|
|
|
$
|
(203.0
|
)
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Earnings Per Share Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings (loss) per common share attributable to Chart Industries, Inc.
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations
|
$
|
1.37
|
|
|
$
|
1.73
|
|
|
$
|
0.85
|
|
|
$
|
0.55
|
|
|
$
|
(3.19
|
)
|
Income (loss) from discontinued operations
|
—
|
|
|
1.10
|
|
|
0.06
|
|
|
0.37
|
|
|
(3.47
|
)
|
|||||
Net income (loss) attributable to Chart Industries, Inc.
|
$
|
1.37
|
|
|
$
|
2.83
|
|
|
$
|
0.91
|
|
|
$
|
0.92
|
|
|
$
|
(6.66
|
)
|
Diluted earnings (loss) per common share attributable to Chart Industries, Inc.
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations
|
$
|
1.32
|
|
|
$
|
1.67
|
|
|
$
|
0.84
|
|
|
$
|
0.55
|
|
|
$
|
(3.19
|
)
|
Income (loss) from discontinued operations
|
—
|
|
|
1.06
|
|
|
0.05
|
|
|
0.36
|
|
|
(3.47
|
)
|
|||||
Net income (loss) attributable to Chart Industries, Inc.
|
$
|
1.32
|
|
|
$
|
2.73
|
|
|
$
|
0.89
|
|
|
$
|
0.91
|
|
|
$
|
(6.66
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted-average shares — basic
|
33.91
|
|
|
31.05
|
|
|
30.74
|
|
|
30.58
|
|
|
30.49
|
|
|||||
Weighted-average shares — diluted (14)
|
35.17
|
|
|
32.20
|
|
|
31.34
|
|
|
30.98
|
|
|
30.49
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash provided by operating activities
|
$
|
133.9
|
|
|
$
|
119.0
|
|
|
$
|
44.3
|
|
|
$
|
169.3
|
|
|
$
|
98.4
|
|
Cash used in investing activities
|
(642.7
|
)
|
|
(260.6
|
)
|
|
(477.8
|
)
|
|
(17.0
|
)
|
|
(70.2
|
)
|
|||||
Cash provided by financing activities
|
511.6
|
|
|
38.2
|
|
|
275.2
|
|
|
7.7
|
|
|
0.4
|
|
|||||
Cash provided by (used in) discontinued operations
|
—
|
|
|
102.5
|
|
|
0.5
|
|
|
0.4
|
|
|
(0.7
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization, including deferred financing costs amortization (15)
|
$
|
81.8
|
|
|
$
|
52.1
|
|
|
$
|
38.9
|
|
|
$
|
34.4
|
|
|
$
|
36.2
|
|
|
As of December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
119.0
|
|
|
$
|
118.1
|
|
|
$
|
122.6
|
|
|
$
|
282.0
|
|
|
$
|
123.7
|
|
Working capital (16)
|
192.6
|
|
|
177.0
|
|
|
73.0
|
|
|
60.4
|
|
|
139.1
|
|
|||||
Goodwill (17) (18) (19)
|
844.9
|
|
|
520.7
|
|
|
459.7
|
|
|
208.9
|
|
|
209.3
|
|
|||||
Identifiable intangible assets, net (17) (18) (19)
|
529.1
|
|
|
330.4
|
|
|
286.4
|
|
|
74.5
|
|
|
84.8
|
|
|||||
Total assets (17) (18) (19)
|
2,481.4
|
|
|
1,897.7
|
|
|
1,724.7
|
|
|
1,233.0
|
|
|
1,200.1
|
|
|||||
Long-term debt
|
761.0
|
|
|
533.2
|
|
|
439.2
|
|
|
233.7
|
|
|
213.8
|
|
|||||
Total debt (20)
|
777.3
|
|
|
544.4
|
|
|
498.1
|
|
|
240.2
|
|
|
220.0
|
|
|||||
Chart Industries, Inc. shareholders’ equity
|
1,227.6
|
|
|
884.5
|
|
|
802.2
|
|
|
697.2
|
|
|
670.6
|
|
(1)
|
Includes sales and operating income for AXC in the E&C FinFans segment results since the acquisition date, July 1, 2019 as follows:
|
•
|
Sales were $103.1 for the year ended December 31, 2019, and
|
•
|
Operating income was $4.6 for the year ended December 31, 2019, which included $18.4 of depreciation and amortization expense.
|
(2)
|
Includes sales and operating (loss) income for VRV in the D&S East and E&C Cryogenics segments results since the acquisition date, November 15, 2018 as follows:
|
•
|
Sales were $104.0 (D&S East: $57.1, E&C Cryogenics: $46.9) for the year ended December 31, 2019,
|
•
|
Sales were $14.1 (D&S East: $10.3, E&C Cryogenics: $3.8) for the year ended December 31, 2018,
|
•
|
Operating loss was $11.2 (D&S East: $9.7, E&C Cryogenics: $1.5) for the year ended December 31, 2019, and
|
•
|
Operating (loss) income was $(2.0) (D&S East: $0.2, E&C Cryogenics: $(2.2)) for the year ended December 31, 2018, which included $1.5 of depreciation and amortization expense and $1.6 in expense recognized in the cost of sales related to inventory step-up.
|
(3)
|
Includes sales and operating income for Hudson in the E&C FinFans segment results since the acquisition date, September 20, 2017 as follows:
|
•
|
Sales were $180.3 and $58.0 for the years ended December 31, 2018 and 2017, respectively, and
|
•
|
Operating income was $19.0 and $6.4 for the years ended December 31, 2018 and 2017, respectively.
|
(4)
|
Cost of sales includes restructuring costs of $12.2, $0.8, $2.7, $3.5 and $2.9 for the years ended December 31, 2019, 2018, 2017, 2016 and 2015, respectively.
|
(5)
|
Operating expenses include selling, general and administrative expenses and amortization expense. Amortization expense related to intangible assets was $39.8, $21.9, $12.2, $8.8 and $9.2 for the years ended December 31, 2019, 2018, 2017, 2016 and 2015, respectively.
|
(6)
|
Includes an expense of $4.0 recorded to cost of sales related to the estimated costs of the aluminum cryobiological tank recall for the year ended December 31, 2018.
|
(7)
|
Operating income (loss) includes restructuring costs of $15.6, $4.4, $11.2, $9.5 and $6.4 for the years ended December 31, 2019, 2018, 2017, 2016 and 2015, respectively.
|
(8)
|
Includes transaction-related costs of $5.4 for the year ended December 31, 2019, which were mainly related to the AXC acquisition. Includes integration costs of $1.6 related to the AXC acquisition for the year ended December 31, 2019.
|
(9)
|
Includes transaction-related costs of $2.1, $10.1, $0.4 and $0.7 for the years ended December 31, 2018, 2017, 2016 and 2015, respectively.
|
(10)
|
During the year ended December 31, 2018, we recorded net severance costs of $2.3 primarily related to headcount reductions associated with the strategic realignment of our segment structure, which includes $1.8 in payroll severance costs partially offset by a $0.9 credit due to related share-based compensation forfeitures for 2018. Includes net severance costs of $1.4 related to the departure of our former CEO, which includes $3.2 in payroll severance costs partially offset by a $1.8 credit due to related share-based compensation forfeitures for 2018.
|
(11)
|
During the year ended December 31, 2017, we recorded a $4.9 loss on extinguishment of debt associated with the repurchase of $192.9 principal amount of our $250.0 2.00% convertible notes due August 2018 and refinance of our senior secured revolving credit facility.
|
(12)
|
Includes a one-time $22.5 net favorable tax benefit that was recorded during the fourth quarter of 2017, which resulted from the enactment of the Tax Cuts and Jobs Act. This benefit mainly consisted of a one-time, provisional benefit of $26.9 related to the remeasurement of certain of our deferred tax liabilities using the lower U.S. federal corporate tax rate of 21%. This was partially offset by (i) a one-time, provisional charge of $8.7 related to the deemed repatriation transition tax, which is a tax on previously untaxed accumulated earnings and profits of certain of our foreign subsidiaries, and (ii) a one-time tax expense and tax benefit of $4.5 and $8.7, respectively, related to our intent to amend pre-acquisition Hudson U.S. federal tax returns. We have completed our analysis to determine the effect of the Tax Cuts and Jobs Act, and as such, we have recorded an additional tax benefit of $1.8 million.
|
(13)
|
Includes gain on sale of the CAIRE business of $34.3, net of taxes of $2.6, for the year ended December 31, 2018.
|
(14)
|
Zero incremental shares from share-based awards are included in the computation of diluted net loss per share for periods in which a net loss occurs, because to do so would be anti-dilutive.
|
(15)
|
Includes deferred financing costs amortization of $3.0 for the year ended December 31, 2019 and $1.3 for each of the years ended December 31, 2018, 2017 and 2016 and 2015.
|
(16)
|
Working capital is defined as current assets excluding cash and cash equivalents minus current liabilities excluding short-term debt and current portion of long-term debt (including current convertible notes, if applicable).
|
(17)
|
Total assets at December 31, 2017 included $572.8 related to Hudson of which $238.3 and $211.0 represented acquired goodwill and intangible assets, net, respectively. For further information, see Note 13, “Business Combinations,” in the consolidated financial statements located elsewhere in this report.
|
(18)
|
Total assets at December 31, 2018 included $327.8 related to VRV of which $64.0 and $66.4 represented acquired goodwill and identifiable intangible assets, net, respectively. For further information, see Note 13, “Business Combinations,” in the consolidated financial statements located elsewhere in this report.
|
(19)
|
Total assets at December 31, 2019 included $593.8 related to AXC of which $287.5 and $256.4 represented acquired goodwill and identifiable intangible assets, net, respectively. For further information, see Note 13, “Business Combinations,” in the consolidated financial statements located elsewhere in this report.
|
(20)
|
Total debt at December 31, 2019 includes $212.2 convertible notes due November 2024, net of unamortized discount and debt issuance costs, $560.7 senior secured revolving credit facility and term loan, net of debt issuance costs and $4.4 foreign facilities. At December 31, 2019 current maturities were $15.7.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
2019
|
|
2018
|
|
2017
|
|||
Sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales (1) (2)
|
74.1
|
|
|
72.7
|
|
|
72.5
|
|
Gross profit
|
25.9
|
|
|
27.3
|
|
|
27.5
|
|
Selling, general and administrative expenses (3) - (8)
|
16.6
|
|
|
16.8
|
|
|
21.5
|
|
Amortization expense
|
3.1
|
|
|
2.0
|
|
|
1.4
|
|
Operating income (9)
|
6.2
|
|
|
8.5
|
|
|
4.6
|
|
Interest expense, net (10) (11)
|
1.9
|
|
|
2.0
|
|
|
2.1
|
|
Loss on extinguishment of debt (12)
|
—
|
|
|
—
|
|
|
0.6
|
|
Financing costs amortization
|
0.2
|
|
|
0.1
|
|
|
0.2
|
|
Foreign currency loss
|
—
|
|
|
—
|
|
|
0.5
|
|
Income tax expense (benefit), net (9)
|
0.5
|
|
|
1.2
|
|
|
(2.0
|
)
|
Net income from continuing operations
|
3.6
|
|
|
5.1
|
|
|
3.3
|
|
Income from discontinued operations, net of tax
|
—
|
|
|
3.2
|
|
|
0.2
|
|
Net income
|
3.6
|
|
|
8.3
|
|
|
3.5
|
|
Income attributable to noncontrolling interests, net of taxes
|
—
|
|
|
0.2
|
|
|
0.2
|
|
Net income attributable to Chart Industries, Inc.
|
3.6
|
|
|
8.1
|
|
|
3.3
|
|
(1)
|
Cost of sales includes restructuring costs of $12.2, $0.8 and $2.7 for the years ended December 31, 2019, 2018 and 2017, respectively.
|
(2)
|
Includes an expense of $4.0 recorded to cost of sales related to the estimated costs of the aluminum cryobiological tank recall for the year ended December 31, 2018.
|
(3)
|
Selling, general and administrative expenses includes restructuring costs of $3.4, $3.6 and $8.5 for the years ended December 31, 2019, 2018 and 2017, respectively.
|
(4)
|
Includes transaction-related costs of $5.4 for the year ended December 31, 2019, which were mainly related to the AXC acquisition. Includes integration costs of $1.6 related to the AXC acquisition for the year ended December 31, 2019.
|
(5)
|
Includes transaction-related costs of $2.1 for the year ended December 31, 2018, which were mainly related to the VRV acquisition. Includes integration costs of $2.7 and $0.8 related to the VRV acquisition for the years ended December 31, 2019 and 2018 respectively.
|
(6)
|
Includes transaction-related costs of $10.1 for the year ended December 31, 2017.
|
(7)
|
During the year ended December 31, 2018, we recorded net severance costs of $2.3 primarily related to headcount reductions associated with the strategic realignment of our segment structure, which includes $1.8 in payroll severance costs partially offset by a $0.9 credit due to related share-based compensation forfeitures for 2018. Includes net severance costs of $1.4 related to the departure of our former CEO, which includes $3.2 in payroll severance costs partially offset by a $1.8 credit due to related share-based compensation forfeitures for 2018.
|
(8)
|
Includes share-based compensation expense of $9.0, $4.9 and $10.6, representing 0.7%, 0.5% and 1.3% of sales, for the years ended December 31, 2019, 2018 and 2017, respectively.
|
(9)
|
Includes a one-time $22.5 net favorable tax benefit that was recorded during the fourth quarter of 2017, which resulted from the enactment of the Tax Cuts and Jobs Act. This benefit mainly consisted of a one-time, provisional benefit of $26.9 related to the remeasurement of certain of our deferred tax liabilities using the lower U.S. federal corporate tax rate of 21%. This was partially offset by (i) a one-time, provisional charge of $8.7 related to the deemed repatriation transition tax, which is a tax on previously untaxed accumulated earnings and profits of certain of our foreign subsidiaries, and (ii) a one-time tax expense and tax benefit of $4.5 and $8.7, respectively, related to our intent to amend pre-acquisition Hudson U.S. federal tax returns. We have completed our analysis to determine the effect of the Tax Cuts and Jobs Act, and as such, we have recorded an additional tax benefit of $1.8.
|
(10)
|
Includes $7.6 and $7.2 of non-cash interest accretion expense related to the carrying amount of the 1.00% Convertible Senior Subordinated Notes due November 2024 (the “2024 Notes”), representing 0.6% and 0.7% of sales for the years ended December 31, 2019 and 2018, respectively.
|
(11)
|
Includes $1.9 and $11.8 of non-cash interest accretion expense related to the carrying amount of the 2.00% Convertible Senior Subordinated Notes due August 2018 (the “2018 Notes”), representing 0.2%, and 1.4% of sales, for the years ended December 31, 2018 and 2017, respectively.
|
(12)
|
During the year ended December 31, 2017, we recorded a $4.9 loss on extinguishment of debt associated with the repurchase of $192.9 principal amount of our 2018 Notes and refinance of our senior secured revolving credit facility.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Sales
|
|
|
|
|
|
||||||
D&S East
|
$
|
293.4
|
|
|
$
|
246.3
|
|
|
$
|
232.3
|
|
D&S West
|
461.7
|
|
|
455.5
|
|
|
400.6
|
|
|||
E&C Cryogenics
|
190.2
|
|
|
136.9
|
|
|
125.5
|
|
|||
E&C FinFans
|
361.7
|
|
|
253.6
|
|
|
100.1
|
|
|||
Intersegment eliminations
|
(7.9
|
)
|
|
(8.0
|
)
|
|
(15.6
|
)
|
|||
Consolidated
|
$
|
1,299.1
|
|
|
$
|
1,084.3
|
|
|
$
|
842.9
|
|
Gross Profit
|
|
|
|
|
|
||||||
D&S East
|
$
|
45.2
|
|
|
$
|
52.4
|
|
|
$
|
48.3
|
|
D&S West (1)
|
157.9
|
|
|
156.8
|
|
|
141.8
|
|
|||
E&C Cryogenics
|
33.5
|
|
|
28.6
|
|
|
23.6
|
|
|||
E&C FinFans
|
102.5
|
|
|
60.6
|
|
|
21.5
|
|
|||
Intersegment eliminations
|
(2.3
|
)
|
|
(2.5
|
)
|
|
(3.6
|
)
|
|||
Consolidated
|
$
|
336.8
|
|
|
$
|
295.9
|
|
|
$
|
231.6
|
|
Gross Profit Margin
|
|
|
|
|
|
||||||
D&S East
|
15.4
|
%
|
|
21.3
|
%
|
|
20.8
|
%
|
|||
D&S West
|
34.2
|
%
|
|
34.4
|
%
|
|
35.4
|
%
|
|||
E&C Cryogenics
|
17.6
|
%
|
|
20.9
|
%
|
|
18.8
|
%
|
|||
E&C FinFans
|
28.3
|
%
|
|
23.9
|
%
|
|
21.5
|
%
|
|||
Consolidated
|
25.9
|
%
|
|
27.3
|
%
|
|
27.5
|
%
|
|||
SG&A Expenses
|
|
|
|
|
|
||||||
D&S East
|
$
|
34.7
|
|
|
$
|
31.6
|
|
|
$
|
33.0
|
|
D&S West
|
48.7
|
|
|
51.0
|
|
|
52.0
|
|
|||
E&C Cryogenics
|
28.7
|
|
|
23.3
|
|
|
23.4
|
|
|||
E&C FinFans
|
33.6
|
|
|
24.8
|
|
|
10.9
|
|
|||
Corporate
|
70.4
|
|
|
51.2
|
|
|
61.6
|
|
|||
Consolidated
|
$
|
216.1
|
|
|
$
|
181.9
|
|
|
$
|
180.9
|
|
SG&A Expenses (% of Sales)
|
|
|
|
|
|
||||||
D&S East
|
11.8
|
%
|
|
12.8
|
%
|
|
14.2
|
%
|
|||
D&S West
|
10.5
|
%
|
|
11.2
|
%
|
|
13.0
|
%
|
|||
E&C Cryogenics
|
15.1
|
%
|
|
17.0
|
%
|
|
18.6
|
%
|
|||
E&C FinFans
|
9.3
|
%
|
|
9.8
|
%
|
|
10.9
|
%
|
|||
Consolidated
|
16.6
|
%
|
|
16.8
|
%
|
|
21.5
|
%
|
|||
Operating Income (Loss) (1) (2)
|
|
|
|
|
|
||||||
D&S East
|
$
|
6.9
|
|
|
$
|
19.3
|
|
|
$
|
14.2
|
|
D&S West
|
104.5
|
|
|
101.2
|
|
|
85.2
|
|
|||
E&C Cryogenics
|
1.6
|
|
|
1.8
|
|
|
(2.1
|
)
|
|||
E&C FinFans
|
40.6
|
|
|
23.7
|
|
|
7.2
|
|
|||
Corporate (3) (4) (5) (6)
|
(70.4
|
)
|
|
(51.4
|
)
|
|
(62.4
|
)
|
|||
Intersegment eliminations
|
(2.3
|
)
|
|
(2.5
|
)
|
|
(3.6
|
)
|
|||
Consolidated
|
$
|
80.9
|
|
|
$
|
92.1
|
|
|
$
|
38.5
|
|
Operating Margin
|
|
|
|
|
|
||||||
D&S East
|
2.4
|
%
|
|
7.8
|
%
|
|
6.1
|
%
|
|||
D&S West
|
22.6
|
%
|
|
22.2
|
%
|
|
21.3
|
%
|
|||
E&C Cryogenics
|
0.8
|
%
|
|
1.3
|
%
|
|
(1.7
|
)%
|
|||
E&C FinFans
|
11.2
|
%
|
|
9.3
|
%
|
|
7.2
|
%
|
|||
Consolidated
|
6.2
|
%
|
|
8.5
|
%
|
|
4.6
|
%
|
(1)
|
Includes an expense of $4.0 recorded to cost of sales in D&S West related to the estimated costs of the aluminum cryobiological tank recall for the year ended December 31, 2018.
|
(2)
|
Restructuring costs for the years ended:
|
•
|
December 31, 2019 were $15.6 ($8.5 - D&S East, $0.9 - D&S West, $2.5 - E&C Cryogenics, $3.5 - E&C FinFans, and $0.2 - Corporate);
|
•
|
December 31, 2018 were $4.4 ($1.4 - D&S East, $0.6 - E&C Cryogenics, $0.1 - E&C FinFans, and $2.3 - Corporate); and
|
•
|
December 31, 2017 were $11.2 ($1.7 - D&S East, $1.1 - D&S West, $2.1 - E&C Cryogenics, $0.3 - E&C FinFans, and $6.0 - Corporate).
|
(3)
|
Includes transaction-related costs of $5.4 in Corporate for the year ended December 31, 2019, which were mainly related to the AXC acquisition. Includes integration costs of $1.6 in Corporate related to the AXC acquisition for the year ended December 31, 2019.
|
(4)
|
Includes transaction-related costs of $2.1 in Corporate for the year ended December 31, 2018, which were mainly related to the VRV acquisition. Includes integration costs of $2.7 and $0.8 in Corporate related to the VRV acquisition for the years ended December 31, 2019 and 2018 respectively.
|
(5)
|
Includes transaction-related costs of $10.1 for the year ended December 31, 2017.
|
(6)
|
During the year ended December 31, 2018, we recorded net severance costs of $2.3 in Corporate primarily related to headcount reductions associated with the strategic realignment of our segment structure, which includes $1.8 in payroll severance costs partially offset by a $0.9 credit due to related share-based compensation forfeitures for 2018. Includes net severance costs of $1.4 in Corporate related to the departure of our former CEO, which includes $3.2 in payroll severance costs partially offset by a $1.8 credit due to related share-based compensation forfeitures for 2018.
|
|
Year Ended December 31,
|
|
2019 vs. 2018
|
|||||||||||
|
2019
|
|
2018
|
|
Variance
($)
|
|
Variance
(%)
|
|||||||
Sales
|
$
|
293.4
|
|
|
$
|
246.3
|
|
|
$
|
47.1
|
|
|
19.1
|
%
|
Gross Profit
|
45.2
|
|
|
52.4
|
|
|
(7.2
|
)
|
|
(13.7
|
)%
|
|||
Gross Profit Margin
|
15.4
|
%
|
|
21.3
|
%
|
|
|
|
|
|||||
SG&A Expenses
|
$
|
34.7
|
|
|
$
|
31.6
|
|
|
$
|
3.1
|
|
|
9.8
|
%
|
SG&A Expenses (% of Sales)
|
11.8
|
%
|
|
12.8
|
%
|
|
|
|
|
|||||
Operating Income
|
$
|
6.9
|
|
|
$
|
19.3
|
|
|
$
|
(12.4
|
)
|
|
(64.2
|
)%
|
Operating Margin
|
2.4
|
%
|
|
7.8
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
2018 vs. 2017
|
|||||||||||
|
2018
|
|
2017
|
|
Variance
($)
|
|
Variance
(%)
|
|||||||
Sales
|
$
|
246.3
|
|
|
$
|
232.3
|
|
|
$
|
14.0
|
|
|
6.0
|
%
|
Gross Profit
|
52.4
|
|
|
48.3
|
|
|
4.1
|
|
|
8.5
|
%
|
|||
Gross Profit Margin
|
21.3
|
%
|
|
20.8
|
%
|
|
|
|
|
|||||
SG&A Expenses
|
$
|
31.6
|
|
|
$
|
33.0
|
|
|
$
|
(1.4
|
)
|
|
(4.2
|
)%
|
SG&A Expenses (% of Sales)
|
12.8
|
%
|
|
14.2
|
%
|
|
|
|
|
|||||
Operating Income
|
$
|
19.3
|
|
|
$
|
14.2
|
|
|
$
|
5.1
|
|
|
35.9
|
%
|
Operating Margin
|
7.8
|
%
|
|
6.1
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
2019 vs. 2018
|
|||||||||||
|
2019
|
|
2018
|
|
Variance
($)
|
|
Variance
(%)
|
|||||||
Sales
|
$
|
461.7
|
|
|
$
|
455.5
|
|
|
$
|
6.2
|
|
|
1.4
|
%
|
Gross Profit
|
157.9
|
|
|
156.8
|
|
|
1.1
|
|
|
0.7
|
%
|
|||
Gross Profit Margin
|
34.2
|
%
|
|
34.4
|
%
|
|
|
|
|
|||||
SG&A Expenses
|
$
|
48.7
|
|
|
$
|
51.0
|
|
|
$
|
(2.3
|
)
|
|
(4.5
|
)%
|
SG&A Expenses (% of Sales)
|
10.5
|
%
|
|
11.2
|
%
|
|
|
|
|
|||||
Operating Income
|
$
|
104.5
|
|
|
$
|
101.2
|
|
|
$
|
3.3
|
|
|
3.3
|
%
|
Operating Margin
|
22.6
|
%
|
|
22.2
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
2018 vs. 2017
|
|||||||||||
|
2018
|
|
2017
|
|
Variance
($)
|
|
Variance
(%)
|
|||||||
Sales
|
$
|
455.5
|
|
|
$
|
400.6
|
|
|
$
|
54.9
|
|
|
13.7
|
%
|
Gross Profit
|
156.8
|
|
|
141.8
|
|
|
15.0
|
|
|
10.6
|
%
|
|||
Gross Profit Margin
|
34.4
|
%
|
|
35.4
|
%
|
|
|
|
|
|||||
SG&A Expenses
|
$
|
51.0
|
|
|
$
|
52.0
|
|
|
$
|
(1.0
|
)
|
|
(1.9
|
)%
|
SG&A Expenses (% of Sales)
|
11.2
|
%
|
|
13.0
|
%
|
|
|
|
|
|||||
Operating Income
|
$
|
101.2
|
|
|
$
|
85.2
|
|
|
$
|
16.0
|
|
|
18.8
|
%
|
Operating Margin
|
22.2
|
%
|
|
21.3
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
2019 vs. 2018
|
|||||||||||
|
2019
|
|
2018
|
|
Variance
($)
|
|
Variance
(%)
|
|||||||
Sales
|
$
|
190.2
|
|
|
$
|
136.9
|
|
|
$
|
53.3
|
|
|
38.9
|
%
|
Gross Profit
|
33.5
|
|
|
28.6
|
|
|
4.9
|
|
|
17.1
|
%
|
|||
Gross Profit Margin
|
17.6
|
%
|
|
20.9
|
%
|
|
|
|
|
|||||
SG&A Expenses
|
$
|
28.7
|
|
|
$
|
23.3
|
|
|
$
|
5.4
|
|
|
23.2
|
%
|
SG&A Expenses (% of Sales)
|
15.1
|
%
|
|
17.0
|
%
|
|
|
|
|
|||||
Operating Income
|
$
|
1.6
|
|
|
$
|
1.8
|
|
|
$
|
(0.2
|
)
|
|
(11.1
|
)%
|
Operating Margin
|
0.8
|
%
|
|
1.3
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
2019 vs. 2018
|
|||||||||||
|
2019
|
|
2018
|
|
Variance
($)
|
|
Variance
(%)
|
|||||||
Sales
|
$
|
361.7
|
|
|
$
|
253.6
|
|
|
$
|
108.1
|
|
|
42.6
|
%
|
Gross Profit
|
102.5
|
|
|
60.6
|
|
|
41.9
|
|
|
69.1
|
%
|
|||
Gross Profit Margin
|
28.3
|
%
|
|
23.9
|
%
|
|
|
|
|
|||||
SG&A Expenses
|
$
|
33.6
|
|
|
$
|
24.8
|
|
|
$
|
8.8
|
|
|
35.5
|
%
|
SG&A Expenses (% of Sales)
|
9.3
|
%
|
|
9.8
|
%
|
|
|
|
|
|||||
Operating Income
|
$
|
40.6
|
|
|
$
|
23.7
|
|
|
$
|
16.9
|
|
|
71.3
|
%
|
Operating Margin
|
11.2
|
%
|
|
9.3
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
2018 vs. 2017
|
|||||||||||
|
2018
|
|
2017
|
|
Variance
($)
|
|
Variance
(%)
|
|||||||
Sales
|
$
|
253.6
|
|
|
$
|
100.1
|
|
|
$
|
153.5
|
|
|
153.3
|
%
|
Gross Profit
|
60.6
|
|
|
21.5
|
|
|
39.1
|
|
|
181.9
|
%
|
|||
Gross Profit Margin
|
23.9
|
%
|
|
21.5
|
%
|
|
|
|
|
|||||
SG&A Expenses
|
$
|
24.8
|
|
|
$
|
10.9
|
|
|
$
|
13.9
|
|
|
127.5
|
%
|
SG&A Expenses (% of Sales)
|
9.8
|
%
|
|
10.9
|
%
|
|
|
|
|
|||||
Operating Income
|
$
|
23.7
|
|
|
$
|
7.2
|
|
|
$
|
16.5
|
|
|
229.2
|
%
|
Operating Margin
|
9.3
|
%
|
|
7.2
|
%
|
|
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less Than 1 Year
|
|
1 – 3 Years
|
|
3 – 5 Years
|
|
More Than 5 Years
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross debt (1)
|
$
|
829.4
|
|
|
$
|
15.7
|
|
|
$
|
39.3
|
|
|
$
|
774.4
|
|
|
$
|
—
|
|
Contractual convertible notes interest
|
12.5
|
|
|
2.6
|
|
|
5.2
|
|
|
4.7
|
|
|
—
|
|
|||||
Operating leases
|
39.1
|
|
|
7.8
|
|
|
12.5
|
|
|
10.9
|
|
|
7.9
|
|
|||||
Pension obligations (2)
|
4.5
|
|
|
0.6
|
|
|
1.7
|
|
|
2.2
|
|
|
—
|
|
|||||
Total contractual cash obligations
|
$
|
887.7
|
|
|
$
|
27.0
|
|
|
$
|
59.2
|
|
|
$
|
792.7
|
|
|
$
|
8.8
|
|
(1)
|
The $258.8 million principal balance of the 2024 Notes will mature on November 15, 2024.
|
(2)
|
The planned funding of the pension obligations is based upon actuarial and management estimates taking into consideration the current status of the plan.
|
|
Total
|
|
Expiring in 2020
|
|
Expiring in 2021 and beyond
|
||||||
Standby letters of credit
|
$
|
56.3
|
|
|
$
|
4.5
|
|
|
$
|
51.8
|
|
Bank guarantees
|
27.8
|
|
|
0.9
|
|
|
26.9
|
|
|||
Total commercial commitments
|
$
|
84.1
|
|
|
$
|
5.4
|
|
|
$
|
78.7
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
Item 9.
|
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Directors
|
STEVEN W. KRABLIN (2) (3)
|
Chairman of the Board
|
Retired President, Chief Executive Officer and Chairman of the Board
|
T-3 Energy Services, Inc.
|
Oilfield services company that manufactures products used in the drilling, production and transportation of oil and gas
|
|
JILLIAN C. EVANKO
|
Chief Executive Officer, President, Chief Financial Officer and Treasurer
|
Chart Industries, Inc.
|
|
W. DOUGLAS BROWN (1) (2)
|
Retired Vice President, General Counsel and Secretary
|
Air Products and Chemicals, Inc.
|
Supplier of industrial gases, performance materials, and equipment and services
|
|
CAREY CHEN (2) (3)
|
Executive Chairman and President of Cincinnati Incorporated
|
Manufacturer of advanced equipment for the metal fabrication industry
|
|
SINGLETON MCALLISTER (1) (2)
|
Of Counsel and Senior Advisor
|
Husch Blackwell and Husch Blackwell Strategies
|
Law firm and affiliated lobbying and governmental affairs counseling firm
|
|
MICHAEL L. MOLININI (1) (3)
|
Retired Chief Executive Officer and President
|
Airgas, Inc.
|
Supplier of gases, welding equipment and supplies, and safety products
|
|
DAVID M. SAGEHORN (1) (3)
|
Executive Vice President and Chief Financial Officer
|
Oshkosh Corporation
|
Global producer of specialty trucks, truck bodies, and access equipment used in defense, construction and service markets
|
|
ELIZABETH G. SPOMER (1) (2)
|
Retired Executive Vice President
|
Veresen Inc. (former owner of Jordan Cove LNG LLC)
|
Retired President and Chief Executive Officer
|
Jordan Cove LNG LLC, a wholly owned subsidiary of Pembina Pipeline Corporation
|
Diversified energy infrastructure company
|
(1)
|
Compensation Committee
|
(2)
|
Nominations and Corporate Governance Committee
|
(3)
|
Audit Committee
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships, Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
Chart Industries, Inc.
|
||
|
|
|
By:
|
|
/s/ Jillian C. Evanko
|
|
|
Jillian C. Evanko
Chief Executive Officer, President, Chief Financial Officer and Treasurer
(Principal Executive Officer)
|
By:
|
|
|
|
|
|
/s/ Steven W. Krablin
|
|
Chairman of the Board, Director
|
Steven W. Krablin
|
|
|
|
|
|
/s/ Jillian C. Evanko
|
|
Chief Executive Officer, President, Chief Financial Officer and Treasurer and Director
(Principal Executive Officer and Principal Financial Officer)
|
Jillian C. Evanko
|
|
|
|
|
|
/s/ Scott W. Merkle
|
|
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
Scott W. Merkle
|
|
|
|
|
|
/s/ W. Douglas Brown
|
|
Director
|
W. Douglas Brown
|
|
|
|
|
|
/s/ Carey Chen
|
|
Director
|
Carey Chen
|
|
|
|
|
|
/s/ Singleton McAllister
|
|
Director
|
Singleton McAllister
|
|
|
|
|
|
/s/ Michael L. Molinini
|
|
Director
|
Michael L. Molinini
|
|
|
|
|
|
/s/ David M. Sagehorn
|
|
Director
|
David M. Sagehorn
|
|
|
|
|
|
/s/ Elizabeth G. Spomer
|
|
Director
|
Elizabeth G. Spomer
|
|
Audited Consolidated Financial Statements:
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
•
|
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the Company;
|
•
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and the directors of the Company; and
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.
|
/s/ Jillian C. Evanko
|
Jillian C. Evanko
|
Chief Executive Officer, President, Chief Financial Officer and Treasurer
|
•
|
We tested the effectiveness of controls over certain revenue contracts recognized over time, including management’s controls over the estimates of total inputs,
|
•
|
We selected a sample of in process revenue contracts recognized over time and performed the following:
|
•
|
Tested the accuracy and completeness of the inputs incurred to date.
|
•
|
Evaluated the estimates of total inputs by:
|
▪
|
Comparing estimates of total inputs to the original project budget and understanding changes in estimates.
|
▪
|
Evaluating management’s ability to achieve the estimates of total inputs by performing corroborating inquiries with the Company’s project managers, engineers, and/or other relevant site personnel to understand the progress to date and the estimate of total inputs.
|
▪
|
Comparing management’s estimates for the selected contracts to inputs of similar contracts, when applicable.
|
•
|
We evaluated management’s ability to estimate total inputs accurately by comparing actual inputs to management’s historical estimates for contracts that have been fulfilled.
|
•
|
We tested the effectiveness of controls over the valuation of the customer relationship, trademarks and trade names, and unpatented technology, including management’s controls over forecasts of future cash flows and selection of the discount rate and royalty rate for these assets.
|
•
|
We assessed the reasonableness of management’s forecasts of future cash flows by comparing the projections to historical results, certain peer companies, and industry projections.
|
•
|
With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) valuation assumptions, including discount rate and royalty rate by:
|
•
|
Testing the source information underlying the determination of the discount rate and royalty rate and testing the mathematical accuracy of the calculation.
|
•
|
Developing a range of independent estimates and comparing those to the discount rate and royalty rate selected by management.
|
•
|
We evaluated whether the estimated future cash flows were consistent with evidence obtained in other areas of the audit.
|
•
|
We tested the effectiveness of controls over management’s impairment evaluation, including those over the determination of the fair value of each reporting unit, such as controls related to management’s forecasts and selection of the pricing multiples and discount rate.
|
•
|
We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.
|
•
|
We evaluated the reasonableness of management’s forecasts by comparing the forecasts to (1) historical results, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in the Company press releases as well as in analyst and industry reports of the Company and companies in its peer group.
|
•
|
We considered the impact of changes in the industry on management’s forecasts.
|
•
|
With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) valuation assumptions, including discount rate and pricing multiples by:
|
•
|
Testing the source information underlying the determination of the discount rate and pricing multiples and testing the mathematical accuracy of the calculation.
|
•
|
Developing a range of independent estimates and comparing those to the discount rate and pricing multiples selected by management.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Sales
|
$
|
1,299.1
|
|
|
$
|
1,084.3
|
|
|
$
|
842.9
|
|
Cost of sales
|
962.3
|
|
|
788.4
|
|
|
611.3
|
|
|||
Gross profit
|
336.8
|
|
|
295.9
|
|
|
231.6
|
|
|||
Selling, general and administrative expenses
|
216.1
|
|
|
181.9
|
|
|
180.9
|
|
|||
Amortization expense
|
39.8
|
|
|
21.9
|
|
|
12.2
|
|
|||
Operating expenses
|
255.9
|
|
|
203.8
|
|
|
193.1
|
|
|||
Operating income
|
80.9
|
|
|
92.1
|
|
|
38.5
|
|
|||
Other expenses:
|
|
|
|
|
|
||||||
Interest expense, net
|
25.3
|
|
|
21.4
|
|
|
17.3
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
4.9
|
|
|||
Financing costs amortization
|
3.0
|
|
|
1.3
|
|
|
1.3
|
|
|||
Foreign currency (gain) loss
|
(0.2
|
)
|
|
0.4
|
|
|
3.9
|
|
|||
Other expenses, net
|
28.1
|
|
|
23.1
|
|
|
27.4
|
|
|||
Income from continuing operations before income taxes
|
52.8
|
|
|
69.0
|
|
|
11.1
|
|
|||
Income tax expense (benefit):
|
|
|
|
|
|
||||||
Current
|
22.2
|
|
|
8.4
|
|
|
14.8
|
|
|||
Deferred
|
(16.2
|
)
|
|
5.0
|
|
|
(31.4
|
)
|
|||
Income tax expense (benefit), net
|
6.0
|
|
|
13.4
|
|
|
(16.6
|
)
|
|||
Net income from continuing operations
|
46.8
|
|
|
55.6
|
|
|
27.7
|
|
|||
Income from discontinued operations, net of tax
|
—
|
|
|
34.4
|
|
|
1.8
|
|
|||
Net income
|
46.8
|
|
|
90.0
|
|
|
29.5
|
|
|||
Less: Income attributable to noncontrolling interests of continuing operations, net of taxes
|
0.4
|
|
|
2.0
|
|
|
1.5
|
|
|||
Net income attributable to Chart Industries, Inc.
|
$
|
46.4
|
|
|
$
|
88.0
|
|
|
$
|
28.0
|
|
Net income attributable to Chart Industries, Inc.
|
|
|
|
|
|
||||||
Income from continuing operations
|
46.4
|
|
|
53.6
|
|
|
26.2
|
|
|||
Income from discontinued operations
|
—
|
|
|
34.4
|
|
|
1.8
|
|
|||
Net income attributable to Chart Industries, Inc.
|
$
|
46.4
|
|
|
$
|
88.0
|
|
|
$
|
28.0
|
|
Basic earnings per common share attributable to Chart Industries, Inc.
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
1.37
|
|
|
$
|
1.73
|
|
|
$
|
0.85
|
|
Income from discontinued operations
|
—
|
|
|
1.10
|
|
|
0.06
|
|
|||
Net income attributable to Chart Industries, Inc.
|
$
|
1.37
|
|
|
$
|
2.83
|
|
|
$
|
0.91
|
|
Diluted earnings per common share attributable to Chart Industries, Inc.
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
1.32
|
|
|
$
|
1.67
|
|
|
$
|
0.84
|
|
Income from discontinued operations
|
—
|
|
|
1.06
|
|
|
0.05
|
|
|||
Net income attributable to Chart Industries, Inc.
|
$
|
1.32
|
|
|
$
|
2.73
|
|
|
$
|
0.89
|
|
Weighted-average number of common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
33.91
|
|
|
31.05
|
|
|
30.74
|
|
|||
Diluted
|
35.17
|
|
|
32.20
|
|
|
31.34
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
46.8
|
|
|
$
|
90.0
|
|
|
$
|
29.5
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(7.5
|
)
|
|
(19.7
|
)
|
|
26.9
|
|
|||
Defined benefit pension plan:
|
|
|
|
|
|
||||||
Actuarial gain (loss) on remeasurement
|
0.3
|
|
|
(3.5
|
)
|
|
2.4
|
|
|||
Amortization of net loss
|
1.3
|
|
|
0.9
|
|
|
1.2
|
|
|||
Defined benefit pension plan
|
1.6
|
|
|
(2.6
|
)
|
|
3.6
|
|
|||
Other comprehensive (loss) income, before tax
|
(5.9
|
)
|
|
(22.3
|
)
|
|
30.5
|
|
|||
Income tax (expense) benefit related to defined benefit pension plan
|
(0.1
|
)
|
|
0.5
|
|
|
(3.3
|
)
|
|||
Other comprehensive (loss) income, net of taxes
|
(6.0
|
)
|
|
(21.8
|
)
|
|
27.2
|
|
|||
Comprehensive income
|
40.8
|
|
|
68.2
|
|
|
56.7
|
|
|||
Less: Comprehensive income attributable to noncontrolling interests, net of taxes
|
(0.4
|
)
|
|
(2.0
|
)
|
|
(1.6
|
)
|
|||
Comprehensive income attributable to Chart Industries, Inc.
|
$
|
40.4
|
|
|
$
|
66.2
|
|
|
$
|
55.1
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net income
|
$
|
46.8
|
|
|
$
|
90.0
|
|
|
$
|
29.5
|
|
Less: Income from discontinued operations
|
—
|
|
|
34.4
|
|
|
1.8
|
|
|||
Income from continuing operations
|
46.8
|
|
|
55.6
|
|
|
27.7
|
|
|||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
78.8
|
|
|
50.8
|
|
|
37.6
|
|
|||
Interest accretion of convertible notes discount
|
7.6
|
|
|
9.1
|
|
|
12.8
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
4.9
|
|
|||
Financing costs amortization
|
3.0
|
|
|
1.3
|
|
|
1.3
|
|
|||
Employee share-based compensation expense
|
9.0
|
|
|
4.9
|
|
|
10.6
|
|
|||
Unrealized foreign currency transaction loss (gain)
|
0.6
|
|
|
(2.2
|
)
|
|
0.3
|
|
|||
Deferred income tax (benefit) expense
|
(16.2
|
)
|
|
5.0
|
|
|
(31.4
|
)
|
|||
Other non-cash operating activities
|
0.9
|
|
|
(2.5
|
)
|
|
2.3
|
|
|||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
23.6
|
|
|
25.5
|
|
|
(32.8
|
)
|
|||
Inventory
|
9.4
|
|
|
(14.1
|
)
|
|
(22.0
|
)
|
|||
Unbilled contract revenues and other assets
|
(1.6
|
)
|
|
(9.1
|
)
|
|
3.5
|
|
|||
Accounts payable and other liabilities
|
(20.9
|
)
|
|
(10.2
|
)
|
|
13.6
|
|
|||
Customer advances and billings in excess of contract revenue
|
(7.1
|
)
|
|
4.9
|
|
|
15.9
|
|
|||
Net Cash Provided By Operating Activities
|
133.9
|
|
|
119.0
|
|
|
44.3
|
|
|||
INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Acquisition of businesses, net of cash acquired
|
(603.9
|
)
|
|
(225.8
|
)
|
|
(446.1
|
)
|
|||
Capital expenditures
|
(36.2
|
)
|
|
(35.6
|
)
|
|
(33.0
|
)
|
|||
Investments (1)
|
(3.3
|
)
|
|
—
|
|
|
—
|
|
|||
Government grants
|
0.7
|
|
|
0.8
|
|
|
0.4
|
|
|||
Proceeds from sale of assets
|
—
|
|
|
—
|
|
|
0.9
|
|
|||
Net Cash Used In Investing Activities
|
(642.7
|
)
|
|
(260.6
|
)
|
|
(477.8
|
)
|
|||
FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Borrowings on revolving credit facilities
|
235.8
|
|
|
411.7
|
|
|
302.2
|
|
|||
Repayments on revolving credit facilities
|
(451.1
|
)
|
|
(316.8
|
)
|
|
(66.1
|
)
|
|||
Repurchase of convertible notes
|
—
|
|
|
(57.1
|
)
|
|
(194.9
|
)
|
|||
Proceeds from issuance of convertible notes
|
—
|
|
|
—
|
|
|
258.8
|
|
|||
Proceeds from issuance of warrants
|
—
|
|
|
—
|
|
|
46.0
|
|
|||
Payments for call options related to convertible notes
|
—
|
|
|
—
|
|
|
(59.5
|
)
|
|||
Borrowings on term loan
|
450.0
|
|
|
—
|
|
|
—
|
|
|||
Repayments on term loan
|
(2.8
|
)
|
|
(5.9
|
)
|
|
(3.1
|
)
|
|||
Payments for debt issuance costs
|
(13.6
|
)
|
|
(1.4
|
)
|
|
(8.2
|
)
|
|||
Issuance of Shares
|
295.8
|
|
|
—
|
|
|
—
|
|
|||
Payments for equity issuance costs
|
(9.5
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from exercise of stock options
|
9.4
|
|
|
10.8
|
|
|
2.0
|
|
|||
Common stock repurchases
|
(2.0
|
)
|
|
(2.7
|
)
|
|
(2.0
|
)
|
|||
Dividend distribution to noncontrolling interests
|
(0.4
|
)
|
|
(0.4
|
)
|
|
—
|
|
|||
Net Cash Provided By Financing Activities
|
511.6
|
|
|
38.2
|
|
|
275.2
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
DISCONTINUED OPERATIONS
|
|
|
|
|
|
||||||
Cash (Used In) Provided By Operating Activities
|
—
|
|
|
(30.2
|
)
|
|
2.7
|
|
|||
Cash Provided By (Used In) Investing Activities (2)
|
—
|
|
|
132.7
|
|
|
(2.2
|
)
|
|||
Cash Provided By Discontinued Operations
|
—
|
|
|
102.5
|
|
|
0.5
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(1.9
|
)
|
|
(11.4
|
)
|
|
7.2
|
|
|||
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents
|
0.9
|
|
|
(12.3
|
)
|
|
(150.6
|
)
|
|||
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period
|
119.1
|
|
|
131.4
|
|
|
282.0
|
|
|||
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD (3)
|
$
|
120.0
|
|
|
$
|
119.1
|
|
|
$
|
131.4
|
|
(1)
|
Non-cash investing activities of $7.0 related to the conversion of a note receivable into an investment in equity securities during the year ended December 31, 2019. Refer to Note 6, “Investments” for further information.
|
(2)
|
Includes proceeds from the sale of CAIRE of $133.5 for the year ended December 31, 2018.
|
(3)
|
Refer to Note 10, “Debt and Credit Arrangements,” for further information regarding restricted cash and restricted cash equivalents balances.
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
|
|
Accumulated Other Comprehensive
(Loss) Income |
|
Non-controlling Interests
|
|
|
|||||||||||||||
|
Shares
Outstanding
|
|
Amount
|
|
|
Retained
Earnings
|
|
|
|
Total
Equity
|
||||||||||||||||
Balance at January 1, 2017
|
30.61
|
|
|
$
|
0.3
|
|
|
$
|
395.8
|
|
|
$
|
336.3
|
|
|
$
|
(35.2
|
)
|
|
$
|
1.4
|
|
|
$
|
698.6
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
28.0
|
|
|
—
|
|
|
1.5
|
|
|
29.5
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27.1
|
|
|
0.1
|
|
|
27.2
|
|
||||||
Equity component of convertible notes issuance, net of deferred financing fees and deferred taxes
|
—
|
|
|
—
|
|
|
36.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36.6
|
|
||||||
Proceeds from issuance of warrants
|
—
|
|
|
—
|
|
|
46.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46.0
|
|
||||||
Purchase of call options, net of deferred taxes
|
—
|
|
|
—
|
|
|
(38.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38.1
|
)
|
||||||
Repurchase of convertible notes
|
—
|
|
|
—
|
|
|
(5.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.8
|
)
|
||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
11.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.1
|
|
||||||
Common stock issued from share-based compensation plans
|
0.25
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
||||||
Common stock repurchases
|
(0.05
|
)
|
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.0
|
)
|
||||||
Other
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||||
Balance at December 31, 2017
|
30.81
|
|
|
0.3
|
|
|
445.7
|
|
|
364.3
|
|
|
(8.1
|
)
|
|
3.0
|
|
|
805.2
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
88.0
|
|
|
—
|
|
|
2.0
|
|
|
90.0
|
|
||||||
Cumulative effect of accounting change
|
—
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21.8
|
)
|
|
—
|
|
|
(21.8
|
)
|
||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
6.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.9
|
|
||||||
Common stock issued from share-based compensation plans
|
0.60
|
|
|
—
|
|
|
10.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.3
|
|
||||||
Common stock repurchases
|
(0.05
|
)
|
|
—
|
|
|
(2.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.7
|
)
|
||||||
Dividend distribution to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
(0.4
|
)
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||||
Balance at December 31, 2018
|
31.36
|
|
|
0.3
|
|
|
460.2
|
|
|
453.9
|
|
|
(29.9
|
)
|
|
4.5
|
|
|
889.0
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
46.4
|
|
|
—
|
|
|
0.4
|
|
|
46.8
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.0
|
)
|
|
—
|
|
|
(6.0
|
)
|
||||||
Common stock issuance, net of equity issuance costs (1)
|
4.03
|
|
|
0.1
|
|
|
286.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
286.3
|
|
||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
9.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.0
|
|
||||||
Common stock issued from share-based compensation plans
|
0.30
|
|
|
—
|
|
|
9.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.4
|
|
||||||
Common stock repurchases
|
0.11
|
|
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.0
|
)
|
||||||
Dividend distribution to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
(0.4
|
)
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
0.3
|
|
||||||
Balance at December 31, 2019
|
35.80
|
|
|
$
|
0.4
|
|
|
$
|
762.8
|
|
|
$
|
500.3
|
|
|
$
|
(35.9
|
)
|
|
$
|
4.8
|
|
|
$
|
1,232.4
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Sales
|
$
|
157.0
|
|
|
$
|
145.9
|
|
Cost of sales
|
115.8
|
|
|
105.4
|
|
||
Selling, general and administrative expenses
|
32.7
|
|
|
34.2
|
|
||
Amortization expense
|
2.3
|
|
|
2.8
|
|
||
Operating income (1)
|
6.2
|
|
|
3.5
|
|
||
Interest expense, net
|
3.2
|
|
|
2.1
|
|
||
Other expense (income), net
|
0.1
|
|
|
(1.1
|
)
|
||
Income before income taxes
|
2.9
|
|
|
2.5
|
|
||
Income tax expense
|
2.8
|
|
|
0.7
|
|
||
Income from discontinued operations before gain on sale of business
|
0.1
|
|
|
1.8
|
|
||
Gain on sale of business, net of taxes of $2.6
|
34.3
|
|
|
—
|
|
||
Income from discontinued operations, net of tax
|
$
|
34.4
|
|
|
$
|
1.8
|
|
(1)
|
Includes depreciation expense of $1.7 and $1.6 for the years ended December 31, 2018 and 2017, respectively.
|
|
Year Ended December 31, 2019
|
||||||||||||||||||||||||||
|
D&S East
|
|
D&S West
|
|
E&C Cryogenics
|
|
E&C FinFans
|
|
Intersegment Eliminations
|
|
Corporate
|
|
Consolidated
|
||||||||||||||
Sales to external customers
|
$
|
293.4
|
|
|
$
|
461.7
|
|
|
$
|
190.2
|
|
|
$
|
361.7
|
|
|
$
|
(7.9
|
)
|
|
$
|
—
|
|
|
$
|
1,299.1
|
|
Depreciation and amortization expense
|
16.6
|
|
|
11.6
|
|
|
14.5
|
|
|
34.5
|
|
|
—
|
|
|
1.6
|
|
|
78.8
|
|
|||||||
Operating income (loss) (1) (2)
|
6.9
|
|
|
104.5
|
|
|
1.6
|
|
|
40.6
|
|
|
(2.3
|
)
|
|
(70.4
|
)
|
|
80.9
|
|
|||||||
Capital expenditures
|
14.8
|
|
|
8.7
|
|
|
4.5
|
|
|
3.1
|
|
|
—
|
|
|
5.1
|
|
|
36.2
|
|
|
Year Ended December 31, 2018
|
||||||||||||||||||||||||||
|
D&S East
|
|
D&S West
|
|
E&C Cryogenics
|
|
E&C FinFans
|
|
Intersegment Eliminations
|
|
Corporate
|
|
Consolidated
|
||||||||||||||
Sales to external customers
|
$
|
246.3
|
|
|
$
|
455.5
|
|
|
$
|
136.9
|
|
|
$
|
253.6
|
|
|
$
|
(8.0
|
)
|
|
$
|
—
|
|
|
$
|
1,084.3
|
|
Depreciation and amortization expense
|
11.1
|
|
|
11.2
|
|
|
10.9
|
|
|
16.1
|
|
|
—
|
|
|
1.5
|
|
|
50.8
|
|
|||||||
Operating income (loss) (1) (3) (4) (5)
|
19.3
|
|
|
101.2
|
|
|
1.8
|
|
|
23.7
|
|
|
(2.5
|
)
|
|
(51.4
|
)
|
|
92.1
|
|
|||||||
Capital expenditures
|
10.4
|
|
|
6.0
|
|
|
12.1
|
|
|
3.4
|
|
|
—
|
|
|
3.7
|
|
|
35.6
|
|
|
Year Ended December 31, 2017
|
||||||||||||||||||||||||||
|
D&S East
|
|
D&S West
|
|
E&C Cryogenics
|
|
E&C FinFans
|
|
Intersegment Eliminations
|
|
Corporate
|
|
Consolidated
|
||||||||||||||
Sales to external customers
|
$
|
232.3
|
|
|
$
|
400.6
|
|
|
$
|
125.5
|
|
|
$
|
100.1
|
|
|
$
|
(15.6
|
)
|
|
$
|
—
|
|
|
$
|
842.9
|
|
Depreciation and amortization expense
|
9.5
|
|
|
10.6
|
|
|
10.3
|
|
|
5.0
|
|
|
—
|
|
|
2.2
|
|
|
37.6
|
|
|||||||
Operating income (loss) (1) (3) (5)
|
14.2
|
|
|
85.2
|
|
|
(2.1
|
)
|
|
7.2
|
|
|
(3.6
|
)
|
|
(62.4
|
)
|
|
38.5
|
|
|||||||
Capital expenditures
|
11.1
|
|
|
4.1
|
|
|
14.1
|
|
|
1.4
|
|
|
—
|
|
|
2.3
|
|
|
33.0
|
|
(1)
|
Restructuring costs for the years ended:
|
•
|
December 31, 2019 were $15.6 ($8.5 - D&S East, $0.9 - D&S West, $2.5 - E&C Cryogenics, $3.5 - E&C FinFans, and $0.2 - Corporate);
|
•
|
December 31, 2018 were $4.4 ($1.4 - D&S East, $0.6 - E&C Cryogenics, $0.1 - E&C FinFans, and $2.3 - Corporate); and
|
•
|
December 31, 2017 were $11.2 ($1.7 - D&S East, $1.1 - D&S West, $2.1 - E&C Cryogenics, $0.3 - E&C FinFans, and $6.0 - Corporate).
|
(2)
|
Includes transaction-related costs of $5.4 recorded in Corporate for the year ended December 31, 2019, which were mainly related to the AXC acquisition. Includes integration costs of $1.6 recorded in Corporate related to the AXC acquisition for the year ended December 31, 2019.
|
(3)
|
Includes an expense of $4.0 recorded to cost of sales related to the estimated costs of the aluminum cryobiological tank recall for the year ended December 31, 2018.
|
(4)
|
During the year ended December 31, 2018, we recorded net severance costs of $2.3 in Corporate primarily related to headcount reductions associated with the strategic realignment of our segment structure, which includes $1.8 in payroll severance costs partially offset by a $0.9 credit due to related share-based compensation forfeitures for 2018. Includes net severance costs of $1.4 related to the departure of our former CEO, which includes $3.2 in payroll severance costs partially offset by a $1.8 credit due to related share-based compensation forfeitures for 2018.
|
(5)
|
Includes transaction-related costs of $2.1 and $10.1 recorded in Corporate for the years ended December 31, 2018 and 2017, respectively.
|
|
Year Ended December 31, 2019
|
||||||||||||||||||||||
|
D&S East
|
|
D&S West
|
|
E&C Cryogenics
|
|
E&C FinFans
|
|
Intersegment Eliminations
|
|
Consolidated
|
||||||||||||
Natural gas processing (including petrochemical) applications
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
80.9
|
|
|
$
|
263.6
|
|
|
$
|
(0.2
|
)
|
|
$
|
344.3
|
|
Liquefied natural gas (LNG) applications
|
72.7
|
|
|
73.1
|
|
|
53.4
|
|
|
42.1
|
|
|
(0.9
|
)
|
|
240.4
|
|
||||||
Industrial gas production applications
|
—
|
|
|
—
|
|
|
25.2
|
|
|
—
|
|
|
—
|
|
|
25.2
|
|
||||||
HVAC, power and refining applications
|
—
|
|
|
—
|
|
|
30.7
|
|
|
56.0
|
|
|
(0.9
|
)
|
|
85.8
|
|
||||||
Bulk industrial gas applications
|
168.7
|
|
|
156.0
|
|
|
—
|
|
|
—
|
|
|
(2.3
|
)
|
|
322.4
|
|
||||||
Packaged gas industrial applications
|
52.0
|
|
|
149.0
|
|
|
—
|
|
|
—
|
|
|
(3.5
|
)
|
|
197.5
|
|
||||||
Cryobiological storage
|
—
|
|
|
83.6
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
83.5
|
|
||||||
Total
|
$
|
293.4
|
|
|
$
|
461.7
|
|
|
$
|
190.2
|
|
|
$
|
361.7
|
|
|
$
|
(7.9
|
)
|
|
$
|
1,299.1
|
|
|
Year Ended December 31, 2018
|
||||||||||||||||||||||
|
D&S East
|
|
D&S West
|
|
E&C Cryogenics
|
|
E&C FinFans
|
|
Intersegment Eliminations
|
|
Consolidated
|
||||||||||||
Natural gas processing (including petrochemical) applications
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
79.5
|
|
|
$
|
182.6
|
|
|
$
|
—
|
|
|
$
|
262.1
|
|
Liquefied natural gas (LNG) applications
|
65.3
|
|
|
71.7
|
|
|
15.2
|
|
|
25.4
|
|
|
(2.0
|
)
|
|
175.6
|
|
||||||
Industrial gas production applications
|
—
|
|
|
—
|
|
|
13.6
|
|
|
—
|
|
|
—
|
|
|
13.6
|
|
||||||
HVAC, power and refining applications
|
—
|
|
|
—
|
|
|
28.6
|
|
|
45.6
|
|
|
—
|
|
|
74.2
|
|
||||||
Bulk industrial gas applications
|
126.1
|
|
|
148.5
|
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
273.6
|
|
||||||
Packaged gas industrial applications
|
54.9
|
|
|
153.4
|
|
|
—
|
|
|
—
|
|
|
(3.5
|
)
|
|
204.8
|
|
||||||
Cryobiological storage
|
—
|
|
|
81.9
|
|
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|
80.4
|
|
||||||
Total
|
$
|
246.3
|
|
|
$
|
455.5
|
|
|
$
|
136.9
|
|
|
$
|
253.6
|
|
|
$
|
(8.0
|
)
|
|
$
|
1,084.3
|
|
|
Year Ended December 31, 2017
|
||||||||||||||||||||||
|
D&S East
|
|
D&S West
|
|
E&C Cryogenics
|
|
E&C FinFans
|
|
Intersegment Eliminations
|
|
Consolidated
|
||||||||||||
Natural gas processing (including petrochemical) applications
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
75.5
|
|
|
$
|
77.4
|
|
|
$
|
—
|
|
|
$
|
152.9
|
|
Liquefied natural gas (LNG) applications
|
80.2
|
|
|
58.0
|
|
|
18.8
|
|
|
10.7
|
|
|
(0.2
|
)
|
|
167.5
|
|
||||||
Industrial gas production applications
|
—
|
|
|
—
|
|
|
22.4
|
|
|
—
|
|
|
—
|
|
|
22.4
|
|
||||||
HVAC, power and refining applications
|
—
|
|
|
—
|
|
|
8.8
|
|
|
12.0
|
|
|
—
|
|
|
20.8
|
|
||||||
Bulk industrial gas applications
|
93.4
|
|
|
129.6
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
222.5
|
|
||||||
Packaged gas industrial applications
|
58.7
|
|
|
136.0
|
|
|
—
|
|
|
—
|
|
|
(14.9
|
)
|
|
179.8
|
|
||||||
Cryobiological storage
|
—
|
|
|
77.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77.0
|
|
||||||
Total
|
$
|
232.3
|
|
|
$
|
400.6
|
|
|
$
|
125.5
|
|
|
$
|
100.1
|
|
|
$
|
(15.6
|
)
|
|
$
|
842.9
|
|
(1)
|
Total assets at December 31, 2019 includes $593.8 related to AXC of which $287.5 and $256.4 represented acquired goodwill and identifiable intangible assets, net, respectively. See Note 13, “Business Combinations,” for further information related to the AXC acquisition.
|
|
Sales for the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
688.6
|
|
|
$
|
604.8
|
|
|
$
|
475.0
|
|
Foreign
|
|
|
|
|
|
||||||
China
|
89.7
|
|
|
115.1
|
|
|
101.3
|
|
|||
Other foreign countries
|
520.8
|
|
|
364.4
|
|
|
266.6
|
|
|||
Total Foreign
|
610.5
|
|
|
479.5
|
|
|
367.9
|
|
|||
Total
|
$
|
1,299.1
|
|
|
$
|
1,084.3
|
|
|
$
|
842.9
|
|
|
Property, plant and equipment, net as of December 31,
|
||||||
|
2019
|
|
2018
|
||||
United States
|
$
|
224.8
|
|
|
$
|
176.8
|
|
Foreign
|
|
|
|
||||
Italy
|
56.4
|
|
|
52.9
|
|
||
China
|
67.8
|
|
|
77.2
|
|
||
Czech Republic
|
25.8
|
|
|
21.5
|
|
||
Germany
|
15.6
|
|
|
12.9
|
|
||
India
|
13.7
|
|
|
19.8
|
|
||
Other foreign countries
|
0.5
|
|
|
—
|
|
||
Total Foreign
|
179.8
|
|
|
184.3
|
|
||
Total
|
$
|
404.6
|
|
|
$
|
361.1
|
|
|
Year Ended December 31, 2019
|
||||||||||||||||||||||
|
D&S East
|
|
D&S West
|
|
E&C Cryogenics
|
|
E&C FinFans
|
|
Intersegment Eliminations
|
|
Consolidated
|
||||||||||||
Point in time
|
$
|
272.2
|
|
|
$
|
415.1
|
|
|
$
|
0.3
|
|
|
$
|
87.9
|
|
|
$
|
(6.8
|
)
|
|
$
|
768.7
|
|
Over time
|
21.2
|
|
|
46.6
|
|
|
189.9
|
|
|
273.8
|
|
|
(1.1
|
)
|
|
530.4
|
|
||||||
Total
|
$
|
293.4
|
|
|
$
|
461.7
|
|
|
$
|
190.2
|
|
|
$
|
361.7
|
|
|
$
|
(7.9
|
)
|
|
$
|
1,299.1
|
|
|
Year Ended December 31, 2018
|
||||||||||||||||||||||
|
D&S East
|
|
D&S West
|
|
E&C Cryogenics
|
|
E&C FinFans
|
|
Intersegment Eliminations
|
|
Consolidated
|
||||||||||||
Point in time
|
$
|
222.9
|
|
|
$
|
405.3
|
|
|
$
|
1.0
|
|
|
$
|
135.2
|
|
|
$
|
(6.2
|
)
|
|
$
|
758.2
|
|
Over time
|
23.4
|
|
|
50.2
|
|
|
135.9
|
|
|
118.4
|
|
|
(1.8
|
)
|
|
326.1
|
|
||||||
Total
|
$
|
246.3
|
|
|
$
|
455.5
|
|
|
$
|
136.9
|
|
|
$
|
253.6
|
|
|
$
|
(8.0
|
)
|
|
$
|
1,084.3
|
|
|
December 31, 2019
|
|
January 1, 2019
|
|
Year-to-date Change ($)
|
|
Year-to-date Change (%)
|
|||||||
Contract assets
|
|
|
|
|
|
|
|
|||||||
Accounts receivable, net of allowances
|
$
|
202.6
|
|
|
$
|
194.8
|
|
|
$
|
7.8
|
|
|
4.0
|
%
|
Unbilled contract revenue
|
86.1
|
|
|
54.5
|
|
|
31.6
|
|
|
58.0
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Contract liabilities
|
|
|
|
|
|
|
|
|||||||
Customer advances and billings in excess of contract revenue
|
$
|
127.8
|
|
|
$
|
130.0
|
|
|
$
|
(2.2
|
)
|
|
(1.7
|
)%
|
Long-term deferred revenue
|
0.8
|
|
|
1.4
|
|
|
(0.6
|
)
|
|
(42.9
|
)%
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Investment in equity securities
|
$
|
6.9
|
|
|
$
|
—
|
|
Equity investments
|
6.5
|
|
|
2.8
|
|
||
Total investments
|
$
|
13.4
|
|
|
$
|
2.8
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Raw materials and supplies
|
$
|
104.0
|
|
|
$
|
97.7
|
|
Work in process
|
47.5
|
|
|
53.0
|
|
||
Finished goods
|
67.9
|
|
|
82.4
|
|
||
Total inventories, net
|
$
|
219.4
|
|
|
$
|
233.1
|
|
|
|
|
|
December 31,
|
||||||
Classification
|
|
Estimated Useful Life
|
|
2019
|
|
2018
|
||||
Land and buildings
|
|
20-35 years
|
|
$
|
329.7
|
|
|
$
|
287.0
|
|
Machinery and equipment
|
|
3-12 years
|
|
208.2
|
|
|
214.7
|
|
||
Computer equipment, furniture and fixtures
|
|
3-7 years
|
|
47.7
|
|
|
38.5
|
|
||
Right-of-use assets
|
|
|
|
42.4
|
|
|
—
|
|
||
Construction in process
|
|
|
|
21.4
|
|
|
30.9
|
|
||
Total property, plant and equipment, gross
|
|
|
|
649.4
|
|
|
571.1
|
|
||
Less: accumulated depreciation
|
|
|
|
(244.8
|
)
|
|
(210.0
|
)
|
||
Total property, plant and equipment, net
|
|
|
|
$
|
404.6
|
|
|
$
|
361.1
|
|
|
D&S East
|
|
D&S West
|
|
E&C
|
|
E&C Cryogenics
|
|
E&C FinFans
|
|
Consolidated
|
||||||||||||
Balance at January 1, 2018
|
$
|
37.3
|
|
|
$
|
147.3
|
|
|
$
|
275.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
459.7
|
|
Foreign currency translation adjustments and other
|
0.2
|
|
|
(0.7
|
)
|
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
||||||
Goodwill acquired during the year
|
36.1
|
|
|
4.7
|
|
|
27.1
|
|
|
—
|
|
|
—
|
|
|
67.9
|
|
||||||
Purchase price adjustments (1)
|
—
|
|
|
—
|
|
|
(5.3
|
)
|
|
—
|
|
|
—
|
|
|
(5.3
|
)
|
||||||
Balance at December 31, 2018
|
73.6
|
|
|
151.3
|
|
|
295.8
|
|
|
—
|
|
|
—
|
|
|
520.7
|
|
||||||
Reallocation (2)
|
—
|
|
|
—
|
|
|
(295.8
|
)
|
|
183.5
|
|
|
112.3
|
|
|
—
|
|
||||||
Foreign currency translation adjustments and other
|
(0.9
|
)
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
(0.2
|
)
|
|
(1.7
|
)
|
||||||
Goodwill acquired during the year
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
287.5
|
|
|
287.5
|
|
||||||
Purchase price adjustments (3)
|
44.3
|
|
|
0.8
|
|
|
—
|
|
|
(6.7
|
)
|
|
—
|
|
|
38.4
|
|
||||||
Balance at December 31, 2019
|
$
|
117.0
|
|
|
$
|
152.1
|
|
|
$
|
—
|
|
|
$
|
176.2
|
|
|
$
|
399.6
|
|
|
$
|
844.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accumulated goodwill impairment loss at December 31, 2018 and January 1, 2018
|
$
|
—
|
|
|
$
|
82.5
|
|
|
$
|
64.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
147.1
|
|
Accumulated goodwill impairment loss at December 31, 2019
|
$
|
—
|
|
|
$
|
82.5
|
|
|
$
|
—
|
|
|
$
|
40.9
|
|
|
$
|
23.7
|
|
|
$
|
147.1
|
|
(1)
|
During 2018, we recorded purchase price adjustments the decrease goodwill by $5.3 related to the Hudson acquisition. For further information, see Note 13, “Business Combinations.”
|
(2)
|
The prior E&C segment goodwill and accumulated goodwill impairment loss at December 31, 2018 was reallocated to the two new segments, E&C Cryogenics and E&C FinFans, based on their relative fair values as of July 1, 2019.
|
(3)
|
During 2019, we recorded purchase price adjustments that increased goodwill by $38.4 (including, an increase of $44.3 in D&S East and a decrease of $6.7 in E&C Cryogenic) related to the VRV acquisition and an increase of $0.8 in D&S West related to the Skaff acquisition. For further information, see Note 13, “Business Combinations.”
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
Weighted-average Estimated Useful Life
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Customer relationships
|
14 years
|
|
$
|
380.3
|
|
|
$
|
(115.0
|
)
|
|
$
|
254.0
|
|
|
$
|
(92.0
|
)
|
Unpatented technology
|
11 years
|
|
90.1
|
|
|
(13.0
|
)
|
|
39.4
|
|
|
(5.1
|
)
|
||||
Patents and other
|
6 years
|
|
20.9
|
|
|
(9.8
|
)
|
|
14.0
|
|
|
(1.5
|
)
|
||||
Trademarks and trade names
|
14 years
|
|
2.4
|
|
|
(1.2
|
)
|
|
13.5
|
|
|
(1.1
|
)
|
||||
Land rights
|
50 years
|
|
12.0
|
|
|
(1.5
|
)
|
|
12.2
|
|
|
(1.3
|
)
|
||||
Total finite-lived intangible assets
|
13 years
|
|
$
|
505.7
|
|
|
$
|
(140.5
|
)
|
|
$
|
333.1
|
|
|
$
|
(101.0
|
)
|
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Trademarks and trade names
|
|
|
163.9
|
|
|
—
|
|
|
98.3
|
|
|
—
|
|
||||
Total intangible assets
|
|
|
$
|
669.6
|
|
|
$
|
(140.5
|
)
|
|
$
|
431.4
|
|
|
$
|
(101.0
|
)
|
(1)
|
Amounts include the impact of foreign currency translation. Fully amortized or impaired amounts are written off.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Current
|
$
|
0.5
|
|
|
$
|
0.5
|
|
Long-term
|
7.2
|
|
|
7.7
|
|
||
Total China Government Grants
|
$
|
7.7
|
|
|
$
|
8.2
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Senior secured revolving credit facilities and term loan:
|
|
|
|
||||
Term loan due June 2024 (1)
|
$
|
447.2
|
|
|
$
|
—
|
|
Senior secured revolving credit facility due June 2024 (2)
|
119.0
|
|
|
—
|
|
||
Senior secured revolving credit facility due November 2022
|
—
|
|
|
329.3
|
|
||
Unamortized debt issuance costs
|
(5.5
|
)
|
|
—
|
|
||
Senior secured revolving credit facility and term loan, net of debt issuance costs
|
560.7
|
|
|
329.3
|
|
||
|
|
|
|
||||
Convertible notes due November 2024:
|
|
|
|
||||
Principal amount
|
258.8
|
|
|
258.8
|
|
||
Unamortized discount
|
(42.8
|
)
|
|
(50.4
|
)
|
||
Unamortized debt issuance costs
|
(3.8
|
)
|
|
(4.5
|
)
|
||
Convertible notes due November 2024, net of unamortized discount and debt issuance costs
|
212.2
|
|
|
203.9
|
|
||
|
|
|
|
||||
Foreign facilities
|
4.4
|
|
|
11.2
|
|
||
|
|
|
|
||||
Total debt, net of unamortized discount and debt issuance costs
|
777.3
|
|
|
544.4
|
|
||
Less: current maturities
|
15.7
|
|
|
11.2
|
|
||
Less: current portion of unamortized debt issuance costs
|
0.6
|
|
|
—
|
|
||
Long-term debt
|
$
|
761.0
|
|
|
$
|
533.2
|
|
(1)
|
As of December 31, 2019, there was $447.2 in borrowings outstanding under the term loan bearing an interest rate of 3.99%. The term loan is repayable annually in quarterly installments of 2.5% of the loan amount over the first two years, 5.0% for the third year, 7.5% for the fourth year and 10.0% for the fifth and final year.
|
(2)
|
The senior secured revolving credit facility due 2024 includes $100.0 sub limit for letters of credit, a $250.0 sub limit for discretionary letters of credit and a $50.0 sub-limit for swingline loans. As of December 31, 2019, there was $119.0 in borrowings outstanding under the senior secured revolving credit facility due 2024 bearing a weighted-average interest rate of 2.57% and $71.5 in letters of credit and bank guarantees outstanding supported by the senior secured revolving credit facility due 2024. As December 31, 2019, the senior secured revolving credit facility due 2024 had availability of $359.5.
|
Year
|
Amount
|
||
2020 (1)
|
$
|
15.7
|
|
2021
|
14.0
|
|
|
2022
|
25.3
|
|
|
2023
|
36.6
|
|
|
2024
|
737.8
|
|
|
Total
|
$
|
829.4
|
|
(1)
|
Includes $4.4 current maturities related to foreign facilities.
|
•
|
The SSRCF has a borrowing capacity of $550.0.
|
•
|
The term loan has a borrowing capacity of $450.0.
|
•
|
The 2019 Credit Facilities bear interest at a base rate margin determined on a leveraged-based scale which ranges from 25 to 125 basis points for alternative base rate loans and 125 to 225 basis points for LIBOR loans.
|
•
|
Interest and fees are payable on a quarterly basis (or if earlier, at the end of each interest period for LIBOR loans).
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Interest expense, term loan due June 2024
|
$
|
8.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest expense, senior secured revolving credit facilities
|
7.5
|
|
|
11.8
|
|
|
2.7
|
|
|||
Interest expense, senior secured revolving credit facilities and term loan due June 2024
|
$
|
15.9
|
|
|
$
|
11.8
|
|
|
$
|
2.7
|
|
|
|
|
|
|
|
||||||
Financing costs amortization, senior secured revolving credit facilities and term loan due 2024
|
$
|
2.0
|
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
2024 Notes, interest accretion of convertible notes discount
|
$
|
7.6
|
|
|
$
|
7.2
|
|
2024 Notes, 1.0% contractual interest coupon
|
2.6
|
|
|
2.6
|
|
||
2024 Notes, total interest expense
|
$
|
10.2
|
|
|
$
|
9.8
|
|
|
|
|
|
||||
2024 Notes, financing costs amortization
|
$
|
0.7
|
|
|
$
|
0.6
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
2018 Notes, interest accretion of convertible notes discount
|
$
|
1.9
|
|
|
$
|
11.8
|
|
2018 Notes, 2.0% contractual interest coupon
|
1.0
|
|
|
4.3
|
|
||
2018 Notes, total interest expense
|
$
|
2.9
|
|
|
$
|
16.1
|
|
|
|
|
|
||||
2018 Notes, loss on extinguishment of debt, bond cost portion
|
—
|
|
|
4.3
|
|
||
2018 Notes, write off of unamortized debt issuance costs
|
—
|
|
|
0.4
|
|
||
2018 Notes, total loss on extinguishment of debt (1)
|
$
|
—
|
|
|
$
|
4.7
|
|
|
|
|
|
||||
2018 Notes, financing costs amortization
|
$
|
0.1
|
|
|
$
|
0.6
|
|
(1)
|
During the year ended December 31, 2017, we wrote off $0.2 of unamortized debt issuance costs related to our senior secured revolving credit facility. When combined with the total loss on extinguishment associated with the 2018 Notes, consolidated loss on extinguishment was $4.9.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Beginning balance
|
$
|
8.9
|
|
|
$
|
11.6
|
|
|
$
|
11.6
|
|
Issued - warranty expense
|
7.8
|
|
|
5.1
|
|
|
3.1
|
|
|||
Acquired - warranty reserve
|
—
|
|
|
—
|
|
|
0.9
|
|
|||
Change in estimate - warranty expense
|
—
|
|
|
(1.6
|
)
|
|
1.5
|
|
|||
Warranty usage
|
(5.0
|
)
|
|
(6.2
|
)
|
|
(5.5
|
)
|
|||
Ending balance
|
$
|
11.7
|
|
|
$
|
8.9
|
|
|
$
|
11.6
|
|
|
Preliminary Estimated Fair Value
|
||
Net assets acquired:
|
|
||
Identifiable intangible assets
|
$
|
256.4
|
|
Goodwill
|
287.5
|
|
|
Property, plant and equipment
|
34.2
|
|
|
Other assets
|
53.1
|
|
|
Liabilities
|
(31.5
|
)
|
|
Net assets acquired
|
$
|
599.7
|
|
|
Weighted-average Estimated Useful Life
|
|
Preliminary Estimated Asset Fair Value
|
||
Finite-lived intangible assets:
|
|
|
|
||
Customer relationships
|
14.0 years
|
|
$
|
139.1
|
|
Unpatented technology
|
10.0 years
|
|
42.1
|
|
|
Backlog (1)
|
1.0 year
|
|
19.2
|
|
|
Other identifiable intangible assets (1)
|
4.0 years
|
|
1.0
|
|
|
Total finite-lived intangible assets acquired
|
11.0 years
|
|
201.4
|
|
|
Indefinite-lived intangible assets:
|
|
|
|
||
Trademarks and trade names
|
|
|
55.0
|
|
|
Total identifiable intangible assets acquired
|
|
|
$
|
256.4
|
|
(1)
|
Backlog and other identifiable intangible assets is included in “Patents and other” in Note 9, “Goodwill and Intangible Assets.”
|
•
|
Adjustment for depreciation related to the step-up in basis of the acquired property, plant and equipment and change in estimated useful lives.
|
•
|
Adjustment for amortization of acquired intangible assets.
|
•
|
Adjustment for the change from last in, first out (LIFO) to weighted-average cost for the acquired inventory and the associated reduction of cost of sales.
|
•
|
Adjustment to reflect an increase in interest expense resulting from interest on the term loan under the 2019 Credit Facilities to finance the AXC acquisition and amortization of related debt issuance costs.
|
•
|
Adjustment to reflect the change in the estimated income tax rate for federal and state purposes.
|
•
|
Adjustment to reflect the increase in weighted-average shares in connection with the equity issuance.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Pro forma sales
|
$
|
1,447.9
|
|
|
$
|
1,291.5
|
|
|
$
|
987.8
|
|
Pro forma net income attributable to Chart Industries, Inc.
|
56.3
|
|
|
72.0
|
|
|
(2.5
|
)
|
|||
|
|
|
|
|
|
||||||
Pro forma net income attributable to Chart Industries, Inc. per common share, basic
|
$
|
1.66
|
|
|
$
|
2.05
|
|
|
$
|
(0.07
|
)
|
Pro forma net income attributable to Chart Industries, Inc. per common share, diluted
|
1.60
|
|
|
1.99
|
|
|
(0.07
|
)
|
|
December 31, 2019
|
|
Adjustments
|
|
As Previously Reported December 31, 2018
|
||||||
Net assets acquired:
|
|
|
|
|
|
||||||
Identifiable intangible assets
|
$
|
50.6
|
|
|
$
|
(16.0
|
)
|
|
$
|
66.6
|
|
Property, plant and equipment
|
67.5
|
|
|
(3.0
|
)
|
|
70.5
|
|
|||
Goodwill
|
101.7
|
|
|
38.5
|
|
|
63.2
|
|
|||
Other net assets
|
2.6
|
|
|
(15.3
|
)
|
|
17.9
|
|
|||
Debt
|
(4.9
|
)
|
|
—
|
|
|
(4.9
|
)
|
|||
Debt extinguished in close proximity to acquisition date (1)
|
(72.0
|
)
|
|
—
|
|
|
(72.0
|
)
|
|||
Net assets acquired
|
$
|
145.5
|
|
|
$
|
4.2
|
|
|
$
|
141.3
|
|
(1)
|
As described above, we assumed indebtedness of VRV of euro 63.7 million (equivalent to $72.0), which was paid off immediately at closing or shortly thereafter. The fair value of the net assets acquired and liabilities assumed reflects this indebtedness and differs from the fair value of the consideration transferred due to the nature and timing of the debt extinguishment.
|
|
Weighted-average Estimated Useful Life
|
|
Estimated Asset Fair Value
|
||
Finite-lived intangible assets:
|
|
|
|
||
Customer relationships
|
12.0 years
|
|
$
|
16.3
|
|
Unpatented technology
|
12.0 years
|
|
23.0
|
|
|
Other identifiable intangible assets (1)
|
4.0 years
|
|
0.5
|
|
|
Total finite-lived intangible assets acquired
|
9.0 years
|
|
39.8
|
|
|
Indefinite-lived intangible assets:
|
|
|
|
||
Trademarks and trade names
|
|
|
10.8
|
|
|
Total identifiable intangible assets acquired
|
|
|
$
|
50.6
|
|
(1)
|
Other identifiable intangible assets is included in “Patents and other” in Note 9, “Goodwill and Intangible Assets.”
|
|
December 31, 2019
|
||||||||||
|
Foreign currency translation adjustments
|
|
Pension liability adjustments, net of taxes
|
|
Accumulated other comprehensive loss
|
||||||
Beginning Balance
|
$
|
(17.5
|
)
|
|
$
|
(12.4
|
)
|
|
$
|
(29.9
|
)
|
Other comprehensive (loss) income
|
(7.5
|
)
|
|
1.1
|
|
|
(6.4
|
)
|
|||
Amounts reclassified from accumulated other comprehensive loss, net of income taxes
|
—
|
|
|
0.4
|
|
|
0.4
|
|
|||
Net current-period other comprehensive loss, net of taxes
|
(7.5
|
)
|
|
1.5
|
|
|
(6.0
|
)
|
|||
Ending Balance
|
$
|
(25.0
|
)
|
|
$
|
(10.9
|
)
|
|
$
|
(35.9
|
)
|
|
December 31, 2018
|
||||||||||
|
Foreign currency translation adjustments
|
|
Pension liability adjustments, net of taxes
|
|
Accumulated other comprehensive loss
|
||||||
Beginning Balance
|
$
|
2.2
|
|
|
$
|
(10.3
|
)
|
|
$
|
(8.1
|
)
|
Other comprehensive loss
|
(21.6
|
)
|
|
(3.0
|
)
|
|
(24.6
|
)
|
|||
Amounts reclassified from accumulated other comprehensive loss, net of income taxes (1)
|
1.9
|
|
|
0.9
|
|
|
2.8
|
|
|||
Net current-period other comprehensive loss, net of taxes
|
(19.7
|
)
|
|
(2.1
|
)
|
|
(21.8
|
)
|
|||
Ending Balance
|
$
|
(17.5
|
)
|
|
$
|
(12.4
|
)
|
|
$
|
(29.9
|
)
|
(1)
|
For the year ended December 31, 2018, $1.9 was reclassified from accumulated other comprehensive loss to foreign currency loss in the consolidated statements of income related to the Divestiture. This reclassification reduced the gain on sale of CAIRE. Refer to Note 3, “Discontinued Operations,” for further discussion.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income attributable to Chart Industries, Inc.
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
46.4
|
|
|
$
|
53.6
|
|
|
$
|
26.2
|
|
Income from discontinued operations
|
—
|
|
|
34.4
|
|
|
1.8
|
|
|||
Net income attributable to Chart Industries, Inc.
|
$
|
46.4
|
|
|
$
|
88.0
|
|
|
$
|
28.0
|
|
Earnings per common share – basic:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
1.37
|
|
|
$
|
1.73
|
|
|
$
|
0.85
|
|
Income from discontinued operations
|
—
|
|
|
1.10
|
|
|
0.06
|
|
|||
Net income attributable to Chart Industries, Inc.
|
$
|
1.37
|
|
|
$
|
2.83
|
|
|
$
|
0.91
|
|
|
|
|
|
|
|
||||||
Earnings per common share – diluted:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
1.32
|
|
|
$
|
1.67
|
|
|
$
|
0.84
|
|
Income from discontinued operations
|
—
|
|
|
1.06
|
|
|
0.05
|
|
|||
Net income attributable to Chart Industries, Inc.
|
$
|
1.32
|
|
|
$
|
2.73
|
|
|
$
|
0.89
|
|
|
|
|
|
|
|
||||||
Weighted average number of common shares outstanding — basic
|
33.91
|
|
|
31.05
|
|
|
30.74
|
|
|||
Incremental shares issuable upon assumed conversion and exercise of share-based awards
|
0.42
|
|
|
0.77
|
|
|
0.60
|
|
|||
Incremental shares issuable due to dilutive effect of the Convertible Notes
|
0.82
|
|
|
0.38
|
|
|
—
|
|
|||
Incremental shares issuable due to dilutive effect of warrants
|
0.02
|
|
|
—
|
|
|
—
|
|
|||
Weighted average number of common shares outstanding — diluted
|
35.17
|
|
|
32.20
|
|
|
31.34
|
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Share-based awards
|
0.15
|
|
|
0.22
|
|
|
0.40
|
|
Convertible note hedge and capped call transactions (1)
|
0.82
|
|
|
0.38
|
|
|
—
|
|
Warrants
|
—
|
|
|
5.18
|
|
|
5.18
|
|
Total anti-dilutive securities
|
0.97
|
|
|
5.78
|
|
|
5.58
|
|
(1)
|
The convertible note hedge offsets any dilution upon actual conversion of the 2024 Notes up to a common stock price of $71.775 per share. For further information, refer to Note 10, “Debt and Credit Arrangements.”
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
39.4
|
|
|
$
|
32.0
|
|
|
$
|
5.5
|
|
Foreign
|
13.4
|
|
|
37.0
|
|
|
5.6
|
|
|||
Income before from continuing operations before income taxes
|
$
|
52.8
|
|
|
$
|
69.0
|
|
|
$
|
11.1
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
6.9
|
|
|
$
|
1.5
|
|
|
$
|
8.7
|
|
State and local
|
3.0
|
|
|
0.5
|
|
|
0.2
|
|
|||
Foreign
|
12.3
|
|
|
6.4
|
|
|
5.9
|
|
|||
Total current
|
22.2
|
|
|
8.4
|
|
|
14.8
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(2.0
|
)
|
|
3.8
|
|
|
(30.7
|
)
|
|||
State and local
|
(5.5
|
)
|
|
1.5
|
|
|
(0.2
|
)
|
|||
Foreign
|
(8.7
|
)
|
|
(0.3
|
)
|
|
(0.5
|
)
|
|||
Total deferred
|
(16.2
|
)
|
|
5.0
|
|
|
(31.4
|
)
|
|||
Total income tax expense (benefit), net
|
$
|
6.0
|
|
|
$
|
13.4
|
|
|
$
|
(16.6
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Income tax expense at U.S. statutory rate
|
$
|
11.2
|
|
|
$
|
14.1
|
|
|
$
|
3.6
|
|
State income taxes, net of federal tax benefit
|
(2.1
|
)
|
|
1.7
|
|
|
0.2
|
|
|||
Foreign income, net of credit on foreign taxes
|
(2.3
|
)
|
|
0.7
|
|
|
8.5
|
|
|||
Effective tax rate differential of earnings outside of U.S.
|
0.1
|
|
|
2.6
|
|
|
(0.3
|
)
|
|||
Change in valuation allowance
|
1.0
|
|
|
38.4
|
|
|
7.6
|
|
|||
Research & experimentation credits
|
(0.9
|
)
|
|
(0.9
|
)
|
|
(0.5
|
)
|
|||
Foreign derived intangible income
|
(0.9
|
)
|
|
(0.8
|
)
|
|
—
|
|
|||
Net non-deductible items
|
2.3
|
|
|
1.2
|
|
|
0.7
|
|
|||
Change in uncertain tax positions
|
—
|
|
|
0.2
|
|
|
0.1
|
|
|||
Share-based compensation
|
(3.0
|
)
|
|
(3.3
|
)
|
|
—
|
|
|||
Domestic production activities deduction
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|||
Capital loss carryover
|
—
|
|
|
(29.7
|
)
|
|
—
|
|
|||
Tax effect of 2017 tax reform federal rate change
|
—
|
|
|
(11.3
|
)
|
|
(26.7
|
)
|
|||
Tax effect of carryforward foreign tax credits
|
—
|
|
|
(0.6
|
)
|
|
(9.4
|
)
|
|||
Other items
|
0.6
|
|
|
1.1
|
|
|
—
|
|
|||
Income tax expense (benefit)
|
$
|
6.0
|
|
|
$
|
13.4
|
|
|
$
|
(16.6
|
)
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Accruals and reserves
|
$
|
19.4
|
|
|
$
|
15.9
|
|
Pensions
|
2.9
|
|
|
3.3
|
|
||
Inventory
|
2.3
|
|
|
2.2
|
|
||
Share-based compensation
|
5.3
|
|
|
6.5
|
|
||
Tax credit carryforwards
|
15.5
|
|
|
16.2
|
|
||
Foreign net operating loss carryforwards
|
24.4
|
|
|
11.2
|
|
||
State net operating loss carryforwards
|
0.3
|
|
|
0.6
|
|
||
Capital loss carryover
|
29.4
|
|
|
29.7
|
|
||
Convertible notes
|
0.7
|
|
|
0.4
|
|
||
Other – net
|
5.5
|
|
|
13.5
|
|
||
Total deferred tax assets before valuation allowances
|
105.7
|
|
|
99.5
|
|
||
Valuation allowances
|
(68.2
|
)
|
|
(65.2
|
)
|
||
Total deferred tax assets, net of valuation allowances
|
$
|
37.5
|
|
|
$
|
34.3
|
|
Deferred tax liabilities:
|
|
|
|
||||
Property, plant and equipment
|
$
|
13.7
|
|
|
$
|
15.4
|
|
Goodwill and intangible assets
|
74.9
|
|
|
88.9
|
|
||
Other – net
|
1.0
|
|
|
1.6
|
|
||
Total deferred tax liabilities
|
$
|
89.6
|
|
|
$
|
105.9
|
|
Net deferred tax liabilities
|
$
|
52.1
|
|
|
$
|
71.6
|
|
The net deferred tax liability is classified as follows:
|
|
|
|
||||
Other assets
|
$
|
—
|
|
|
$
|
(4.8
|
)
|
Long-term deferred tax liabilities
|
52.1
|
|
|
76.4
|
|
||
Net deferred tax liabilities
|
$
|
52.1
|
|
|
$
|
71.6
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Unrecognized tax benefits at beginning of the year
|
$
|
2.3
|
|
|
$
|
0.8
|
|
|
$
|
0.8
|
|
Additions for tax positions of prior years
|
(0.1
|
)
|
|
0.9
|
|
|
0.1
|
|
|||
Additions for tax positions acquired
|
0.2
|
|
|
1.4
|
|
|
—
|
|
|||
Reductions for tax positions of prior years
|
—
|
|
|
(0.8
|
)
|
|
(0.1
|
)
|
|||
Unrecognized tax benefits at end of the year
|
$
|
2.4
|
|
|
$
|
2.3
|
|
|
$
|
0.8
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Interest cost
|
$
|
2.2
|
|
|
$
|
2.1
|
|
|
$
|
2.2
|
|
Expected return on plan assets
|
(2.9
|
)
|
|
(3.3
|
)
|
|
(2.8
|
)
|
|||
Amortization of net loss
|
1.3
|
|
|
0.9
|
|
|
1.2
|
|
|||
Total net periodic pension expense (income)
|
$
|
0.6
|
|
|
$
|
(0.3
|
)
|
|
$
|
0.6
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Change in projected benefit obligation:
|
|
|
|
||||
Projected benefit obligation at beginning of year
|
$
|
53.6
|
|
|
$
|
57.0
|
|
Interest cost
|
2.2
|
|
|
2.1
|
|
||
Assumption changes
|
5.4
|
|
|
—
|
|
||
Benefits paid
|
(2.5
|
)
|
|
(2.4
|
)
|
||
Actuarial gains
|
(0.2
|
)
|
|
(3.1
|
)
|
||
Projected benefit obligation at year end
|
$
|
58.5
|
|
|
$
|
53.6
|
|
Change in plan assets:
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
$
|
42.8
|
|
|
$
|
48.5
|
|
Actual return
|
8.4
|
|
|
(3.3
|
)
|
||
Employer contributions
|
0.4
|
|
|
—
|
|
||
Benefits paid
|
(2.5
|
)
|
|
(2.4
|
)
|
||
Fair value of plan assets at year end
|
$
|
49.1
|
|
|
$
|
42.8
|
|
Funded status (Accrued pension liabilities) (1)
|
$
|
(9.4
|
)
|
|
$
|
(10.8
|
)
|
|
|
|
|
||||
Unrecognized actuarial loss recognized in accumulated other comprehensive loss
|
$
|
14.2
|
|
|
$
|
15.8
|
|
(1)
|
Accrued pension liabilities on the the consolidated balance sheets for both December 31, 2019 and 2018 were $0.8, respectively, related to Hudson, which is not included in the table above.
|
|
December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Assumptions used to determine benefit obligation at year end:
|
|
|
|
|
|
|||
Discount rate
|
3.2
|
%
|
|
4.2
|
%
|
|
3.7
|
%
|
Assumptions used to determine net periodic benefit cost:
|
|
|
|
|
|
|||
Discount rate
|
4.2
|
%
|
|
3.7
|
%
|
|
4.0
|
%
|
Expected long-term weighted-average rate of return on plan assets
|
7.0
|
%
|
|
7.0
|
%
|
|
7.0
|
%
|
|
Target Allocations by Asset Category
|
|
Fair Value
|
||||||||||||||||||||||
|
|
Total
|
|
Level 2
|
|
Level 3
|
|||||||||||||||||||
Plan Assets:
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||||||
Equity funds
|
60% – 70%
|
|
$
|
36.0
|
|
|
$
|
30.0
|
|
|
$
|
36.0
|
|
|
$
|
30.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fixed income funds
|
26% – 30%
|
|
12.8
|
|
|
12.6
|
|
|
12.8
|
|
|
12.6
|
|
|
—
|
|
|
—
|
|
||||||
Other investments
|
3% – 6%
|
|
0.3
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
0.2
|
|
||||||
Total
|
|
|
$
|
49.1
|
|
|
$
|
42.8
|
|
|
$
|
48.8
|
|
|
$
|
42.6
|
|
|
$
|
0.3
|
|
|
$
|
0.2
|
|
Balance at January 1, 2018
|
$
|
2.9
|
|
Purchases, sales and settlements, net
|
(2.8
|
)
|
|
Transfers, net
|
0.1
|
|
|
Balance at December 31, 2018
|
$
|
0.2
|
|
Purchases, sales and settlements, net
|
(3.1
|
)
|
|
Transfers, net
|
3.2
|
|
|
Balance at December 31, 2019
|
$
|
0.3
|
|
2020
|
$
|
3.0
|
|
2021
|
3.1
|
|
|
2022
|
3.2
|
|
|
2023
|
3.3
|
|
|
2024
|
3.3
|
|
|
In aggregate during five years thereafter
|
17.2
|
|
(a)
|
Assets contributed to the multi-employer by one employer may be used to provide benefits to employees of other participating employers.
|
(b)
|
If a participating employer ceases contributing to the plan, the unfunded obligations of the plan may be inherited by the remaining participating employers.
|
(c)
|
If we choose to stop participating in the multi-employer plan, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Weighted-average grant-date fair value per share
|
$
|
30.66
|
|
|
$
|
26.67
|
|
|
$
|
20.11
|
|
Expected term (years)
|
5.0
|
|
|
5.5
|
|
|
5.4
|
|
|||
Risk-free interest rate
|
2.24
|
%
|
|
2.30
|
%
|
|
2.00
|
%
|
|||
Expected volatility
|
50.94
|
%
|
|
59.41
|
%
|
|
60.31
|
%
|
|
December 31, 2019
|
|||||||||||
|
Number
of Shares
|
|
Weighted-average
Exercise
Price
|
|
Aggregate Intrinsic Value
|
|
Weighted- average Remaining Contractual Term
|
|||||
Outstanding at beginning of year
|
0.79
|
|
|
$
|
38.46
|
|
|
|
|
|
||
Granted
|
0.13
|
|
|
66.50
|
|
|
|
|
|
|||
Exercised
|
(0.26
|
)
|
|
32.09
|
|
|
|
|
|
|||
Forfeited / Cancelled
|
(0.03
|
)
|
|
54.90
|
|
|
|
|
|
|||
Outstanding at end of year
|
0.63
|
|
|
$
|
46.01
|
|
|
$
|
15.0
|
|
|
5.2 years
|
Vested and expected to vest at end of year
|
0.62
|
|
|
$
|
45.71
|
|
|
$
|
6.9
|
|
|
5.1 years
|
Exercisable at end of year
|
0.28
|
|
|
$
|
47.12
|
|
|
$
|
14.9
|
|
|
3.3 years
|
|
December 31, 2019
|
|||||
|
Number
of Shares
|
|
Weighted-Average
Grant-Date Fair Value
|
|||
Unvested at beginning of year
|
0.27
|
|
|
$
|
41.01
|
|
Granted
|
0.09
|
|
|
67.64
|
|
|
Forfeited
|
(0.02
|
)
|
|
61.42
|
|
|
Vested
|
(0.12
|
)
|
|
30.05
|
|
|
Unvested at end of year
|
0.22
|
|
|
$
|
55.46
|
|
|
December 31, 2019
|
|||||
|
Number
of Shares
|
|
Weighted-Average
Grant-Date Fair Value
|
|||
Unvested at beginning of year
|
0.04
|
|
|
$
|
27.49
|
|
Granted
|
0.03
|
|
|
69.53
|
|
|
Vested
|
(0.02
|
)
|
|
18.62
|
|
|
Forfeited
|
(0.01
|
)
|
|
73.30
|
|
|
Unvested at end of year
|
0.04
|
|
|
$
|
61.71
|
|
2020
|
$
|
7.8
|
|
2021
|
6.4
|
|
|
2022
|
6.1
|
|
|
2023
|
5.6
|
|
|
2024
|
5.3
|
|
|
Thereafter (1)
|
7.9
|
|
|
Total future minimum lease payments
|
$
|
39.1
|
|
(1)
|
As of December 31, 2019, future minimum lease payments for non-cancelable operating leases for period subsequent to 2024 relate to 7 leased facilities.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Severance:
|
|
|
|
|
|
|
||||||
Cost of sales
|
|
$
|
2.9
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
Selling, general, and administrative expenses
|
|
1.4
|
|
|
3.2
|
|
|
3.2
|
|
|||
Total severance costs
|
|
$
|
4.3
|
|
|
$
|
3.2
|
|
|
$
|
3.6
|
|
Other restructuring:
|
|
|
|
|
|
|
|
|
|
|||
Cost of sales
|
|
$
|
9.3
|
|
|
$
|
0.8
|
|
|
$
|
2.3
|
|
Selling, general, and administrative expenses
|
|
2.0
|
|
|
0.4
|
|
|
5.3
|
|
|||
Total other restructuring costs
|
|
$
|
11.3
|
|
|
$
|
1.2
|
|
|
$
|
7.6
|
|
|
|
|
|
|
|
|
||||||
Total restructuring costs
|
|
$
|
15.6
|
|
|
$
|
4.4
|
|
|
$
|
11.2
|
|
|
Year Ended December 31, 2019
|
||||||||||||||||||||||
|
D&S East
|
|
D&S West
|
|
E&C Cryogenics
|
|
E&C FinFans
|
|
Corporate
|
|
Consolidated
|
||||||||||||
Balance as of December 31, 2018
|
$
|
0.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
0.9
|
|
Restructuring charges
|
8.5
|
|
|
0.9
|
|
|
2.5
|
|
|
3.5
|
|
|
0.2
|
|
|
15.6
|
|
||||||
Property, plant and equipment impairment
|
(4.0
|
)
|
|
—
|
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
(5.6
|
)
|
||||||
Cash payments and other
|
(4.9
|
)
|
|
(0.8
|
)
|
|
(0.7
|
)
|
|
(3.5
|
)
|
|
(0.1
|
)
|
|
(10.0
|
)
|
||||||
Balance as of December 31, 2019
|
$
|
0.4
|
|
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
0.9
|
|
|
Year Ended December 31, 2018
|
||||||||||||||||||||||
|
D&S East
|
|
D&S West
|
|
E&C Cryogenics
|
|
E&C FinFans
|
|
Corporate
|
|
Consolidated
|
||||||||||||
Balance as of December 31, 2017
|
$
|
0.2
|
|
|
$
|
1.2
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
1.1
|
|
|
$
|
2.7
|
|
Restructuring charges
|
1.4
|
|
|
—
|
|
|
0.6
|
|
|
0.1
|
|
|
2.3
|
|
|
4.4
|
|
||||||
Cash payments and other
|
(0.8
|
)
|
|
(1.2
|
)
|
|
(0.7
|
)
|
|
(0.2
|
)
|
|
(3.3
|
)
|
|
(6.2
|
)
|
||||||
Balance as of December 31, 2018
|
$
|
0.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
0.9
|
|
|
Year Ended December 31, 2017
|
||||||||||||||||||||||
|
D&S East
|
|
D&S West
|
|
E&C Cryogenics
|
|
E&C FinFans
|
|
Corporate
|
|
Consolidated
|
||||||||||||
Balance as of December 31, 2016
|
$
|
—
|
|
|
$
|
3.2
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
3.0
|
|
|
$
|
6.3
|
|
Restructuring charges
|
1.7
|
|
|
1.1
|
|
|
2.1
|
|
|
0.3
|
|
|
6.0
|
|
|
11.2
|
|
||||||
Cash payments and other
|
(1.5
|
)
|
|
(3.1
|
)
|
|
(2.1
|
)
|
|
(0.2
|
)
|
|
(7.9
|
)
|
|
(14.8
|
)
|
||||||
Balance as of December 31, 2017
|
$
|
0.2
|
|
|
$
|
1.2
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
1.1
|
|
|
$
|
2.7
|
|
|
Year Ended December 31, 2019
|
||||||||||||||||||
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total
|
||||||||||
Sales
|
$
|
289.3
|
|
|
$
|
309.6
|
|
|
$
|
357.8
|
|
|
$
|
342.4
|
|
|
$
|
1,299.1
|
|
Gross profit
|
67.1
|
|
|
82.8
|
|
|
101.2
|
|
|
85.7
|
|
|
336.8
|
|
|||||
Operating income (1)
|
4.6
|
|
|
25.3
|
|
|
29.9
|
|
|
21.1
|
|
|
80.9
|
|
|||||
Net income
|
1.0
|
|
|
14.6
|
|
|
18.7
|
|
|
12.5
|
|
|
46.8
|
|
|||||
Net income attributable to Chart Industries, Inc. (5)
|
0.9
|
|
|
14.4
|
|
|
18.7
|
|
|
12.4
|
|
|
46.4
|
|
|||||
Net income attributable to Chart Industries, Inc. — basic (2)
|
$
|
0.03
|
|
|
$
|
0.44
|
|
|
$
|
0.52
|
|
|
$
|
0.35
|
|
|
$
|
1.37
|
|
Net income attributable to Chart Industries, Inc. — diluted (2)
|
$
|
0.03
|
|
|
$
|
0.41
|
|
|
$
|
0.51
|
|
|
$
|
0.34
|
|
|
$
|
1.32
|
|
(1)
|
Includes transaction-related costs of $5.4 for the year ended December 31, 2019, which were mainly related to the AXC acquisition. Includes integration costs of $1.6 related to the AXC acquisition for the year ended December 31, 2019.
|
(2)
|
Basic and diluted earnings per share are computed independently for each of the quarters presented. As such, the sum of quarterly basic and diluted earnings per share may not equal reported annual basic and diluted earnings per share.
|
|
Year Ended December 31, 2018
|
||||||||||||||||||
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total
|
||||||||||
Sales
|
$
|
244.1
|
|
|
$
|
277.9
|
|
|
$
|
272.2
|
|
|
$
|
290.1
|
|
|
$
|
1,084.3
|
|
Gross profit
|
66.9
|
|
|
72.8
|
|
|
82.3
|
|
|
73.9
|
|
|
295.9
|
|
|||||
Operating income (1) (2)
|
15.0
|
|
|
19.3
|
|
|
31.5
|
|
|
26.3
|
|
|
92.1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
$
|
4.2
|
|
|
$
|
9.9
|
|
|
$
|
21.5
|
|
|
$
|
18.0
|
|
|
$
|
53.6
|
|
Income from discontinued operations
|
1.6
|
|
|
2.4
|
|
|
0.7
|
|
|
29.7
|
|
|
34.4
|
|
|||||
Net income attributable to Chart Industries, Inc. (3) (4)
|
$
|
5.8
|
|
|
$
|
12.3
|
|
|
$
|
22.2
|
|
|
$
|
47.7
|
|
|
$
|
88.0
|
|
Basic earnings per common share attributable to Chart Industries, Inc. (5) (6)
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
$
|
0.14
|
|
|
$
|
0.32
|
|
|
$
|
0.69
|
|
|
$
|
0.58
|
|
|
$
|
1.73
|
|
Income from discontinued operations
|
0.05
|
|
|
0.08
|
|
|
0.03
|
|
|
0.94
|
|
|
1.10
|
|
|||||
Net income attributable to Chart Industries, Inc.
|
$
|
0.19
|
|
|
$
|
0.40
|
|
|
$
|
0.72
|
|
|
$
|
1.52
|
|
|
$
|
2.83
|
|
Diluted earnings per common share attributable to Chart Industries, Inc. (5) (6)
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
$
|
0.13
|
|
|
$
|
0.31
|
|
|
$
|
0.65
|
|
|
$
|
0.56
|
|
|
$
|
1.67
|
|
Income from discontinued operations
|
0.05
|
|
|
0.07
|
|
|
0.02
|
|
|
0.91
|
|
|
1.06
|
|
|||||
Net income attributable to Chart Industries, Inc.
|
$
|
0.18
|
|
|
$
|
0.38
|
|
|
$
|
0.67
|
|
|
$
|
1.47
|
|
|
$
|
2.73
|
|
(1)
|
Includes an expense of $3.8 recorded to the cost of sales related to the estimated costs of the aluminum cryobiological tank recall for the second quarter of 2018 and an additional expense of $0.2 recorded to the cost of sales for the fourth quarter of 2018.
|
(2)
|
During the year ended December 31, 2018, we recorded net severance costs of $2.3 primarily related to headcount reductions associated with the strategic realignment of our segment structure, which includes $1.8 in payroll severance costs partially offset by a $0.9 credit due to related share-based compensation forfeitures for the third quarter of 2018. Includes net severance
|
(3)
|
Includes transaction-related costs of $2.1 for the year ended December 31, 2018, which were mainly related to the VRV acquisition. Includes integration costs of $0.8 related to the VRV acquisition for the fourth quarter of 2018.
|
(4)
|
Includes gain on sale of the CAIRE business of $34.3 for the fourth quarter of 2018.
|
(5)
|
We have completed our analysis to determine the effect of the Tax Cuts and Jobs Act, and as such, we have recorded an additional tax benefit of $1.8.
|
(6)
|
Basic and diluted earnings per share are computed independently for each of the quarters presented. As such, the sum of quarterly basic and diluted earnings per share may not equal reported annual basic and diluted earnings per share.
|
|
|
|
Additions
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Balance at
beginning
of period
|
|
Charged to
costs and
expenses
|
|
Charged
to other
accounts
|
|
|
Deductions
|
|
|
Translations
|
|
Balance
at end of
period
|
||||||||||||
Year Ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Allowance for doubtful accounts
|
$
|
8.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
0.3
|
|
|
$
|
8.8
|
|
Allowance for excess and obsolete inventory
|
9.0
|
|
|
7.8
|
|
|
—
|
|
|
|
(5.6
|
)
|
(3)
|
|
(0.4
|
)
|
|
10.8
|
|
||||||
Deferred tax assets valuation allowance
|
65.2
|
|
|
5.4
|
|
|
5.3
|
|
(1)
|
|
(5.9
|
)
|
(4)
|
|
(1.8
|
)
|
|
68.2
|
|
||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Allowance for doubtful accounts
|
$
|
9.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
(0.8
|
)
|
(2)
|
|
$
|
0.2
|
|
|
$
|
8.5
|
|
Allowance for excess and obsolete inventory
|
7.1
|
|
|
4.8
|
|
|
—
|
|
|
|
(3.5
|
)
|
(3)
|
|
0.6
|
|
|
9.0
|
|
||||||
Deferred tax assets valuation allowance
|
26.8
|
|
|
38.7
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.3
|
)
|
|
65.2
|
|
||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Allowance for doubtful accounts
|
$
|
9.0
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
|
$
|
(0.9
|
)
|
(2)
|
|
$
|
0.5
|
|
|
$
|
9.1
|
|
Allowance for excess and obsolete inventory
|
9.1
|
|
|
4.2
|
|
|
—
|
|
|
|
(6.3
|
)
|
(3)
|
|
0.1
|
|
|
7.1
|
|
||||||
Deferred tax assets valuation allowance
|
14.9
|
|
|
10.9
|
|
|
—
|
|
|
|
—
|
|
|
|
1.0
|
|
|
26.8
|
|
(1)
|
Deferred tax assets valuation allowance related to the VRV acquisition.
|
(2)
|
Reversal of amounts previously recorded as bad debt and uncollectible accounts written off.
|
(3)
|
Inventory items written off against the allowance.
|
(4)
|
Deductions to the deferred tax assets valuation allowance relate to decreased deferred tax assets and the release of the valuation allowance.
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
2.1
|
|
|
|
|
|
2.1.1
|
|
|
|
|
|
2.2
|
|
|
|
|
|
2.2.1
|
|
|
|
|
|
2.3
|
|
|
|
|
|
2.4
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
10.1
|
|
|
10.1.1
|
|
|
|
|
|
10.1.2
|
|
|
|
|
|
10.1.3
|
|
|
|
|
|
10.1.4
|
|
|
|
|
|
10.1.5
|
|
|
|
|
|
10.1.6
|
|
|
|
|
|
10.1.7
|
|
|
|
|
|
10.1.8
|
|
|
|
|
|
10.1.9
|
|
|
|
|
|
10.1.10
|
|
|
|
|
|
10.1.11
|
|
|
|
|
|
10.1.12
|
|
|
|
|
|
10.1.13
|
|
|
|
|
|
10.1.14
|
|
|
|
|
|
10.1.15
|
|
|
|
|
|
10.1.16
|
|
|
|
|
|
10.1.17
|
|
|
|
|
|
10.1.18
|
|
|
|
|
|
10.1.19
|
|
|
|
|
|
10.1.20
|
|
|
|
|
|
10.1.21
|
|
|
|
|
|
10.1.22
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.2.1
|
|
|
|
|
|
10.2.2
|
|
|
|
|
|
10.2.3
|
|
|
|
|
|
10.2.4
|
|
|
|
|
|
10.2.5
|
|
|
|
|
|
10.2.6
|
|
|
|
|
|
10.2.7
|
|
|
|
|
|
10.2.8
|
|
|
|
|
|
10.2.9
|
|
|
|
|
|
10.2.10
|
|
|
|
|
|
10.2.11
|
|
|
|
|
|
10.2.12
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.3.1
|
|
|
|
|
|
10.3.2
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
10.7
|
|
|
|
|
|
10.8
|
|
|
|
|
|
10.9
|
|
|
|
|
|
10.10.1
|
|
|
|
|
|
10.10.2
|
|
|
|
|
|
10.11
|
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13.1
|
|
|
|
|
|
10.13.2
|
|
|
|
|
|
10.13.3
|
|
|
|
|
|
10.13.4
|
|
|
|
|
|
10.13.5
|
|
|
|
|
|
10.13.6
|
|
|
|
|
|
10.13.7
|
|
|
|
|
|
10.13.8
|
|
|
|
|
|
10.13.9
|
|
|
|
|
|
10.13.10
|
|
|
|
|
|
10.13.11
|
|
|
|
|
|
10.14
|
|
|
|
|
|
21.1
|
|
|
|
|
|
23.1
|
|
|
|
|
|
23.2
|
|
|
|
|
|
31.1
|
|
|
|
|
|
32.1
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document (x)
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document (x)
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document (x)
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document (x)
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document (x)
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document (x)
|
(x)
|
Filed herewith.
|
(xx)
|
Furnished herewith.
|
*
|
Management contract or compensatory plan or arrangement.
|
**
|
Certain exhibits and schedules have been omitted and Chart agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits and schedules upon request.
|
•
|
the designation of such series;
|
•
|
the number of shares to constitute such series;
|
•
|
the voting powers and rights (if any) of the shares of such series;
|
•
|
if such series has voting rights, whether or not such series is to be entitled to vote as a separate class either alone or together with the holders of Common Stock or one or more other series of Preferred Stock;
|
•
|
the preferences and relative, participating, optional, conversion or other special rights (if any) of such series and the qualifications, limitations or restrictions (if any) with respect to such series;
|
•
|
the redemption rights and price(s), if any, of such series, and whether or not the shares of such series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement and, if such retirement or sinking fund or funds are to be established, the periodic amount thereof and the terms and provisions relative to the operation thereof;
|
•
|
the dividend rights and preferences (if any) of such series, including, without limitation, (A) the rates of dividends payable thereon, (B) the conditions upon which and the time when such dividends are payable, (C) whether or not such dividends shall be cumulative or noncumulative and, if cumulative, the date or dates from which such dividends shall accumulate and (D) whether or not the payment of such dividends shall be preferred to the payment of dividends payable on Common Stock or any other series of Preferred Stock;
|
•
|
the preferences and special rights (if any), and the amounts thereof, which the holders of such series shall be entitled to receive upon the voluntary or involuntary liquidation, dissolution or winding-up of, or upon any distribution of the assets of, the Company;
|
•
|
whether or not the shares of such series, at the option of the Company or the holders thereof or upon the happening of any specified event, shall be convertible into or exchangeable for (A) shares of Common Stock, (B) shares of any other series of Preferred Stock or (C) any other stock or securities of the Company or any other corporation;
|
•
|
if such series is to be convertible or exchangeable, the price or prices or ratio or ratios or rate or rates at which such conversion or exchange may be made and the terms and conditions (if any) upon which such price or prices or ratio or ratios or rate or rates may be adjusted; and
|
•
|
such other rights, powers and preferences with respect to the series as Board may deem advisable.
|
•
|
the removal of directors;
|
•
|
the limitation of stockholder action by written consent;
|
•
|
the ability to call a special meeting of stockholders being vested solely in the chairman of the Board, the Board and any committee of the Board that has been designated by the Board;
|
•
|
the advance notice requirements for stockholder proposals and director nominations; and
|
•
|
the amendment provision requiring that the above provisions be amended only with a 75% supermajority vote.
|
(a)
|
“Cause” means, with respect to the Grantee, the meaning ascribed to such term in any employment, severance, or change in control agreement entered into by the Grantee. If the Grantee has not entered into any employment, severance, or change in control agreement with a definition of Cause, then “Cause” means (i) the Grantee’s willful failure to perform duties which, if curable, is not cured promptly, or in any event within ten (10) days, following the first written notice of such failure from the Company, (ii) the Grantee’s commission of, or plea of guilty or no contest to a (x) felony or (y) crime involving moral turpitude, (iii) willful malfeasance or misconduct by the Grantee which is demonstrably injurious to the Company or its Subsidiaries or Affiliates, (iv) material breach by the Grantee of any non-competition, non-solicitation or confidentiality covenants, (v) commission by the Grantee of any act of gross negligence, corporate waste, disloyalty or unfaithfulness to the Company which adversely affects the business of the Company or its Subsidiaries or Affiliates, or (vi) any other act or course of conduct by the Grantee which will demonstrably have a material adverse effect on the Company, a Subsidiary or Affiliate’s business.
|
(b)
|
“Disability” or variations thereof means, with respect to the Grantee, a medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months which: (i) renders the Grantee unable to engage in substantial gainful activity or (ii) results in the Grantee receiving income replacement benefits for at least three months under an accident and health plan sponsored by the Grantee’s employer. Notwithstanding the foregoing, a Grantee will not be considered “Disabled” with respect to this Agreement unless his or her disability satisfies the requirements set forth in Section 409A of the Code.
|
(c)
|
“Good Reason” means, with respect to the Grantee, the meaning ascribed to such term in any employment, severance, or change in control agreement entered into by the Grantee. If the Grantee has not entered into any employment, severance, or change in control agreement with a definition of Good Reason, then “Good Reason” means without the Grantee’s consent, (i) a material diminution in the Grantee’s authority, position or duties, or a material adverse change in reporting lines, (ii) Grantee’s principal place of employment with the Company or Post-CIC Entity is relocated a material distance (which for this purpose shall be deemed to be more than 50 miles) from such Grantee’s principal place of employment immediately prior to the Change in Control, (iii) any reduction in the Grantee’s base salary and (excluding any general salary reduction affecting similarly situated employees of the Company as a result of a material adverse change in the Company’s prospects or business), or (iv) the Grantee is excluded, following a Change in Control (other than through Grantee’s voluntary action(s)), from full participation in any benefit plan or arrangement maintained for similarly situated employees of the Company or Post-CIC Entity, and such exclusion materially reduces the benefits that otherwise would have been available to the Grantee, in each case which is not cured within thirty (30) days following the Company’s receipt of written notice from the Grantee describing the event constituting Good Reason.
|
(d)
|
“Retirement” or variations thereof means, with respect to the Grantee, a voluntary termination of Employment with the Company, its Subsidiaries and its Affiliates, either (i) after attaining age 60 and completing 10 years of service with such entities or (ii) after attaining age 65 and completing 5 years of service with such entities.
|
(a)
|
Service-Based. Subject to the Grantee’s continued Employment with the Company or its Affiliates as of such dates (except as otherwise provided herein with respect to death, Disability, Retirement or a Change in Control), the RSUs, together with any dividend equivalents credited pursuant to Section 7(b) below, shall Vest with respect to thirty-three and one-third percent (33 1/3%) of the Shares covered by the Award on each of the first (the “First Vesting Date”), second (the “Second Vesting Date”), and third (the “Third Vesting Date”) anniversaries of the Grant Date (each, a “Vesting Date”).
|
(b)
|
Retirement. If the Grantee’s Employment terminates as a result of Retirement, the vesting provisions set forth in Sections 4(a) and 24 of this Agreement shall continue to apply and the Participant will have continued vesting of unvested RSUs that would have otherwise vested in the year following the year in which the Participant retires. The remaining unvested RSUs are forfeited. .
|
(c)
|
Death or Disability. If the Grantee dies or the Grantee becomes Disabled, the RSUs together with any dividend equivalents credited pursuant to Section 7(b) below, shall, to the extent not then Vested and not previously forfeited, immediately become fully Vested as of the date of the Grantee’s death or Disability.
|
(i)
|
Company Remains Surviving Entity or Awards Assumed by Successor.
|
(A)
|
Upon the occurrence of a Change in Control in which either (i) the Company remains the surviving entity or (ii) the Company is not the surviving entity, but the RSUs are Assumed (as defined in Section 4(d)(i)(C) below) by the entity (or any successor or parent thereof) that effects such change in control (the “Post-CIC Entity”), any RSU granted prior to the Change in Control shall continue to vest in accordance with the terms of this Agreement unless, during the two-year period commencing on the date of the Change in Control:
|
(1)
|
the Grantee’s employment or service is involuntarily terminated by the Company or the Post-CIC Entity, as applicable, for reasons other than for Cause; or
|
(2)
|
the Grantee Terminates Grantee’s employment or service for Good Reason.
|
(B)
|
If a Grantee’s employment or service is terminated as described in Section 4(d)(i)(A)(1) or (2) above (“Protected Termination”), any restrictions that apply to the RSUs shall lapse; provided, that if Grantee intends to incur a Protected Termination of Grantee’s employment or service for Good Reason, Grantee must:
|
(1)
|
provide the Company with a written notice of his or her intent to incur a Protected Termination of employment or service for Good Reason within sixty (60) days after the Grantee becomes aware of the circumstances giving rise to Good Reason; and
|
(2)
|
allow the Company thirty (30) days to remedy such circumstances to the extent curable.
|
(C)
|
For purposes of this Section 4, an Award shall be considered assumed by the Post-CIC Entity (“Assumed”) if all of the following conditions are met:
|
(1)
|
RSUs are converted into replacement awards covering a number of Shares of the Post-CIC Entity, as determined in a manner substantially similar to how the same number of Shares would be treated in the Change in Control transaction; provided that, to the extent that any portion of the consideration received by holders of Shares in the Change in Control transaction is not in the form of the common stock of the Post-CIC Entity, the number of shares covered by the replacement awards shall be based on the average of the high and low selling prices of the common stock of such Post-CIC Entity on the established stock exchange on the trading day immediately preceding the date of the Change in Control;
|
(2)
|
the replacement awards contain provisions for scheduled vesting and treatment on Protected Termination of employment (including the definitions of Cause and Good Reason, if applicable) that are no less favorable to the Grantee than this Agreement, and all other terms of the replacement awards (other than the security and number of shares represented by the replacement awards) are substantially similar to, or more favorable to the Grantee than, the terms of this Agreement; and
|
(3)
|
the security represented by the replacement awards, if any, is of a class that is publicly held and widely traded on an established stock exchange.
|
(ii)
|
Awards Not Assumed by Successor. Upon the occurrence of a Change in Control in which the Company is not the surviving Company, if this Agreement is not Assumed by the Post-CIC Entity, Grantee shall receive the RSUs that Grantee would have received in the Change in Control transaction had Grantee been, immediately prior to such transaction, a holder of the number of Shares equal to the number of RSUs, payable at the same time as consideration is paid to the holders of Shares in connection with the Change in Control, provided such payments are made no later than the fifth anniversary of the Change in Control.
|
(a)
|
Voting Rights. The Grantee will not have any Stockholder rights, including voting rights, with respect to the RSUs unless and until Shares have actually been issued to the Grantee.
|
(b)
|
Dividend Equivalents. If on any date prior to a Payment Date the Company shall pay any cash dividend on the Shares (with a record date after the Grant Date), then the Company shall credit on the books and records of the Company and the Grantee shall be entitled to receive, on the Payment Date, a number of Shares (rounded down to the next whole Share) equal to: (a) the aggregate number of RSUs credited to the Grantee as of the related dividend record date, multiplied by (b) the per Share amount of such cash dividend and divided by (c) the Fair Market Value of a Share on the dividend record date. In the case of any dividend declared on Shares (with a record date after the Grant Date) that is payable in the form of Shares, the Company shall credit to the Grantee’s bookkeeping account and the Grantee shall be granted, as of the Payment Date, a number of additional Shares (rounded down to the next whole Share) equal to: (x) the aggregate number of RSUs credited to the Grantee as of the related dividend record date, multiplied by (y) the number of Shares (including any fraction thereof) payable as a dividend on a Share.
|
a.
|
“Cause” means, with respect to the Grantee, the meaning ascribed to such term in any employment, severance, or change in control agreement entered into by the Grantee. If the Grantee has not entered into any employment, severance, or change in control agreement with a definition of Cause, then “Cause” means (i) the Grantee’s willful failure to perform duties which, if curable, is not cured promptly, or in any event within ten (10) days, following the first written notice of such failure from the Company, (ii) the Grantee’s commission of, or plea of guilty or no contest to a (x) felony or (y) crime involving moral turpitude, (iii) willful malfeasance or misconduct by the Grantee which is demonstrably injurious to the Company or its Subsidiaries or Affiliates, (iv) material breach by the Grantee of any non-competition, non-solicitation or confidentiality covenants, (v) commission by the Grantee of any act of gross negligence, corporate waste, disloyalty or unfaithfulness to the Company which adversely affects the business of the Company or its Subsidiaries or Affiliates, or (vi) any other act or course of conduct by the Grantee which will demonstrably have a material adverse effect on the Company, a Subsidiary or Affiliate’s business.
|
b.
|
“Disability” means, with respect to the Grantee, a medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months which: (i) renders the Grantee unable to engage in substantial gainful activity
|
c.
|
“Good Reason” means, with respect to the Grantee, the meaning ascribed to such term in any employment, severance, or change in control agreement entered into by the Grantee. If the Grantee has not entered into any employment, severance, or change in control agreement with a definition of Good Reason, then “Good Reason” means without the Grantee’s consent, (i) a material diminution in the Grantee’s authority, position or duties, or a material adverse change in reporting lines, (ii) Grantee’s principal place of employment with the Company or Post-CIC Entity is relocated a material distance (which for this purpose shall be deemed to be more than 50 miles) from such Grantee’s principal place of employment immediately prior to the Change in Control, (iii) any reduction in the Grantee’s base salary and (excluding any general salary reduction affecting similarly situated employees of the Company as a result of a material adverse change in the Company’s prospects or business), or (iv) the Grantee is excluded, following a Change in Control (other than through Grantee’s voluntary action(s)), from full participation in any benefit plan or arrangement maintained for similarly situated employees of the Company or Post-CIC Entity, and such exclusion materially reduces the benefits that otherwise would have been available to the Grantee, in each case which is not cured within thirty (30) days following the Company’s receipt of written notice from the Grantee describing the event constituting Good Reason.
|
d.
|
“Performance Period” means the period set forth in Exhibit A.
|
e.
|
“Performance Requirements” means the performance measure(s) set forth in Exhibit A.
|
f.
|
“Performance Unit” means a Restricted Share Unit representing the right to receive a Share after completion of the Performance Period provided that the Performance Requirements have been satisfied.
|
g.
|
“Retirement” (or variations thereof) means a voluntary termination of Employment with the Company, its Subsidiaries and its Affiliates after either (i) attaining age 60 and completing 10 years of service with such entities or (ii) attaining age 65 and completing 5 years of service with such entities.
|
a.
|
Retirement, Death or Disability. If the Grantee terminates Employment as a result of Retirement, death or Disability prior to the last day of the Performance Period, the Grantee (or his or her beneficiary or beneficiaries) shall be entitled to a pro-rated number of Shares, calculated by multiplying (x) by (y) where:
|
(x)
|
is the number of Shares, if any, that would have been earned by the Grantee as the result of the satisfaction of the Performance Requirements; and
|
(y)
|
is the number of months that the Grantee was employed (rounded up to the nearest whole number) during the Performance Period divided by the number of months in the Performance Period.
|
b.
|
Reasons Other Than Retirement, Death or Disability. Except as otherwise provided in Section 5, if the Committee determines in its sole and exclusive discretion that the Grantee’s Employment has terminated prior to the end of the Performance Period for reasons other than those described in Section 4(a) above, the Grantee will forfeit his or her Performance Units. If the Performance Units are forfeited, the Grantee and all persons who might claim through him or her will have no further interests under this Agreement.
|
a.
|
Company Remains Surviving Entity or Awards Assumed by Successor.
|
i.
|
Upon the occurrence of a Change in Control as defined in the Plan in which either (i) the Company remains the surviving entity or (ii) the Company is not the surviving entity, but the Performance Units granted pursuant to this Agreement are Assumed (as defined in Section 5(a)(iii) below) by the entity (or any successor or parent thereof) that effects such change in control (the “Post-CIC Entity”), any Performance Units granted pursuant to this Agreement prior to the Change in Control shall continue to vest in accordance with the terms of this Agreement unless, during the two-year period commencing on the date of the Change in Control:
|
A.
|
the Grantee’s employment or service is involuntarily Terminated by the Company or the Post-CIC Entity, as applicable, for reasons other than for Cause; or
|
B.
|
the Grantee Terminates Grantee’s employment or service for Good Reason.
|
ii.
|
If a Grantee’s employment or service is terminated as described in Section 5(a)(i)(A) or (B) above (a “Protected Termination”), the Performance Units granted to Grantee pursuant to this Agreement shall immediately be earned or vest in a prorated amount (as described below) and such prorated portion shall, to the extent permitted under Code Section 409A without resulting in adverse tax effects to the Grantee, become immediately payable in accordance with the Award’s terms; provided, that if the Grantee intends to incur a Protected Termination of Grantee’s employment or service for Good Reason, Grantee must:
|
A.
|
provide the Company with a written notice of Grantee’s intent to incur a Protected Termination of employment or service for Good Reason within sixty (60) days after the Grantee becomes aware of the circumstances giving rise to Good Reason; and
|
B.
|
allow the Company thirty (30) days to remedy such circumstances to the extent curable.
|
iii.
|
For purposes of this Section 5, the Performance Units granted pursuant to this Agreement shall be considered assumed by the Post-CIC Entity (“Assumed”) if all of the following conditions are met:
|
A.
|
Such Performance Units are converted into replacement awards that preserve the value of such Performance Units at the time of the Change in Control;
|
B.
|
the replacement awards contain provisions for scheduled vesting and treatment on a Protected Termination of employment (including the definitions of Cause and Good Reason, if applicable) that are no less favorable to the Grantee than the underlying Performance Units, and all other terms of the replacement awards (other than the security and number of shares represented by the replacement awards) are substantially similar to, or more favorable to the Grantee than, the terms of this Agreement; and
|
C.
|
the security represented by the replacement awards, if any, is of a class that is publicly held and widely traded on an established stock exchange.
|
b.
|
Awards Not Assumed by Successor.
|
i.
|
Upon the occurrence of a Change in Control in which the Company is not the surviving Company, a prorated amount (as described below) of any Performance Units granted pursuant to this Agreement that are subject to Performance Requirements and that are not Assumed by the Post-CIC Entity shall immediately vest and become immediately payable in accordance with its terms (subject to Section 5(c)), and this Section 5(b) shall apply.
|
ii.
|
The payments contemplated by this Section 5(b) shall be made at the same time as consideration is paid to the holders of Shares in
|
a.
|
with respect to Shares earned under Sections 4 or 5, the Company will deliver to Grantee (or his or her beneficiary or beneficiaries) certificates for the Shares to which Grantee is entitled, subject to any applicable securities law restrictions; and
|
b.
|
with respect to Shares otherwise earned under this Agreement, the Company will issue to the Grantee the Shares to which Grantee is entitled, subject to any applicable securities law restrictions, and provided that the Grantee is in active Employment on the last day of the Performance Period.
|
(Operating Income) X (1 minus the Company’s Effective Tax Rate)
|
Average Capital# of last 2 years
|
•
|
“Operating Income” is the sum of the last twelve months of Total Sales less Cost of Sales and Operating Expenses (excluding nonrecurring items, such as impairment charges and unusual loss or gain on disposal of assets);
|
•
|
“Noncontrolling Interest” is, with respect to subsidiaries of the Company that are not fully owned by the Company, the portion of the equity of such subsidiaries that is not owned by the Company;
|
•
|
“ST Debt” is debt that is due within one year;
|
•
|
“LT Debt” is debt that is due longer than one year; and
|
•
|
“Cash” is cash and cash equivalents.
|
•
|
the average annual ROI will be calculated by adding the ROI for each Measurement Period and dividing the sum by three (the “Average Annual ROI”); and
|
•
|
the average annual Operating Income will be calculated by adding the Operating Income for each Measurement Period and dividing the sum by three (the “Average Annual Operating Income”).
|
a.
|
If the Company does not recognize any revenue for Big LNG during the Performance Period, then based on the Company’s Average Annual ROI during the Performance Period, determine the percentage of Earned Performance Units (the “Non-LNG Earned Percentage”) as follows:
|
•
|
Multiply the total revenue from Big LNG for each year of the Performance Period by [MARGIN FACTOR]% to determine the adjustment amount for each year of the Performance Period (the “Adjustment Amounts”),
|
•
|
Add the respective Adjustment Amounts for each year of the Performance Period to the Operating Income forecasted for each year of the Performance Period (previously disclosed to the Compensation Committee as an input for the target Average Annual ROI), and adjust the target Average Annual ROI accordingly (using the other inputs for calculation of target Average Annual ROI as previously disclosed to the Compensation Committee).
|
b.
|
If the Non-LNG Earned Percentage applies, determine the number of Earned Performance Units under the ROI metric as follows:
|
a.
|
If the Company does not recognize any revenue for Big LNG during the Performance Period, based on the Company’s Average Annual Operating Income during the
|
•
|
Multiply the total revenue from Big LNG for each year of the Performance Period by [MARGIN FACTOR]% to determine the adjustment amount for each year of the Performance Period (the “Adjustment Amounts”),
|
•
|
Add the respective Adjustment Amounts for each year of the Performance Period to the Operating Income amounts noted above, under sub-part a, to determine the new Maximum, Target, and Minimum Average Annual Operating Income figures.
|
b.
|
If the Non-LNG Earned Percentage applies, determine the number of Earned Performance Units under the Operating Income metric as follows:
|
a.
|
Service-Based. Subject to the Participant’s continued Employment as of such dates (except as otherwise provided herein with respect to death, Disability, Retirement or Change in Control), the Option shall vest and become exercisable with respect to twenty-five percent (25%) of the Shares initially covered by the Option on each of the first, second, third and fourth anniversaries of the Grant Date.
|
i.
|
Company Remains Surviving Entity or Awards Assumed by Successor.
|
A.
|
Upon the occurrence of a Change in Control as defined in the Plan in which either (i) the Company remains the surviving entity or (ii) the Company is not the surviving entity, but this Agreement is Assumed (as defined in Section 4(b)(i)(C) below) by the entity (or any successor or parent thereof) that effects such change in control (the “Post-CIC Entity”), the Option shall continue to vest and become exercisable in accordance with the terms of this Agreement unless, during the two-year period commencing on the date of the Change in Control:
|
1.
|
the Participant’s employment or service is involuntarily terminated by the Company or the Post-CIC Entity, as applicable, for reasons other than for Cause (as defined in Section 4(d)(iii)); or
|
2.
|
the Participant terminates the Participant’s employment or service for Good Reason (as defined in Section 4(d)(iv)).
|
B.
|
If a Participant’s employment or service is terminated as described in Section 4(b)(i)(A)(1) or (2) above (“Protected Termination”), the Option shall become fully vested and remain exercisable until the earlier of (A) the end of the original term of the Option as provided in the Plan or (B) the second anniversary of the date the Protected Termination occurs; provided, that any Participant who is to incur a Protected Termination in connection with Participant’s employment or service for Good Reason must:
|
1.
|
provide the Company with a written notice of Participant’s intent to incur a Protected Termination of employment or service for Good Reason within sixty (60) days after the Participant becomes aware of the circumstances giving rise to Good Reason; and
|
2.
|
allow the Company thirty (30) days to remedy such circumstances to the extent curable.
|
C.
|
For purposes of this Section 4, an Award shall be considered assumed by the Post-CIC Entity (“Assumed”) if all of the following conditions are met:
|
1.
|
The Option is converted into a replacement award in a manner that complies with Code Section 409A;
|
2.
|
the replacement awards contain provisions for scheduled vesting and treatment on Protected Termination of employment (including the definitions of Cause and Good Reason, if applicable) that are no less favorable to the Participant than the Option, and all other terms of the replacement awards (other than the security and number of shares represented by the replacement awards) are substantially similar to, or more favorable to the Participant than, the terms of the Option; and
|
3.
|
the security represented by the Option is of a class that is publicly held and widely traded on an established stock exchange.
|
ii.
|
Awards Not Assumed by Successor.
|
A.
|
Upon the occurrence of a Change in Control in which the Company is not the surviving Company, if the Option is not Assumed by the Post-CIC Entity, the Option shall become fully vested and exercisable on the date of the Change in Control, and the following provisions of this Section 4(b)(ii) shall apply.
|
B.
|
The Participant shall receive a payment equal to the difference between the consideration (consisting of cash or other property (including securities of a successor or parent corporation)) received by holders of Shares in the Change in Control transaction and the exercise price of the applicable Stock Option or SAR, if such difference is positive. Such payment shall be made in the same form as the consideration received by holders of Shares. If the Option has an exercise price that is higher than the per share consideration received by holders of Shares in connection with the Change in Control, the Option shall be cancelled for no additional consideration.
|
C.
|
The payments contemplated by Sections 4(b)(ii)(B) shall be made at the same time as consideration is paid to the holders of Shares in connection with the Change in Control, provided such payments are made no later than the fifth anniversary of the Change in Control.
|
c.
|
Termination of Employment
|
i.
|
General Rule. If the Participant’s Employment is terminated for any reason other than those reasons specifically addressed in Section 4(c), and except as otherwise provided in Section 4(b), the Unvested Portion of the Option shall be canceled and the Participant shall have no further rights with respect thereto and the Vested Portion of the Option shall remain exercisable for the period set forth in Section 5(a) of this Agreement.
|
ii.
|
Death or Disability. If the Participant’s Employment terminates as a result of death or Disability, the Option shall, to the extent not then vested and not previously canceled, immediately become fully vested and exercisable.
|
iii.
|
Retirement. If the Participant’s Employment terminates as a result of Retirement and the Participant will have continued vesting of unvested stock options that would have otherwise vested in the year following the year in which the Participant retires. The remaining unvested options are forfeited. .
|
d.
|
Special Terms.
|
i.
|
At any time, the portion of the Option which has become vested and exercisable as described above is referred to as the “Vested Portion,” and the portion of the Option which is then unvested is referred to as the “Unvested Portion.”
|
ii.
|
The term “Retirement” or variations thereof means a voluntary termination of Employment with the Company, its Subsidiaries and its Affiliates after either (i) attaining age 60 and completing 10 years of service with such entities or (ii) attaining age 65 and completing 5 years of service with such entities.
|
iii.
|
“Cause” shall mean, with respect to the Participant, the meaning ascribed to such term in any employment, severance, or change in control agreement entered into by the Participant. If the Participant has not entered into any employment, severance, or change in control agreement with a definition of Cause, then “Cause” means (i) the Participant’s willful failure to perform duties which, if curable, is not cured promptly, or in any event within ten (10) days, following the first written notice of such failure from the Company, (ii) the Participant’s commission of, or plea of guilty or no contest to a (x) felony or (y) crime involving moral turpitude, (iii) willful malfeasance or misconduct by the Participant which is demonstrably injurious to the Company or its Subsidiaries or Affiliates, (iv) material breach by the Participant of any non-competition, non-solicitation or confidentiality covenants, (v) commission by the Participant of any act of gross negligence, corporate waste, disloyalty or unfaithfulness to the Company which adversely affects the business of the Company or its Subsidiaries or Affiliates, or (vi) any other act or course of conduct by the Participant which will demonstrably have a material adverse effect on the Company, a Subsidiary or Affiliate’s business; and
|
iv.
|
“Good Reason” means, with respect to the Participant, the meaning ascribed to such term in any employment, severance, or change in control agreement entered into by the Participant. If the Participant has not entered into any employment, severance, or change in control agreement with a definition of Good Reason, then “Good Reason” means without the Participant’s consent, (i) a material diminution in the Participant’s authority, position or duties, or a material adverse change in reporting lines, (ii) Participant’s principal place of employment with the Company or Post-CIC Entity is relocated a material distance (which for this purpose shall be deemed to be more than 50 miles) from such Participant’s principal place of employment immediately prior to the Change in Control, (iii) any reduction in the Participant’s base salary and (excluding any general salary reduction affecting similarly situated employees of the Company as a result of a material adverse change in the Company’s prospects or business), or (iv) the Participant is excluded, following a Change in Control (other than through Participant’s voluntary action(s)), from full participation in any benefit plan or arrangement maintained for similarly situated employees of the Company or Post-CIC Entity, and such exclusion materially reduces the benefits that otherwise would have been available to the Participant, in each case which is not cured within thirty (30) days following the Company’s receipt of written notice from the Participant describing the event constituting Good Reason.
|
v.
|
“Disability” shall mean, with respect to the Participant, a medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months which: (i) renders the Participant unable to engage in substantial gainful activity or (ii) results in the Participant receiving income replacement benefits for at least three months under an accident and health plan sponsored by the Participant’s employer.
|
a.
|
Period of Exercise. Except as otherwise provided in Section 4(b)(i)(B) above, and subject to the provisions of the Plan and this Agreement, the Participant (or his or her successor, as appropriate) may exercise all or any part of the Vested Portion of the Option at any time prior to the earliest to occur of:
|
i.
|
the tenth anniversary of the Grant Date;
|
ii.
|
the first anniversary of the Participant’s termination of Employment due to death or Disability;
|
iii.
|
the fifth anniversary of the Participant’s termination of Employment due to Retirement;
|
iv.
|
thirty (30) days following the date of the Participant’s termination of Employment by the Participant without Good Reason (other than Retirement) or by the Company or its Affiliates for Cause; and
|
v.
|
ninety (90) days following the date of the Participant’s termination of Employment for reasons other than the reasons described in Section 5(a)(ii), 5(a)(iii) and 5(a)(iv) above.
|
i.
|
Subject to Section 5(a), the Vested Portion of the Option may be exercised by delivering written notice of intent to so exercise to the Company at its principal office; provided that, the Option may be exercised with respect to whole Shares only. Such notice shall specify the number of Shares for which the Option is being exercised and shall be accompanied by full payment of the Option Price. Payment of the Option Price may be made at the election of the Participant: (w) in cash or its equivalent (e.g., by check); (x) to the extent permitted by the Committee, in Shares having a Fair Market Value as of the payment date equal to the aggregate Option Price for the Shares being purchased and satisfying such other requirements imposed by the Committee, provided that such Shares have been held by the Participant for more than six months (or such other period as established from time to time by the Committee); (y) partially in cash and, to the extent permitted by the Committee, partially in such Shares; or (z) if there is a public market for the Shares on the payment date, subject to such rules as may be established by the Committee, through the delivery of irrevocable instructions to a broker to sell Shares obtained upon the exercise of the Option and to deliver promptly to the Company an amount out of the proceeds of such sale equal to the aggregate Option Price for the Shares being purchased. No Participant shall have any rights to dividends or other rights of a stockholder with respect to Shares subject to an Option until the Participant has given written notice of exercise of the Option, paid the full Option Price for such Shares and, if applicable, satisfied any other requirements imposed by the Committee.
|
ii.
|
Notwithstanding any other provision of the Plan or this Agreement to the contrary, the Option may not be exercised prior to the completion of any registration or qualification of the Option or the Shares under applicable state and federal securities or other laws, or under any ruling or regulation of any governmental body or national securities exchange that the Committee determines, in its sole discretion, to be necessary or advisable.
|
iii.
|
Upon the Committee’s determination that the Option has been validly exercised as to any of the Shares, the Company shall issue certificates in the Participant’s name for such Shares. However, the Company shall not be liable to any person or entity for damages relating to any delays in issuing the certificates, any loss of the certificates or any mistakes or errors in the issuance of the certificates or in the certificates themselves.
|
iv.
|
In the event of the Participant’s death, the Vested Portion of the Option shall remain exercisable by the Participant’s successor to the extent set forth in Section 5(a). No beneficiary, executor, administrator, heir or legatee of the Participant shall have greater rights than the Participant under this Agreement or otherwise.
|
CAIRE Medical Technology (Chengdu) Co., Ltd. (formerly known as Chart BioMedical (Chengdu) Co., Ltd.1
|
China
|
Chart Asia Investment Company Limited
|
Hong Kong
|
Chart Asia, Inc.
|
Delaware
|
Chart Australia Pty Ltd
|
Australia
|
Chart Cooler Service Company, Inc.2
|
Delaware
|
Chart Cryogenic Distribution Equipment (Changzhou) Company Limited*
|
China
|
Chart Cryogenic Engineering Systems (Changzhou) Co., Ltd.
|
China
|
Chart Cryogenic Equipment (Chengdu) Co., Ltd.
|
China
|
Chart D&S India Private Limited
|
India
|
Chart Energy & Chemicals, Inc.
|
Delaware
|
Chart Ferox, a.s.
|
Czech Republic
|
Chart Germany GmbH
|
Germany
|
Chart Inc.
|
Delaware
|
Chart Industries (Gibraltar) Limited
|
Gibraltar
|
Chart Industries Luxembourg S.à r.l.
|
Luxembourg
|
Chart Industries Limited
|
United Kingdom
|
Chart Industries (Malaysia) Sdn. Bhd.
|
Malaysia
|
Chart International Holdings, Inc.
|
Delaware
|
Chart International, Inc.
|
Delaware
|
Chart Latin America S.A.S.
|
Colombia
|
Chart Lifecyle, Inc.
|
Delaware
|
Chart S.à r.l & Co. KG
|
Germany
|
Cofimco Fan (Changshu) Co., Ltd.
|
China
|
Cofimco Industrial Fans India Private Ltd.****
|
India
|
Cofimco International (Shanghai) Trading Co, Inc.
|
China
|
Cofimco S.r.l.
|
Italy
|
Cofimco USA, Inc.
|
Virginia
|
Cryo Diffusion S.A.S.
|
France
|
Cryo-Lease, LLC
|
Florida
|
E&C FinFan, Inc.
|
Delaware
|
Fema S.r.l.
|
Italy
|
Flow Instruments & Engineering GmbH
|
Germany
|
GOFA Gocher Fahrzeugbau GmbH
|
Germany
|
GTC of Clarksville, LLC
|
Delaware
|
Hetsco, Inc.
|
Delaware
|
Hetsco Holdings, Inc.
|
Delaware
|
Hudson-Cofimco Limited
|
Hong Kong
|
Hudson Heat Transfer International, Inc.
|
Panama
|
Hudson Parent Corporation
|
Delaware
|
Hudson Products Corporation
|
Texas
|
Hudson Products de Mexico, S.A. de C.V.*
|
Mexico
|
Hudson Products Holdings, Inc.
|
Delaware
|
Hudson Products Holdings Cooperatief UA
|
Netherlands
|
Hudson Products Middle East LLC
|
Delaware
|
Hudson Products Netherlands B.V.
|
Netherlands
|
Industrie Meccaniche di Bagnolo S.r.l.
|
Italy
|
MVE CryoSystems Japan Co., Ltd.
|
Japan
|
Nanjing New Metallurgy Electric Engineering Co., Ltd.**
|
China
|
Prefontaine Properties, Inc.
|
New Hampshire
|
PT. Thermax***
|
Indonesia
|
RCHPH Holdings, Inc.
|
Delaware
|
Skaff, LLC
|
Delaware
|
Skaff Cryogenics, Inc.
|
New Hampshire
|
Thermax Cryogenic Heat Exchangers Trading (Shanghai) Co., Ltd.
|
China
|
Thermax, Inc.
|
Massachusetts
|
VCT Vogel GmbH
|
Germany
|
VRV Asia Pacific Private Limited
|
India
|
VRV Holdings S.r.l.
|
Italy
|
VRV S.r.l.
|
Italy
|
VRV Services S.r.l.
|
Italy
|
*50% of equity interests owned indirectly by the Company.
|
**80% of equity interests owned indirectly by the Company.
|
***95% of equity interests owned indirectly by the Company.
|
****99.8% of equity interests owned indirectly by the Company.
|
1Pursuant to the Stock Purchase Agreement (the “Purchase Agreement”) entered into on September 28, 2018 with respect to the previously announced divestiture of Chart’s oxygen-related products business to NGK Spark Plug Co., Ltd. (the “Buyer”), which was consummated on December 20, 2018, Chart retained ownership of the equity of CAIRE Medical Technology (Chengdu) Co., Ltd. (formerly known as Chart BioMedical (Chengdu) Co., Ltd. (“Chart China”)) for the year ended December 31, 2019; provided, however, that during such time, Chart China was held, managed and operated in all respects by Buyer and for Buyer’s account, with all gains, income, losses, assets, liabilities, taxes, tax benefits and other items generated solely for Buyer’s benefit and burden in accordance with Section 8.7 of the Purchase Agreement.
|
|
2Merged into E&C FinFan, Inc. effective as of December 31, 2019, with E&C FinFan, Inc. as surviving entity.
|
/s/ Deloitte & Touche LLP
|
(1)
|
Registration Statement (Form S-8, File No. 333-162740) pertaining to the Chart Industries, Inc. Amended and Restated 2009 Omnibus Equity Plan,
|
(2)
|
Registration Statement (Form S-8, File No. 333-138682) pertaining to the Amended and Restated Chart Industries, Inc. 2005 Stock Incentive Plan,
|
(3)
|
Registration Statement (Form S-8, File No. 333-183031) pertaining to the Chart Industries, Inc. Amended and Restated 2009 Omnibus Equity Plan,
|
(4)
|
Registration Statement (Form S-8, File No. 333-219509) pertaining to the Chart Industries, Inc. 2017 Omnibus Equity Plan, and
|
(5)
|
Registration Statement (Form S-3, File No. 333-232049) of Chart Industries, Inc.
|
/S/ ERNST & YOUNG LLP
|
1.
|
I have reviewed this Annual Report on Form 10-K of Chart Industries, 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.
|
I am 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 me 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 my 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 my 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.
|
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.
|
|
/s/ Jillian C. Evanko
|
|
Jillian C. Evanko
|
|
Chief Executive Officer, President, Chief Financial Officer and Treasurer
|
a.
|
The Annual Report on Form 10-K for the period ended December 31, 2019 of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
b.
|
The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Form 10-K.
|
|
/s/ Jillian C. Evanko
|
|
Jillian C. Evanko
|
|
Chief Executive Officer, President, Chief Financial Officer and Treasurer
|