þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 20-5657551 | |
(State or other jurisdiction of incorporation of organization) | (I.R.S. Employer Identification Number) |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
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6
7
8
9
10
11
12
13
14
15
16
17
18
June 30,
December 31,
2011
2010
(Unaudited)
$
30,647
$
30,524
109
21,500
21,175
648
807
129
89
1,759
1,861
54,792
54,456
14,021
14,384
21,051
21,051
5,755
6,050
4,894
5,000
2,337
2,262
$
102,850
$
103,203
$
2,321
$
2,269
6,647
7,516
1,958
2,863
412
1,857
2,369
3,306
13,707
17,811
1,567
1,482
15,274
19,293
243
242
131,153
129,424
(44,306
)
(46,075
)
410
243
76
76
87,576
83,910
$
102,850
$
103,203
Table of Contents
Three Months Ended
Six Months Ended
June 30
June 30
2011
2010
2011
2010
$
19,021
$
18,902
$
41,643
$
36,519
10,553
11,067
22,019
20,567
7,966
8,018
15,917
15,498
(758
)
(758
)
315
165
717
311
18,076
19,250
37,895
36,376
945
(348
)
3,748
143
(38
)
(33
)
(78
)
(77
)
4
1
5
2
(155
)
(166
)
(195
)
(258
)
756
(546
)
3,480
(190
)
(326
)
237
(1,711
)
95
$
430
$
(309
)
$
1,769
$
(95
)
$
0.02
$
(0.01
)
$
0.07
$
0.00
$
0.02
$
(0.01
)
$
0.07
$
0.00
24,269,000
24,215,000
24,242,000
24,213,000
24,909,000
24,215,000
24,900,000
24,213,000
Table of Contents
(in thousands)
Six Months Ended
June 30
2011
2010
$
1,769
$
(95
)
1,534
1,626
455
443
(2
)
6
(758
)
(253
)
(887
)
1,696
2,569
70
2
(185
)
(4,435
)
168
5
37
32
(935
)
12
(2,675
)
2,099
921
1,377
200
2
(1,242
)
(642
)
(1,240
)
(442
)
313
10
(722
)
(5
)
313
(717
)
129
(117
)
123
101
30,524
20,965
$
30,647
$
21,066
Table of Contents
June 30, 2011
(Unaudited)
(in thousands, except share and per-share data)
Table of Contents
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Three Months Ended
Six Months Ended
June 30
June 30
2011
2010
2011
2010
24,269
24,215
24,242
24,213
7
7
633
651
24,909
24,215
24,900
24,213
Three Months Ended
Six Months Ended
June 30
June 30
2011
2010
2011
2010
$
430
$
(309
)
$
1,769
$
(95
)
38
(58
)
99
(117
)
68
68
$
536
$
(367
)
$
1,936
$
(212
)
Table of Contents
Three Months Ended
Six Months Ended
June 30
June 30
2011
2010
2011
2010
$
869
$
1,352
$
1,405
$
2,519
173
254
17
22
37
50
1,059
1,374
1,696
2,569
(355
)
(469
)
(550
)
(868
)
$
704
$
905
$
1,146
$
1,701
Table of Contents
0.0
%
1.8
%
57.2
%
5.0 years
Weighted-
Average
Number
Weighted-
Remaining
Aggregate
of
Average
Contractual
Intrinsic
Options
Exercise Price
Term
Value
2,856,125
$
14.68
60,000
8.16
(814,500
)
22.06
(70,000
)
4.47
(79,625
)
20.51
1,952,000
$
11.53
5.4 years
$
984
1,692,375
$
11.59
5.0 years
$
962
Non-Vested Stock
Weighted-Average
Options
Grant Date
Outstanding
Fair Value
578,500
$
7.50
60,000
4.08
(272,500
)
7.03
(91,500
)
9.97
(14,875
)
7.04
259,625
$
6.36
Table of Contents
The first type of award is based on individual performance during the 2011 calendar year
as determined by the Committee based on performance criteria specified in the Agreement.
These awards will vest over a three year period beginning on the Determination Date. We
estimated the fair value of these performance-based RSU awards on the date of the Agreement
using the intrinsic value method and our estimate of the probability that the specified
performance criteria will be met. The fair value measurement and probability estimate will
be re-measured each reporting date until the Determination Date, at which time the final
award amount will be known. For these job performance-based awards, we amortize
compensation costs over the requisite service period, adjusted for estimated forfeitures,
for each separately vesting tranche of the award.
The second type of RSU award contains a targeted number of RSUs to be granted based on
the Companys revenue growth relative to a specified peer group during the 2011 and 2012
calendar years. These awards vest 67% on the second anniversary of the Agreement date and
33% on the third anniversary of the Agreement date. We estimated the fair value of these
performance-based RSU awards on the Agreement date using the intrinsic value method and our
estimate of the probability that the specified performance criteria will be met. For these
revenue growth performance-based awards, we amortize compensation costs over the requisite
service period, adjusted for estimated forfeitures, for each separately vesting tranche of
the award.
The third type of RSU award contains a targeted number of RSUs to be granted based on
the total shareholder return (TSR) of the Companys common stock relative to a specified
peer group during the 2011 and 2012 calendar years. These awards vest 67% on the second
anniversary of the Agreement date and 33% on the third anniversary of the Agreement date.
We estimated the fair value of these market-based RSU awards on the Agreement date using a
Monte Carlo valuation methodology and amortize the fair value over the requisite service
period for each separately vesting tranche of the award.
Weighted Average
Grant Date
Shares
Fair Value
149,000
$
8.63
267,372
6.53
(1,000
)
8.63
415,372
$
7.28
Table of Contents
The Air Pollution Control technology segment includes technologies to reduce NOx
emissions in flue gas from boilers, incinerators, furnaces and other stationary
combustion sources. These include Low and Ultra Low NOx Burners (LNB and ULNB),
Over-Fire Air (OFA) systems, NOxOUT
®
and HERT
Selective
Non-Catalytic Reduction (SNCR) systems, and Advanced Selective Catalytic Reduction
(ASCR
) systems. The ASCR system includes ULNB, OFA, and SNCR components,
along with a downsized SCR catalyst, Ammonia Injection Grid (AIG), and Graduated
Straightening Grid
(GSG) systems to provide high NOx reductions at
significantly lower capital and operating costs than conventional SCR systems. The
NOxOUT-CASCADE
®
and NOxOUT-SCR
®
processes are basic types of ASCR
Table of Contents
systems, using just SNCR and SCR catalyst components. ULTRA technology creates ammonia
at a plant site using safe urea for use with any SCR application. Flue Gas Conditioning
systems are chemical injection systems offered in markets outside the U.S. and Canada to
enhance electrostatic precipitator and fabric filter performance in controlling
particulate emissions.
The FUEL CHEM
®
technology segment, which uses chemical processes in
combination with advanced Computational Fluid Dynamics (CFD) and Chemical Kinetics
Modeling (CKM) boiler modeling, for the control of slagging, fouling, corrosion, opacity
and other sulfur trioxide-related issues in furnaces and boilers through the addition of
chemicals into the furnace using TIFI
®
Targeted In-Furnace Injection
technology.
Three months ended
Air Pollution
FUEL CHEM
June 30, 2011
Control Segment
Segment
Other
Total
$
9,644
$
9,377
$
$
19,021
5,246
5,307
10,553
4,398
4,070
8,468
7,966
7,966
315
315
(758
)
(758
)
$
4,398
$
4,070
$
7,523
$
945
Three months ended
Air Pollution
FUEL CHEM
June 30, 2010
Control Segment
Segment
Other
Total
$
9,291
$
9,611
$
$
18,902
6,046
5,021
11,067
3,245
4,590
7,835
8,018
8,018
165
165
$
3,245
$
4,590
$
8,183
$
(348
)
Six months ended
Air Pollution
FUEL CHEM
June 30, 2011
Control Segment
Segment
Other
Total
$
20,736
$
20,907
$
$
41,643
10,799
11,220
22,019
9,937
9,687
19,624
15,917
15,917
717
717
(758
)
(758
)
$
9,937
$
9,687
$
15,876
$
3,748
Six months ended
Air Pollution
FUEL CHEM
June 30, 2010
Control Segment
Segment
Other
Total
$
17,505
$
19,014
$
$
36,519
11,304
9,263
20,567
6,201
9,751
15,952
15,498
15,498
311
311
$
6,201
$
9,751
$
15,809
$
143
Table of Contents
Three months ended June 30
Six months ended June 30
2011
2010
2011
2010
$
15,529
$
14,461
$
35,147
$
29,502
3,492
4,441
6,496
7,017
$
19,021
$
18,902
$
41,643
$
36,519
June 30,
December 31,
2011
2010
$
91,821
$
92,485
11,029
10,718
$
102,850
$
103,203
Six Months Ended June 30
2011
2010
$
215
$
199
100
60
(112
)
(57
)
$
203
$
202
Table of Contents
Level 1 Observable inputs to the valuation methodology such as
quoted prices in active markets for identical assets or
liabilities.
Level 2- Inputs to the valuation methodology including quoted
prices for similar assets or liabilities in active markets, quoted
prices for identical assets of liabilities in inactive markets,
inputs other than quoted prices that are observable for the asset
or liability, and inputs that are derived principally from or
corroborated by observable market data by correlation or other
means.
Level 3 Significant unobservable inputs in which there is
little or no market data, which require the reporting entity to
develop its own estimates and assumptions or those expected to be
used by market participants. Generally, these fair value measures
are model-based valuation techniques such as discounted cash
flows, option pricing models, and other commonly used valuation
techniques.
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19
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Third Amendment to Credit Agreement and Amended Revolving Loan Note
Agreement, each dated June 30, 2011, between Fuel Tech, Inc. and JPMorgan Chase Bank,
N.A.
Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act of 2002
Certification of CFO pursuant to Section 302 of Sarbanes-Oxley Act of 2002
Certification of CEO and CFO pursuant to Section 906 of Sarbanes-Oxley Act of 2002
Table of Contents
Date: August 8, 2011
By:
/s/ Douglas G. Bailey
Douglas G. Bailey
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 8, 2011
By:
/s/ David S. Collins
David S. Collins
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
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3
BORROWER:
FUEL TECH, INC., a Delaware corporation |
||||
By: | ||||
Name: | ||||
Title: | ||||
FUEL TECH S.r.l.,
organized under the laws of the Italian Republic |
||||
By: | ||||
Name: | ||||
Title: | ||||
LENDER:
JPMORGAN CHASE BANK, N.A. a national association |
||||
By: | ||||
Name: | ||||
Title: | ||||
4
$15,000,000.00
Chicago, Illinois |
June 30, 2011 |
2
FUEL TECH, INC.,
a Delaware corporation, |
||||
By: | ||||
Name: | ||||
Title: | ||||
Date: August 8, 2011 | By: | /s/ Douglas G. Bailey | ||
Douglas G. Bailey | ||||
President and Chief Executive Officer
(Principal Executive Officer) |
21
Date: August 8, 2011 | By: | /s/ David S. Collins | ||
David S. Collins | ||||
Senior Vice President and Chief Financial Officer
(Principal Financial Officer) |
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Date: August 8, 2011 | By: | /s/ Douglas G. Bailey | ||
Douglas G. Bailey | ||||
President and Chief Executive Officer
(Principal Executive Officer) |
||||
Date: August 8, 2011 | By: | /s/ David S. Collins | ||
David S. Collins | ||||
Senior Vice President, Treasurer and Chief Financial Officer
(Principal Financial Officer) |
||||
23