Delaware | 3443 | 34-1712937 | ||
(State of Incorporation) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer Identification No.) |
Edward P. Tolley III, Esq.
Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017-3954 Tel.: (212) 455-2000 Fax: (212) 455-2502 |
James S. Scott Sr., Esq.
Michael Benjamin, Esq. Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022-6069 Tel: (212) 848-4000 Fax: (212) 848-7179 |
Proposed Maximum | Proposed Maximum | ||||||||||
Title of Each Class of | Number of Shares | Offering Price per | Aggregate Offering | Amount of | |||||||
Securities to be Registered | to be Registered(1) | Share(2) | Price(2) | Registration Fee(3) | |||||||
Common stock, par value $0.01 per share
|
14,375,000 | $21.00 | $301,875,000 | $32,300.63 | |||||||
(1) | Includes shares of common stock issuable upon exercise of the underwriters option to purchase additional shares of common stock. |
(2) | Estimated solely for the purpose of calculating the registration fee under Rule 457(a) of the Securities Act of 1933, as amended (the Securities Act). |
(3) | Previously paid. |
The information
in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and we are
not soliciting offers to buy these securities in any state where
the offer or sale is not permitted.
|
Initial Public | Underwriting | Proceeds, before | ||||||||||
Offering Price | Discount | expenses, to us | ||||||||||
Per Share
|
$ | $ | $ | |||||||||
Total
|
$ | $ | $ |
Morgan Stanley | Lehman Brothers | UBS Investment Bank |
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F-1 | ||||||||
EX-1.1: FORM OF UNDERWRITING AGREEMENT | ||||||||
EX-4.1: FORM OF CERTIFICATE | ||||||||
EX-5.1: OPINION OF SIMPSON THACHER & BARTLETT LLP | ||||||||
EX-10.11: FORM OF STOCKHOLDERS AGREEMENT | ||||||||
EX-10.16: AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN | ||||||||
EX-10.22: FORM OF RESTRICTED STOCK UNIT AGREEMENT | ||||||||
EX-23.3: CONSENT OF STEVEN W. KRABLIN |
i
1
2
3
4
increasing demand for natural gas and the geographic dislocation
of supply and consumption, which is resulting in the need for a
global network for liquefied natural gas, or LNG;
increasing demand for natural gas processing, particularly in
the Middle East, as crude oil producers look to utilize the gas
portions of their reserves; and
increased demand for natural and industrial gases resulting from
rapid economic growth in developing areas, particularly Central
and Eastern Europe and China.
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Focus on Attractive Growing End Markets.
We
anticipate growing demand in the end markets we serve, with
particularly strong growth in LNG, natural gas processing,
specific international markets across all segments, and
biomedical equipment. Rapid economic development in developing
areas, particularly Central and Eastern Europe and China, has
caused a significant increase in the demand for natural and
industrial gases.
Substantial Revenue Visibility.
We have a large
and growing backlog, which provides us with a high degree of
visibility in our forecasted revenue. Our backlog as of
March 31, 2006 was $237.0 million, compared to
$233.6 million, $129.3 million and $49.6 million
as of December 31, 2005, 2004 and 2003, respectively.
Projects for energy-related applications totaled approximately
$180.0 million in backlog as of December 31, 2005.
Leading Market Positions.
We believe we are
the #1 or #2 equipment supplier in each of our primary
end markets both domestically and internationally. We believe
that our strong industry positioning makes us typically one of
only two or three suppliers qualified to provide certain
products to key customers.
Diverse, Long-Standing Customer Base.
We currently
serve over 2,000 customers worldwide. Our primary customers are
large, multinational producers and distributors of hydrocarbon
and industrial gases that provide us with revenue stability.
Customers and end-users also include high growth LNG processors,
petrochemical processors and biomedical companies. We have
developed strong, long-standing relationships with these
customers.
Highly Flexible and Low-Cost Manufacturing Base.
Given our long-term investment in global manufacturing
facilities and specialized equipment, we have developed a
substantial comparative scale and geographic advantage within
the markets for the cryogenic products that we manufacture with
more than 1.6 million square feet of manufacturing space
across 14 primary facilities and three continents. This
scale and the related substantial operational flexibility enable
us to be a low-cost producer for our products.
Product Expertise, Quality, Reliability and
Know-How.
Within our end markets, we have established a
reputation for quality, reliability and technical innovation. We
believe that the main drivers of our target customers
purchasing decisions are a suppliers product expertise,
quality, reliability and know-how rather than pricing and terms,
giving us an advantage based on our reputation and consequent
brand recognition. We believe it would be difficult for a new
entrant to duplicate our capabilities.
Experienced Management Team.
We have assembled a
strong senior management team with over 250 combined years
of related experience and complementary skills. This team is
responsible for our strong performance since 2003.
Continue to develop innovative, high-growth,
energy-specific products.
We plan to continue to focus
on extending our cryogenic technological leadership, both to
capitalize on increasing demand for energy and to create new
applications.
Leverage our global platform to capitalize on growing
international demand.
We expect growth in hydrocarbon
and industrial gas demand and investment over the next five
years in the Middle East,
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Central and Eastern Europe, Russia and China. We believe that
our investment in manufacturing, sales and marketing
capabilities positions us to increase our market share in
growing international markets.
Capitalize on our position as a market leader.
We
plan to continue to grow our long-standing relationships with
the leading users of cryogenic equipment and expand our customer
base.
Maintain our position as a low-cost producer while
continuing to improve operating performance.
We believe
we are the lowest cost manufacturer for most of our products and
we intend to continue to leverage our scale, scope, technical
expertise and know-how to deliver to our customers higher
quality and more reliable products and services at lower cost.
Our disciplined approach to capital expenditures is intended to
enhance capacity where we expect to realize significant and
timely returns.
the sale of shares of common stock of Chart Industries, Inc. by
certain of its stockholders to CI Acquisition; and
the merger of CI Acquisition with and into Chart Industries,
with Chart Industries surviving the merger as an indirect,
wholly-owned subsidiary of First Reserve.
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5
6
7
8
9
10
11
12
Shares of common stock offered by Chart Industries, Inc.
12,500,000 shares.
Shares of common stock to be outstanding after this offering
25,588,049 shares (including 1,875,000 shares that
will be dividended to our stockholders existing immediately
prior to this offering, consisting of affiliates of First
Reserve and certain members of our management, assuming the
underwriters do not exercise their option to purchase additional
shares and giving effect to the
4.6263-for
-one stock
split we expect to effect prior to the consummation of this
offering).
Over-allotment option
1,875,000 shares.
Use of proceeds
We estimate that the net proceeds to us from this offering,
after deducting underwriting discounts, will be approximately
$233.8 million. We intend to use approximately
$25.0 million of the net proceeds to repay certain
indebtedness. We intend to use the remaining net proceeds of
approximately $208.8 million to pay a dividend to our
stockholders existing immediately prior to the offering,
consisting of affiliates of First Reserve and certain members of
our management. See Use of Proceeds. We also intend
to use the proceeds we receive from any shares sold pursuant to
the underwriters over-allotment option to pay an
additional dividend to our existing stockholders.
Nasdaq National Market symbol
GTLS
assumes no exercise by the underwriters of their option to
purchase additional shares;
gives effect to (i) the 4.6263-for-one stock split to be
effected prior to the consummation of the offering and
(ii) a 10.1088-for-one adjustment with respect to the
number of shares underlying options outstanding on the date of
this prospectus and a corresponding adjustment to the exercise
prices of such options (assuming the mid-point of the price
range set forth on the cover page hereof);
assumes that we issue an additional 1,875,000 shares of our
common stock to our existing stockholders pursuant to a stock
dividend that we will declare prior to the consummation of this
offering, the terms of which will require that shortly after the
expiration of the underwriters over-allotment option
(assuming the option is not exercised in full), we issue to our
existing stockholders the number of shares equal to (x) the
number of additional shares the underwriters have an option to
purchase minus (y) the actual number of shares the
underwriters purchase from us pursuant to that option. See
Dividend Policy for a description of the purpose of
the stock dividend;
gives effect to the issuance of 2,651,012 shares which have
been issued to FR X Chart Holdings LLC, an affiliate of First
Reserve, upon exercise of its warrant (see Certain Related
Party Transactions);
gives effect to the issuance of 609,856 shares which have
been issued to certain members of management upon exercise of
their rollover options (see ManagementManagement
Equity); and
excludes 2,478,235 shares of common stock reserved for
issuance under stock options that we expect to continue to be
outstanding under our plans after this offering, after adjusting
for the 4.6263-for-one stock split, the dividend of the
$208.8 million of the net proceeds (assuming the mid-point
of the range set forth on the cover page hereof) described
above, and the stock dividend assumed in the third bullet point
above, which options would be exercisable at a weighted average
exercise price of $7.02.
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Table of Contents
Reorganized Company
Successor Company
Predecessor
Pro Forma
Company
Pro Forma
As Adjusted
Three
Three
Three
As Adjusted
Three
Nine Months
Months
January 1,
Months
October 17,
Months
Year
Months
Ended
Ended
Year Ended
2005 to
Ended
2005 to
Ended
Ended
Ended
September 30,
December 31,
December 31,
October 16,
March 31,
December 31,
March 31,
December 31,
March 31,
2003
2003
2004
2005
2005
2005
2006
2005
2006
(unaudited)
(unaudited)
(Dollars and shares in thousands, except per share data)
$
197,017
$
68,570
$
305,576
$
305,497
$
85,170
$
97,652
$
120,840
$
403,149
$
120,840
141,240
52,509
211,770
217,284
60,532
75,733
83,853
293,017
83,853
55,777
16,061
93,806
88,213
24,638
21,919
36,987
110,132
36,987
44,211
14,147
53,374
59,826
14,401
16,632
21,039
84,764
21,039
13,503
994
3,353
7,528
604
217
162
7,745
162
57,714
15,141
56,727
67,354
15,005
16,849
21,201
92,509
21,201
(1,937
)
920
37,079
20,859
9,633
5,070
15,786
17,623
15,786
10,300
1,344
4,712
4,164
985
5,556
6,545
24,088
5,717
(3,737
)
(350
)
(465
)
659
21
409
222
2,239
222
6,563
994
4,247
4,823
1,006
5,965
6,767
26,327
5,939
(8,500
)
(74
)
32,832
16,036
8,627
(895
)
9,019
(8,704
)
9,847
1,755
(125
)
10,134
7,159
3,071
(441
)
2,980
(2,343
)
3,295
(10,255
)
51
22,698
8,877
5,556
(454
)
6,039
(6,361
)
6,552
(63
)
(20
)
(98
)
(19
)
(21
)
(52
)
6
(71
)
6
(10,318
)
31
22,600
8,858
5,535
(506
)
6,045
(6,432
)
6,558
3,233
$
(7,085
)
$
31
$
22,600
$
8,858
$
5,535
$
(506
)
$
6,045
$
(6,432
)
$
6,558
$
(0.27
)
$
0.01
$
4.22
$
1.65
$
1.03
$
(0.06
)
$
0.76
$
(0.25
)
$
0.26
$
(0.27
)
$
0.01
$
4.10
$
1.57
$
0.99
$
(0.06
)
$
0.73
$
(0.25
)
$
0.26
26,336
5,325
5,351
5,366
5,358
7,952
7,952
25,604
25,604
26,336
5,325
5,516
5,649
5,609
7,952
8,285
25,604
25,604
$
19,466
$
4,988
$
35,059
$
15,641
$
(4,063
)
$
18,742
$
12,327
15,101
154
(3,317
)
(20,799
)
(1,629
)
(362,250
)
(2,566
)
(15,907
)
(13,976
)
(35,744
)
1,708
(624
)
348,489
(5,839
)
$
9,260
$
2,225
$
8,490
$
6,808
$
1,944
$
4,396
$
5,194
$
20,987
$
5,194
15,522
3,475
45,936
26,989
11,535
9,005
20,764
36,300
20,764
1,907
518
9,379
11,038
1,734
5,601
2,566
51,781
49,635
129,278
206,215
160,113
233,639
237,033
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As of March 31, 2006
Actual
As Adjusted
(unaudited)
(In thousands)
$
19,462
$
31,341
(11)
55,685
55,685
656,483
(13)
668,362
(13)
1,513
1,513
340,000
290,000
341,513
291,513
$
124,146
$
186,025
(1)
The three months ended December 31, 2003 and the 2005
Successor Period include non-cash inventory valuation charges of
$5.4 million and $8.9 million, respectively, related
to Fresh-Start and purchase accounting.
(2)
In March 2003, we completed the closure of our Wolverhampton,
United Kingdom manufacturing facility, operated by Chart Heat
Exchangers Limited, or CHEL. On March 28, 2003, CHEL filed
for voluntary administration under the U.K. Insolvency Act of
1986. CHELs application for voluntary administration was
approved on April 1, 2003 and an administrator was
appointed. In accordance with SFAS No. 94,
Consolidation of All Majority-Owned Subsidiaries, we
are not consolidating the accounts or financial results of CHEL
subsequent to March 28, 2003 due to the assumption of
control of CHEL by the insolvency administrator. Effective
March 28, 2003, we recorded a non-cash impairment charge of
$13.7 million to write off our net investment in CHEL.
(3)
In September 2003, in accordance with Fresh-Start accounting
related to our emergence from Chapter 11 bankruptcy, all
assets and liabilities were adjusted to their fair values. The
adjustment to record the assets and liabilities at fair value
resulted in net other income of $5.7 million. Further
information about the adjustment is included in the notes to our
audited consolidated financial statements included elsewhere in
this prospectus.
(4)
Includes gain or loss on sale of assets.
(5)
Includes derivative contract valuation income or expense for
interest rate collars to manage interest exposure relative to
term debt.
(6)
This relates to the sale of our former Greenville Tube, LLC
business in July 2003. See Managements Discussion
and Analysis of Financial Condition and Results of
Operations for additional information.
(7)
Unaudited pro forma basic and diluted earnings (loss) per share
have been calculated in accordance with the Securities and
Exchange Commission, or SEC, rules for initial public offerings.
These rules require that the weighted average share calculation
give retroactive effect to any changes in our capital structure
as well as the number of shares whose sale proceeds would be
necessary to repay any debt or to pay any dividend as reflected
in the pro forma adjustments. In addition, pro forma weighted
average shares for purposes of the unaudited pro forma basic and
diluted earnings per share calculation, has been adjusted to
reflect (i) the 4.6263-for-one stock split we expect to
effect immediately prior to consummation of this offering and
(ii) the stock dividend of 1,875,000 shares to our
existing stockholders that will be made shortly after the
expiration of the underwriters over-allotment option
assuming no exercise of that option and 12,500,000 shares
of our common stock being offered hereby.
(8)
The basic and diluted loss or earnings per share for the nine
months ended September 30, 2003, the three months ended
December 31, 2003, the 2005 Successor Period, the pro forma
as adjusted year ended December 31, 2005 and the pro forma
as adjusted three months ended March 31, 2006 are the same
because incremental shares issuable upon conversion are
anti-dilutive.
(9)
The nine months ended September 30, 2003, the 2005
Successor Period and the three months ended March 31, 2006
include financing costs amortization of $1.7 million,
$0.3 million and $0.4 million, respectively.
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(10)
EBITDA is calculated as net income (loss) before
income tax expense and interest expense plus depreciation and
amortization. Adjusted EBITDA is defined as EBITDA adjusted as
indicated below. EBITDA and Adjusted EBITDA are not intended to
represent cash flow from operations as defined by GAAP and
should not be used as an alternative to net income as an
indicator of operating performance or to cash flow as a measure
of liquidity. EBITDA and Adjusted EBITDA are included in this
prospectus because they are a basis upon which our management
assesses financial performance. The senior secured credit
facility also includes the definition of pro forma EBITDA which
is used in the calculation of certain covenants. Pro forma
EBITDA is calculated based on EBITDA and is adjusted in a manner
similar to that described herein. While EBITDA and Adjusted
EBITDA are frequently used as a measure of operations and the
ability to meet debt service requirements, they are not
necessarily comparable to other similarly titled captions of
other companies due to potential inconsistencies in the method
of calculation. The following table reconciles EBITDA to net
income (loss):
Pro Forma
Predecessor
As
Company
Reorganized Company
Successor Company
Pro Forma
Adjusted
Year As
Three
Nine Months
Three Months
January 1,
Three Months
October 17,
Three Months
Adjusted
Months
Ended
Ended
Year Ended
2005 to
Ended
2005 to
Ended
Ended
Ended
September 30,
December 31,
December 31,
October 16,
March 31,
December 31,
March 31,
December 31,
March 31,
2003
2003
2004
2005
2005
2005
2006
2005
2006
(unaudited)
(unaudited)
(Dollars in thousands)
$
(7,085
)
$
31
$
22,600
$
8,858
$
5,535
$
(506
)
$
6,045
$
(6,432
)
$
6,558
3,047
(125
)
10,134
7,159
3,071
(441
)
2,980
(2,343
)
3,295
10,300
1,344
4,712
4,164
985
5,556
6,545
24,088
5,717
9,260
2,225
8,490
6,808
1,944
4,396
5,194
20,987
5,194
$
15,522
$
3,475
$
45,936
$
26,989
$
11,535
$
9,005
$
20,764
$
36,300
$
20,764
(a)
Includes derivative contract valuation income or expense for
interest rate collars to manage interest exposure relative to
term debt.
(b)
The nine months ended September 30, 2003, the 2005
Successor Period and the three months ended March 31, 2006
include financing costs amortization of $1.7 million,
$0.3 million and $0.4 million, respectively.
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The following table reconciles EBITDA to Adjusted EBITDA as such
terms are defined in our senior secured credit facility and the
indenture governing the notes. Certain covenants under the
senior secured credit facility are also tied to ratios based on
Adjusted EBITDA and our ability to engage in activities such as
incurring additional debt, making investments and paying
dividends under both our indenture and senior secured credit
facility is also tied to ratios based on Adjusted EBITDA:
Reorganized Company
Predecessor
Pro Forma
Company
Successor Company
As Adjusted
Three
Pro Forma
Three
Nine Months
Three Months
January 1,
Months
October 17,
Three Months
As Adjusted
Months
Ended
Ended
Year Ended
2005 to
Ended
2005 to
Ended
Year Ended
Ended
September 30,
December 31,
December 31,
October 16,
March 31,
December 31,
March 31,
December 31,
March 31,
2003
2003
2004
2005
2005
2005
2006
2005
2006
(Dollars in thousands)
$
15,522
$
3,475
$
45,936
$
26,989
$
11,535
$
9,005
$
20,764
$
36,300
$
20,764
2,433
9,508
592
437
321
9,945
321
5,368
8,903
8,903
expenses(c)
6,602
6,602
2,768
2,768
1,057
406
182
1,463
182
1,338
1,010
3,346
1,700
703
255
162
1,955
162
369
357
706
1,470
73
88
45
1,558
45
500
500
380
306
95
8,929
(57
)
133
(131
)
78
(53
)
(833
)
$
25,325
$
10,153
$
52,934
$
50,269
$
12,998
$
19,672
$
21,474
$
69,941
$
21,474
(a)
Represents stock-based compensation charges for stock and stock
options issued to key employees and directors, and an additional
charge for the cash-out of stock options in the 2005 Reorganized
Period as a result of the Acquisition. Although it may be of
limited relevance to holders of our debt instruments, it may be
of more relevance to our equity holders, since such equity
holders ultimately bear such expenses.
(b)
Represents a non-cash inventory valuation charge recorded in
cost of sales for the adjustment of inventory to fair value as a
result of Fresh-Start accounting as of September 30, 2003
and purchase accounting as of October 17, 2005, the closing
date of the Acquisition. Under Fresh-Start and purchase
accounting, inventory was adjusted to the fair value as of the
dates indicated above, and a corresponding charge was taken in
the subsequent three months ended December 31, 2003 and the
2005 Successor Period cost of sales as the inventory was sold.
(c)
Represents acquisition expenses, primarily professional fees,
incurred by us as a result of the Acquisition.
(d)
Represents a non-cash charge for purchased in-process research
and development in conjunction with the acquisition of Changzhou
CEM Cryo Equipment Co., Ltd., or CEM, in 2005.
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(e)
Represents losses and costs incurred related to the damaged
caused by Hurricane Rita at our New Iberia, Louisiana facilities.
(f)
Includes inventory valuation charges recorded in cost of sales,
and severance expenses, facility exit costs and non-operating
expenses related to the execution of our operational
restructuring plan, which primarily included moving the
Burnsville, Minnesota manufacturing operations to Canton,
Georgia, closing the Plaistow, New Hampshire and Wolverhampton,
United Kingdom manufacturing facilities and closing the
Westborough, Massachusetts engineering office. See
Managements Discussion and Analysis of Financial
Condition and Results of Operations for additional
information.
(g)
Includes pre-bankruptcy debt restructuring-related fees,
Fresh-Start accounting adjustments and expenses, and a claim
settlement related to our 2003 bankruptcy reorganization. See
Managements Discussion and Analysis of Financial
Condition and Results of Operations for additional
information.
(h)
Represents a charge for the settlement of former Reorganized
Company shareholders appraisal rights claims as a result
of the Acquisition.
(i)
Represents non-recurring management fees charged by our
Reorganized Company majority shareholders, which are not charged
by First Reserve.
(j)
Includes non-recurring gains and losses and charges on the sale,
disposal or impairment of assets. See Managements
Discussion and Analysis of Financial Condition and Results of
Operations for additional information.
(k)
Represents income from our former Greenville Tube, LLC stainless
steel tubing business, which was sold in July 2003. See
Managements Discussion and Analysis of Financial
Condition and Results of Operations for additional
information.
(11)
The as adjusted cash and cash equivalents excludes the cash
payment of the purchase price in the amount of
$16.5 million for Cooler Service paid on May 26, 2006.
See Capitalization for our cash and cash equivalents
giving effect to that payment.
(12)
Working capital is defined as current assets excluding cash
minus current liabilities excluding short-term debt.
(13)
Includes $236.8 million of goodwill and $150.5 million
of finite-lived and indefinite-lived intangible assets as of
March 31, 2006.
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The markets we serve are subject to cyclical demand, which could harm our business and make it difficult to project long-term performance. |
The loss of, or significant reduction in, purchases by our largest customers could reduce our revenues and profitability. |
We may be unable to compete successfully in the highly competitive markets in which we operate. |
13
We will soon be required to evaluate our internal controls under Section 404 of the Sarbanes-Oxley Act of 2002 and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price. |
As a global business, we are exposed to economic, political and other risks in different countries which could materially reduce our revenues, profitability or cash flows, or materially increase our liabilities. |
| changes in foreign currency exchange rates; | |
| exchange controls and currency restrictions; | |
| changes in a specific countrys or regions political, social or economic conditions, particularly in emerging markets; | |
| civil unrest, turmoil or outbreak of disease in any of the countries in which we operate; | |
| tariffs, other trade protection measures and import or export licensing requirements; | |
| 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; |
14
| 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. |
If we are unable to successfully manage our growth, it may place a significant strain on our management and administrative resources and lead to increased costs and reduced profitability. |
If we lose our senior management or other key employees, our business may be adversely affected. |
15
Fluctuations in the prices and availability of raw materials and our exposure to fixed-price contracts could negatively impact our financial results. |
We may fail to successfully acquire or integrate companies that provide complementary products or technologies. |
| 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; | |
| We may fail to achieve acquisition synergies; or | |
| The focus on the integration of operations of acquired entities may divert managements attention from the day-to -day operation of our businesses. |
16
If we are unable to continue our technological innovation in our business and successful introduction of new commercial products, our profitability could be adversely affected. |
We carry significant goodwill and indefinite-lived intangible assets on our balance sheet, which are subject to impairment testing and could subject us to significant charges to earnings in the future if impairment occurs. |
We may be required to make material expenditures in order to comply with environmental, health and safety laws, or incur additional liabilities under these laws. |
17
The insolvency of our formerly consolidated subsidiary, Chart Heat Exchangers Limited, could have a material adverse impact on our liquidity and financial position. |
Due to the nature of our business and products, we may be liable for damages based on product liability and warranty claims. |
Increases in labor costs, potential labor disputes and work stoppages at our facilities could materially decrease our revenues and profitability. |
18
We may have to make significant cash payments to our defined benefit pension plans, reducing the cash available for our business. |
Fluctuations in exchange and interest rates may affect our operating results. |
Our operations could be impacted by the effects of hurricanes, which could be more severe than the damage and impact that our New Iberia, Louisiana operations encountered from hurricanes in 2005. |
19
Failure to protect our intellectual property and know-how could reduce or eliminate any competitive advantage and reduce our sales and profitability. |
We may be subject to claims that our products or processes infringe the intellectual property rights of others, which may cause us to pay unexpected litigation costs or damages, modify our products or processes or prevent us from selling our products. |
20
We are subject to regulations governing the export of our products. |
As a provider of products to the U.S. government, we are subject to federal rules, regulations, audits and investigations, the violation or failure of which could adversely affect our business. |
We are controlled by First Reserve, whose interests may not be aligned with yours or ours. |
As a controlled company within the meaning of the Nasdaq Marketplace rules, we may qualify for, and would rely on, exemptions from certain corporate governance requirements. |
21
Because most of the proceeds from this offering will be used to pay a dividend to our current stockholders, only a portion of the proceeds will be used to repay our existing debt and none of such proceeds will be used to further invest in our business. |
Our substantial leverage and significant debt service obligations could limit our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from fulfilling our debt service obligations. |
| we may have difficulty generating sufficient cash flows to pay interest and satisfy our debt obligations; | |
| we may have difficulty obtaining financing in the future for working capital, capital expenditures, acquisitions or other purposes; | |
| we need to use a substantial portion of our available cash flow to pay interest and principal on our debt, which will reduce the amount of money available to finance our operations and other business activities; | |
| some of our debt, including our borrowings under our senior secured credit facility, has variable rates of interest, which exposes us to the risk of increased interest rates; | |
| our debt level increases our vulnerability to general economic downturns and adverse industry conditions; | |
| our debt level could limit our flexibility in planning for, or reacting to, changes in our business and in our industry in general; | |
| our substantial amount of debt and the amount we must pay to service our debt obligations could place us at a competitive disadvantage compared to our competitors that have less debt; | |
| our customers may react adversely to our significant debt level and seek or develop alternative suppliers; and | |
| our failure to comply with the financial and other restrictive covenants in our debt instruments which, among other things, require us to maintain specified financial ratios and limit our ability to incur debt and sell assets, could result in an event of default that, if not cured or waived, could have a material adverse effect on our business or prospects. |
22
Despite our current leverage, we may still be able to incur substantially more debt. This could further exacerbate the risks that we face. |
The senior secured credit facility and the indenture governing the notes contain a number of restrictive covenants which limit our ability to finance future operations or capital needs and engage in other business activities that may be in our interest. |
| incur additional indebtedness; | |
| create liens; | |
| pay dividends and make other distributions in respect of our capital stock; | |
| redeem our capital stock; | |
| make certain investments or certain other restricted payments; | |
| sell certain kinds of assets; |
23
| 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; | |
| require us to apply all of our available cash to repay the borrowings; or | |
| prevent us from making debt service payments on the notes; |
We are a holding company and we depend upon cash from our subsidiaries. If we do not receive cash distributions, dividends or other payments from our subsidiaries, we may be unable to meet our obligations. |
There is no existing market for our common stock, and we do not know if one will develop to provide you with adequate liquidity. |
24
Future sales of our shares could depress the market price of our common stock. |
The market price of our common stock may be volatile, which could cause the value of your investment to decline. |
| actual or anticipated variations in our operating results; | |
| changes in financial estimates by research analysts, or any failure by us to meet or exceed any such estimates, or changes in the recommendations of any research analysts that elect to follow our common stock or the common stock of our competitors; | |
| actual or anticipated changes in economic, political or market conditions, such as recessions or international currency fluctuations; | |
| actual or anticipated changes in the regulatory environment affecting our industry; | |
| changes in the market valuations of our industry peers; and |
25
| announcements by us or our competitors of significant acquisitions, strategic partnerships, divestitures, joint ventures or other strategic initiatives. |
The tangible book value of shares of common stock purchased in the offering will be immediately diluted and may be subject to additional dilution in the future. |
Provisions in our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law may discourage a takeover attempt. |
26
| the cyclicality of the markets which we serve; | |
| the loss of, or a significant reduction in purchases by, our largest customers; | |
| competition in our markets; | |
| our compliance obligations with the Sarbanes-Oxley Act of 2002; | |
| general economic, political, business and market risks associated with our non-U.S. operations; | |
| our ability to successfully manage our growth; | |
| the loss of key employees; | |
| the pricing and availability of raw materials and our ability to manage our fixed-price contract exposure; | |
| our ability to successfully acquire or integrate companies that provide complementary products or technologies; | |
| our ability to continue our technical innovation in our product lines; | |
| the impairment of our goodwill and other indefinite-lived intangible assets; | |
| the costs of compliance with environmental, health and safety laws and responding to potential liabilities under these laws; | |
| the insolvency of our formerly consolidated subsidiary, Chart Heat Exchangers Limited, or CHEL, and CHELs administration proceedings in the United Kingdom, including claims that may be asserted against us with respect to CHELs obligations; | |
| litigation and disputes involving us, including the extent of product liability, warranty, pension and severance claims asserted against us; | |
| labor costs and disputes; | |
| our relations with our employees; | |
| our funding requirements in connection with our defined benefit pension plans; | |
| fluctuations in foreign currency exchange and interest rates; | |
| disruptions in our operations due to hurricanes; | |
| our ability to protect our intellectual property and know-how; | |
| regulations governing the export of our products; | |
| the possibility that our existing stockholders interests will conflict with ours or yours; |
27
| our status as a controlled company under Nasdaq corporate governance requirements; | |
| risks associated with our substantial indebtedness, leverage, debt service and liquidity; | |
| risks related to this offering; and | |
| other factors described in this prospectus. |
28
29
General |
| the sale of shares of common stock of Chart Industries, par value $0.01 per share, owned by the Principal Stockholders, which we refer to as the Principal Stockholder Shares, to CI Acquisition, which we refer to as the stock purchase; and | |
| the merger of CI Acquisition with and into Chart Industries, with Chart Industries surviving the merger as an indirect, wholly-owned subsidiary of First Reserve, which we refer to as the merger. |
Agreement and Plan of Merger |
30
Sources | Uses | ||||||||||
(In millions) | |||||||||||
Senior secured credit facility:
|
|||||||||||
Revolving credit facility(1)
|
$ | | Purchase of equity(2) | $ | 378.8 | ||||||
Term loan B facility
|
180.0 | Repayment of then-existing debt(3) | 66.8 | ||||||||
Senior subordinated notes
|
170.0 | Funded cash(2) | 3.4 | ||||||||
Equity contribution(4)
|
117.7 | Fees and expenses | 18.7 | ||||||||
Total Sources of Funds
|
$ | 467.7 | Total Uses of Funds | $ | 467.7 | ||||||
(1) | As of October 17, 2005, we had approximately $40.9 million available for borrowing under the revolving credit portion of the senior secured credit facility, subject to certain conditions, after giving effect to approximately $19.1 million outstanding letters of credit and bank guarantees. |
(2) | Represents a purchase price of $378.8 million in respect of the equity, resulting in a gross cash purchase price of $449.0 million for the Acquisition. We had approximately $3.4 million of cash on hand upon consummation of the Acquisition, resulting in the net purchase price reflected above. |
(3) | We used an estimated $14.3 million of cash on our balance sheet to repay existing debt immediately prior to the closing of the Acquisition. |
(4) | Prior to the consummation of the Acquisition, management held options valued at $6.4 million, together with other options that were cashed out in the Acquisition. In connection with the Acquisition, our compensation committee elected to adjust these options to represent options to acquire shares of our common stock after consummation of the Acquisition. This amount includes $6.4 million representing the value of these options. |
31
32
| The first dividend will be a cash dividend of $208.8 million, assuming an initial public offering price per share of $20.00, which we will pay to our existing stockholders out of a portion of the net proceeds from this offering. | |
| The second dividend will be a cash dividend of up to $35.1 million, assuming an initial public offering price per share of $20.00, which we will pay to our existing stockholders with all of the proceeds we receive from the shares sold pursuant to the underwriters over-allotment option, if exercised. | |
| The third dividend will be a stock dividend of up to 1,875,000 shares of our common stock, which we will pay to our existing stockholders, the terms of which will require that shortly after the expiration of the underwriters over-allotment option (assuming the option is not exercised in full), we issue to our existing stockholders the number of shares equal to (x) the number of additional shares the underwriters have an option to purchase minus (y) the actual number of shares the underwriters purchase from us pursuant to that option. |
33
| the sale by us of 12,500,000 shares of our common stock in this offering, after deducting underwriting discounts and estimated offering expenses; | |
| the application of the estimated net proceeds as described in Use of Proceeds as well as the $25.0 million voluntary principal prepayment under the term loan portion of our senior secured credit facility in the second quarter of 2006 and the payment of $16.5 million of cash to acquire Cooler Service; | |
| the 4.6263-for-one stock split we expect to effect immediately prior to the consummation of this offering; | |
| the issuance of 2,651,012 shares which have been issued to FR X Chart Holdings LLC upon its exercise of its warrant for $37.1 million in cash (see Certain Related Party Transactions); | |
| the issuance of 609,856 shares which have been issued to certain members of management upon their exercise of their rollover options for $2.1 million in cash (see Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital ResourcesCash Requirements); and | |
| the stock dividend of 1,875,000 shares to our existing stockholders shortly after the expiration of the underwriters over-allotment option, assuming no exercise of that option. |
As of | |||||||||||
March 31, 2006 | |||||||||||
Actual | As Adjusted | ||||||||||
(Unaudited, in millions, | |||||||||||
except share and per | |||||||||||
share data) | |||||||||||
Cash and cash equivalents
|
$ | 19.5 | $ | 14.8 | |||||||
Debt:
|
|||||||||||
Senior secured credit facility:
|
|||||||||||
Revolving credit facility(1)
|
| | |||||||||
Term loan facility
|
170.0 | 120.0 | |||||||||
9
1
/
8
% senior subordinated notes due 2015
|
170.0 | 170.0 | |||||||||
Other debt(2)
|
1.5 | 1.5 | |||||||||
Total debt
|
$ | 341.5 | $ | 291.5 | |||||||
Shareholders equity:
|
|||||||||||
Common stock, par value $0.01 per share,
9,500,000 shares authorized, actual, 150,000,000 shares
authorized, as adjusted, 7,952,180 shares issued and
outstanding, actual and 25,588,049 shares issued and
outstanding, as adjusted(3)(4)
|
| 0.3 | |||||||||
Additional paid-in capital
|
117.7 | 179.3 | |||||||||
Retained earnings
|
5.5 | 5.5 | |||||||||
Accumulated other comprehensive income
|
0.9 | 0.9 | |||||||||
Total shareholders equity
|
$ | 124.1 | $ | 186.0 | |||||||
Total capitalization
|
$ | 465.6 | $ | 477.5 | |||||||
(1) | As of March 31, 2006, we had approximately $35.1 million available for borrowing under the revolving portion of the senior secured credit facility, subject to certain conditions, after giving effect to approximately $24.9 million of letters of credit and bank guarantees outstanding thereunder. The credit |
34
facility has since been amended to increase the availability thereunder. See The Transactions and Description of Indebtedness. | |
(2) | This relates to the indebtedness of CEM, our subsidiary located in China. |
(3) | 11,213,049 shares issued and outstanding as of May 22, 2006. |
(4) | To the extent we change the number of shares of common stock we sell in this offering from the 12,500,000 shares we expect to sell or we change the initial public offering price from the $20.00 per share assumed initial offering price, or any combination of these events occurs, our net proceeds from this offering and as adjusted additional paid-in capital may increase of decrease. A $0.25 increase (decrease) in the assumed initial public offering price per share of the common stock, assuming no change in the number of shares of common stock to be sold, would increase (decrease) the net proceeds that we receive in this offering (and accordingly that we dividend to our stockholders) and our as adjusted additional paid-in capital by $2.9 million and an increase (decrease) of 1,000,000 shares from the expected number of shares to be sold in the offering, assuming no change in the assumed initial public offering price per share, would increase (decrease) our net proceeds from this offering and our as adjusted additional paid-in capital by approximately $18.7 million. |
35
| the sale of shares of common stock in this offering at an assumed initial public offering price of $20.00 per share, the mid-point of the price range on the cover of this prospectus; | |
| the payment of the $208.8 million dividend that we intend to declare prior to the consummation of the offering to the existing stockholders; | |
| the application of the estimated net proceeds as described under Use of Proceeds as well as the $25.0 million voluntary principal prepayment under the term loan portion of our senior secured credit facility in the second quarter of 2006 and the payment of $16.5 million of cash to acquire Cooler Service; | |
| the 4.6263-for -one stock split we expect to effect immediately prior to the consummation of this offering; | |
| the issuance of 2,651,012 shares which have been issued to FR X Chart Holdings LLC upon its exercise of its warrant for $37.1 million in cash; | |
| the issuance of 609,856 shares which have been issued to certain members of management upon their exercise of their rollover options for $2.1 million in cash; and | |
| the effect of any other pro forma adjustments, | |
Initial public offering price per share
|
$ | 20.00 | |||||||
Net tangible book deficit per share at March 31, 2006
|
$ | (23.47 | ) | ||||||
Increase in net tangible book value per share attributable to
new investors
|
$ | 15.60 | |||||||
Pro forma net tangible book deficit per share after the offering
|
$ | (7.87 | ) | ||||||
Dilution per share to new investors
|
$ | 27.87 | |||||||
36
Shares Purchased | Total Consideration | ||||||||||||||||||||
Average Price | |||||||||||||||||||||
Number | Percent | Amount | Percent | Per Share | |||||||||||||||||
(In millions) | |||||||||||||||||||||
Existing stockholders
|
13,088,049 | 51.1% | $ | (58.2 | ) | (30.3 | )% | $ | (4.45 | ) | |||||||||||
New investors
|
12,500,000 | 48.9% | 250.0 | 130.3 | 20.00 | ||||||||||||||||
Total
|
25,588,049 | 100.0% | $ | 191.8 | 100.0 | % | $ | 7.50 | |||||||||||||
37
38
As
Historical
Offering Adjustments
Adjusted
(In thousands, except share data)
Assets
$
19,462
$
11,879
(a)(c)(d)(e)
$
31,341
(b)
64,237
64,237
53,596
53,596
32,440
32,440
3,096
3,096
14,176
14,176
3,084
3,084
190,091
11,879
201,970
66,205
66,205
236,810
236,810
150,495
150,495
12,882
12,882
$
656,483
$
11,879
$
668,362
Liabilities and Shareholders Equity
$
38,130
$
38,130
40,166
40,166
14,503
14,503
3,760
3,760
18,385
18,385
1,513
1,513
116,457
116,457
340,000
(50,000
)
(d)
290,000
56,038
56,038
19,842
19,842
80
157
(c)(e)
237
117,625
61,722
(a)(c)(e)
179,347
5,539
5,539
902
902
124,146
61,879
186,025
$
656,483
$
11,879
$
668,362
(a) | Reflects payment, using cash on-hand, of $2,358 of expenses in connection with this offering, which reduces additional paid in capital. |
39
(b) | The as adjusted cash and cash equivalents excludes the cash payment of the purchase price in the amount of $16,500 for Cooler Service paid on May 26, 2006. See Capitalization for our cash and cash equivalents giving effect to that payment. |
(c) | Reflects $39,237 of cash received upon the exercise by FR X Chart Holdings LLC of its warrant and the exercise by certain members of management of their rollover options. This transaction increased common stock by $32 (3.2 million shares issued at $0.01 per share) and additional paid in capital by $39,205. |
(d) | Reflects the use of a portion of the proceeds from the offering, net of fees and expenses, and cash received upon the exercise by FR X Chart Holdings LLC of its warrant and the exercise by certain members of management of their rollover options, and cash on hand to repay $50,000 of term loans under our senior secured credit facility. |
(e) | Reflects the assumed gross proceeds of $250,000 from the offering, net of underwriting discounts of $16,250, which increases common stock by $125 (12.5 million shares issued at $0.01 per share) and increases additional paid in capital by $233,625. On a pro forma basis as of March 31, 2006, $208,750 of the net proceeds from the offering is assumed to be used to pay a dividend to our existing stockholders, which reduces additional paid in capital. See Use of Proceeds. Of such amount, $197,396 will be received by FR X Chart Holdings LLC, $8,148 will be received by Mr. Thomas, $456 will be received by Mr. Biehl and approximately $2,750 will be received by seven other employees. |
40
Reorganized
Successor
Pro Forma
January 1,
October 17,
Pro Forma
As Adjusted
2005 to
2005 to
Year Ended
Year Ended
October 16,
December 31,
Pro Forma
December 31,
Offering
December 31,
2005(1)
2005(2)
Adjustments(3)
2005
Adjustments(4)
2005
(In thousands, except per share data)
$
305,497
$
97,652
$
$
403,149
$
$
403,149
217,284
75,733
293,017
293,017
88,213
21,919
110,132
110,132
59,826
16,632
8,306
(a)(b)
84,764
84,764
6,602
6,602
6,602
1,057
139
1,196
1,196
(131
)
78
(53
)
(53
)
67,354
16,849
8,306
92,509
92,509
20,859
5,070
(8,306
)
17,623
17,623
4,192
5,565
17,681
(c)
27,438
(3,313
)
24,125
308
1,171
(d)
1,479
1,479
(28
)
(9
)
(37
)
(37
)
659
101
760
760
4,823
5,965
18,852
29,640
(3,313
)
26,327
16,036
(895
)
(27,158
)
(12,017
)
3,313
(8,704
)
7,159
(441
)
(10,320
)(e)
(3,602
)
1,259
(2,343
)
8,877
(454
)
(16,838
)
(8,415
)
2,054
(6,361
)
(19
)
(52
)
(71
)
(71
)
$
8,858
$
(506
)
$
(16,838
)
$
(8,486
)
$
2,054
$
(6,432
)
$
1.65
$
(0.06
)
$
(1.06
)
$
(0.25
)
$
1.57
$
(0.06
)
$
(1.06
)
$
(0.25
)
5,366
7,952
7,952
25,604
5,649
7,952
7,952
25,604
41
Successor
Pro Forma
Pro Forma
As Adjusted
Three Months
Three Months
Three Months
Ended
Ended
Ended
March 31,
Pro Forma
March 31,
Offering
March 31,
2006
Adjustments(3)
2006
Adjustments(4)
2006
(In thousands, except per share data)
$
120,840
$
$
120,840
$
$
120,840
83,853
83,853
83,853
36,987
36,987
36,987
21,039
21,039
21,039
162
162
162
21,201
21,201
21,201
15,786
15,786
15,786
6,545
6,545
(828
)
5,717
370
370
370
(148
)
(148
)
(148
)
6,767
6,767
(828
)
5,939
9,019
9,019
828
9,847
2,980
2,980
315
3,295
6,039
6,039
513
6,552
6
6
6
$
6,045
$
$
6,045
$
513
$
6,558
$
0.76
$
0.76
$
0.26
$
0.73
$
0.73
$
0.26
7,952
7,952
25,604
8,285
8,285
25,604
42
(1) | The amounts in this column represent the reported results of Chart Industries, Inc. prior to the Acquisition, from January 1, 2005 through October 16, 2005. |
(2) | The amounts in this column represent the reported results of Chart Industries, Inc. subsequent to the Acquisition, for the period from October 17, 2005 to December 31, 2005. |
(3) | The amounts in this column represent the adjustments to reflect the pro forma impact of the Acquisition as follows: |
(a) | Reflects the adjustment to historical expense for management fees of $306 charged by our Reorganized Company majority shareholders, which are not charged by First Reserve. | |
(b) | Reflects the adjustment to historical expense for the change in amortization expense due to the revaluation of our identifiable finite-lived intangible assets in purchase accounting. Annual amortization expense under the new basis of accounting is estimated to be $14,271, of which $2,973 was recognized during the 2005 Successor Period, and $2,686 of amortization expense relating to finite-lived intangible assets was recorded during the 2005 Reorganized Period, resulting in a pro forma adjustment of $8,612. | |
(c) | Reflects the adjustment to historical interest expense for interest on the senior secured credit facility entered into in conjunction with the Acquisition of $11,925 assuming an outstanding balance of $180,000 and an interest rate of 6.625% per annum. This interest rate is variable and was calculated as LIBOR plus 2.00%, which is equal to the 180-day LIBOR interest rate contract that we entered into on November 21, 2005 under the credit facility. A 0.125% change in the variable interest rate would affect pro forma income before taxes by $225. Also, reflects the adjustment to historical interest expense for interest on the notes issued in conjunction with the Acquisition of $15,513, assuming an outstanding balance of $170,000 and a fixed interest rate of 9.125% per annum. During the 2005 Successor Period, $5,565 of interest expense was recorded for the senior secured credit facility and the notes and $4,192 of interest expense was recorded in the 2005 Reorganized Period for our then existing senior credit facility. This results in a pro forma adjustment of $17,681. | |
(d) | Reflects the adjustment to historical expense for the change in amortization expense for deferred financing costs that were paid in conjunction with the Acquisition. The annual amortization expense is estimated to be $1,479, of which $308 was recorded in the 2005 Successor Period, and no amortization expense was recorded in the 2005 Reorganized Period, resulting in a pro forma adjustment of $1,171. | |
(e) | Reflects the income tax of our pro forma adjustments to the income statement at an estimated statutory tax rate of 38%. |
(4) | The amounts in this column represent the adjustments to reflect the pro forma impact of this offering and the estimated use of proceeds therefrom. |
(5) | Reflects the offering adjustment to historical interest expense for the $50,000 principal payment of our senior secured credit facility using the proceeds from the exercise of the warrant and rollover options, cash on hand and the proceeds of this offering for the year ended December 31, 2005 and the three months ended March 31, 2006. The interest rate used in the calculation is 6.625% per annum. This interest is variable and was calculated as LIBOR plus 2.0%, which is equal to the 180-day LIBOR interest rate contract that we entered into on November 21, 2005 under the credit facility. A 0.125% change in the variable interest rate would affect pro forma as adjusted income before taxes by $163 and $40 for the year ended December 31, 2005 and the three months ended March 31, 2006, respectively. The income tax effect of our offering adjustments has been calculated using an estimated statutory tax rate of 38% for both the year ended December 31, 2005 and the three months ended March 31, 2006. |
43
(6) | Unaudited pro forma as adjusted basic and diluted earnings per share have been calculated in accordance with the SEC rules for initial public offerings. These rules require that the weighted average share calculation give retroactive effect to any changes in our capital structure as well as the number of shares whose sale proceeds would be necessary to repay any debt or to pay any dividend as reflected in the pro forma adjustments. In addition, pro forma as adjusted weighted average shares for purposes of the unaudited pro forma as adjusted basic and diluted earnings per share calculation, has been adjusted to reflect (i) the 4.6263-for -one stock split we expect to effect immediately prior to the consummation of this offering and (ii) the stock dividend of 1,875,000 shares to our existing stockholders that will be made shortly after the expiration of the underwriters over-allotment option assuming no exercise of that option, and includes 12,500,000 shares of our common stock being offered hereby. |
(7) | The basic and diluted loss per share for the 2005 Successor Period are the same because incremental shares issuable upon conversion are anti-dilutive. For the three months ended March 31, 2006, the incremental shares issuable upon conversion of stock options and exercise of stock warrants are 307,418 and 25,546, respectively. For the purposes of computing diluted earnings per share, weighted average common share equivalents do not include 1,107,008 and 1,657,843 warrants and stock options, respectively, for the 2005 Successor Period and 780,511 stock options for the three months ended March 31, 2006 as the effect would be anti-dilutive. |
(8) | Pro forma basic earnings (loss) per common share is computed by dividing earnings (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Pro forma diluted earnings per common share is computed by dividing earnings (loss) available to common stockholders by the sum of weighted average common shares outstanding plus dilutive incremental common shares for the period. Pro forma basic and diluted common shares also include the number of shares from this offering whose proceeds were used for the repayment of debt. |
Pro Forma | ||||||||||||
Pro Forma | As Adjusted | |||||||||||
As Adjusted | Three Months | |||||||||||
Year Ended | Ended | |||||||||||
December 31, | March 31, | |||||||||||
2005 | 2006 | |||||||||||
Basic and diluted pro forma net income per common share:
|
||||||||||||
Numerator:
|
||||||||||||
Net (loss) income
|
$ | (6.4 | ) | $ | 6.6 | |||||||
Denominator:
|
||||||||||||
Weighted-average common shares outstanding(a)
|
13.1 | 13.1 | ||||||||||
Less: Weighted-average unvested common shares subject to
repurchase or cancellation
|
| | ||||||||||
Add:
|
||||||||||||
Shares from this offering whose proceeds would be used for the
repayment of debt(b)
|
1.3 | 1.3 | ||||||||||
Shares from this offering whose proceeds would be used for the
payment of a dividend(c)
|
11.2 | 11.2 | ||||||||||
Denominator for basic calculation
|
25.6 | 25.6 | ||||||||||
Effect for dilutive securities:
|
||||||||||||
Add: Weighted-average stock options and unvested common shares
subject to repurchase or cancellation
|
| | ||||||||||
Denominator for diluted calculation
|
25.6 | 25.6 | ||||||||||
Pro forma net (loss) income per common sharebasic
|
$ | (0.25 | ) | $ | 0.26 | |||||||
Pro forma net (loss) income per common sharediluted
|
$ | (0.25 | ) | $ | 0.26 | |||||||
44
(a) | Represents weighted-average shares outstanding after an adjustment for (i) the 4.6263-for-one stock split we expect to effect immediately prior to consummation of this offering and (ii) the stock dividend of 1,875,000 shares to our existing stockholders that will be made shortly after the expiration of the underwriters over-allotment option assuming no exercise of that option as follows: |
Shares outstanding at December 31, 2005 and March 31,
2006
|
7,952,180 | |||
Issuance of shares upon exercise of FR X Chart Holdings LLC
warrant
|
2,651,012 | |||
Issuance of shares upon exercise of certain members of
managements rollover options
|
609,856 | |||
Shares issued for stock dividend to existing shareholders
|
1,875,000 | |||
Weighted-average common shares outstanding
|
13,088,048 | |||
(b) | Calculated as $25.3 million of proceeds to be used in the repayment of debt, including accrued interest thereon through the anticipated date of repayment, divided by the offering proceeds of $18.70 per share, net of issuance costs and expenses. |
(c) | Calculated as $208.8 million of proceeds to be used in the payment of a dividend, divided by the offering proceeds of $18.70 per share, net of issuance costs and expenses. |
45
46
Predecessor Company
Reorganized Company
Successor Company
Three
Three
Three
Years Ended
Nine Months
Months
January 1,
Months
October 17,
Months
December 31,
Ended
Ended
Year Ended
2005 to
Ended
2005 to
Ended
September 30,
December 31,
December 31,
October 16,
March 31,
December 31,
March 31,
2001
2002
2003
2003
2004
2005
2005
2005
2006
(In thousands, except per share data)
$
305,288
$
276,353
$
197,017
$
68,570
$
305,576
$
305,497
$
85,170
$
97,652
$
120,840
226,266
205,595
141,240
52,509
211,770
217,284
60,532
75,733
83,853
79,022
70,758
55,777
16,061
93,806
88,213
24,638
21,919
36,987
55,128
65,679
44,211
14,147
53,374
59,826
14,401
16,632
21,039
6,329
104,477
13,503
994
3,353
7,528
604
217
162
61,457
170,156
57,714
15,141
56,727
67,354
15,005
16,849
21,201
17,565
(99,398
)
(1,937
)
920
37,079
20,859
9,633
5,070
15,786
24,465
19,176
10,300
1,344
4,712
4,164
985
5,556
6,545
1,567
4,240
(3,737
)
(350
)
(465
)
659
21
409
222
26,032
23,416
6,563
994
4,247
4,823
1,006
5,965
6,767
(8,467
)
(122,814
)
(8,500
)
(74
)
32,832
16,036
8,627
(895
)
9,019
398
11,136
1,755
(125
)
10,134
7,159
3,071
(441
)
2,980
(8,865
)
(133,950
)
(10,255
)
51
22,698
8,877
5,556
(454
)
6,039
(199
)
(52
)
(63
)
(20
)
(98
)
(19
)
(21
)
(52
)
6
(9,064
)
(134,002
)
(10,318
)
31
22,600
8,858
5,535
(506
)
6,045
3,906
3,217
3,233
$
(5,158
)
$
(130,785
)
$
(7,085
)
$
31
$
22,600
$
8,858
$
5,535
$
(506
)
$
6,045
$
(0.21
)
$
(5.22
)
$
(0.27
)
$
0.01
$
4.22
$
1.65
$
1.03
$
(0.06
)
$
0.76
$
(0.21
)
$
(5.22
)
$
(0.27
)
$
0.01
$
4.10
$
1.57
$
0.99
$
(0.06
)
$
0.73
24,573
25,073
26,336
5,325
5,351
5,366
5,358
7,952
7,952
24,573
25,073
26,336
5,325
5,516
5,649
5,609
7,952
8,285
$
7,458
$
5,249
$
19,466
$
4,988
$
35,059
$
15,641
$
(4,063
)
$
18,742
$
12,327
(6,261
)
1,288
15,101
154
(3,317
)
(20,799
)
(1,629
)
(362,250
)
(2,566
)
504
(17,614
)
(15,907
)
(13,976
)
(35,744
)
1,708
(624
)
348,489
(5,839
)
$
17,783
$
14,531
$
9,260
$
2,225
$
8,490
$
6,808
$
1,944
$
4,396
$
5,194
47
Predecessor Company
Reorganized Company
Successor Company
As of
December 31,
As of
As of
As of
As of
As of
As of
September 30,
December 31,
December 31,
October 16,
December 31,
March 31,
2001
2002
2003
2003
2004
2005
2005
2006
(In thousands)
$
11,801
$
7,225
$
27,815
$
18,600
$
14,814
$
11,470
$
15,433
$
19,462
57,438
48,563
35,826
47,161
51,292
43,486
55,454
55,685
408,980
279,294
299,745
299,637
307,080
343,107
641,806
(10)
656,483
(10)
259,120
1,161
122,537
109,081
76,406
74,480
345,000
340,000
272,083
263,900
126,012
112,561
79,411
80,943
347,304
341,513
49,340
(81,617
)
89,865
90,807
115,640
121,321
116,330
124,146
(1) | In March 2003, we completed the closure of our Wolverhampton, United Kingdom manufacturing facility, operated by CHEL. On March 28, 2003, CHEL filed for voluntary administration under the U.K. Insolvency Act of 1986. CHELs application for voluntary administration was approved on April 1, 2003 and an administrator was appointed. In accordance with SFAS No. 94, Consolidation of All Majority-Owned Subsidiaries, we are not consolidating the accounts or financial results of CHEL subsequent to March 28, 2003 due to the assumption of control of CHEL by the insolvency administrator. Effective March 28, 2003, we recorded a non-cash impairment charge of $13.7 million to write off our net investment in CHEL. | |
(2) | In 2002, we recorded a non-cash impairment charge of $92.4 million to write off non-deductible goodwill of the D&S segment. Further information about this charge is found in Note A to our audited consolidated financial statements included elsewhere in this prospectus. | |
(3) | In September 2003, in accordance with Fresh-Start accounting, all assets and liabilities were adjusted to their fair values. See Managements Discussion and Analysis of Financial Condition and Results of Operations for further discussion. The adjustment to record the assets and liabilities at fair value resulted in net other income of $5.7 million. Further information about the adjustment is located in Note A to our audited consolidated financial statements included elsewhere in this prospectus. | |
(4) | Includes derivative contracts valuation income or expense for interest rate collars to manage interest exposure relative to term debt. | |
(5) | This relates to the sale of our former Greenville Tube, LLC business in July 2003. See Managements Discussion and Analysis of Financial Condition and Results of Operations for additional information. | |
(6) | The basic and diluted loss and earnings per share for the years ended December 31, 2001 and 2002, the nine months ended September 30, 2003, the three months ended December 31, 2003 and the 2005 Successor Period are the same because incremental shares issuable upon conversion are anti-dilutive. | |
(7) | Includes financing costs amortization for the years ended December 31, 2001 and 2002, the nine months ended September 30, 2003 and the 2005 Successor Period of $1.5 million, $3.2 million, $1.7 million and $0.3 million, respectively. | |
(8) | Working capital is defined as current assets excluding cash minus current liabilities excluding short-term debt. | |
(9) | As of December 31, 2002, we were in default on our senior debt due to violation of financial covenants. In April 2003, the lenders under our then-existing credit facility waived all defaults existing at December 31, 2002 and through April 30, 2003. Since the waiver of defaults did not extend until January 1, 2004, this debt was classified as a current liability on our consolidated balance sheet as of December 31, 2002. |
(10) | Includes $236.7 million of goodwill and $154.1 million of finite-lived and indefinite-lived intangible assets as of December 31, 2005. Includes $236.8 million of goodwill and $150.5 million of finite-lived and indefinite- lived intangible assets as of March 31, 2006. |
48
49
50
Predecessor | ||||||||||||||||||||||||||||||
Company | Reorganized Company | Successor Company | ||||||||||||||||||||||||||||
Nine Months | Three Months | January 1, | Three Months | October 17, | Three Months | |||||||||||||||||||||||||
Ended | Ended | Year Ended | 2005 to | Ended | 2005 to | Ended | ||||||||||||||||||||||||
September 30, | December 31, | December 31, | October 16, | March 31, | December 31, | March 31, | ||||||||||||||||||||||||
2003 | 2003 | 2004 | 2005 | 2005 | 2005 | 2006 | ||||||||||||||||||||||||
Sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100 | % | 100.0 | % | 100.0 | % | 100 | % | ||||||||||||||||
Cost of sales(1)
|
71.7 | 76.6 | 69.3 | 71.1 | 71.1 | 77.6 | 69.4 | |||||||||||||||||||||||
Gross profit
|
28.3 | 23.4 | 30.7 | 28.9 | 28.9 | 22.4 | 30.6 | |||||||||||||||||||||||
Selling, general and administrative expenses(2)(3)(4)(5)(6)
|
22.5 | 20.6 | 17.5 | 19.6 | 16.9 | 17.0 | 17.4 | |||||||||||||||||||||||
Acquisition expense(7)
|
0.0 | 0.0 | 0.0 | 2.2 | 0.0 | 0.0 | 0.0 | |||||||||||||||||||||||
Employee separation and plant closure costs
|
0.4 | 1.5 | 1.0 | 0.3 | 0.7 | 0.1 | 0.1 | |||||||||||||||||||||||
(Loss) gain on sale of assets
|
0.5 | 0.1 | 0.0 | 0.0 | 0.0 | (0.1 | ) | 0.0 | ||||||||||||||||||||||
Loss on insolvent subsidiary
|
6.9 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||||||||||||||
Equity expense in joint venture
|
0.0 | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||||||||||||||
Operating income (loss)
|
(1.0 | ) | 1.3 | 12.2 | 6.8 | 11.3 | 5.2 | 13.1 | ||||||||||||||||||||||
Interest expense, net
|
(5.0 | ) | (2.1 | ) | (1.6 | ) | (1.4 | ) | (1.2 | ) | (5.7 | ) | (5.4 | ) | ||||||||||||||||
Financing costs amortization
|
(0.9 | ) | 0.0 | 0.0 | 0.0 | 0.0 | (0.3 | ) | (0.3 | ) | ||||||||||||||||||||
Derivative contracts valuation income (expense)
|
(0.2 | ) | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||||||||||||
Foreign currency income (loss)
|
(0.1 | ) | 0.5 | 0.1 | (0.2 | ) | 0.0 | (0.1 | ) | 0.1 | ||||||||||||||||||||
Reorganization items, net
|
2.8 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||||||||||||||
Income tax (benefit) expense
|
0.8 | (0.2 | ) | 3.3 | 2.3 | 3.6 | (0.5 | ) | 2.5 | |||||||||||||||||||||
(Loss) income from continuing operations
|
(5.2 | ) | 0.0 | 7.4 | 2.9 | 6.5 | (0.4 | ) | 5.0 | |||||||||||||||||||||
Income from discontinued operation, including gain on sale, net
of tax
|
1.6 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||||||||||||||
Net (loss) income
|
(3.6 | ) | 0.0 | 7.4 | 2.9 | 6.5 | (0.4 | ) | 5.0 |
(1) | Includes non-cash inventory valuation charges of $9.0 million, $0.6 million, $0.2 million, $5.4 million, and $0.5 million, representing 9.2%, 0.2%, 0.1%, 7.9%, and 0.2% of sales, for the 2005 Successor Period, the 2005 Reorganized Period, the year ended December 31, 2004, the three months ended December 31, 2003, and the nine months ended September 30, 2003, respectively. |
51
(2) | Includes $1.5 million, $0.7 million, and $6.4 million, representing 0.5%, 0.2%, and 3.2% of sales, for claim settlements, professional fees incurred by us related to our debt restructuring and bankruptcy reorganization activities for the 2005 Reorganized Period, the year ended December 31, 2004, and the nine months ended September 30, 2003, respectively. |
(3) | Includes stock-based compensation expense of $0.3 million, $0.4 million, $0.6 million, $9.5 million, and $2.4 million, representing 0.3%, 0.4%, 0.7% 3.1%, and 0.8% of sales, for the three months ended March 31, 2006, the 2005 Successor Period, the three months ended March 31, 2005, the 2005 Reorganized Period, and the year ended December 31, 2004, respectively. |
(4) | Includes charges and losses related to damages caused by Hurricane Rita of $0.2 million, $0.4 million and $1.1 million, representing 0.2%, 0.4% and 0.3% of sales, for the three months ended March 31, 2006, the 2005 Successor Period and the 2005 Reorganized Period, respectively. |
(5) | Includes a charge for the settlement of former shareholders appraisal rights claims related to the Acquisition of $0.5 million, or 0.5% of sales, and a charge for the write-off of purchased in-process research and development of $2.8 million, or 0.1% of sales, for the 2005 Successor Period and the 2005 Reorganized Period, respectively. |
(6) | Includes amortization expense for intangible assets of $3.6 million, $3.0 million, $0.7 million, $2.7 million, $2.8 million, $0.7 million, and $1.2 million, representing 3.0%, 3.0%, 0.8%, 0.9%, 0.9%, 1.0%, and 0.6% of sales, for the three months ended March 31, 2006, the 2005 Successor Period, the three months ended March 31, 2005, the 2005 Reorganized Period, the year ended December 31, 2004, the three months ended December 31, 2003, and the nine months ended September 30, 2003, respectively. |
(7) | Represents expenses incurred by us related to the Acquisition. |
Predecessor | |||||||||||||||||||||||||||||||
Company | Reorganized Company | Successor Company | |||||||||||||||||||||||||||||
Nine Months | Three Months | January 1, | Three Months | October 17, | Three Months | ||||||||||||||||||||||||||
Ended | Ended | Year Ended | 2005 to | Ended | 2005 to | Ended | |||||||||||||||||||||||||
September 30, | December 31, | December 31, | October 16, | March 31, | December 31, | March 31, | |||||||||||||||||||||||||
2003 | 2003 | 2004 | 2005 | 2005 | 2005 | 2006 | |||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||
Sales
|
|||||||||||||||||||||||||||||||
Energy & Chemicals
|
$ | 42,910 | $ | 15,699 | $ | 69,609 | $ | 86,920 | $ | 23,663 | $ | 34,135 | $ | 41,174 | |||||||||||||||||
Distribution and Storage
|
102,469 | 37,863 | 162,508 | 161,329 | 44,665 | 47,832 | 60,318 | ||||||||||||||||||||||||
BioMedical
|
51,638 | 15,008 | 73,459 | 57,248 | 16,842 | 15,685 | 19,348 | ||||||||||||||||||||||||
Total
|
$ | 197,017 | $ | 68,570 | $ | 305,576 | $ | 305,497 | $ | 85,170 | $ | 97,652 | $ | 120,840 | |||||||||||||||||
Gross Profit
|
|||||||||||||||||||||||||||||||
Energy & Chemicals
|
$ | 12,683 | $ | 5,405 | $ | 21,475 | $ | 23,391 | $ | 5,996 | $ | 10,494 | $ | 11,648 | |||||||||||||||||
Distribution and Storage
|
25,515 | 8,682 | 46,588 | 47,120 | 13,571 | 8,861 | 18,822 | ||||||||||||||||||||||||
BioMedical
|
17,579 | 1,974 | 25,743 | 17,702 | 5,071 | 2,564 | 6,517 | ||||||||||||||||||||||||
Total
|
$ | 55,777 | $ | 16,061 | $ | 93,806 | $ | 88,213 | $ | 24,638 | $ | 21,919 | $ | 36,987 | |||||||||||||||||
Gross Profit Margin
|
|||||||||||||||||||||||||||||||
Energy & Chemicals
|
29.6 | % | 34.4 | % | 30.9 | % | 26.9 | % | 25.3 | % | 30.7 | % | 28.3 | % | |||||||||||||||||
Distribution and Storage
|
24.9 | % | 22.9 | % | 28.7 | % | 29.2 | % | 30.4 | % | 18.5 | % | 31.2 | % | |||||||||||||||||
BioMedical
|
34.0 | % | 13.2 | % | 35.0 | % | 30.9 | % | 30.1 | % | 16.4 | % | 33.7 | % | |||||||||||||||||
Total
|
28.3 | % | 23.4 | % | 30.7 | % | 28.9 | % | 28.9 | % | 22.4 | % | 30.6 | % | |||||||||||||||||
Operating (Loss) Income
|
|||||||||||||||||||||||||||||||
Energy & Chemicals
|
$ | (8,694 | ) | $ | 3,298 | $ | 11,545 | $ | 13,717 | $ | 3,576 | $ | 5,092 | $ | 5,933 | ||||||||||||||||
Distribution & Storage
|
9,112 | 1,613 | 27,951 | 27,005 | 8,364 | 3,947 | 11,053 | ||||||||||||||||||||||||
BioMedical
|
12,381 | (479 | ) | 14,208 | 8,343 | 2,115 | 714 | 3,714 | |||||||||||||||||||||||
Corporate
|
(14,736 | ) | (3,512 | ) | (16,625 | ) | (28,206 | ) | (4,422 | ) | (4,683 | ) | (4,914 | ) | |||||||||||||||||
Total
|
$ | (1,937 | ) | $ | 920 | $ | 37,079 | $ | 20,859 | $ | 9,633 | $ | 5,070 | $ | 15,786 | ||||||||||||||||
52
Sales |
Gross Profit and Margin |
Selling, General and Administrative Expenses, or SG&A |
53
Employee Separation and Plant Closure Costs |
Operating Income |
Net Interest Expense |
Other Expense and Income |
Foreign Currency Gain |
54
Income Tax Expense |
Net Income |
Sales |
Gross Profit and Margin |
SG&A |
55
Employee Separation and Plant Closure Costs |
Other Expenses and Income |
Foreign Currency Loss |
Income Tax Expense |
Net Loss |
Sales |
56
Gross Profit and Margin |
SG&A |
Acquisition Expenses |
Employee Separation and Plant Closure Costs |
57
Gain on Sale of Assets |
Operating Income |
Net Interest Expense |
Foreign Currency Loss |
Income Tax Expense |
Net Income |
Sales |
58
Gross Profit and Margin |
SG&A |
Employee Separation and Plant Closure Costs |
59
Loss on Sale of Assets |
Operating Income |
Equity Loss |
Net Interest Expense |
Derivative Contracts Valuation Income and Expense |
Foreign Currency Gain |
60
Income Tax Expense |
Net Income |
Sales |
Gross Profit and Margin |
SG&A |
61
Employee Separation and Plant Closure Costs |
Operating Income |
Equity Loss |
Net Interest Expense |
Derivative Contracts Valuation Expense |
Foreign Currency Gain |
Income Tax Benefit |
Net Income |
62
Sales |
Gross Profit and Margin |
SG&A |
Employee Separation and Plant Closure Costs |
Gain on Sale of Assets |
63
Loss on Insolvent Subsidiary |
Operating Loss |
Net Interest Expense |
Financing Costs Amortization |
Derivative Contracts Valuation Expense |
64
Foreign Currency Loss |
Reorganization Items, Net |
Income Tax Expense |
Net Income |
65
Predecessor | |||||||||||||||||||||||||||
Company | Reorganized Company | Successor Company | |||||||||||||||||||||||||
Nine Months | Three Months | January 1, | October 17, | Three Months | |||||||||||||||||||||||
Ended | Ended | Year Ended | 2005 to | 2005 to | Ended | ||||||||||||||||||||||
September 30, | December 31, | December 31, | October 16, | December 31, | March 31, | ||||||||||||||||||||||
2003 | 2003 | 2004 | 2005 | 2005 | 2006 | ||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||
Orders
|
|||||||||||||||||||||||||||
Energy & Chemicals
|
$ | 28,621 | $ | 15,262 | $ | 121,793 | $ | 130,786 | $ | 67,232 | $ | 30,797 | |||||||||||||||
Distribution & Storage
|
105,233 | 37,696 | 193,156 | 191,188 | 45,859 | 76,020 | |||||||||||||||||||||
BioMedical
|
52,751 | 14,492 | 77,893 | 62,396 | 13,768 | 18,221 | |||||||||||||||||||||
Total
|
$ | 186,605 | $ | 67,450 | $ | 392,842 | $ | 384,370 | $ | 126,859 | $ | 125,038 | |||||||||||||||
Backlog
|
|||||||||||||||||||||||||||
Energy & Chemicals
|
$ | 20,673 | $ | 19,834 | $ | 70,766 | $ | 114,633 | $ | 147,732 | $ | 137,346 | |||||||||||||||
Distribution & Storage
|
28,591 | 27,993 | 53,900 | 83,194 | 79,524 | 94,621 | |||||||||||||||||||||
BioMedical
|
2,517 | 1,808 | 4,613 | 8,388 | 6,383 | 5,066 | |||||||||||||||||||||
Total
|
$ | 51,781 | $ | 49,635 | $ | 129,279 | $ | 206,215 | $ | 233,639 | $ | 237,033 | |||||||||||||||
66
Debt Instruments and Related Covenants |
67
Sources and Uses of Cash |
Three Months Ended March 31, 2006 and 2005 |
2005 Successor Period |
68
2005 Reorganized Period |
Year Ended December 31, 2004 |
69
Three Months Ended December 31, 2003 |
Nine Months Ended September 30, 2003 |
Cash Requirements |
70
Contractual Obligations |
Payments Due by Period | ||||||||||||||||||||
2011 and | ||||||||||||||||||||
Total | 2006 | 2007-2008 | 2009-2010 | Thereafter | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Long-term debt(1)
|
$ | 345,000 | $ | | $ | 720 | $ | 2,880 | $ | 341,400 | ||||||||||
Interest on long-term debt(1)
|
236,531 | 27,729 | 54,957 | 54,689 | 99,156 | |||||||||||||||
Operating leases
|
9,255 | 2,040 | 3,568 | 2,939 | 708 | |||||||||||||||
Pension obligations
|
16,596 | 1,176 | 2,589 | 3,010 | 9,821 | |||||||||||||||
Total contractual cash obligations
|
$ | 607,382 | $ | 30,945 | $ | 61,834 | $ | 63,518 | $ | 451,085 | ||||||||||
(1) | We repaid $5.0 million and $25.0 million of our term indebtedness in the first and second quarters of 2006, respectively, and intend to repay an additional $25.0 million of term indebtedness using a portion of the net proceeds from this offering. This will reduce our long-term debt and interest obligations. See Use of Proceeds and Unaudited Pro Forma Financial Information. |
Total | 2006 | 2007-2008 | ||||||||||
(Dollars in thousands) | ||||||||||||
Standby letters of credit
|
$ | 12,325 | $ | 10,585 | $ | 1,740 | ||||||
Bank guarantees
|
11,623 | 9,279 | 2,344 | |||||||||
Total commercial commitments
|
$ | 23,948 | $ | 19,864 | $ | 4,084 | ||||||
Capital Structure |
71
72
73
74
75
76
Four Quarters Ended | ||||||||
March 31, 2006 | ||||||||
Covenant Level | Ratio | |||||||
Senior Secured Credit Facility(1)
|
||||||||
Minimum Adjusted EBITDA to cash interest ratio
|
1.75x | 3.00x | ||||||
Maximum total debt to Adjusted EBITDA ratio
|
6.75x | 4.15x | ||||||
Indenture(2)
|
||||||||
Minimum pro forma Adjusted EBITDA to pro forma fixed charge
coverage ratio required to incur additional debt pursuant to
ratio provisions(3)
|
2.0x | 3.00x |
(1) | The senior secured credit facility requires us to maintain an Adjusted EBITDA to cash interest ratio starting at a minimum of 1.75x and a total net debt to Adjusted EBITDA ratio starting at a maximum of 6.75x. Failure to satisfy these ratio requirements would constitute a default under the senior secured credit facility. If lenders under the senior secured credit facility failed to waive any such default, repayment obligations under the senior secured credit facility could be accelerated, which would also constitute a default under the indenture. |
(2) | Our ability to incur additional debt and make certain restricted payments under our indenture, subject to specified exceptions, is tied to an Adjusted EBITDA to fixed charge ratio of at least 2.0 to 1.0. |
(3) | The ratio is calculated giving pro forma effect to the Acquisition and the incurrence of debt under the indenture and the senior secured credit facility. |
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Predecessor | ||||||||||||||||||||||||||||||||||
Company | Reorganized Company | Successor Company | ||||||||||||||||||||||||||||||||
Nine Months | Three Months | January 1, | Three Months | October 17, | Three Months | Pro Forma | ||||||||||||||||||||||||||||
Ended | Ended | Year Ended | 2005 to | Ended | 2005 to | Ended | Year Ended | |||||||||||||||||||||||||||
September 30, | December 31, | December 31, | October 16, | March 31, | December 31, | March 31, | December 31, | |||||||||||||||||||||||||||
2003 | 2003 | 2004 | 2005 | 2005 | 2005 | 2006 | 2005 | |||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||
Net income (loss)
|
$ | (7,085 | ) | $ | 31 | $ | 22,600 | $ | 8,858 | 5,535 | $ | (506 | ) | 6,045 | (8,486 | ) | ||||||||||||||||||
Income tax expense (benefit)
|
3,047 | (125 | ) | 10,134 | 7,159 | 3,071 | (441 | ) | 2,980 | (3,602 | ) | |||||||||||||||||||||||
Interest expense net
|
10,300 | 1,344 | 4,712 | 4,164 | 985 | 5,556 | 6,545 | 27,401 | ||||||||||||||||||||||||||
Depreciation and amortization(a)
|
9,260 | 2,225 | 8,490 | 6,808 | 1,944 | 4,396 | 5,194 | 20,987 | ||||||||||||||||||||||||||
EBITDA
|
$ | 15,522 | $ | 3,475 | $ | 45,936 | $ | 26,989 | 11,535 | $ | 9,005 | 20,764 | 36,300 | |||||||||||||||||||||
EBITDA
|
$ | 15,522 | $ | 3,475 | $ | 45,936 | $ | 26,989 | $ | 11,535 | $ | 9,005 | $ | 20,764 | 36,300 | |||||||||||||||||||
Stock-based compensation expense(b)
|
| | 2,433 | 9,508 | 592 | 437 | 321 | 9,945 | ||||||||||||||||||||||||||
Inventory valuation charge(c)
|
| 5,368 | | | | 8,903 | | 8,903 | ||||||||||||||||||||||||||
Acquisition expenses(d)
|
| | | 6,602 | | | | 6,602 | ||||||||||||||||||||||||||
In-process research and development charge(e)
|
| | | 2,768 | | | | 2,768 | ||||||||||||||||||||||||||
Hurricane losses(f)
|
| | | 1,057 | | 406 | 182 | 1,463 | ||||||||||||||||||||||||||
Employee separation and plant closure costs(g)
|
1,338 | 1,010 | 3,346 | 1,700 | 703 | 255 | 162 | 1,955 | ||||||||||||||||||||||||||
Reorganization expenses(h)
|
369 | 357 | 706 | 1,470 | 73 | 88 | 45 | 1,558 | ||||||||||||||||||||||||||
Appraisal rights settlement(i)
|
| | | | | 500 | | 500 | ||||||||||||||||||||||||||
Management fees(j)
|
| | 380 | 306 | 95 | | | | ||||||||||||||||||||||||||
(Gain) loss on sale of assets(k)
|
8,929 | (57 | ) | 133 | (131 | ) | | 78 | | (53 | ) | |||||||||||||||||||||||
Income from discontinued operations(l)
|
(833 | ) | | | | | | | | |||||||||||||||||||||||||
Adjusted EBITDA
|
$ | 25,325 | $ | 10,153 | $ | 52,934 | $ | 50,269 | $ | 12,998 | $ | 19,672 | $ | 21,474 | 69,941 | |||||||||||||||||||
(a) | The nine months ended September 30, 2003, the 2005 Successor Period and the three months ended March 31, 2006 include financing costs amortization of $1.7 million, $0.3 million and $0.4 million respectively. |
(b) | Represents stock-based compensation charges for stock and stock options issued to key employees and directors, and an additional charge for the cash-out of stock options in the 2005 Reorganized Period as a result of the Acquisition. Although it may be of limited relevance to holders of our debt instruments, it may be of more relevance to our equity holders, since such equity holders ultimately bear such expenses. |
(c) | Represents a non-cash inventory valuation charge recorded in cost of sales for the adjustment of inventory to fair value as a result of Fresh-Start accounting as of September 30, 2003 and purchase accounting as of October 17, 2005, the closing date of the Acquisition. Under Fresh-Start and purchase accounting, inventory was adjusted to the fair value as of the dates indicated above, and a corresponding charge was taken in the subsequent three months ended December 31, 2003 and the 2005 Successor Period cost of sales as the inventory was sold. |
(d) | Represents acquisition expenses, primarily professional fees, incurred by us as a result of the Acquisition. |
(e) | Represents a non-cash charge for purchased in-process research and development in conjunction with the acquisition of CEM in 2005. |
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(f) | Represents losses and costs incurred related to the damaged caused by Hurricane Rita at our New Iberia, Louisiana facilities. |
(g) | Includes inventory valuation charges recorded in cost of sales, and severance expenses, facility exit costs and non-operating expenses related to the execution of our operational restructuring plan, which primarily included moving the Burnsville, Minnesota manufacturing operations to Canton, Georgia, closing the Plaistow, New Hampshire and Wolverhampton, United Kingdom manufacturing facilities and closing the Westborough, Massachusetts engineering office. |
(h) | Includes pre-bankruptcy debt restructuring-related fees, Fresh-Start accounting adjustments and expenses, and a claim settlement related to our 2003 bankruptcy reorganization. |
(i) | Represents a charge for the settlement of former Reorganized Company shareholders appraisal rights claims as a result of the Acquisition. |
(j) | Represents non-recurring management fees charged by our Reorganized Company majority shareholders, which are not charged by First Reserve. |
(k) | Includes non-recurring gains and losses and charges on the sale, disposal or impairment of assets. |
(l) | Represents income from our former Greenville Tube, LLC stainless steel tubing business, which was sold in July 2003. |
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| increasing demand for natural gas and the geographic dislocation of supply and consumption, which is resulting in the need for a global network for LNG; | |
| increasing demand for natural gas processing, particularly in the Middle East, as crude oil producers look to utilize the gas portions of their reserves; and | |
| increased demand for natural and industrial gases resulting from rapid economic growth in developing areas, particularly Central and Eastern Europe and China. |
83
Focus on Attractive Growing End Markets. We anticipate growing demand in the end markets we serve, with particularly strong growth in LNG, natural gas processing, specific international markets across all segments and biomedical equipment. Energy Ventures Analysis projects global LNG liquefaction capacity to increase 15.2% per annum from 2005 through 2011 and the International Energy Agency expects the natural gas industry to invest approximately $250 billion in LNG facilities from 2001 to 2030. In addition, international demand for our products is being driven by growing manufacturing capacity and industrial activity in developing areas, particularly Central and Eastern Europe and China. Rapid economic development in these areas has caused a significant increase in the demand for natural and industrial gases. According to Spiritus Consulting, the global market for industrial gas is projected to grow 7.0% per annum from 2009. | |
Substantial Revenue Visibility. We have a large and growing backlog, which provides us with a high degree of visibility in our forecasted revenue. Our backlog is comprised of the portion of signed purchase orders or other written contractual commitments received from customers that we have not recognized as revenue under the percentage of completion method or based upon shipment. Our backlog as of March 31, 2006 was $237.0 million, compared to $233.6 million, $129.3 million and $49.6 million as of December 31, 2005, 2004 and 2003, respectively. Projects for energy-related applications totaled approximately $180.0 million in backlog as of December 31, 2005. Substantially all of our backlog as of December 31, 2005 is scheduled to be recognized as sales during the next twelve months. | |
Leading Market Positions. We believe we are the #1 or #2 equipment supplier in each of our primary end markets both domestically and internationally. Based on our relationships with key customers, we believe that our strong industry positioning makes us typically one of only two or three suppliers qualified to provide certain products to key customers. As our customers continue to rationalize their vendors, we expect to gain additional market share and that the benefit of our leading position will become more pronounced. | |
Diverse, Long-Standing Customer Base. We currently serve over 2,000 customers worldwide. Our primary customers are large, multinational producers and distributors of hydrocarbon and industrial gases that provide us with revenue stability. Customers and end-users also include high growth LNG processors, petrochemical processors and biomedical companies. We have developed strong, long-standing relationships with these customers, many of whom have been purchasing products from us or |
84
one of our predecessors for over 20 years. Our primary customers and end-users include Air Products, Praxair, Airgas, Air Liquide, JGC, Bechtel Corporation, GE, ExxonMobil, BP and ConocoPhillips. | |
Highly Flexible and Low-Cost Manufacturing Base. Given our long-term investment in global manufacturing facilities and specialized equipment, we have developed a substantial comparative scale and geographic advantage within the markets for the cryogenic products that we manufacture. The scale enables cost efficiencies and the geographic reach provides access to customers that we believe would be difficult for a potential competitor to replicate. With more than 1.6 million square feet of manufacturing space across 14 primary facilities and three continents, we have substantial operational flexibility. We are a low-cost producer for our products across all segments. In addition, the high cost of capital and economies of scale required for this type of manufacturing create significant barriers for new entrants. | |
Product Expertise, Quality, Reliability and Know-How. Within our end markets, we have established a reputation for quality, reliability and technical innovation. We believe that the main drivers of our target customers purchasing decisions are a suppliers product expertise, quality, reliability and know-how rather than pricing and terms, giving us an advantage based on our reputation and consequent brand recognition. The value of this brand recognition is significantly enhanced by the extended life cycle of our products and the high cost to our target customers of product failure. As a focused provider of highly engineered cryogenic equipment, we believe it would be difficult for a new entrant to duplicate our capabilities. | |
Experienced Management Team. We have assembled a strong senior management team with over 250 combined years of related experience. We have a balance of entrepreneurs, internally developed leaders and experienced managers from analogous industries. The team has grown into a cohesive unit with complementary management and operational skills. The current management team is directly responsible for the strong sales growth and the significant margin improvements experienced since 2003. |
Continue to develop innovative, high-growth, energy-specific products. We plan to continue to focus on extending our cryogenic technological leadership, both to capitalize on increasing demand for energy and to create new applications. We believe that we are well positioned to benefit from increased demand for LNG, natural gas processing and gas to liquid, or GTL, solutions. Our engineering, technical and marketing employees actively assist customers in specifying their needs and in determining appropriate products to meet those needs. Current product development includes subsea VIP, synthetic gas, hydrogen recovery, small-scale bulk gas distribution solutions and LNG/ GTL production systems. | |
Leverage our global platform to capitalize on growing international demand. We expect growth in hydrocarbon and industrial gas demand and investment over the next five years in the Middle East, Central and Eastern Europe, Russia and China. We believe that our historic and planned investment in our manufacturing facilities in the Czech Republic and China and the investment in sales and marketing capabilities in these markets, supplemented by our continuing investment in our U.S. facilities, has positioned us to increase our market share in growing international markets. We believe we are well-positioned to make acquisitions of complementary businesses to expand our global infrastructure. | |
Capitalize on our position as a market leader. We plan to continue to grow our long-standing relationships with the leading users of cryogenic equipment. Our engineering and development teams |
85
partner with our customers to better understand and meet their cryogenic equipment needs, particularly in the growing LNG and international markets. We intend to grow our customer base as industrial gas producers increasingly outsource bulk tank storage and other non-core parts of their business. | |
Maintain our position as a low-cost producer while continuing to improve operating performance. We believe we are the lowest cost manufacturer for most of our products and we intend to continue to leverage our scale, scope, technical expertise and know-how to deliver to our customers higher quality and more reliable products and services at lower cost. Our largest manufacturing facility is in the Czech Republic, which allows us to achieve considerable cost savings versus our competitors. In addition, we believe China, where we are experiencing significant growth, will be a sustainable low-cost labor environment. We maintain a disciplined approach to capital expenditures. We intend to make capacity investments in energy-related markets where we expect to realize significant and timely returns, and to also leverage our existing operating capacity in other markets. |
Energy and Chemicals Segment |
Heat Exchangers |
86
Cold Boxes |
LNG Vacuum Insulated Pipe |
Distribution and Storage Segment |
Cryogenic Bulk Storage Systems |
Cryogenic Packaged Gas Systems |
87
Cryogenic Systems and Components |
LNG Vehicle Fuel Systems |
Beverage Liquid CO 2 Systems |
Cryogenic Services |
BioMedical Segment |
Medical Products |
88
Biological Storage Systems |
MRI Components |
89
90
91
Location | Segment | Square Feet | Ownership | Use | ||||||||
LaCrosse, Wisconsin
|
Energy & Chemicals | 149,000 | Owned | Manufacturing/Office | ||||||||
New Iberia, Louisiana
|
Energy & Chemicals | 62,400 | Leased | Manufacturing | ||||||||
New Iberia, Louisiana
|
Energy & Chemicals | 35,000 | Leased | Manufacturing | ||||||||
The Woodlands, Texas
|
Energy & Chemicals | 29,000 | Leased | Office | ||||||||
Houston, Texas
|
Energy & Chemicals | 103,000 | Leased | Manufacturing | ||||||||
Tulsa, Oklahoma
|
Energy & Chemicals | 58,500 | Owned | Manufacturing/Office/ | ||||||||
Warehouse | ||||||||||||
Tulsa, Oklahoma
|
Energy & Chemicals | 31,500 | Leased | Manufacturing | ||||||||
Wolverhampton, United Kingdom
|
Energy & Chemicals | 1,600 | Leased | Office | ||||||||
Changzhou, China(1)
|
Distribution & Storage | 21,500 | Leased | Manufacturing/ Office | ||||||||
Changzhou, China
|
Distribution & Storage | 130,000 | Owned | Manufacturing/ Office | ||||||||
Changzhou, China
|
Distribution & Storage | 60,000 | Leased | Manufacturing/ Office | ||||||||
Changzhou, China
|
Distribution & Storage | 40,000 | Leased | Manufacturing | ||||||||
Decin, Czech Republic
|
Distribution & Storage | 564,000 | Owned | Manufacturing/ Office | ||||||||
Houston, Texas
|
Distribution & Storage | 22,000 | Owned | Service | ||||||||
Plaistow, New Hampshire(2)
|
Distribution & Storage | 164,400 | Owned | Manufacturing/ Office | ||||||||
Solingen, Germany
|
Distribution & Storage | 3,000 | Leased | Office | ||||||||
Zhangiajang, China
|
Distribution & Storage | 30,000 | Leased | Manufacturing/ Office | ||||||||
Canton, Georgia
|
Distribution & Storage/ BioMedical | 154,000 | Owned | Manufacturing/ Office | ||||||||
Jasper, Georgia
|
Distribution & Storage/ BioMedical | 32,500 | Leased | Warehouse/ Service | ||||||||
New Prague, Minnesota
|
Distribution & Storage/ BioMedical | 254,000 | Owned | Manufacturing/Service/ Office | ||||||||
Denver, Colorado
|
BioMedical | 109,000 | Owned | Manufacturing | ||||||||
Marietta, Georgia
|
BioMedical | 11,100 | Leased | Office/Lab | ||||||||
Bracknell, United Kingdom
|
BioMedical | 12,500 | Leased | Office/ Warehouse | ||||||||
Lidcombe, Australia
|
BioMedical | 2,400 | Leased | Office/ Warehouse | ||||||||
New Prague, Minnesota
|
BioMedical | 11,700 | Leased | Warehouse | ||||||||
Burnsville, Minnesota(3)
|
Corporate | 7,000 | Leased | Office | ||||||||
Garfield Heights, Ohio
|
Corporate | 10,300 | Leased | Office | ||||||||
Clarksville, Arkansas(4)
|
Discontinued operation | 110,000 | Owned | Manufacturing/ Office |
92
(1) | This facility has been vacated and we may sublease until the lease expires. |
(2) | This facility is being held for sale. |
(3) | This facility will be vacated no later than when the lease expires in January 2008. |
(4) | This facility is leased from us, with a purchase option, by the company that purchased certain assets of the former Greenville Tube LLC stainless steel tubing business. |
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94
Name | Age | Position | ||||
Samuel F. Thomas
|
54 | Chief Executive Officer, President and Director | ||||
Michael F. Biehl
|
50 | Executive Vice President, Chief Financial Officer and Treasurer | ||||
Matthew J. Klaben
|
37 | Vice President, General Counsel and Secretary | ||||
James H. Hoppel, Jr.
|
42 | Chief Accounting Officer, Controller and Assistant Treasurer | ||||
John T. Romain
|
42 | PresidentEnergy & Chemicals Group | ||||
Thomas M. Carey
|
48 | PresidentDistribution & Storage Group | ||||
Steven T. Shaw
|
45 | PresidentBioMedical Group | ||||
Ben A. Guill
|
55 | Chairman of the Board of Directors | ||||
Kenneth W. Moore
|
37 | Director | ||||
Timothy H. Day
|
35 | Director | ||||
Steven W. Krablin
|
56 | Director* |
* | Nominee for director. Mr. Krablin has consented to being named herein as a nominee for director. |
95
96
97
Summary Compensation Table |
98
Long-Term | |||||||||||||||||||||||||
Compensation | |||||||||||||||||||||||||
Annual Compensation | Awards | ||||||||||||||||||||||||
Number of | |||||||||||||||||||||||||
Other Annual | Underlying | All Other | |||||||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus | Compensation(1) | Options | Compensation | |||||||||||||||||||
Samuel F. Thomas(2)
|
2005 | $ | 400,000 | $ | 600,000 | $ | 5,766,483 | (3) | 682,819 | (4) | $ | 18,726 | (5) | ||||||||||||
Chief Executive Officer and | 2004 | $ | 400,000 | $ | 600,000 | $ | 435,123 | (6) | 203,701 | (7) | $ | 19,595 | (5) | ||||||||||||
President | 2003 | $ | 92,307 | $ | 94,338 | | | | |||||||||||||||||
Michael F. Biehl
|
2005 | $ | 213,200 | $ | 319,800 | $ | 1,166,830 | (3) | 204,844 | (4) | $ | 18,726 | (5) | ||||||||||||
Executive Vice President, | 2004 | $ | 205,000 | $ | 374,167 | (8) | | 28,000 | (7) | $ | 14,536 | (5) | |||||||||||||
Chief Financial Officer and | 2003 | $ | 200,000 | (8) | | | $ | 14,077 | (5) | ||||||||||||||||
Treasurer | |||||||||||||||||||||||||
Charles R. Lovett
|
2005 | $ | 173,349 | $ | 260,024 | $ | 916,205 | (3) | 68,284 | (4) | $ | 15,471 | (5) | ||||||||||||
Vice President | 2004 | $ | 168,300 | $ | 307,450 | (8) | | 23,000 | (7) | $ | 5,100 | (5) | |||||||||||||
Manufacturing | 2003 | $ | 165,000 | (8) | | | $ | 4,950 | (5) |
(1) | No person listed in the table received personal benefits or perquisites in excess of the lesser of $50,000 or 10% of his aggregate salary and bonus. Messrs. Thomas and Biehl received automobile allowances of $1,846 and $6,923 in 2005, respectively, and Mr. Biehl received the use of a company car in 2003, 2004 and part of 2005. |
(2) | Mr. Thomas became Chief Executive Officer on October 6, 2003. |
(3) | These amounts reflect the payments made by us in connection with the Acquisition related to the cancellation of stock options (or portions of stock options) held by the named individuals before the Acquisition. |
(4) | These options were granted on November 23, 2005 pursuant to the terms of our Amended and Restated 2005 Stock Incentive Plan. The following portions of these options vest annually in equal installments over five years based on continued service: Mr. Thomas 240,993; Mr. Biehl, 72,298; and Mr. Lovett, 24,099. The following portions of these options vest based on performance, measured by reference to First Reserves net return on its investment in us: Mr. Thomas, 441,825; Mr. Biehl, 132,546; and Mr. Lovett, 44,185. |
(5) | Represents amounts contributed by us to the listed persons personal account under the Chart Industries, Inc. 401(k) Investment and Savings Plan. |
(6) | On February 26, 2004, Mr. Thomas purchased from us 28,797 shares of common stock at a price of $13.89 per share. Such number of shares and price have not been adjusted for the 4.6263-for-one stock split. The amount listed as Other Annual Compensation for Mr. Thomas for 2004 is equal to the product of the total number of shares purchased and the difference between the price paid to us and the closing price of $29.00 per share of Reorganized Company common stock in the over-the -counter-market on February 26, 2004. |
(7) | These options were granted on March 19, 2004 pursuant to the terms of our 2004 Stock Option and Incentive Plan and have not been adjusted for the 4.6263-for-one stock split. A portion of these options were cancelled in the Acquisition in exchange for the payments describe in footnote (3) above. The remainder of these options were converted into options to acquire 437,646, 24,505 and 24,154 shares as adjusted for the 4.6263-for-one stock split for Messrs. Thomas, Biehl and Lovett, respectively. |
(8) | Of the amounts listed for 2004, $307,500 and $252,450 represent year-end cash bonuses paid to Mr. Biehl and Mr. Lovett, respectively, for our 2004 fiscal year. The balance of the amounts listed for 2004, $66,667 for Mr. Biehl and $55,000 for Mr. Lovett, represent retention incentives that were paid in March 2004 in lieu of any other cash bonuses for 2003. These retention incentives were paid under retention agreements |
99
entered into in 2003 with Mr. Biehl and Mr. Lovett, which required these officers to remain employed with the company through February 29, 2004 as a condition to payment. |
Stock Options |
Individual Grants | |||||||||||||||||||||||||
Percent of | Potential Realizable Value | ||||||||||||||||||||||||
Number of | Total | at Assumed Annual Rates | |||||||||||||||||||||||
Securities | Options | of Stock Price | |||||||||||||||||||||||
Underlying | Granted to | Exercise | Appreciation for Option | ||||||||||||||||||||||
Options | Employees | or Base | Term | ||||||||||||||||||||||
Granted | in Fiscal | Price | Expiration | ||||||||||||||||||||||
Name | (#) | Year | ($/Sh) | Date | 5% ($) | 10% ($) | |||||||||||||||||||
Samuel F. Thomas
|
682,819 | (1) | 31.0 | % | $ | 6.41 | 11/23/15 | (2) | $ | 11,194,495 | (3) | $ | 20,417,926 | (3) | |||||||||||
Chief Executive Officer and President | |||||||||||||||||||||||||
Michael F. Biehl
|
204,844 | (1) | 9.3 | % | $ | 6.41 | 11/23/15 | (2) | $ | 3,358,315 | (3) | $ | 6,125,318 | (3) | |||||||||||
Executive Vice President, Chief Financial Officer and Treasurer | |||||||||||||||||||||||||
Charles R. Lovett
|
68,284 | (1) | 3.1 | % | $ | 6.41 | 11/23/15 | (2) | $ | 1,119,483 | (3) | $ | 2,041,853 | (3) | |||||||||||
Vice President Manufacturing |
(1) | These options were granted on November 23, 2005 at an exercise price of $6.41 pursuant to the terms of our Amended and Restated 2005 Stock Incentive Plan. The following portions of these options vest annually in equal installments over five years based on continued service: Mr. Thomas, 240,993; Mr. Biehl, 72,298; and Mr. Lovett, 24,099. The following portions of these options vest based on performance, measured by reference to First Reserves net return on its investment in us: Mr. Thomas, 441,825; Mr. Biehl, 132,546; and Mr. Lovett, 44,185. See Amended and Restated 2005 Stock Incentive Plan. |
(2) | The portion of these options that vests based on performance, as described in footnote (1), may terminate earlier than this date to the extent the performance measure is not satisfied at such time that First Reserve may cease to have any ownership interest in us. |
(3) | The potential realized values are net of exercise price but do not take into account the payment of taxes associated with exercise. The amounts represent hypothetical gains that could be achieved for the respective options if exercised at the end of the option term based on assumed annual rates of compound share price appreciation from the date of this prospectus of 5% and 10% based on $14.00 per share, the fair market value on the date of grant. The 5% and 10% assumed annual rates of compounded share price appreciation are mandated by rules of the SEC and do not represent our estimate or projection of our future common share prices. Actual gains, if any, on stock option exercises are dependent on the future performance of our common shares and overall stock market conditions and the option holders continued service with us. |
100
Exercise of Options |
Number of Securities | Value of Unexercised | ||||||||||||||||
Underlying Unexercised | In-the-Money Options at | ||||||||||||||||
Shares | Options at | Fiscal Year-End | |||||||||||||||
Acquired on | Value | Fiscal Year-End (#) | ($)(1)(2) | ||||||||||||||
Name | Exercise (#) | Realized($) | Exercisable/Unexercisable(1) | Exercisable/Unexercisable | |||||||||||||
Samuel F. Thomas
|
| | 437,646/682,819(3) | $7,221,159/$9,279,510 | |||||||||||||
Chief Executive Officer and President | |||||||||||||||||
Michael F. Biehl
|
| | 24,505/204,844(3) | $404,333/$2,783,830 | |||||||||||||
Executive Vice President, Chief Financial Officer and Treasurer | |||||||||||||||||
Charles R. Lovett
|
| | 20,124/72,313(3) | $332,046/$994,458(4) | |||||||||||||
Vice President Manufacturing |
(1) | Since December 31, 2005, Mr. Thomas, Mr. Biehl and Mr. Lovett have exercised their respective options to acquire 437,646, 24,505 and 24,154 shares, which have been adjusted by the 4.6263-for-one stock split, respectively, of our common stock for $3.50 per share. Messrs. Thomas, Biehl and Lovett will receive the pro-rata dividends to which they are entitled as stockholders of these shares, as described under the caption Dividend Policy, and the value of those dividends has not been included in the calculation of the value of the related options that have been exercised. |
(2) | There was no public trading market for our common stock as of December 31, 2005. The value of unexercised in-the -money options is based on the assumed initial public offering price of $20.00 per share. |
(3) | For Messrs. Thomas and Biehl, represents underlying shares as adjusted by the 10.1088-for-one adjustment. For Mr. Lovett, represents an option to purchase 871 shares (which has been exercised before the date of this prospectus) adjusted by the 4.6263-for-one stock split and an option to purchase 6,755 shares adjusted by the 10.1088-for-one adjustment. |
(4) | Represents the exercise of the option to purchase 4,029 shares at an exercise price of $3.50 per share and the exercise of the option to purchase 68,284 shares at an exercise price of $6.41 per share. |
101
102
103
104
105
Samuel F. Thomas |
Michael F. Biehl |
106
Matthew J. Klaben |
James H. Hoppel, Jr. |
107
Charles R. Lovett |
108
| each person who is known by us to own beneficially more than 5% of our common stock; | |
| each member of our board of directors and each of our named executive officers; and | |
| all members of our board of directors and our executive officers as a group. |
Shares Beneficially Owned Immediately | ||||||||||||||||||||||||
After this Offering | ||||||||||||||||||||||||
Shares Beneficially | Assuming the | Assuming the | ||||||||||||||||||||||
Owned Immediately | Underwriters Option is | Underwriters Option is | ||||||||||||||||||||||
Prior to this Offering | Not Exercised(1) | Exercised in Full | ||||||||||||||||||||||
Percent of | Percent of | Percent of | ||||||||||||||||||||||
Name of Beneficial Holder | Number | Common | Number | Common | Number | Common | ||||||||||||||||||
First Reserve Fund X, L.P(2)
|
10,603,192 | 94.6% | 12,376,214 | 48.4 | % | 10,603,192 | 41.4 | % | ||||||||||||||||
Samuel F. Thomas(3)
|
437,646 | 3.9% | 510,827 | 2.0 | % | 437,646 | 1.7 | % | ||||||||||||||||
Michael F. Biehl
|
24,505 | * | 28,602 | * | 24,505 | * | ||||||||||||||||||
Matthew J. Klaben
|
| | | | | | ||||||||||||||||||
James H. Hoppel, Jr.
|
| | | | | | ||||||||||||||||||
Charles R. Lovett
|
24,154 | * | 28,192 | * | 24,154 | * | ||||||||||||||||||
Ben A. Guill(4)
|
| | | | | | ||||||||||||||||||
Kenneth W. Moore(4)
|
| | | | | | ||||||||||||||||||
Timothy H. Day(4)
|
| | | | | | ||||||||||||||||||
All directors and officers as a group (8 persons)
|
486,305 | 4.3% | 567,621 | 2.2 | % | 486,305 | 1.9 | % |
(1) | We will grant the underwriters an option to purchase up to an additional shares in this offering. Immediately prior to the consummation of this offering, we will declare a stock dividend, the terms of which will require that shortly after the expiration of the underwriters over-allotment option (assuming the option is not exercised in full) we issue to our existing stockholders the number of shares equal to (x) the number of additional shares the underwriters have an option to purchase minus (y) the actual number of shares the underwriters purchase from us pursuant to that option. |
(2) | 94.6% of our common stock is owned by FR X Chart Holdings LLC, which in turn is 100% owned and managed by First Reserve Fund X, L.P., or Fund X. First Reserve GP X, L.P., or GP X, is the general partner of Fund X. First Reserve GP X, Inc., or GP X, Inc., is the general partner of GP X. First Reserve Corporation is the advisor to Fund X. The officers for GP X and GP X Inc. are William E. Macaulay, John A. Hill, Ben A. Guill, Thomas R. Denison, Cathleen M. Ellsworth, J.W.G. (Will) Honeybourne, Alex T. Krueger, Mark A. McComiskey, Kenneth W. Moore, Thomas J. Sikorski, Jennifer C. Zarrilli, Craig M. Jarchow, Timothy H. Day, Joseph Robert Edwards, J. Hardy Murchison, Catia Cesari, Glenn J. Payne, Kristin A. Custar, Rahman P. DArgenio, Brian K. Lee, Bingfeng Leng, Timothy K. OKeefe, Jeffrey K. Quake, Daniel S. Rice, Anne E. Gold, Valeria A. Thomason and Damien T.J. Harris, who are all employees of First Reserve. Decisions with respect to voting and investments are made by the Investment Committee of First Reserve, made up of a subset of these officers that includes the officers |
109
named above except for Ms. Thomason and Mr. Harris. With respect to investments held by these entities, decisions with respect to operations oversight are made by the subset of these officers that work most closely on a given investment, which includes Messrs. Macaulay, Guill, Moore and Day in the case of Chart Industries, Inc. The address of FR X Chart Holdings LLC, Fund X, GP X, GP X, Inc. and First Reserve Corporation is c/o First Reserve Corporation, One Lafayette Place, Greenwich, Connecticut 06830. |
(3) | Shares beneficially owned by Mr. Thomas include 115,658 shares that were transferred to a trust of which Mr. Thomas is the grantor and the current beneficiary. |
(4) | Mr. Guill is the President, a Managing Director and a member of the board of directors of First Reserve Corporation and GP X, Inc. Mr. Moore is a Managing Director of First Reserve Corporation and GP X, Inc. Mr. Day is a Director of First Reserve Corporation and GP X, Inc. Mr. Guill, Mr. Moore and Mr. Day all disclaim beneficial ownership of any shares of the issuers equity securities owned by such entities or their affiliates (including First Reserve Fund X, L.P.). |
* | Less than 1%. |
110
111
112
Overview |
| a $180.0 million term loan facility; and | |
| a $115.0 million revolving credit facility. |
Interest Rate and Fees |
113
Prepayments |
| beginning in the year ending December 31, 2006, 75% (which percentage will be reduced to 50% if our leverage ratio is equal to or less than 4.75 and greater than 3.75 to 1.00, and to 25% if our leverage ratio is equal to or less than 3.75 to 1.00 and greater than 2.75 to 1.00, and to 0% if our leverage ratio is equal to or less than 2.75 to 1.00) of our annual excess cash flow; | |
| 100% of the net cash proceeds in excess of an amount to be determined from non-ordinary course asset sales and casualty and condemnation events, if we do not reinvest or contract to reinvest those proceeds within 12 months and use such proceeds within 18 months of receipt, subject to certain limitations; | |
| 100% of the net cash proceeds of any incurrence of debt, other than certain debt permitted under the senior secured credit facility; and | |
| 100% of amounts in excess of an aggregate amount of $5.0 million in respect of certain claims arising out of the Acquisition, subject to certain exceptions. |
Amortization |
Guarantee and Security |
| subject to certain exceptions, a pledge of the capital stock of each direct and indirect domestic subsidiary owned by us or a Domestic Guarantor (other than subsidiaries substantially all of whose assets consist of stock in controlled foreign corporations) and 65% of the capital stock of each first tier foreign subsidiary owned by us or a Domestic Guarantor and of each first tier domestic subsidiary owned by us or a Domestic Guarantor substantially all of whose assets consist of stock in controlled foreign corporations; and | |
| subject to certain exceptions, a security interest in substantially all of the tangible and intangible assets owned by us and each Domestic Guarantor. |
114
Certain Covenants and Events of Default |
| sell assets; | |
| incur additional indebtedness; | |
| prepay, redeem or repurchase other indebtedness (including the notes); | |
| pay dividends and distributions or repurchase capital stock; | |
| create liens on assets; | |
| make investments, loans or advances; | |
| make capital expenditures; | |
| make certain acquisitions; | |
| engage in mergers or consolidations; | |
| engage in certain transactions with affiliates; | |
| amend certain material agreements governing indebtedness (including the notes); | |
| change the business conducted by us and our subsidiaries; | |
| enter into agreements that restrict dividends from subsidiaries; | |
| enter into sale and lease-back transactions; and | |
| enter into swap agreements. |
| a maximum consolidated net leverage ratio; and | |
| a minimum interest coverage ratio. |
General |
Guarantees |
Ranking |
115
Optional Redemption |
(1) at least 65% of the aggregate principal amount of notes issued under the indenture (excluding notes held by us and our subsidiaries) remains outstanding immediately after the occurrence of such redemption; and | |
(2) the redemption occurs within 180 days of the date of the closing of such equity offering. |
Year | Percentage | |||
2010
|
104.563% | |||
2011
|
103.042% | |||
2012
|
101.521% | |||
2013 and thereafter
|
100.000% |
Change of Control |
116
Covenants |
| incur additional debt or issue certain preferred shares; | |
| pay dividends on or make distributions in respect of our or any of our restricted subsidiaries capital stock or make other restricted payments; | |
| make certain investments; | |
| sell certain assets; | |
| create liens on certain debt without securing the notes; | |
| consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; | |
| enter into certain transactions with our affiliates; and | |
| designate our subsidiaries as unrestricted subsidiaries. |
Events of Default |
Exchange Offer |
117
Common Stock |
Preferred Stock |
| the designation of the series; | |
| the number of shares of the series, which our board may, except where otherwise provided in the preferred stock designation, increase or decrease, but not below the number of shares then outstanding; | |
| whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series; |
118
| the dates at which dividends, if any, will be payable; | |
| the redemption rights and price or prices, if any, for shares of the series; | |
| the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series; | |
| the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of our company, or upon any distribution of assets of our company; | |
| whether the shares of the series will be convertible into shares of any other class or series, or any other security, of our company or any other corporation, and, if so, the specification of the other class or series or other security, the conversion price or prices or rate or rates, any rate adjustments, the date or dates as of which the shares will be convertible and all other terms and conditions upon which the conversion may be made; | |
| the preferences and special rights, if any, of the series and the qualifications and restrictions, if any, of the series; | |
| the voting rights, if any, of the holders of the series; and | |
| such other rights, powers and preferences with respect to the series as our board of directors may deem advisable. |
Removal of Directors; Vacancies |
No Cumulative Voting |
Calling of Special Meetings of Stockholders |
119
Stockholder Action by Written Consent |
Advance Notice Requirements for Stockholder Proposals and Director Nominations |
Supermajority Provisions |
| 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 our chairman of the board, our board of directors and any committee of the board of directors which has been designated by our board of directors; | |
| 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. |
Limitations on Liability and Indemnification of Officers and Directors |
| for breach of duty of loyalty; | |
| for acts or omissions not in good faith or involving intentional misconduct or knowing violation of law; | |
| under Section 174 of the DGCL (unlawful dividends); or | |
| for transactions from which the director derived improper personal benefit. |
120
Delaware Anti-takeover Statute |
121
Number of Shares | Date | |
7,952,180
|
After days from the date of this prospectus (subject to volume limitations and other conditions under Rule 144 and to the lock-up agreements described below) | |
2,651,012
|
After days from the date of this prospectus (subject to volume limitations and other conditions under Rule 144 and to the lock-up agreements described below) |
| 1% of the then-outstanding shares of common stock; and | |
| the average weekly reported volume of trading in the common stock on the Nasdaq National Market during the four calendar weeks preceding the date on which notice of sale is filed, subject to restrictions. |
122
123
| an individual citizen or resident of the United States; | |
| a corporation (or any other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; | |
| an estate the income of which is subject to United States federal income taxation regardless of its source; or | |
| a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person. |
124
| the gain is effectively connected with a trade or business of the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to a United States permanent establishment (or, for an individual, a fixed base) of the non-U.S. holder); | |
| the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of the disposition, and certain other conditions are met; or | |
| we are or have been a United States real property holding corporation for United States federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition and the non-U.S. holders holding period for our common stock. |
125
126
Underwriters | Number of Shares | ||||
Morgan Stanley & Co. Incorporated
|
|||||
Lehman Brothers Inc.
|
|||||
UBS Securities LLC
|
|||||
Natexis Bleichroeder Inc.
|
|||||
Simmons & Company International
|
|||||
Howard Weil Incorporated
|
|||||
Total
|
12,500,000 | ||||
Paid by Chart Industries, Inc. | No Exercise | Full Exercise | ||||||
Per Share
|
||||||||
Total
|
127
| offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock or file any registration statement under the Securities Act of 1933 (other than a registration statement on Form S-8) with respect to the foregoing; or | |
| enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock; |
| the sale of shares to the underwriters pursuant to the underwriting agreement; | |
| the issuance by us of shares of common stock upon the exercise of an option or a warrant or the conversion of a security outstanding on the date of this prospectus of which the underwriters have been advised in writing; | |
| grants, issuances, or exercises under our existing employee benefits plans; | |
| the issuance of common stock in connection with the acquisition of, or joint venture with, another company, provided that the recipient agrees to be bound by the restrictions described in the previous paragraph; | |
| transactions by any person other than us relating to shares of common stock or other securities acquired in open market transactions after the completion of the offering of the shares; | |
| transfers by any person other than us of shares of common stock or any security convertible, exchangeable for or exercisable into common stock as a bona fide gift or gifts as a result of operation of law or testate or in testate succession, provided that such transferee agrees to be bound by the restrictions described in the previous paragraph; | |
| transfers by any person other than us to a trust, partnership, limited liability company or other entity, all of the beneficial interests of which are held, directly, or indirectly by such person or such persons spouse or children, provided that such transferee agrees to be bound by the restrictions described in the previous paragraph; or | |
| distributions by any person other than us of shares of common stock or any security convertible, exchangeable for or exercisable into common stock to limited partners or stockholders of such person, provided that such distributee agrees to be bound by the restrictions described in the previous paragraph. |
128
129
130
Audited Consolidated Financial Statements
|
||
F-2 | ||
F-4 | ||
F-5 | ||
F-6 | ||
F-9 | ||
F-10 | ||
Unaudited Consolidated Financial Statements
|
||
F-44 | ||
F-45 | ||
F-46 | ||
F-47 |
F-1
F-2
/s/ Ernst & Young, LLP |
F-3
F-4
F-5
F-6
F-7
F-8
F-9
Table of Contents
Successor
Predecessor
Company
Reorganized Company
Company
October 17,
January 1,
Year
Three Months
Nine Months
2005 to
2005 to
Ended
Ended
Ended
December 31,
October 16,
December 31,
December 31,
September 30,
2005
2005
2004
2003
2003
$
97,652
$
305,497
$
305,576
$
68,570
$
197,017
75,733
217,284
211,770
52,509
141,240
21,919
88,213
93,806
16,061
55,777
16,632
59,826
53,374
14,147
44,211
6,602
139
1,057
3,169
1,010
882
78
(131
)
133
(57
)
(1,061
)
13,682
51
41
16,849
67,354
56,727
15,141
57,714
5,070
20,859
37,079
920
(1,937
)
(5,565
)
(4,192
)
(4,760
)
(1,390
)
(9,911
)
(308
)
(1,653
)
9
28
48
46
(389
)
(101
)
(659
)
465
350
(287
)
5,677
(5,965
)
(4,823
)
(4,247
)
(994
)
(6,563
)
(895
)
16,036
32,832
(74
)
(8,500
)
1,902
9,420
8,031
(751
)
(3,245
)
(2,343
)
(2,261
)
2,103
626
5,000
(441
)
7,159
10,134
(125
)
1,755
(454
)
8,877
22,698
51
(10,255
)
(52
)
(19
)
(98
)
(20
)
(63
)
(506
)
8,858
22,600
31
(10,318
)
833
2,400
$
(506
)
$
8,858
$
22,600
$
31
$
(7,085
)
$
(0.06
)
$
1.65
$
4.22
$
0.01
$
(0.39
)
0.03
0.09
$
(0.06
)
$
1.65
$
4.22
$
0.01
$
(0.27
)
$
(0.06
)
$
1.57
$
4.10
$
0.01
$
(0.39
)
0.03
0.09
$
(0.06
)
$
1.57
$
4.10
$
0.01
$
(0.27
)
7,952
5,366
5,351
5,325
26,336
7,952
5,638
5,516
5,325
26,336
Table of Contents
Common Stock
Accumulated
Total
Additional
Retained
Other
Shareholders
Shares
Paid-In
Earnings
Comprehensive
Treasury
Equity
Outstanding
Amount
Capital
(Deficit)
(Loss) Income
Stock
(Deficit)
25,554
$
257
$
45,792
$
(116,086
)
$
(10,799
)
$
(781
)
$
(81,617
)
(7,085
)
(7,085
)
7,532
7,532
447
944
9
328
6
343
430
430
(232
)
(111
)
(111
)
(9
)
(9
)
26,266
$
266
$
46,550
$
(123,180
)
$
(3,267
)
$
(886
)
$
(80,517
)
Table of Contents
Common Stock
Accumulated
Total
Additional
Retained
Other
Shareholders
Shares
Paid-In
Earnings
Comprehensive
Treasury
Equity
Outstanding
Amount
Capital
(Deficit)
(Loss) Income
Stock
(Deficit)
$
$
$
$
$
$
5,325
53
89,812
89,865
31
31
914
914
(3
)
(3
)
942
5,325
53
89,812
31
911
90,807
22,600
22,600
2,635
2,635
(1,243
)
(1,243
)
23,992
33
1
840
841
5,358
54
90,652
22,631
2,303
115,640
8,858
8,858
(2,240
)
(2,240
)
6,618
(2,628
)
(2,628
)
51
1,691
1,691
5,409
$
54
$
89,715
$
31,489
$
63
$
$
121,321
Table of Contents
Common Stock
Accumulated
Additional
Other
Total
Shares
Paid-in
Retained
Comprehensive
Shareholders
Outstanding
Amount
Capital
(Deficit)
(Loss)
Equity
$
$
$
$
$
7,952
17
111,281
111,298
5,947
5,947
(506
)
(506
)
(286
)
(286
)
(262
)
(262
)
(1,054
)
139
139
63
(63
)
7,952
$
80
$
117,304
$
(506
)
$
(548
)
$
116,330
Table of Contents
Successor
Predecessor
Company
Reorganized Company
Company
Three
October 17,
January 1,
Year
Months
Nine Months
2005 to
2005 to
Ended
Ended
Ended
December 31,
October 16,
December 31,
December 31,
September 30,
2005
2005
2004
2003
2003
$
(506
)
$
8,858
$
22,600
$
31
$
(7,085
)
(833
)
8,903
5,368
(5,677
)
1,430
13,682
308
1,653
437
9,509
2,433
6,046
177
456
78
(131
)
133
(57
)
(4,753
)
2,768
4,088
6,808
8,490
2,225
7,607
51
41
101
659
(465
)
(350
)
287
95
29
198
34
105
(2,343
)
(2,261
)
2,103
626
5,000
343
(8,267
)
(8,611
)
(4,661
)
(3,027
)
2,486
2,812
(6,463
)
(11,566
)
2,603
6,574
2,687
(11,039
)
2,903
(853
)
(1,304
)
6,424
6,634
4,602
(1,838
)
(1,527
)
779
731
3,146
8,150
6,631
185
(3,594
)
18,742
15,641
35,059
4,988
19,466
(5,601
)
(11,038
)
(9,379
)
(518
)
(1,907
)
790
2,220
6,057
16,075
(12,147
)
(356,649
)
166
5
672
143
(362,250
)
(20,799
)
(3,317
)
154
15,101
350,000
2,605
18,901
1,742
4,151
20,359
(4,790
)
(15,916
)
(1,742
)
(6,775
)
(21,614
)
(81,457
)
(2,968
)
(33,148
)
(10,840
)
(1,199
)
111,298
(11,558
)
(15,756
)
(1,853
)
(1,882
)
(12,583
)
(805
)
(512
)
(759
)
1,691
400
(111
)
(309
)
348,489
1,708
(35,744
)
(13,976
)
(15,907
)
4,981
(3,450
)
(4,002
)
(8,834
)
18,660
1,592
4,981
(3,450
)
(4,002
)
(8,834
)
20,252
(1,018
)
106
216
(381
)
338
11,470
14,814
18,600
27,815
7,225
$
15,433
$
11,470
$
14,814
$
18,600
$
27,815
Table of Contents
F-10
Cash and cash equivalents
|
$ | 20,861 | ||
Accounts receivable, net
|
54,594 | |||
Inventories, net
|
65,005 | |||
Unbilled contract revenue
|
22,667 | |||
Prepaid expenses
|
3,544 | |||
Other current assets
|
5,396 | |||
Assets held for sale
|
3,084 | |||
Deferred income taxes, net
|
4,900 | |||
Total Current Assets
|
180,051 | |||
Property, plant and equipment
|
61,189 | |||
Goodwill
|
236,823 | |||
Identifiable intangible assets
|
157,162 | |||
Other assets
|
13,357 | |||
Total Assets
|
$ | 648,582 | ||
F-11
$
31,469
23,546
16,069
3,439
25,620
4,486
104,629
350,000
56,978
18,392
1,337
$
117,246
$
648,582
F-12
F-13
Successor | Reorganized | ||||||||
Company | Company | ||||||||
December 31, | December 31, | ||||||||
2005 | 2004 | ||||||||
Raw materials and supplies
|
$ | 26,385 | $ | 22,896 | |||||
Work in process
|
13,003 | 16,918 | |||||||
Finished goods
|
13,744 | 7,963 | |||||||
$ | 53,132 | $ | 47,777 | ||||||
F-14
Successor
Reorganized
Company
Company
December 31,
December 31,
Classification
Estimated Useful Life
2005
2004
20-35 years (buildings)
$
34,450
$
24,264
3-12 years
19,750
21,917
3-7 years
2,383
2,823
8,244
2,476
64,827
51,480
(562
)
(9,487
)
$
64,265
$
41,993
F-15
Successor Company
Reorganized Company
December 31, 2005
December 31, 2004
Weighted
Weighted
Average
Gross
Average
Gross
Estimated
Carrying
Accumulated
Estimated
Carrying
Accumulated
Useful Life
Amount
Amortization
Useful Life
Amount
Amortization
9 years
$
9,400
$
(235
)
9 years
$
3,305
$
(450
)
10 years
8,138
(298
)
11 years
4,269
(566
)
20 years
940
(10
)
14 months
5,440
(1,110
)
3 years
1,344
(280
)
18 months
48
(20
)
13 years
96,906
(1,480
)
13 years
23,960
(2,495
)
$
122,216
$
(3,433
)
$
31,534
$
(3,511
)
$
236,742
$
75,110
35,280
20,449
$
272,022
$
95,559
F-16
Successor | Reorganized | ||||||||
Company | Company | ||||||||
December 31, | December 31, | ||||||||
2005 | 2004 | ||||||||
USD
|
$ | | $ | 400 | |||||
Euros
|
2,400 | | |||||||
$ | 2,400 | $ | 400 | ||||||
Successor | Predecessor | ||||||||||||||||||||||
Company | Reorganized Company | Company | |||||||||||||||||||||
October 17, | January 1, | Three | Nine | ||||||||||||||||||||
2005 | 2005 | Year | Months | Months | |||||||||||||||||||
to | to | Ended | Ended | Ended | |||||||||||||||||||
December 31, | October 16, | December 31, | December 31, | September 30, | |||||||||||||||||||
2005 | 2005 | 2004 | 2003 | 2003 | |||||||||||||||||||
Balance at beginning of period
|
$ | 3,439 | $ | 2,812 | $ | 3,208 | $ | 3,803 | $ | 4,032 | |||||||||||||
Warranty expense
|
515 | 2,206 | 1,522 | 89 | 1,214 | ||||||||||||||||||
Warranty usage
|
(356 | ) | (1,579 | ) | (1,918 | ) | (684 | ) | (1,443 | ) | |||||||||||||
Balance at end of period
|
$ | 3,598 | $ | 3,439 | $ | 2,812 | $ | 3,208 | $ | 3,803 | |||||||||||||
F-17
Successor
Reorganized
Company
Company
December 31,
December 31,
2005
2004
$
(286
)
$
3,549
(262
)
(1,246
)
$
(548
)
$
2,303
F-18
F-19
Successor
Predecessor
Company
Reorganized Company
Company
October 17,
January 1,
Year
Three Months
Nine Months
2005 to
2005 to
Ended
Ended
Ended
December 31,
October 16,
December 31,
December 31,
September 30,
2005
2005
2004
2003
2003
$
(506
)
$
8,858
$
22,600
$
31
$
(10,318
)
833
2,400
$
(506
)
$
8,858
$
22,600
$
31
$
(7,085
)
$
(0.06
)
$
1.65
$
4.22
$
0.01
$
(0.39
)
0.03
0.09
$
(0.06
)
$
1.65
$
4.22
$
0.01
$
(0.27
)
$
(0.06
)
$
1.57
$
4.10
$
0.01
$
(0.39
)
0.03
0.09
$
(0.06
)
$
1.57
$
4.10
$
0.01
$
(0.27
)
7,952
5,366
5,351
5,325
26,336
61
15
222
150
7,952
5,649
5,516
5,325
26,336
F-20
F-21
Successor | Reorganized | |||||||||
Company | Company | |||||||||
December 31, | December 31, | |||||||||
2005 | 2004 | |||||||||
Other current assets:
|
||||||||||
Deposits
|
$ | 306 | $ | 425 | ||||||
Investment in leases
|
133 | 133 | ||||||||
Deferred income taxes
|
6,429 | 7,125 | ||||||||
Other receivables
|
5,234 | 7,157 | ||||||||
$ | 12,102 | $ | 14,840 | |||||||
Other assets net:
|
||||||||||
Deferred financing costs
|
$ | 11,749 | $ | | ||||||
Investment in leases
|
64 | 185 | ||||||||
Cash value life insurance
|
1,265 | 1,719 | ||||||||
Unearned compensation
|
159 | | ||||||||
Other
|
435 | 212 | ||||||||
$ | 13,672 | $ | 2,116 | |||||||
Other current liabilities:
|
||||||||||
Accrued interest
|
$ | 4,599 | $ | 324 | ||||||
Accrued income taxes
|
| 2,636 | ||||||||
Accrued other taxes
|
1,948 | 936 | ||||||||
Accrued rebates
|
3,152 | 2,734 | ||||||||
Accrued employee separation and plant closure costs
|
2,007 | 2,763 | ||||||||
Accrued other
|
5,900 | 2,960 | ||||||||
$ | 17,606 | $ | 12,353 | |||||||
Other long-term liabilities:
|
||||||||||
Accrued environmental
|
$ | 6,608 | $ | 6,460 | ||||||
Accrued pension cost
|
7,233 | 11,106 | ||||||||
Minority interest
|
1,103 | 1,213 | ||||||||
Accrued contingencies and other
|
5,013 | 7,028 | ||||||||
$ | 19,957 | $ | 25,807 | |||||||
F-22
Successor
Reorganized
Company
Company
December 31,
December 31,
2005
2004
$
175,000
$
78,395
170,000
1,016
2,304
347,304
79,411
2,304
3,005
$
345,000
$
76,406
F-23
Year | Amount | |||
2006
|
$ | | ||
2007
|
| |||
2008
|
720 | |||
2009
|
1,440 | |||
2010 and thereafter
|
342,840 | |||
$ | 345,000 | |||
F-24
October 17, 2005 to December 31, 2005 Successor Company | ||||||||||||||||||||
Distribution | Energy & | |||||||||||||||||||
BioMedical | & Storage | Chemicals | Corporate | Total | ||||||||||||||||
One-time employee termination costs
|
$ | 17 | $ | (120 | ) | $ | 78 | $ | 86 | $ | 61 | |||||||||
Other associated costs
|
2 | 102 | (26 | ) | | 78 | ||||||||||||||
Employee separation and plant closure costs
|
19 | (18 | ) | 52 | 86 | 139 | ||||||||||||||
Inventory valuation in cost of sales
|
149 | | | (34 | ) | 115 | ||||||||||||||
168 | (18 | ) | 52 | 52 | 254 | |||||||||||||||
Reserve usage
|
(33 | ) | (97 | ) | (48 | ) | (57 | ) | (235 | ) | ||||||||||
Change in reserve
|
135 | (115 | ) | 4 | (5 | ) | 19 | |||||||||||||
Reserves as of October 16, 2005
|
104 | 305 | 1,553 | 5 | 1,967 | |||||||||||||||
Reserve as of December 31, 2005
|
$ | 239 | $ | 190 | $ | 1,557 | $ | | $ | 1,986 | ||||||||||
F-25
January 1, 2005 to October 16, 2005Reorganized Company
Distribution
Energy &
BioMedical
& Storage
Chemicals
Corporate
Total
$
$
41
$
$
(159
)
$
(118
)
540
465
129
41
1,175
540
506
129
(118
)
1,057
643
643
1,183
506
129
(118
)
1,700
(1,451
)
(542
)
(133
)
(370
)
(2,496
)
(268
)
(36
)
(4
)
(488
)
(796
)
372
341
1,557
493
2,763
$
104
$
305
$
1,553
$
5
$
1,967
Year Ended December 31, 2004Reorganized Company
Distribution
Energy &
BioMedical
& Storage
Chemical
Corporate
Total
$
381
$
215
$
303
$
398
$
1,297
317
29
346
406
726
412
(18
)
1,526
787
1,258
744
380
3,169
97
80
177
884
1,338
744
380
3,346
(512
)
(1,530
)
(1,369
)
(562
)
(3,973
)
372
(192
)
(625
)
(182
)
(627
)
533
2,182
675
3,390
$
372
$
341
$
1,557
$
493
$
2,763
Three Months Ended December 31, 2003Reorganized Company
Distribution
Energy &
BioMedical
& Storage
Chemical
Corporate
Total
$
139
$
633
$
28
$
19
$
819
9
113
69
191
148
633
141
88
1,010
(165
)
(721
)
(307
)
48
(1,145
)
(17
)
(88
)
(166
)
136
(135
)
17
621
2,348
539
3,525
$
$
533
$
2,182
$
675
$
3,390
F-26
Nine Months Ended September 30, 2003 Predecessor Company
Distribution
Energy &
BioMedical
& Storage
Chemicals
Corporate
Total
$
42
$
350
$
754
$
384
$
1,530
47
(1,604
)
756
97
(704
)
10
8
30
8
56
99
(1,246
)
1,540
489
882
16
440
456
115
(806
)
1,540
489
1,338
(2,976
)
(2,976
)
(328
)
(1,665
)
(1,182
)
(477
)
(3,652
)
(213
)
(2,471
)
(2,618
)
12
(5,290
)
230
3,092
4,966
527
8,815
$
17
$
621
$
2,348
$
539
$
3,525
F-27
$
2,413
3,904
2,939
1,168
(1,323
)
(1,302
)
3,268
2,615
$
13,682
Successor
Reorganized
Company
Company
December 31,
December 31,
2005
2004
$
7,665
$
7,355
2,699
3,209
1,288
1,490
3,370
4,535
$
15,022
$
16,589
$
5,795
$
6,218
58,836
16,185
$
64,631
$
22,403
$
(49,609
)
$
(5,814
)
F-28
Successor
Reorganized Company
Predecessor
Company
Company
Three
October 17,
January 1,
Months
Nine Months
2005 to
2005 to
Year Ended
Ended
Ended
December 31,
October 16,
December 31,
December 31,
September 30,
2005
2005
2004
2003
2003
$
(1,425
)
$
10,718
$
25,566
$
1,749
$
(13,689
)
530
5,319
7,266
(1,823
)
5,189
$
(895
)
$
16,037
$
32,832
$
(74
)
$
(8,500
)
Successor | Reorganized Company | Predecessor | |||||||||||||||||||||
Company | Company | ||||||||||||||||||||||
Three | |||||||||||||||||||||||
October 17, | January 1, | Months | Nine Months | ||||||||||||||||||||
2005 to | 2005 to | Year Ended | Ended | Ended | |||||||||||||||||||
December 31, | October 16, | December 31, | December 31, | September 30, | |||||||||||||||||||
2005 | 2005 | 2004 | 2003 | 2003 | |||||||||||||||||||
Current:
|
|||||||||||||||||||||||
Federal
|
$ | 1,476 | $ | 6,601 | $ | 5,224 | $ | | $ | (5,308 | ) | ||||||||||||
State
|
199 | 1,013 | 928 | 181 | 158 | ||||||||||||||||||
Foreign
|
227 | 1,806 | 1,879 | (932 | ) | 1,905 | |||||||||||||||||
1,902 | 9,420 | 8,031 | (751 | ) | (3,245 | ) | |||||||||||||||||
Deferred:
|
|||||||||||||||||||||||
Federal
|
(2,055 | ) | (1,793 | ) | 1,692 | 537 | 6,639 | ||||||||||||||||
State
|
(185 | ) | (161 | ) | 166 | | 664 | ||||||||||||||||
Foreign
|
(103 | ) | (307 | ) | 245 | 89 | (2,303 | ) | |||||||||||||||
(2,343 | ) | (2,261 | ) | 2,103 | 626 | 5,000 | |||||||||||||||||
$ | (441 | ) | $ | 7,159 | $ | 10,134 | $ | (125 | ) | $ | 1,755 | ||||||||||||
F-29
Successor
Reorganized Company
Predecessor
Company
Company
Three
October 17,
January 1,
Months
Nine Months
2005 to
2005 to
Year Ended
Ended
Ended
December 31,
October 16,
December 31,
December 31,
September 30,
2005
2005
2004
2003
2003
$
(313
)
$
5,691
$
11,491
$
(26
)
$
(2,683
)
129
659
612
118
102
(18,283
)
(127
)
(408
)
(71
)
(463
)
(488
)
(205
)
89
(130
)
(648
)
(456
)
(88
)
(263
)
71
1,203
(525
)
76
4,535
969
22,274
156
(500
)
(4,016
)
$
(441
)
$
7,159
$
10,134
$
(125
)
$
1,755
F-30
Successor | Reorganized Company | Predecessor | ||||||||||||||||||||
Company | Company | |||||||||||||||||||||
Three | ||||||||||||||||||||||
October 17, | January 1, | Months | Nine Months | |||||||||||||||||||
2005 to | 2005 to | Year Ended | Ended | Ended | ||||||||||||||||||
December 31, | October 16, | December 31, | December 31, | September 30, | ||||||||||||||||||
2005 | 2005 | 2004 | 2003 | 2003 | ||||||||||||||||||
Service cost
|
$ | 53 | $ | 205 | $ | 887 | $ | 269 | $ | 851 | ||||||||||||
Interest cost
|
410 | 1,559 | 2,056 | 534 | 1,515 | |||||||||||||||||
Expected return on plan assets
|
(474 | ) | (1,807 | ) | (2,135 | ) | (472 | ) | (1,197 | ) | ||||||||||||
Amortization of net (gain) loss
|
| (6 | ) | (48 | ) | | 431 | |||||||||||||||
Amortization of prior service cost
|
| (141 | ) | | | 83 | ||||||||||||||||
Total pension (benefit) cost
|
$ | (11 | ) | $ | (190 | ) | $ | 760 | $ | 331 | $ | 1,683 | ||||||||||
F-31
Successor
Reorganized
Company
Company
December 31,
December 31,
2005
2004
$
36,104
$
35,354
258
887
1,969
2,056
(990
)
(943
)
(2,015
)
63
765
$
37,404
$
36,104
$
27,789
$
25,244
2,359
1,777
946
1,711
(990
)
(943
)
$
30,104
$
27,789
$
(7,300
)
$
(8,315
)
424
(874
)
$
(6,876
)
$
(9,189
)
$
(7,300
)
$
(11,106
)
424
1,917
$
(6,876
)
$
(9,189
)
F-32
Successor
Predecessor
Company
Reorganized Company
Company
Three
Nine
October 17,
January 1,
Months
Months
2005 to
2005 to
Year Ended
Ended
Ended
December 31,
October 16,
December 31,
December 31,
September 30,
2005
2005
2004
2003
2003
5.50
%
5.75
%
5.75
%
6.25
%
6.50
%
*
3.00
%
4.00
%
4.00
%
4.00
%
8.25
%
8.25
%
8.25
%
8.25
%
8.25
%
* | No longer applicable as Plans were frozen and participants are no longer accruing benefits. |
Actual | ||||||||||||
Successor | Reorganized | |||||||||||
Company | Company | |||||||||||
Target | 2005 | 2004 | ||||||||||
Stocks
|
64 | % | 57 | % | 57 | % | ||||||
Fixed income funds
|
34 | % | 41 | % | 41 | % | ||||||
Cash and cash equivalents
|
2 | % | 2 | % | 2 | % | ||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
F-33
2006
|
$ | 1,176 | ||
2007
|
1,263 | |||
2008
|
1,327 | |||
2009
|
1,432 | |||
2010
|
1,578 | |||
$ | 6,776 | |||
F-34
F-35
Successor Company
Reorganized Company
December 31, 2005
December 31, 2004
Weighted
Weighted
Average
Average
Number
Exercise
Number
Exercise
of Shares
Price
of Shares
Price
$
$
610
3.50
2,208
6.41
508
18.04
(28
)
13.89
2,818
$
5.78
480
$
18.28
567
$
3.50
104
$
37.03
$
32
34
68
75
* | Remaining contractual term of 8 years and 3 months. |
Environmental |
F-36
Appraisal Rights |
CHEL |
F-37
Chapter 11 Reorganization |
Performance Under Contracts |
Legal Proceedings |
F-38
Successor Company | ||||||||||||||||||||
October 17, 2005 to December 31, 2005 | ||||||||||||||||||||
Reportable Segments | ||||||||||||||||||||
Energy and | Distribution | |||||||||||||||||||
Chemicals | and Storage | BioMedical | Corporate | Total | ||||||||||||||||
Revenues from external customers
|
$ | 34,135 | $ | 47,832 | $ | 15,685 | $ | | $ | 97,652 | ||||||||||
Employee separation and plant closure costs (benefit)
|
52 | (18 | ) | 19 | 86 | 139 | ||||||||||||||
Depreciation and amortization expense
|
1,424 | 2,152 | 458 | 54 | 4,088 | |||||||||||||||
Operating income (loss)
|
5,092 | 3,947 | 714 | (4,683 | ) | 5,070 | ||||||||||||||
Total assets(B)(C)
|
177,915 | 341,644 | 93,929 | 28,318 | 641,806 | |||||||||||||||
Capital expenditures
|
877 | 3,338 | 1,255 | 131 | 5,601 |
Reorganized Company | ||||||||||||||||||||
January 1, 2005 to October 16, 2005 | ||||||||||||||||||||
Reportable Segments | ||||||||||||||||||||
Energy and | Distribution | |||||||||||||||||||
Chemicals | and Storage | BioMedical | Corporate | Total | ||||||||||||||||
Revenues from external customers
|
$ | 86,920 | $ | 161,329 | $ | 57,248 | $ | | $ | 305,497 | ||||||||||
Employee separation and plant closure costs (benefit)
|
129 | 506 | 540 | (118 | ) | 1,057 | ||||||||||||||
Depreciation and amortization expense
|
931 | 3,694 | 1,901 | 282 | 6,808 | |||||||||||||||
Operating income (loss)
|
13,717 | 27,005 | 8,343 | (28,206 | ) | 20,859 | ||||||||||||||
Total assets(B)(D)
|
85,203 | 151,404 | 99,001 | 7,499 | 343,107 | |||||||||||||||
Capital expenditures
|
2,817 | 5,878 | 1,490 | 853 | 11,038 |
Reorganized Company | ||||||||||||||||||||
Year Ended December 31, 2004 | ||||||||||||||||||||
Reportable Segments | ||||||||||||||||||||
Energy and | Distribution | |||||||||||||||||||
Chemicals | and Storage | BioMedical | Corporate | Total | ||||||||||||||||
Revenues from external customers
|
$ | 69,609 | $ | 162,508 | $ | 73,459 | $ | | $ | 305,576 | ||||||||||
Employee separation and plant closure costs
|
744 | 1,258 | 787 | 380 | 3,169 | |||||||||||||||
Depreciation and amortization expense
|
1,180 | 2,614 | 1,386 | 3,310 | 8,490 | |||||||||||||||
Equity expense in joint venture
|
(51 | ) | | | | (51 | ) | |||||||||||||
Operating income (loss)
|
11,545 | 27,951 | 14,208 | (16,625 | ) | 37,079 | ||||||||||||||
Total assets(B)(D)
|
65,212 | 118,555 | 100,768 | 22,545 | 307,080 | |||||||||||||||
Capital expenditures
|
1,681 | 4,643 | 2,357 | 698 | 9,379 |
F-39
Reorganized Company
Three Months Ended December 31, 2003
Reportable Segments
Energy and
Distribution
Chemicals
and Storage
BioMedical
Corporate
Total
$
15,699
$
37,863
$
15,008
$
$
68,570
141
633
148
88
1,010
356
991
791
87
2,225
(41
)
(41
)
3,298
1,613
(479
)
(3,512
)
920
62,558
105,508
105,127
26,444
299,637
340
340
42
476
518
Predecessor Company
Nine Months Ended September 30, 2003
Reportable Segments
Energy and
Distribution
Chemicals
and Storage
BioMedical
Corporate
Total
$
42,910
$
102,469
$
51,638
$
$
197,017
1,540
(1,246
)
99
489
882
934
4,639
1,505
529
7,607
13,682
13,682
(8,694
)
9,112
12,381
(14,736
)
(1,937
)
59,307
105,147
109,196
39,272
312,922
381
381
138
1,573
196
1,907
(A) | Corporate operating loss for the nine months ended September 30, 2003 includes $6,046 of professional fees incurred by the Company related to its debt restructuring activities. | |
(B) | Corporate assets at December 31, 2005, October 16, 2005, December 31, 2004, December 31, 2003 and September 30, 2003 consist primarily of cash and cash equivalents and deferred income taxes. | |
(C) | Total assets at December 31, 2005 includes goodwill of $72,833, $128,653 and $35,256 for the Energy and Chemicals, Distribution and Storage, and BioMedical segments, respectively. | |
(D) | Total assets at October 16, 2005, December 31, 2004, December 31, 2003 and September 30, 2003 includes goodwill of $31,648, $2,787 and $40,675 for the Energy and Chemicals, Distribution and Storage, and BioMedical segments, respectively. |
F-40
Successor
Predecessor
Company
Reorganized Company
Company
October 17,
January 1,
Three
Nine
2005
2005
Year
Months
Months
to
to
Ended
Ended
Ended
December 31,
October 16,
December 31,
December 31,
September 30,
2005
2005
2004
2003
2003
$
5,070
$
20,859
$
37,079
$
920
$
(1,937
)
(5,565
)
(4,192
)
(4,760
)
(1,390
)
(9,911
)
(308
)
(1,653
)
9
28
48
46
(389
)
(101
)
(659
)
465
350
(287
)
5,677
$
(895
)
$
16,036
$
32,832
$
(74
)
$
(8,500
)
F-41
Successor
Predecessor
Company
Reorganized Company
Company
October 17,
January 1,
Three
Nine
2005
2005
Year
Months
Months
to
to
Ended
Ended
Ended
December 31,
October 16,
December 31,
December 31,
September 30,
2005
2005
2004
2003
2003
$
22,218
$
52,702
$
48,091
$
10,975
$
31,430
11,917
34,218
21,518
4,724
11,480
34,135
86,920
69,609
15,699
42,910
22,626
70,180
73,118
17,950
43,248
18,150
65,713
59,706
13,447
41,677
2,862
11,571
14,767
3,798
8,424
4,194
13,865
14,917
2,668
9,120
47,832
161,329
162,508
37,863
102,469
13,355
48,488
62,873
12,337
41,355
2,330
$
8,760
10,586
2,671
10,283
15,685
57,248
73,459
15,008
51,638
$
97,652
$
305,497
$
305,576
$
68,570
$
197,017
Successor Company
Reorganized
Predecessor Company
Company
October 17,
January 1,
Three
Nine
2005
2005
Year
Months
Months
to
to
Ended
Ended
Ended
December 31,
October 16,
December 31,
December 31,
September 30,
2005
2005
2004
2003
2003
Long-Lived
Long-Lived
Geographic Information:
Revenues
Assets
Revenues
Revenues
Assets
Revenues
Revenues
$
75,692
$
398,576
$
233,669
$
233,466
$
156,181
$
52,828
$
155,451
12,829
27,944
42,645
43,163
5,494
10,205
20,406
9,131
42,222
29,183
28,947
6,016
5,537
21,160
$
97,652
$
468,742
$
305,497
$
305,576
$
167,691
$
68,570
$
197,017
F-42
Year Ended December 31, 2005
Successor
Reorganized Company
Company
First
Second
Third
Fourth
Fourth
Quarter
Quarter
Quarter
Quarter(a)
Quarter(a)
$
85,170
$
99,721
$
105,787
$
14,819
$
97,652
24,898
29,932
30,101
3,282
21,919
604
201
200
52
139
9,893
15,332
12,505
(16,871
)
5,070
5,795
8,658
7,228
(12,823
)
(506
)
(a) | The fourth quarter for the Reorganized Company is the period October 1, 2005 to October 16, 2005 and the fourth quarter for the Successor Company is the period October 17, 2005 to December 31, 2005. |
Year Ended December 31, 2004 | ||||||||||||||||||||
Reorganized Company | ||||||||||||||||||||
First | Second | Third | Fourth | |||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Total | ||||||||||||||||
Sales
|
$ | 68,782 | $ | 74,665 | $ | 76,380 | $ | 85,749 | $ | 305,576 | ||||||||||
Gross Profit
|
21,831 | 22,136 | 23,687 | 26,152 | 93,806 | |||||||||||||||
Employee separation and plant closure costs
|
(964 | ) | (776 | ) | (618 | ) | (811 | ) | (3,169 | ) | ||||||||||
Operating Income
|
7,804 | 7,809 | 9,775 | 11,691 | 37,079 | |||||||||||||||
Net Income
|
4,034 | 4,223 | 6,924 | 7,419 | 22,600 |
F-43
F-44
F-45
F-46
F-47
F-48
F-49
F-50
F-51
F-52
F-53
F-54
F-55
Table of Contents
Successor
Reorganized
Company
Company
Three Months
Three Months
Ended
Ended
March 31, 2006
March 31, 2005
$
120,840
$
85,170
83,853
60,532
36,987
24,638
21,039
14,401
162
604
21,201
15,005
15,786
9,633
(6,545
)
(1,023
)
(370
)
38
148
(21
)
(6,767
)
(1,006
)
9,019
8,627
2,980
3,071
6,039
5,556
(6
)
21
$
6,045
$
5,535
$
0.76
$
1.03
$
0.73
$
0.99
7,952
5,358
8,285
5,609
Table of Contents
Successor
Reorganized
Company
Company
Three Months
Three Months
Ended
Ended
March 31, 2006
March 31, 2005
$
6,045
$
5,535
4,824
1,944
321
592
370
(159
)
155
(3,840
)
25
30
(4,261
)
(9,486
)
(9,057
)
998
676
13,224
328
12,327
(4,063
)
(2,566
)
(1,734
)
105
(2,566
)
(1,629
)
1,029
(839
)
(1,029
)
(5,000
)
(651
)
27
(5,839
)
(624
)
3,922
(6,316
)
107
204
15,433
14,814
$
19,462
$
8,702
Table of Contents
Table of Contents
March 31,
December 31,
2006
2005
$
27,721
$
26,385
12,594
13,003
13,281
13,744
$
53,596
$
53,132
Successor
Reorganized
Company
Company
Three Months
Three Months
Ended
Ended
March 31, 2006
March 31, 2005
$
3,598
$
2,812
875
478
(713
)
(532
)
$
3,760
$
2,758
Table of Contents
As of March 31, 2006
As of December 31, 2005
Weighted
Average
Gross
Gross
Estimated
Carrying
Accumulated
Carrying
Accumulated
Useful Life
Amount
Amortization
Amount
Amortization
9 years
$
9,400
$
(517
)
$
9,400
$
(235
)
10 years
8,138
(544
)
8,138
(298
)
20 years
940
(22
)
940
(10
)
14 months
5,440
(2,287
)
5,440
(1,110
)
3 years
1,344
(392
)
1,344
(280
)
18 months
48
(28
)
48
(20
)
13 years
96,906
(3,211
)
96,906
(1,480
)
$
122,216
$
(7,001
)
$
122,216
$
(3,433
)
$
236,810
$
236,742
35,280
35,280
$
272,090
$
272,022
Table of Contents
Three Months Ended
March 31,
2005
$
5,535
391
(661
)
$
5,265
$
1.03
0.07
(0.12
)
$
0.98
Table of Contents
Table of Contents
Successor
Reorganized
Company
Company
Three Months
Three Months
Ended
Ended
March 31,
March 31,
2006
2005
$
6,045
5,535
$
0.76
$
1.03
$
0.73
$
0.99
7,952
5,358
26
55
307
196
8,285
5,609
March 31,
December 31,
2006
2005
$
1,164
$
(286
)
(262
)
(262
)
$
902
$
(548
)
Table of Contents
Successor Company
Three Months Ended March 31, 2006
Energy &
Distribution &
Chemicals
Storage
BioMedical
Total
$
$
$
$
9
153
162
9
153
162
9
153
162
(9
)
(153
)
(97
)
(259
)
(97
)
(97
)
1,557
190
239
1,986
$
1,557
$
190
$
142
$
1,889
Reorganized Company
Three Months Ended March 31, 2005
Energy &
Distribution
Chemicals
& Storage
BioMedical
Corporate
Total
$
$
28
$
$
7
$
35
54
218
285
12
569
54
246
285
19
604
99
99
54
246
384
19
703
(54
)
(276
)
(505
)
(147
)
(982
)
(30
)
(121
)
(128
)
(279
)
1,557
341
372
493
2,763
$
1,557
$
311
$
251
$
365
$
2,484
Table of Contents
Successor
Reorganized
Company
Company
Three Months
Three Months
Ended March 31,
Ended March 31,
2006
2005
$
65
$
222
492
404
(570
)
(414
)
(37
)
(12
)
$
(50
)
$
200
Successor Company
Three Months Ended March 31, 2006
Energy
and
Distribution
Chemicals
and Storage
BioMedical
Corporate
Total
$
41,174
$
60,318
$
19,348
$
$
120,840
5,933
11,053
3,714
(4,914
)
15,786
Table of Contents
Reorganized Company
Three Months Ended March 31, 2005
Energy
and
Distribution
Chemicals
and Storage
BioMedical
Corporate
Total
$
23,663
$
44,665
$
16,842
$
$
85,170
3,576
8,364
2,115
(4,422
)
9,633
Table of Contents
Table of Contents
II-1
II-2
II-3
II-4
II-5
Item 13.
Other Expenses of Issuance and Distribution.
$
32,300
$
105,000
$
30,000
$
325,000
$
1,100,000
$
300,000
$
20,000
$
415,000
$
30,600
$
2,357,900
Item 14.
Indemnification of Directors and Officers.
Item 15.
Recent Sales of Unregistered Securities.
Table of Contents
Shares of Common
Date of Exercise
Warrants Exercised
Exercise Price
Stock Issued
2
$32.97 per share
2
26,390
$32.97 per share; cashless
5,323
53
$32.97 per share
53
5
$32.97 per share
5
19
$32.97 per share
19
1
$32.97 per share
1
53
$32.97 per share
53
6
$32.97 per share
6
24
$32.97 per share
24
9
$32.97 per share
9
1
$32.97 per share
1
1
$32.97 per share
1
819
$32.97 per share
819
987
$32.97 per share
987
107
$32.97 per share
107
1
$32.97 per share
1
77
$32.97 per share
77
53
$32.97 per share
53
9
$32.97 per share
9
124
$32.97 per share
124
2
$32.97 per share
2
2
$32.97 per share
2
14
$32.97 per share
14
20
$32.97 per share
20
6
$32.97 per share
6
1,157
$32.97 per share
1,157
7
$32.97 per share
7
1,043
$32.97 per share
1,043
Table of Contents
Shares of Common
Date of Exercise
Warrants Exercised
Exercise Price
Stock Issued
2,000
$32.97 per share
2,000
1,780
$32.97 per share
1,780
1,458
$32.97 per share
1,458
820
$32.97 per share
820
1
$32.97 per share
1
5,148
$32.97 per share
5,148
32
$32.97 per share
32
4,279
$32.97 per share
4,279
1
$32.97 per share
1
7,116
$32.97 per share
7,116
2
$32.97 per share
2
2,100
$32.97 per share
2,100
7
$32.97 per share
7
53
$32.97 per share
53
551
$32.97 per share
551
15,000
$32.97 per share
15,000
300
$32.97 per share
300
3,200
$32.97 per share
3,200
1,900
$32.97 per share
1,900
434
$32.97 per share
434
200
$32.97 per share
200
357
$32.97 per share
357
134
$32.97 per share
134
77,865
56,798
Table of Contents
Table of Contents
Item 16.
Exhibits and Financial Statement Schedules.
Item 17.
Undertakings.
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
(2) For purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offering therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Table of Contents
II-6
CHART INDUSTRIES, INC.
By:
/s/
Michael F. Biehl
Name: Michael F. Biehl
Title: Executive Vice President, Chief
Financial Officer and Treasurer
Table of Contents
Exhibit
No.
Description of Exhibit
1
.1
Form of Underwriting Agreement
2
.1*
Agreement and Plan of Merger, dated as of August 2, 2005,
by and among Chart Industries, Inc., certain of its
stockholders, First Reserve Fund X, L.P. and CI
Acquisition, Inc.
2
.2*
Asset Purchase Agreement among GT Acquisition Company and
Greenville Tube, LLC, dated July 1, 2003
3
.1*
Form of Amended and Restated Certificate of Incorporation
3
.2*
Form of Amended and Restated By-Laws
4
.1
Form of certificate of Chart Industries, Inc. common stock
4
.2*
Indenture, dated as of October 17, 2005, between Chart
Industries, Inc. and The Bank of New York as trustee
4
.3*
Registration Rights Agreement, dated October 17, 2005,
among Chart Industries, Inc., the subsidiary guarantors party
thereto and Morgan Stanley & Co., as representative of
the initial purchasers
4
.4*
Form of Senior Subordinated Note (included in Exhibit 4.2)
5
.1
Opinion of Simpson Thacher & Bartlett LLP
10
.1*
Credit Agreement, dated as of October 17, 2005, among FR X
Chart Holdings LLC, CI Acquisition, Inc., as borrower, the
lenders party thereto, Citicorp North America, Inc., as
administrative agent, Morgan Stanley Senior Funding, Inc., as
syndication agent, Citigroup Global Markets Inc. and Morgan
Stanley Senior Funding, Inc., as joint lead arrangers and joint
book managers and Natexis Banques Populaires and Sovereign Bank,
as co-documentation agents
10
.2*
Guarantee and Collateral Agreement, dated as of October 17,
2005, among FR X Chart Holdings LLC, as guarantor and pledgor,
CI Acquisition, Inc., as borrower, each subsidiary loan party
named therein and Citicorp North America, Inc., as collateral
agent
10
.3*
Employment Agreement, dated November 23, 2005, between
Chart Industries, Inc. and Samuel F. Thomas
10
.4*
Employment Agreement, dated December 1, 2005, between Chart
Industries, Inc. and Michael F. Biehl
10
.5*
Employment Agreement, dated December 1, 2005, between Chart
Industries, Inc. and Charles R. Lovett
10
.6*
Employment Agreement, dated March 29, 2006, between Chart
Industries, Inc. and Matthew J. Klaben
10
.7*
Employment Agreement, dated May 5, 2006, between Chart
Industries, Inc. and James H. Hoppel, Jr.
10
.8*
IAM Agreement 2004-2007, effective February 8, 2004, by and
between Chart Heat Exchangers, L.P. and Local Lodge 2191 of
District Lodge 66 of the International Association of
Machinists and Aerospace Workers, AFL-CIO
10
.9*
Amended and Restated Chart Industries, Inc. Voluntary Deferred
Income Plan
10
.10*
Form of Management Stockholders Agreement
10
.11
Form of Stockholder Agreement
10
.12*
Chart Industries, Inc. 2004 Stock Option and Incentive Plan
10
.13*
Amendment No. 1 to the 2004 Stock Option and Incentive Plan
10
.14*
Form of Stock Option Agreement under the 2004 Stock Option and
Incentive Plan (for Samuel F. Thomas)
10
.15*
Form of Stock Option Agreement under the 2004 Stock Option and
Incentive Plan (for those other than Samuel F. Thomas)
10
.16
Amended and Restated Chart Industries, Inc. 2005 Stock Incentive
Plan
10
.17*
Form of Stock Option Agreement under the Amended and Restated
Chart Industries, Inc. 2005 Stock Incentive Plan
Table of Contents
Exhibit
No.
Description of Exhibit
10
.18*
2006 Chart Executive Incentive Compensation Plan
10
.19*
Incentive Compensation Plan
10
.20*
Form of Indemnification Agreement
10
.21*
Form of Amendment No. 1 to the Credit Agreement
10
.22
Form of Restricted Stock Unit Agreement (for non-employee
directors) under the Amended and Restated Chart Industries, Inc.
2005 Stock Incentive Plan
21
.1*
List of Subsidiaries
23
.1
Consent of Simpson Thacher & Bartlett LLP (included as
part of its opinion filed as Exhibit 5.1 hereto)
23
.2**
Consent of Ernst & Young LLP
23
.3
Consent of Steven W. Krablin
24
.1*
Powers of Attorney
*
Previously filed.
**
To be filed by amendment.
Filed herewith.
- 2 -
- 3 -
- 4 -
- 5 -
- 6 -
- 7 -
- 8 -
- 9 -
- 10 -
- 11 -
- 12 -
- 13 -
- 14 -
- 15 -
- 16 -
- 17 -
- 18 -
- 19 -
- 20 -
- 21 -
- 22 -
- 23 -
- 24 -
- 25 -
Very truly yours, | ||||||
|
||||||
CHART INDUSTRIES, INC. | ||||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: |
- 26 -
By:
|
Morgan Stanley & Co. Incorporated | |||
|
||||
By:
|
||||
|
|
|||
|
Title: | |||
|
||||
By:
|
Lehman Brothers Inc. | |||
|
||||
By:
|
||||
|
|
|||
|
Title: | |||
|
||||
By:
|
UBS Securities LLC | |||
|
||||
By:
|
||||
|
|
|||
|
Title: | |||
|
||||
By:
|
||||
|
|
|||
|
Title: |
- 27 -
Number of Firm Shares
Underwriter
To Be Purchased
12,500,000
A-1
|
Very truly yours, | |||
|
||||
|
|
|||
|
||||
|
|
A-2
B-1
Morgan Stanley & Co. Incorporated | ||||
Lehman Brothers Inc. | ||||
UBS Securities LLC, Et. Al. | -2- | [___], 2006 |
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Morgan Stanley & Co. Incorporated
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Lehman Brothers Inc.
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UBS Securities LLC, Et. Al.
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Morgan Stanley & Co. Incorporated
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Lehman Brothers Inc.
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UBS Securities LLC, Et. Al.
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Very truly yours,
SIMPSON THACHER & BARTLETT LLP |
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Morgan Stanley & Co. Incorporated
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Lehman Brothers Inc.
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UBS Securities LLC, Et. Al.
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Morgan Stanley & Co. Incorporated
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Lehman Brothers Inc.
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UBS Securities LLC, Et. Al.
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(i) | we advise you that the Registration Statement, as of the date it became effective under the Securities Act, and the Prospectus, as of ___, 2006, appeared, on its face, to be appropriately responsive, in all material respects, to the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder, except that in each case we express no view with respect to the financial statements or other financial or statistical data contained in, or omitted from, the Registration Statement or the Prospectus; and | ||
(ii) | nothing has come to our attention that causes us to believe that (a) the Registration Statement, as of the date it became effective under the Securities Act, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading, (b) the Pricing Disclosure Package, as of pm on ___, 2006, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not |
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Morgan Stanley & Co. Incorporated
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Lehman Brothers Inc.
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UBS Securities LLC, Et. Al.
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misleading, or (c) the Prospectus, as of ___, 2006 or as of the date hereof, contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that we express no belief in any of clauses (a), (b) or (c) above with respect to the financial statements or other financial or statistical data contained in, or omitted from, the Registration Statement, the Pricing Disclosure Package or the Prospectus. |
Very truly yours,
SIMPSON THACHER & BARTLETT LLP |
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Morgan Stanley & Co. Incorporated
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Lehman Brothers Inc.
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UBS Securities LLC, Et. Al.
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[ ], 2006 |
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Morgan Stanley & Co. Incorporated
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Lehman Brothers Inc.
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UBS Securities LLC, Et. Al.
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[ ], 2006 |
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Morgan Stanley & Co. Incorporated
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Lehman Brothers Inc.
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UBS Securities LLC, Et. Al.
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[ ], 2006 |
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Morgan Stanley & Co. Incorporated
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Lehman Brothers Inc.
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UBS Securities LLC, Et. Al.
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[ ], 2006 |
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Morgan Stanley & Co. Incorporated
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Lehman Brothers Inc.
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UBS Securities LLC, Et. Al.
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[ ], 2006 |
Very truly yours,
Matthew J. Klaben |
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COMMON STOCKCOMMON STOCK GTLS CUSIP 16115Q 30 8 INCORPORATED UNDER THE LAWSSEE REVERSE FOR CERTAIN DEFINITIONS OF THE STATE OF DELAWARE Chart Industries, Inc. THIS CERTIFIESTHAT IS THE OWNER OF FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, $0.01 PAR VALUE, OF CHART INDUSTRIES, INC. transferable onthebooksof the Corporation by the holder of record hereof in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificateisnotvalid unless countersigned and registered by the Transfer Agent and Registrar. Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated: COUNTERSIGNED AND REGISTERED: NATIONAL CITY BANK PRESIDENT (CLEVELAND, OHIO) TRANSFER AGENT AND REGISTRAR BY: AUTHORIZED SIGNATURESECRETARY |
The Corporation will furnish without charge to each stockholder who so requests a statement of the designations, powers, preferences and relative participating, optional or other special rights of each class of stock or series thereof of the Corporation and the qualifications, limitations or restrictions of such preferences and/or rights. Such request may be made to the Corporation or the Transfer Agent. Signature(s) Guaranteed: THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. |
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Very truly yours, | |
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SIMPSON THACHER & BARTLETT LLP |
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(1) | such Takedown Request shall count against the number of requests for registration permitted to be made by First Reserve only if road show assistance is provided in the offering pursuant to Section 2.5(h); | ||
(2) | the number of shares of Registrable Securities of First Reserve included in such Takedown may be reduced in the manner set forth in Section 2.2(b); and | ||
(3) | the Company shall use its reasonable best efforts to effectuate such Takedown as promptly thereafter as practicable, and otherwise shall fulfill its obligations in connection with such Takedown in accordance with the provisions of this Agreement as if such Takedown were a registration requested or effected pursuant to Section 2.2(a). |
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(a) | Act : The Securities Exchange Act of 1934, as amended, or any successor thereto. | ||
(b) | Affiliate : With respect to any entity, any entity directly or indirectly controlling, controlled by, or under common control with, such entity. | ||
(c) | Award : An Option, Stock Appreciation Right or Other Stock-Based Award granted pursuant to the Plan. | ||
(d) | Beneficial Owner : A beneficial owner, as such term is defined in Rule 13d-3 under the Act (or any successor rule thereto). | ||
(e) | Board : The Board of Directors of the Company. | ||
(f) | Change in Control : The occurrence of any of the following events: (i) the sale or disposition, in one or a series of related transactions, of all or substantially all, of the assets of the Company to any Person or group (as such term is defined in Sections 13(d)(3) or 14(d)(2) of the Act) other than the Permitted Holders; (ii) any Person or group, other than the Permitted Holders, is or becomes the Beneficial Owner (except that a person shall be deemed to have beneficial ownership of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the voting stock of the Company (or any entity which controls the Company or which is a successor to all or substantially all of the assets of the Company), including by way of merger, consolidation, tender or exchange offer or otherwise; or (iii) during any period of two (2) consecutive years, |
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individuals who at the beginning of such period constituted the Board (together with any new directors whose election by such Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors of the Company, then still in office, who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board, then in office. |
(g) | Code : The Internal Revenue Code of 1986, as amended, or any successor thereto. | ||
(h) | Committee : The Board or any person or persons designated by the Board to administer the Plan. | ||
(i) | Company : Chart Industries, Inc., a Delaware corporation. | ||
(j) | Disability : Inability of a Participant to perform in all material respects his duties and responsibilities to the Company, or any Subsidiary of the Company, by reason of a physical or mental disability or infirmity which inability is reasonably expected to be permanent and has continued for a period of six consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period. Any question as to the existence of the Disability of a Participant as to which the Participant and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Participant and the Company. If the Participant and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Participant shall be final and conclusive for all purposes of the Plan and any Award agreement. | ||
(k) | Employment : The term Employment as used herein shall be deemed to refer to (i) a Participants employment if the Participant is an employee of the Company or any of its Affiliates, (ii) a Participants services as a consultant, if the Participant is a consultant to the Company or its Affiliates and (iii) a Participants services as a non-employee director, if the Participant is a non-employee member of the Board. | ||
(l) | Fair Market Value : On a given date, (i) if there is a public market for the Shares on such date, the arithmetic mean of the high and low prices of the Shares as reported on such date on the Composite Tape of the principal national securities exchange on which such Shares are listed or admitted to trading, or, if the Shares are not listed or admitted on any national securities exchange, the arithmetic mean of the per Share closing bid price and the per Share closing asked price on such date as quoted on the National Association of Securities Dealers Automated Quotation System (or such market in which such prices are regularly quoted) (the |
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NASDAQ), or if no sale of Shares shall have been reported on the Composite Tape of any national securities exchange or quoted on NASDAQ on such date, then the immediately preceding date on which sales of the Shares have been so reported or quoted shall be used, and (ii) if there is no public market for the Shares on such date, the Fair Market Value shall be the fair market value of the Shares as determined in good faith by the Board assuming a hypothetical liquidation of the Company or the sale of the Company to a third party; provided that if the Participant disagrees with the Boards determination, he may require the Company to retain an independent investment banker to determine the fair market value. The Company will bear the cost of such appraisal, unless the appraised value is 110% or less of the Boards determination of the fair market value, in which case the Participant will bear the cost of such appraisal. |
(m) | Other Stock-Based Awards : Awards granted pursuant to Section 8 of the Plan. | ||
(n) | Option : A stock option granted pursuant to Section 6 of the Plan. | ||
(o) | Option Price : The purchase price per Share of an Option, as determined pursuant to Section 6(a) of the Plan. | ||
(p) | Participant : An employee, director or consultant of the Company or its Affiliates who is selected by the Committee to participate in the Plan; provided however that, if the Shares issuable under this Plan are registered under the Securities Act of 1933, as amended on a Registration Statement on Form S-8 (or any successor form), then consultants may be Participants only to the extent Shares issuable hereunder may be registered on Form S-8 (or any successor form). | ||
(q) | Permitted Holder : As of the date of determination, any and all of (i) an employee benefit plan (or trust forming a part thereof) maintained by (A) the Company or its Affiliates or (B) any corporation or other Person of which a majority of its voting power of its voting equity securities or equity interest is owned, directly or indirectly, by the Company and (ii) First Reserve Fund X, L.P. or any of its Affiliates. | ||
(r) | Person : A person, as such term is used for purposes of Section 13(d) or 14(d) of the Act (or any successor section thereto). | ||
(s) | Plan : The Amended and Restated Chart Industries, Inc. 2005 Stock Incentive Plan. | ||
(t) | Shares : Shares of common stock of the Company. | ||
(u) | Stock Appreciation Right : A stock appreciation right granted pursuant to Section 7 of the Plan. |
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(v) | Subsidiary : A subsidiary corporation, as defined in Section 424(f) of the Code (or any successor section thereto). |
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(a) | Option Price . Subject to Section 4, the Option Price per Share shall be equal to the Fair Market Value on the applicable date of grant. | ||
(b) | Exercisability . Options granted under the Plan shall be exercisable at such time and upon such terms and conditions as may be determined by the Committee, but in no event shall an Option be exercisable more than ten years after the date it is granted. | ||
(c) | Exercise of Options . Except as otherwise provided in the Plan or in an Award agreement, an Option may be exercised for all, or from time to time any part, of the Shares for which it is then exercisable. For purposes of Section 6 of the Plan, the exercise date of an Option shall be the later of the date a notice of exercise is received by the Company and, if applicable, the date payment is received by the Company pursuant to clauses (i), (ii), (iii) or (iv) in the following sentence. The purchase price for the Shares as to which an Option is exercised shall be paid to the Company in full at the time of exercise at the election of the Participant (i) in cash or its equivalent (e.g., by check), (ii) to the extent permitted by the Committee, in Shares having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased and satisfying such other requirements as may be 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 in order to avoid adverse accounting treatment applying generally accepted accounting principles), (iii) partly in cash and, to the extent permitted by the Committee, partly in such Shares, (iv) if there is a public market for the Shares at such time, to the extent permitted by, and 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, or (v) through such cashless exercise procedures (including surrender of a portion of the Option in payment of the Option Price) as the Committee may permit. Except with respect to an adjustment pursuant to Section 9 of |
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the Plan, 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 in full for such Shares and, if applicable, has satisfied any other conditions imposed by the Committee pursuant to the Plan. |
(d) | Attestation . Wherever in this Plan or any agreement evidencing an Award a Participant is permitted to pay the Option Price of an Option or taxes relating to the exercise of an Option by delivering Shares, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial ownership of such Shares, in which case the Company shall treat the Option as exercised without further payment and shall withhold such number of Shares from the Shares acquired by the exercise of the Option. |
(a) | Grants . The Committee also may grant (i) a Stock Appreciation Right independent of an Option or (ii) a Stock Appreciation Right in connection with an Option, or a portion thereof. A Stock Appreciation Right granted pursuant to clause (ii) of the preceding sentence (A) may be granted at the time the related Option is granted or at any time prior to the exercise or cancellation of the related Option, (B) shall cover the same number of Shares covered by an Option (or such lesser number of Shares as the Committee may determine) and (C) shall be subject to the same terms and conditions as such Option except for such additional limitations as are contemplated by this Section 7 (or such additional limitations as may be included in an Award agreement). | ||
(b) | Terms . The exercise price per Share of a Stock Appreciation Right shall be an amount determined by the Committee but in no event shall such amount be less than the greater of (i) the Fair Market Value of a Share on the date the Stock Appreciation Right is granted or, in the case of a Stock Appreciation Right granted in conjunction with an Option, or a portion thereof, the Option Price of the related Option and (ii) the minimum amount permitted by applicable laws, rules, by-laws or policies of regulatory authorities or stock exchanges. Each Stock Appreciation Right granted independent of an Option shall entitle a Participant upon exercise to an amount equal to (i) the excess of (A) the Fair Market Value on the exercise date of one Share over (B) the exercise price per Share, times (ii) the number of Shares covered by the Stock Appreciation Right. Each Stock Appreciation Right granted in conjunction with an Option, or a portion thereof, shall entitle a Participant to surrender to the Company the unexercised Option, or any portion thereof, and to receive from the Company in exchange therefor an amount equal to (i) the excess of (A) the Fair Market Value on the exercise date of one Share over (B) the Option Price per Share, times (ii) the number of Shares covered by the Option, or portion thereof, which is surrendered. The date a notice of exercise is |
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received by the Company shall be the exercise date. Payment to the Participant shall be made in Shares or in cash, or partly in Shares and partly in cash (any such Shares valued at such Fair Market Value), all as shall be determined by the Committee. Stock Appreciation Rights may be exercised from time to time upon actual receipt by the Company of written notice of exercise stating the number of Shares with respect to which the Stock Appreciation Right is being exercised. No fractional Shares will be issued in payment for Stock Appreciation Rights, but instead cash will be paid for a fraction or, if the Committee should so determine, the number of Shares will be rounded downward to the next whole Share. |
(c) | Limitations . The Committee may impose, in its discretion, such conditions upon the exercisability or transferability of Stock Appreciation Rights as it may deem fit. |
(a) | Generally . The Committee, in its sole discretion, may grant or sell Awards of Shares, Awards of restricted Shares and Awards that are valued in whole or in part by reference to, or are otherwise based on the Fair Market Value of, Shares ( Other Stock-Based Awards ). Such Other Stock-Based Awards shall be in such form, and dependent on such conditions, as the Committee shall determine, including, without limitation, the right to receive, or vest with respect to, one or more Shares (or the equivalent cash value of such Shares) upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives. Other Stock-Based Awards may be granted alone or in addition to any other Awards granted under the Plan. Subject to the provisions of the Plan, the Committee shall determine to whom and when Other Stock-Based Awards will be made; the number of Shares to be awarded under (or otherwise related to) such Other Stock-Based Awards; whether such Other Stock-Based Awards shall be settled in cash, Shares or a combination of cash and Shares; and all other terms and conditions of such Awards (including, without limitation, the vesting provisions thereof and provisions ensuring that all Shares so awarded and issued shall be fully paid and non-assessable). |
(a) | Generally . In the event of any change in the outstanding Shares after the effective date of the Plan by reason of any Share dividend or split, reorganization, recapitalization, merger, consolidation, spin-off, combination, combination or transaction or exchange of Shares or other corporate exchange, or any distribution to shareholders other than regular cash dividends or any transaction similar to the foregoing, the Committee |
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shall make such substitution or adjustment, if any, as it deems to be equitable, as to (i) the number or kind of Shares or other securities issued or reserved for issuance pursuant to the Plan or pursuant to outstanding Awards, (ii) the Option Price or exercise price of any Award and/or (iii) any other affected terms of such Awards. |
(b) | Change in Control . In the event of a Change in Control after the effective date of the Plan, (i) if determined by the Committee in the applicable Award agreement or otherwise, any outstanding Awards then held by Participants which are unexercisable or otherwise unvested or subject to lapse restrictions may automatically be deemed exercisable or otherwise vested or no longer subject to lapse restrictions, as the case may be, as of immediately prior to such Change in Control and (ii) the Committee may, but shall not be obligated to, (A) cancel such Awards for fair value, to the extent permitted under Section 409A of the Code, which, in the case of Options and Stock Appreciation Rights, may equal the excess, if any, of value of the consideration to be paid in the Change in Control transaction to holders of the same number of Shares subject to such Options or Stock Appreciation Rights (or, if no consideration is paid in any such transaction, the Fair Market Value of the Shares subject to such Options or Stock Appreciation Rights) over the aggregate Option Price or exercise price of such Options or Stock Appreciation Rights or (B) provide for the issuance of substitute Awards that will substantially preserve the otherwise applicable terms and value of any affected Awards previously granted hereunder as determined by the Committee or (C) provide that for a period of at least 15 days prior to the Change in Control, such Awards shall be exercisable, to the extent applicable, as to all Shares subject thereto and the Committee may further provide that upon the occurrence of the Change in Control, such Awards shall terminate and be of no further force and effect. |
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1 | Insert first anniversary in the event no deferral election is made or the applicable date or dates as reflected in the directors deferral election. |
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CHART INDUSTRIES, INC.
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By: | ||||
PARTICIPANT
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By: | ||||
Exhibit 23.3
Consent