SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR FISCAL YEAR ENDED DECEMBER 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NO. 1-3071
THE HANOVER COMPANIES RETIREMENT SAVINGS PLAN
(FULL TITLE OF THE PLAN)
HANOVER COMPRESSOR COMPANY
12001 NORTH HOUSTON ROSSLYN, HOUSTON, TEXAS 77086
(NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE PLAN AND THE ADDRESS
OF ITS PRINCIPAL EXECUTIVE OFFICE)
Required Information
Financial Statements and Supplemental Schedules for the Plan
The Hanover Companies Retirement Savings Plan (the "Plan") is subject to
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In
lieu of the requirements of Items 1-3 of this Form, the Plan is filing financial
statements and supplemental schedule prepared in accordance with the financial
reporting requirements of ERISA. The Plan's financial statements and
supplemental schedule has been examined by PricewaterhouseCoopers LLP,
Independent Accountants and their report is included herein.
Exhibit
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Designation Description Method of Filing
- ----------- ----------- ----------------
Exhibit 23 Consent of PricewaterhouseCoopers LLP Filed with this Report.
2
The Hanover Companies
Retirement Savings
Plan
Financial Statements
December 31, 2000 and 1999
The Hanover Companies Retirement Savings Plan
Table of Contents
December 31, 2000 and 1999
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Page
Report of Independent Accountants 1
Financial Statements:
Statement of Net Assets Available for Benefits
at December 31, 2000 and 1999 2
Statement of Changes in Net Assets Available for Benefits
for the year ended December 31, 2000 3
Notes to Financial Statements 4
Supplemental Schedule:*
Schedule I - Schedule of Assets Held at the End of the Year 11
Signatures 12
* Other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
Report of Independent Accountants
To the Participants and Administrator of
The Hanover Companies Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of The Hanover Companies Retirement Savings Plan (the Plan) at December 31, 2000
and 1999, and the changes in net assets available for benefits for the year
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule identified in
the table of contents is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
PricewaterhouseCoopers LLP
Houston, TX
June 15, 2001
The Hanover Companies Retirement Savings Plan
Statement of Net Assets Available for Benefits
December 31, 2000 and 1999
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2000 1999
Investments at fair value:
Cash, noninterest-bearing $ 162 $ 191
Common stock 7,818,791 2,021,202
Mutual fund investments 9,117,525 7,551,715
Common/collective trust investments 2,924,160 1,981,591
Participant loans, at cost 978,895 723,729
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Total investments 20,839,533 12,278,428
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Employer contributions receivable 225,615 68,486
Employee contributions receivable 193,802 56,715
Securities purchased 95,926
Investment income receivable 8,217 3,723
Excess contributions payable (46,081) (66,789)
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Net assets available for benefits 21,317,012 12,340,563
=========== ===========
The accompanying notes are an integral part of these financial
statements.
The Hanover Companies Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2000
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Investment income:
Net depreciation in fair value of mutual funds (1,161,156)
Net depreciation common/collective trust in fair value (50,191)
Net appreciation in fair value of common stock 3,789,831
-----------
2,578,484
Dividend income 1,053,019
Interest income 60,524
-----------
Total investment income 3,692,027
-----------
Contributions:
Employer contributions 661,382
Employee contributions 2,728,792
Employee rollover contributions 2,579,843
-----------
Total contributions 5,970,017
-----------
9,662,044
Deductions from plan assets:
Benefits paid 680,833
Administrative expenses 4,762
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Increase in net assets available for benefits 8,976,449
Net assets available for benefits:
Beginning of year 12,340,563
-----------
End of year 21,317,012
===========
The accompanying notes are an integral part of these financial
statements.
The Hanover Companies Retirement Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
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1. Description of Plan
The Hanover Companies Retirement Savings Plan (the Plan) was adopted
effective January 1, 1994 by Hanover Compressor Company (the Company) and
replaced the Company's former plan, the Hanover Energy Employee's Savings
Plan. The plan custodian is Merrill Lynch.
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
General
The Plan is a defined contribution plan covering all employees of the
Company. It is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
Plan Changes
Effective May 18, 2000, participants are able to contribute a fixed dollar
amount or a fixed percentage each pay period. Previously participants were
limited to contributing a fixed percentage. Additionally, participants
become eligible on the first of the month following six months of
continuous service. Previously, a participant became eligible following
one year of service.
Contributions
Participants may contribute up to 20% of their pre-tax compensation, as
defined. Participants may also elect to roll over contributions from other
qualified plans. The Company may make discretionary contributions to the
Plan in the form of matching contributions of 35% of each participant's
contributions for the plan year, up to an annual maximum of $1,000 per
individual. Participants who were employed on the last day of the plan
year or who died, became disabled while an employee of the Company or
terminated employment after obtaining normal retirement age, as defined,
during the plan year are eligible for an allocation of discretionary
employer contributions. The Company made discretionary contributions of
$661,382 during the plan year ended December 31, 2000.
Participant's Accounts
Each participant's account is credited with the participant's
contributions, employer contributions and an allocation of Plan earnings
and forfeitures of terminated participants' nonvested accounts. All plan
assets are allocated to individual participant account balances. The
benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
-1-
The Hanover Companies Retirement Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
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Vesting
Participants are immediately vested in their voluntary contributions plus
actual earnings thereon. Participants become vested in the Company's
contributions at the rate of 20% per year after two years of service.
Forfeitures
Forfeited nonvested accounts will be allocated to participants based on
their contributions. During the year ended December 31, 2000, forfeited
nonvested accounts totaling $8,307 were allocated to participants.
Investment Options
Upon enrollment in the Plan, participants may direct their contributions
among 23 different investment options consisting of Hanover Compressor
Company common stock, common/collective trusts and mutual funds.
Payment of Benefits
A participant may elect to withdraw any part of his or her vested account
upon retirement, termination of employment, death or disability or
attainment of age 59 1/2. Benefits may be paid by either a lump-sum amount
equal to the value of his or her account or periodic installments. A lump-
sum payment is automatically distributed to terminated participants with
vested balances equal to or less than $5,000. Withdrawals of vested
balances due to immediate and heavy financial need are also permitted.
Participant Loans
Upon written application by a participant, the Plan administrator may make
loans to participants subject to limitations defined by the Plan. A
participant loan is a participant-directed investment of his or her account
which earns a reasonable rate of interest (7.5% to 10.0% on loans
outstanding during 2000) and is repaid by regular principal and interest
payments through payroll deductions.
2. Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared on an accrual basis in
accordance with accounting principles generally accepted in the United
States of America.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities and
changes therein, and disclosure of
-2-
The Hanover Companies Retirement Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
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contingent assets and liabilities. Actual results could differ from those
estimates.
Valuation of Investments
Shares of mutual funds are valued at quoted market prices which represent
the net asset value of shares held by the Plan at year-end. The Company
stock is valued at its quoted market price. Shares of common/collective
trusts are stated at the fair value of the trusts' underlying net assets as
determined by the quoted closing price for those securities for which
market quotations are available or with respect to other assets, fair value
as determined in good faith by Merrill Lynch. Units of participation in
funds holding primarily guaranteed investment contracts are valued at the
contract value of the underlying contracts, which represents contributions
made under the contracts, plus interest at the contract rate, less funds
used to pay withdrawals and loans. The cost of guaranteed investment
contracts approximates fair value. The participants are exposed to credit
loss in the event of nonperformance by the insurance companies with whom
the investment contracts are placed. However, the plan administrator does
not anticipate nonperformance by these companies. Participant loans are
valued at cost which approximates fair value.
Investment Income
Investment income is recorded when earned. The net appreciation in fair
value of investments includes the gain or loss on investments bought and
sold during the year as well as the change in fair value.
-3-
The Hanover Companies Retirement Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
- --------------------------------------------------------------------------------
3. Investments
The following presents investments as of December 31, 2000 and 1999 that
represent five percent or more of the Plan's net assets. Investments that
include nonparticipant-directed accounts are denoted.
December 31,
--------------------------------
2000 1999
Common stock:
Hanover Compressor Company 7,818,791 /a/ 2,021,202 /a/
Common/collective trusts:
Merrill Lynch Retirement Preservation 2,380,810 1,463,460
Mutual funds:
Merrill Lynch Balanced Capital Fund 1,396,221 1,513,382
Merrill Lynch Global Allocations Fund 1,835,861 1,663,739
Merrill Lynch Growth Fund 1,359,429 1,725,349
Merrill Lynch Focus Value Fund 1,311,699 1,401,332
/a/ Denotes funds which include nonparticipant directed investments.
The following presents the change in the Plan's investment in Hanover
Compressor Company common stock for the year ended December 31, 2000.
Net appreciation in fair value of common stock 3,789,831
Interest income on participant loans 11,940
Employer contributions 504,252
Employee contributions 514,690
Employee rollover contributions 228,813
Loan repayments 47,857
Net interfund transfers 804,257
Benefits paid (107,349)
Administration fees 3,298
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Net increase 5,797,589
Total investment
Beginning of year 2,021,202
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End of year 7,818,791
==========
Contributions and benefit payments are presented in the Plan's financial
statements on a cash basis. The following presents the difference of
employer contributions for the Hanover
-4-
The Hanover companies Retirement Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
- --------------------------------------------------------------------------------
Compressor Company common stock between the cash basis and the accrual
basis.
Employer contributions to Hanover Compressor Company common
stock account for the year ended December 31, 2000 $504,252
Employer contributions receivable at December 31, 1999 225,616
Employer contributions receivable at December 31, 2000 (68,486)
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Employer contributions to the Plan for the year ended
December 31, 2000 $661,382
=======
4. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contribution at any time and to
terminate the Plan subject to the provisions of ERISA.
5. Federal Income Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated December 6, 1995 that the Plan is designed in accordance with
applicable sections of the Internal Revenue Code (IRC). The Plan has been
amended since receiving the determination letter. However, the Plan
administrator and the Plan's tax counsel believe that the Plan is designed
and is currently being operated in compliance with the applicable
requirements of the IRC.
6. Party-In-Interest Transactions
Certain Plan investments are shares of mutual funds and common trusts
managed by Merrill Lynch. Merrill Lynch is the trustee as defined by the
Plan and, therefore, these transactions qualify as party-in-interest
transactions. Any purchases and sales of these investments are open market
transactions at fair market value. Consequently, such transactions are
permitted under the provisions of the Plan and are exempt from the
prohibition of party-in-interest transactions under ERISA.
During the year ended December 31, 2000, administrative expenses of
approximately $46,597 were paid by the Company on behalf of the Plan.
-5-
Schedule I
(Page 1 of 2)
The Hanover Companies Retirement Savings Plan
Schedule of Assets (Held at End of the Year)
December 31, 2000
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Historical Current
Identity of issuer Description of asset cost value
* Hanover Compressor Co. Common stock $3,796,711 $7,818,791
* Merrill Lynch Equity Index Trust Comm/Collective Tr 532,895 543,350
* Merrill Lynch Retirement Preservation Comm/Collective Tr 2,380,810 2,380,810
Trust
Massachusetts Financial Services Company
Emerging Growth Fund Mutual Fund 788,158 690,264
Davis Series Financial Fund Mutual Fund 11,621 12,212
John Hancock Health Science Fund Mutual Fund 34,134 35,712
* Merrill Lynch Balanced Capital Fund Mutual Fund 1,548,865 1,396,221
* Merrill Lynch Corporate Bond Fund -
Investment Grade Portfolio Mutual Fund 702,769 696,915
* Merrill Lynch Euro Fund Mutual Fund 8,447 8,648
* Merrill Lynch Global Allocation Fund Mutual Fund 1,942,679 1,835,861
* Merrill Lynch Growth Fund Mutual Fund 1,665,544 1,359,429
* Merrill Lynch Healthcare Fund Mutual Fund 61,884 62,599
* Merrill Lynch Focus Value Fund Mutual Fund 1,435,212 1,311,699
* Merrill Lynch Pacific Fund Mutual Fund 7,750 5,603
Chase Vista European Fund Mutual Fund 26,468 21,122
Van Kampen Latin American Fund Mutual Fund 5,030 4,232
Munder Netnet Fund Mutual Fund 250,067 118,866
Ivy International Fund Mutual Fund 91,858 71,053
Pioneer Mid Cap Value Fund Mutual Fund 202,171 206,861
Schedule I
(Page 2 of 2)
The Hanover Companies Retirement Savings Plan
Schedule of Assets (Held at End of the Year)
December 31, 2000
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Historical Current
Identity of issuer Description of asse cost value
John Hancock Small Cap Growth Fund Mutual Fund 196,735 179,149
Massachusetts Financial Services
Utilities Fund Mutual Fund 74,775 68,003
Massachusetts Investors Trust Mutual Fund 580,326 570,853
Davis New York Venture Fund Inc. Mutual Fund 461,075 462,223
* Participant loans Loans (7.5% - 10.0) 978,895 978,895
Cash, noninterest bearing Cash 162 162
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Assets held for investment 17,785,041 20,839,533
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* Denotes a Party-In-Interest as defined by ERISA.
Signature
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Plan administrator for the Hanover Companies Retirement Savings Plan has duly
caused this Annual Report to be signed by the undersigned thereunto duly
authorized.
Hanover Companies Retirement Savings Plan
By: /s/ Michael J. McGhan
---------------------------------
Michael J. McGhan,
President/Chief Executive Officer
Date: June 28, 2001