1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): July 31, 1997
Commission File Number 1-11442
CHART INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 34-1712937
- ------------------------------- ---------------------------------------
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
35555 Curtis Boulevard, Eastlake, OH 44095
------------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (216) 946-2525
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ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
On July 31, 1997, Chart Industries, Inc. (the "Company") completed its
acquisition of Cryenco Sciences, Inc. ("Cryenco"), a Delaware corporation, from
the shareholders of Cryenco by means of a merger (the "Merger") between Cryenco
and Chart Acquisition Company, Inc. ("Acquisition"), a Delaware corporation and
a wholly-owned subsidiary of Greenville Tube Corporation ("Greenville"), an
Arkansas corporation and a wholly-owned subsidiary of the Company. The Merger
was accomplished pursuant to a Plan and Agreement of Merger dated as of April
30,1997, among the Company, Greenville, Acquisition and Cryenco (the "Merger
Agreement"). A copy of the Merger Agreement is filed as an Exhibit hereto.
Cryenco manufactures vacuum-jacketed containment systems and related products
for the transportation, storage and dispensing of LNG, LCNG and liquefied argon,
oxygen and nitrogen. Cryenco's products include cryogenic transport
trailers, large cryogenic storage tanks, cryogenic intermodal containers,
LNG/LCNG fueling stations, fuel gas modules and cryostats for MRI and
low-temperature research.
Total consideration for the Merger consisted of the payment to the shareholders
of Cryenco of $19.7 million to purchase the outstanding common stock and
certain warrants of Cryenco and of $685,000 to redeem the outstanding preferred
stock of Cryenco. Pursuant to the Merger Agreement, the Company also entered
into certain Amendments to Warrant Agreements (the "Amended Warrant
Agreements") between the Company, Cryenco, and the holders of certain other
warrants for the purchase of the common stock of Cryenco (the "Cryenco
Warrants"). The Amended Warrant Agreements convert the Cryenco Warrants into
warrants for the purchase of the Company's Common Stock, par value $.01 per
share, at the conversion ratio provided for in the Merger Agreement. The
Cryenco Warrants and the Amended Warrant Agreements are filed as Exhibits
hereto.
The cash consideration for the transaction was made available through a
draw-down of the Company's renegotiated credit facility under a Credit Agreement
by and between the Company and National City Bank and NBD Bank (collectively,
the "Banks"); and National City Bank, as agent for the Banks (the "Agent"),
dated July 29, 1997 (the "Credit Agreement"). A copy of the Credit Agreement is
filed as an Exhibit hereto. The merger will be accounted for under the purchase
method of accounting for financial reporting purposes.
The purchase price and other terms of the Merger Agreement and of the Warrant
Agreements were determined through arms-length negotiations. The Company is not
aware of any pre-existing material relationships between (i) Cryenco or any of
its shareholders, and (ii) the Company, any of the Company's affiliates,
directors and officers or any associate of such directors and officers.
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ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
A) FINANCIAL STATEMENTS OF THE BUSINESS ACQUIRED
CRYENCO SCIENCES, INC.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) PAGE
----
Consolidated Balance Sheets as of August 31, 1996 and May 31, 1997 4-5
Consolidated Statements of Operations for both three and nine months
ended May 31, 1996 and May 31, 1997 6
Consolidated Statements of Cash Flows for nine months
ended May 31, 1996 and May 31, 1997 7
Notes to Interim Consolidated Financial Statements 8-10
AUDITED FISCAL 1996 FINANCIAL STATEMENTS
Report of Independent Auditors 11
Consolidated Balance Sheets 12-13
Consolidated Statements of Operations 14
Consolidated Statements of Stockholders' Equity 15
Consolidated Statements of Cash Flows 16-17
Notes to Consolidated Financial Statements 18-29
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CRYENCO SCIENCES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
AUGUST 31, MAY 31,
1996 1997
-----------------------
(audited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 111 $ 426
Accounts receivable, trade 5,352 4,510
Accounts receivable, affiliate 1,423 -
Costs and estimated earnings in excess of
billings on uncompleted contracts 3,944 2,666
Inventories (Note 2) 4,333 5,558
Prepaid expenses 57 100
-----------------------
Total current assets 15,220 13,260
Property and equipment:
Leasehold improvements 739 867
Machinery and equipment 5,355 5,306
Office furniture and equipment 1,231 1,421
-----------------------
7,325 7,594
Less accumulated depreciation 3,099 3,810
-----------------------
4,226 3,784
Property on operating leases 604 51
Deferred financing costs 120 56
Goodwill 5,226 5,114
Other assets 308 199
-----------------------
TOTAL ASSETS $25,704 $22,464
=======================
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CRYENCO SCIENCES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
AUGUST 31, MAY 31,
1996 1997
----------------------
(audited) (unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,224 $ 1,490
Accrued expenses 1,123 1,431
Accrued management fees 324 323
Current portion of long-term debt (Note 3) 1,382 294
Income tax payable 344 --
----------------------
Total current liabilities 5,397 3,538
Long-term debt, less current portion (Note 3) 8,634 6,964
----------------------
14,031 10,502
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value,
authorized shares-2,000,000, preferences,
limitations and relative rights to be
established by the Board of Directors:
Series A, nonvoting, 150,000 authorized
shares, 67,838 and 68,517 issued and
outstanding shares (aggregate liquidation
preference of $678,380 and $685,170) 1 1
Common stock, $0.01 par value:
Class A, voting, 21,500,000 authorized
shares, 6,996,997 shares issued and
Outstanding 70 70
Class B, nonvoting, 1,500,000 authorized
shares, none issued or outstanding - -
Additional paid-in capital 14,020 14,027
Warrants 169 169
Retained earnings (deficit) (2,587) (2,305)
----------------------
TOTAL STOCKHOLDERS' EQUITY 11,673 11,962
----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 25,704 $ 22,464
======================
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CRYENCO SCIENCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(unaudited)
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
MAY 31, 1996 MAY 31, 1997 MAY 31, 1996 MAY 31, 1997
Contract revenue $ 8,232 $ 7,680 $ 24,420 $ 20,518
Cost of revenue 6,405 6,409 19,544 16,496
--------------------------------------------------------------
Gross profit 1,827 1,271 4,876 4,022
Selling, general and
administrative expenses 894 1,024 2,433 2,510
Research and development
expenses 277 (14) 708 315
Amortization expense 87 59 259 181
--------------------------------------------------------------
Operating income 569 202 1,476 1,016
Other (income) expense:
Interest income 0 0 (1) 0
Interest expense 226 231 666 722
Other expense, net 5 (213) 1 (269)
--------------------------------------------------------------
Income from operations before
income taxes and
extraordinary item 338 184 810 563
Income tax expense 126 68 300 208
--------------------------------------------------------------
Income from operations before
extraordinary item 212 116 510 355
Extraordinary item (net of
income tax benefit of $54)
(Note 4) 0 0 (93) 0
--------------------------------------------------------------
NET INCOME $ 212 $ 116 $ 417 $ 355
==============================================================
Earnings per common and
common equivalent share
(Note 5)
Income from operations
before extraordinary item $ 0.03 $ 0.01 $ 0.06 $ 0.04
Extraordinary item 0.00 0.00 (0.01) 0.00
--------------------------------------------------------------
Net income $ 0.03 $ 0.01 $ 0.05 $ 0.04
==============================================================
WEIGHTED AVERAGE NUMBER OF
SHARES AND COMMON
EQUIVALENT SHARES OUTSTANDING
7,318,413 7,188,423 7,320,789 7,203,180
==============================================================
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CRYENCO SCIENCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
NINE MONTHS ENDED NINE MONTHS ENDED
MAY 31, 1996 MAY 31, 1997
------------------------------------
OPERATING ACTIVITIES
Net income $ 417 $ 355
Adjustments to reconcile net income
to net cash (used) provided by operating activities:
Depreciation 611 868
Amortization 482 245
Gain from sale of assets 0 (259)
Changes in operating assets and liabilities:
Accounts receivable (3,894) 2,265
Costs and estimated earnings in excess of
billings on uncompleted contracts 1,941 1,278
Inventories 14 (1,226)
Income taxes 33 (344)
Prepaid expenses and other assets (159) (1)
Accounts payable (958) (735)
Accrued expenses 190 315
----------------------
Net cash provided (used) by operating activities (1,323) 2,761
----------------------
INVESTING ACTIVITIES
Purchases of property and equipment (1,510) (380)
Proceeds from sale of assets 0 765
----------------------
Net cash provided (used) by investing activities (1,510) 385
----------------------
FINANCING ACTIVITIES
Payments of long-term debt (17,309) (25,180)
Borrowings 19,684 22,421
Dividends paid on preferred stock (67) (72)
----------------------
Net cash provided (used) by financing activities 2,308 (2,831)
----------------------
Net increase (decrease) in cash and cash equivalents (525) 315
Cash and cash equivalents at beginning of period 632 111
----------------------
Cash and cash equivalents at end of period $ 107 $ 426
======================
Supplementary disclosure of cash flow information:
Cash paid for interest $ 590 $ 679
Cash paid for taxes 319 562
Supplementary disclosure of non cash financing activity:
Issuance of preferred stock in consideration for
dividends payable $ 2 $ 7
Equipment acquired and financed under
capital leases 304 0
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CRYENCO SCIENCES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1997
(Unaudited, except information for the fiscal year ended August 31, 1996)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine months ended May 31,
1997 are not necessarily indicative of the results that may be expected for the
year ending August 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in Company's Annual Report
on Form 10-K for the year ended August 31, 1996.
2. INVENTORIES
Inventories (in thousands) consisted of the following:
August 31, May 31,
1996 1997
------- -------
Raw Materials $ 3,344 $ 3,997
Finished goods and work-in-process 1,139 1,683
------- -------
4,483 5,680
Less reserve for obsolescence (150) (122)
------- -------
$ 4,333 $ 5,558
======= =======
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3. LONG-TERM DEBT
Long-term debt (in thousands) at May 31, 1997 is comprised of the following:
Term loan maturing December 31, 1998 bearing interest
at the reference rate (as defined in the loan agreement)
plus 3/4% (9.25% May 31, 1997) payable monthly.
Principal payments of $12,806 are payable monthly. $ 499
Revolving credit facility maturing December 31, 1998
bearing interest at the reference rate (as defined in the loan
agreement) plus up to an additional 1.0% depending upon
financial performance (9.0% at May 31, 1997). 6,363
Other 396
------
7,258
Less current portion (294)
------
$6,964
======
On April 10, 1997 the Company prepaid the outstanding balance ($1,150,000) of
the note payable to the CIT Group/Equity Investments, Inc. ("CIT").
The Company must comply with certain financial covenants in connection with its
long-term debt, including the maintenance of certain financial ratios and
restrictions on dividends.
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4. EXTRAORDINARY ITEM - EARLY EXTINGUISHMENT OF DEBT
As a result of the early retirement of the Chemical Bank debt and the partial
payment on the CIT note, the Company recognized an extraordinary expense of
$93,000 (net of the related tax benefit of $54,000) for the write down of
deferred financing expenses related to these debts during the three months ended
February 29, 1996.
5. EARNINGS PER SHARE
Net earnings per share is computed using the weighted average number of shares
of common stock outstanding for the period. When dilutive, stock options and
warrants are included as share equivalents using the treasury stock method. In
calculating net earnings per share, preferred dividends of $24,718 and $71,746
reduced the net earnings available to common stockholders for the three months
and nine months ended May 31, 1997, respectively. Fully diluted net earnings per
common share is not significantly different from primary net earnings per common
share.
6. RECENT DEVELOPMENTS
On April 30, 1997, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with Chart Industries, Inc. ("Chart") and certain of
Chart's wholly-owned subsidiaries pursuant to which the Company will become an
indirect, wholly-owned subsidiary of Chart (the "Merger"). As a result of the
Merger, each outstanding share of common stock of the Company will be converted
into the right to receive $2.75 in cash, without interest. The Merger Agreement
and the Merger are subject to approval by the stockholders of the Company. A
Special Meeting of the Company's stockholders is scheduled for July 31, 1997 in
order to vote upon approval and adoption of the Merger Agreement and the
transactions contemplated thereby.
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REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Cryenco Sciences, Inc.
We have audited the accompanying consolidated balance sheets of Cryenco
Sciences, Inc. as of August 31, 1996 and 1995, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended August 31, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Cryenco Sciences,
Inc. at August 31, 1996 and 1995, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended
August 31, 1996, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Denver, Colorado
October 5, 1996
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CRYENCO SCIENCES, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
AUGUST 31,
1996 1995
---------------------
ASSETS
Current assets:
Cash and cash equivalents $ 111 $ 632
Accounts receivable, trade, net of
allowance of $12 in 1996 and $14 in 1995 5,352 2,738
Accounts receivable, affiliate 1,423 83
Costs and estimated earnings in excess of
billings on uncompleted contracts 3,944 6,707
Inventories (Note 2) 4,333 4,208
Prepaid expenses 57 116
---------------------
Total current assets 15,220 14,484
Property and equipment:
Leasehold improvements 739 684
Machinery and equipment 5,355 3,979
Office furniture and equipment 1,231 402
---------------------
7,325 5,065
Less accumulated depreciation 3,099 2,249
---------------------
4,226 2,816
Property on operating leases, net of
accumulated depreciation of $7 604 -
Deferred financing costs, net of accumulated
amortization of $177 in 1996 and $738 in
1995 120 256
Organizational costs, net of accumulated
amortization of $507 in 1996 and $404 in
1995 - 103
Goodwill, net of accumulated amortization of
$738 in 1996 and $589 in 1995 5,226 5,375
Other assets 308 343
---------------------
TOTAL ASSETS $25,704 $23,377
=====================
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AUGUST 31,
1996 1995
--------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,224 $ 3,469
Accrued expenses 1,123 880
Accrued management fees 324 324
Current portion of long-term debt and
capital lease obligations 1,382 1,593
Income tax payable 344 246
--------------------------
Total current liabilities 5,397 6,512
Long-term debt and capital lease obligations,
less current portion 8,634 5,629
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, authorized
shares - 2,000,000, preferences, limitations
and relative rights to be established by the
Board of Directors:
Series A, nonvoting, authorized shares -
150,000
Issued and outstanding shares -
67,838 (aggregate liquidation preference
of $678,380) 1 1
Common stock, $.01 par value:
Class A, voting, authorized shares -
21,500,000
Issued and outstanding shares -
6,996,997 at August 31, 1996 and
6,842,828 at August 31, 1995 70 68
Class B, nonvoting, authorized shares -
1,500,000
Issued and outstanding shares - none - -
Additional paid-in capital 14,020 14,022
Warrants 169 169
Retained earnings (deficit) (2,587) (3,024)
--------------------------
Total stockholders' equity 11,673 11,236
--------------------------
Total liabilities and stockholders' equity $ 25,704 $ 23,377
==========================
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CRYENCO SCIENCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
YEAR ENDED AUGUST 31
--------------------
1996 1995 1994
---- ---- ----
Contract revenue $ 31,259 $ 27,215 $ 17,665
Cost of revenue 24,898 22,350 14,670
----------- ----------- -----------
Gross profit 6,361 4,865 2,995
Selling, general and administrative expenses 3,288 2,867 2,834
Research and development expenses 792 70 86
Amortization expense 346 346 338
----------- ----------- -----------
Operating income (loss) 1,935 1,582 (263)
Other (income) expense:
Interest income (1) (20) (103)
Interest expense 944 1,007 1,208
Other nonoperating (income) expense, net 9 40 (69)
----------- ----------- -----------
Income (loss) from operations before
income taxes and extraordinary item 983 555 (1,299)
Income tax expense (benefit) 363 194 (403)
----------- ----------- -----------
Income (loss) from operations before
extraordinary item 620 361 (896)
Extraordinary item (net of income tax
benefit of $54) 93 - -
----------- ----------- -----------
Net income (loss) $ 527 $ 361 $ (896)
=========== =========== ===========
Earnings (loss) per common share and
common share equivalent:
Income (loss) from operations before
extraordinary item $ .07 $ .04 $ (.17)
Extraordinary item (.01) - -
----------- ----------- -----------
Net income (loss) $ .06 $ .04 $ (.17)
=========== =========== ===========
Weighted average number of shares
outstanding during year 7,230,773 6,620,055 5,346,760
=========== =========== ===========
See accompanying notes.
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CRYENCO SCIENCES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
PREFERRED COMMON
STOCK STOCK ADDITIONAL RETAINED
----- ----- PAID-IN EARNINGS
SHARES AMOUNT SHARES AMOUNT CAPITAL WARRANTS (DEFICIT) TOTAL
------ ------ ------ ------ ------- -------- --------- -----
Balance at August 31, 1993 - $- 5,326,936 $53 $9,469 $55 $(2,386) $7,191
Issuance of warrants - - - - - 94 - 94
Issuance of preferred
stock 67,838 1 - - 678 - - 679
Issuance of common
stock in exchange for
warrants exercised - - 56,974 1 (1) - - -
Cash dividends paid on
preferred stock ($.32
per share) - - - - - - (21) (21)
Net loss - - - - - - (896) (896)
--------------------------------------------------------------------------------------------
Balance at August 31, 1994 67,838 1 5,383,910 54 10,146 149 (3,303) 7,047
Sale of common stock - - 800,000 8 2,223 - - 2,231
Issuance of warrants - - - - - 74 - 74
Issuance of common
stock in exchange for
warrants exercised - - 658,918 6 1,653 (54) - 1,605
Cash dividends paid on
preferred stock ($1.22
per share) - - - - - - (82) (82)
Net income - - - - - - 361 361
--------------------------------------------------------------------------------------------
Balance at August 31, 1995 67,838 1 6,842,828 68 14,022 169 (3,024) 11,236
Issuance of common
stock in exchange for
warrants exercised - - 154,169 2 (2) - - -
Dividends on preferred
stock ($1.32 per share) - - - - - - (90) (90)
Net income - - - - - - 527 527
--------------------------------------------------------------------------------------------
Balance at August 31, 1996 67,838 $1 6,996,997 $ 70 $ 14,020 $ 169 $(2,587) $ 11,673
====== == ========== ====== ======== ======= ======= ========
See accompanying notes.
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CRYENCO SCIENCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEAR ENDED AUGUST 31
--------------------
1996 1995 1994
---- ---- ----
OPERATING ACTIVITIES
Net income (loss) $ 527 $ 361 $ (896)
Adjustments to reconcile net income (loss)
to net cash provided (used) by
operating activities:
Depreciation 857 684 571
Amortization 436 346 338
Deferred taxes 26 - -
Write-down of deferred financing costs 147 - -
Changes in operating assets and liabilities:
Accounts receivable (3,954) (48) 525
Costs and estimated earnings in excess of
billings on uncompleted contracts 2,763 (3,191) (293)
Inventories (125) (1,562) (114)
Income tax payable 72 596 863
Prepaid expenses and other assets (101) 14 228
Accounts payable (1,245) 2,107 217
Accrued expenses 220 (16) 87
Accrued management fees - 80 133
Customer deposits - (607) 285
-------- ------- -------
Net cash provided (used) by operating activities (377) (1,236) 1,944
INVESTING ACTIVITIES
Purchases of property and equipment (1,956) (1,402) (601)
Payments for operating lease property (611) - -
Proceeds from sale of property and equipment - 6 17
-------- ------- -------
Net cash used by investing activities (2,567) (1,396) (584)
FINANCING ACTIVITIES
Net proceeds from issuance of common stock - 3,892 -
Net proceeds from issuance of stock warrants - 72 60
Principal payments on long-term debt and capital
lease obligations (31,322) (1,343) (1,927)
Proceeds from long-term debt borrowings, net
of expenses 33,812 - -
Exercise of common stock options and warrants - (54) -
Dividends paid on preferred stock (67) (82) (21)
-------- ------- -------
Net cash provided (used) by financing activities 2,423 2,485 (1,888)
-------- ------- -------
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CRYENCO SCIENCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)
YEAR ENDED AUGUST 31
--------------------
1996 1995 1994
---- ---- ----
Net decrease in cash and cash equivalents $(521) $(147) $ (528)
Cash and cash equivalents at beginning of year 632 779 1,307
----- ----- -------
Cash and cash equivalents at end of year $ 111 $ 632 $ 779
===== ===== =======
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ 247 $ - $ -
Cash paid for interest 787 875 1,267
Supplemental disclosures of noncash financing
activities:
Equipment acquired and financed under capital
leases 304 317 87
Retirement of debt in exchange for issuance of
Series A preferred stock - - 678
Issuance of common stock in exchange for
warrants exercised 2 2 1
Issuance of warrants as part of debt
restructurings - - 35
See accompanying notes.
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CRYENCO SCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1996
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF THE BUSINESS
Cryenco Sciences, Inc. (the Company) designs and manufactures controlled
atmospheric enclosures and products to transport, store and dispense cryogenic
materials.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Cryenco Sciences,
Inc. and its wholly owned subsidiaries. All significant intercompany balances
and transactions have been eliminated.
INCOME TAXES
Deferred tax liabilities or assets (net of a valuation allowance) are provided
in the financial statements by applying the provisions of applicable tax laws to
measure the deferred tax consequences of temporary differences that will result
in net taxable or deductible amounts in future years as a result of events
recognized in the financial statements in the current or preceding years.
CASH AND CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the Company considers
all highly liquid investments with original maturities of three months or less
to be cash equivalents.
CONTRACT REVENUE AND COST RECOGNITION
Revenue and costs on long-term contracts (contracts with a value in excess of
$100,000 and requiring more than six months to complete) are recognized using
the percentage-of-completion method (measured by the percentage of costs
incurred to date to total estimated costs for each contract) or units delivered,
whichever is deemed more appropriate for the contract.
Revenue and costs on short-term contracts (contracts with a value less than
$100,000 and requiring six months or less to complete) are recognized using the
completed contract method, which results in the deferral of revenue and costs
until such time as the contracts are complete. A contract is considered complete
when all costs, except insignificant items, have been incurred and the units
have been delivered to the customer.
Contract costs include all direct material and labor costs and those indirect
costs related to contract performance such as indirect labor, building and
equipment rental, supplies, freight and depreciation costs. Selling, general and
administrative costs are charged to expense as incurred. Provisions for
estimated losses on uncompleted contracts are made in the period such losses are
determined.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market. The
Company records an allowance for excess and obsolete inventory based on periodic
reviews.
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PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets.
DEFERRED FINANCING COSTS
Deferred financing costs are amortized using the straight-line method over the
term of the related indebtedness.
ORGANIZATIONAL COSTS
Organizational costs are amortized using the straight-line method over five
years.
GOODWILL
Goodwill is being amortized using the straight-line method over forty years. The
Company periodically evaluates goodwill impairment on the basis of whether the
goodwill is fully recoverable from projected, undiscounted operating cash flows.
RESEARCH AND DEVELOPMENT
Research and development expenses are typically charged to expense as incurred
or are charged against a specific contract, if to be reimbursed by the customer.
In May 1995, the Company entered into an arrangement with a corporation under
which the corporation would provide $452,500 to the Company for the development,
demonstration, delivery, and installation of an on-site Thermo-Acoustic Driven
Orifice Pulse Tube Refrigerator (TADOPTR) liquefier and LNG dispensing system.
The period of performance under the arrangement was over twelve months. For the
year ended August 31, 1995, the Company incurred approximately $255,000 in costs
for development for which it was fully reimbursed. For the year ended August 31,
1996, the Company incurred approximately $504,000 in costs for development and
received $120,000 of reimbursement.
WARRANTIES
The Company records a warranty accrual at the time of sale for estimated claims,
based on actual claims experience. The warranty for the Company's products
generally is for defects in material and workmanship for a period of twelve
months.
EARNINGS (LOSS) PER COMMON SHARE
Net earnings (loss) per common share is computed using the weighted average
number of shares of common stock outstanding. When dilutive, stock options and
warrants are included as share equivalents using the treasury stock method. In
calculating net earnings (loss) per share, preferred dividends of $89,661 and
$82,538 decreased the net earnings during 1996 and 1995, respectively. Preferred
dividends of $21,150 increased the net loss during 1994. Fully diluted net
earnings (loss) per common share is not significantly different from primary net
earnings (loss) per common share.
CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS
During the fiscal years ended August 31, 1996, 1995 and 1994, revenue from one
customer, General Electric, was approximately $11,067,000 (35% of revenue),
$9,702,000 (36% of revenue), and $8,888,000 (50% of revenue), respectively. This
customer also represented $1,140,000 (21%) and $659,000 (24%) of accounts
receivable at August 31, 1996 and 1995, respectively, and $2,775,000 (70%) and
$2,734,000 (40%) of costs and estimated earnings in excess of billings on
uncompleted contracts at August 31, 1996 and 1995, respectively.
19
20
Revenue from Jack B. Kelley, Inc. and affiliates totaled approximately
$9,566,000 (31% of revenue) in 1996, $9,854,000 (36% of revenue) in 1995 and
$2,545,000 (14% of revenue) in 1994. Jack B. Kelley, Inc. and affiliates also
represent $1,835,000 (34%) and $821,000 (30%) of accounts receivable and
$435,000 (11%) and $2,182,000 (32%) of costs and estimated earnings in excess of
billings on uncompleted contracts at August 31, 1996 and 1995, respectively.
Revenue from Air Products totaled approximately $4,024,000 (13% of revenue) in
1996. Air Products also represents $408,000 (8%) of accounts receivable and
$960,000 (24%) of costs and estimated earnings in excess of billings on
uncompleted contracts as of August 31, 1996.
The Company performs periodic credit evaluations of its customers' financial
condition and generally does not require collateral. Receivables are generally
due within 30 days. Credit losses consistently have not been significant.
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 amounts reported in the financial statements and disclosures made in
the accompanying notes to the financial statements. Actual results could differ
from those estimates.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying values of the Company's financial assets approximate fair value.
The fair values of debt are estimated using discounted cash flow analyses with
discount rates equal to the interest rates currently being offered for loans
with similar terms to borrowers of similar credit quality. While the Company
believes the carrying value of its note payable generally approximates fair
value, a reasonable estimate of the fair market value could not be made without
incurring excessive costs.
STOCK BASED COMPENSATION
In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 123, Accounting for Stock-Based Compensation. Statement No. 123 is
applicable for fiscal years beginning after December 15, 1995 and gives the
option to either follow fair value accounting or to follow Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees (APB No. 25), and
related interpretations.
The Company has determined it will follow APB No. 25 and related interpretations
in accounting for its employee stock options. The Company has not yet determined
the impact on its financial position or results of operations had fair value
accounting been adopted.
LONG-LIVED ASSETS
In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present. The Company is required to adopt Statement
No. 121 in the first quarter of fiscal year 1997 and, based on current
circumstances, does not believe the effect of adoption will be material.
20
21
2. INVENTORIES
At August 31, inventories consist of:
1996 1995
---- ----
(IN THOUSANDS)
Raw materials $3,344 $3,514
Finished goods and work-in-process 1,139 794
----- ---
4,483 4,308
Less reserve for obsolescence 150 100
--- ---
$4,333 $4,208
====== ======
3. COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS
At August 31, costs and estimated earnings in excess of billings on uncompleted
contracts consist of:
1996 1995
---- ----
(IN THOUSANDS)
Costs on uncompleted contracts $5,436 $8,776
Estimated gross profit to date 2,203 2,616
------ ------
Estimated revenue 7,639 11,392
Less billings to date 3,695 4,685
------ ------
$3,944 $6,707
====== ======
4. LONG-TERM DEBT
Long-term debt is comprised of the following:
AUGUST 31,
1996 1995
---- ----
(IN THOUSANDS)
Note payable bearing interest at 14%, subordinated,
unsecured. Interest is payable quarterly and
principal payments of $275,000 are payable
quarterly beginning November 30, 1996. $1,700 $2,200
Term loan maturing December 31, 1998 bearing interest
at the reference rate (as defined in the loan agreement)
plus 3/4% (9.0% at August 31, 1996) payable monthly.
Principal payments of $12,806 are payable monthly
beginning September 15, 1996. 615 -
Term loan bearing interest at the adjusted LIBO rate
plus 3 1/2%. - 2,500
Revolving credit facility. Interest payable at the
adjusted LIBO-rate plus 3 1/2%. - 2,200
21
22
AUGUST 31,
-----------------------
1996 1995
---- ----
(IN THOUSANDS)
Revolving credit facility maturing December 31, 1998
bearing interest at the reference rate (as defined in the
loan agreement) plus up to an additional 1.0%
depending upon financial performance (9.25% at
August 31, 1996 $ 7,210 $ -
Capital lease Obligations 491 322
------- ------
10,016 7,222
Less current portion 1,382 1,593
------- ------
$ 8,634 $5,629
======= ======
In December 1995, the Company entered into a Credit and Security Agreement (the
Agreement) with FBS Business Finance Corporation (FBS). Under the Agreement, FBS
has provided a revolving loan facility of up to $9,000,000 through December 31,
1997, increasing to $10,000,000 through December 31, 1998, subject to the amount
of the Company's borrowing base, and a term loan facility of up to $2,960,000,
subject to eligible manufacturing additions for the year ended August 31, 1996.
On January 16, 1996, the Company obtained the initial funding under the
revolving loan in the amount of $5,825,000. The proceeds of this loan were used
to retire the outstanding revolving credit facility ($2,200,000), to retire the
outstanding term loan ($2,125,000), to make a partial payment on the outstanding
note payable ($500,000) and for general corporate purposes ($1,000,000). As a
result of the early retirement of the term loan, the revolving credit facility,
and the partial payment on the note payable, the Company recognized an
extraordinary expense of $93,000 (net of the related tax benefit of $54,000) for
the write-down of deferred financing expenses related to these debts.
The term loan and revolving credit facility are secured by the common stock of
Cryenco, Inc. and all accounts receivable, inventories, property and equipment
and intangible assets of the Company.
The Company must comply with certain debt covenants, including the maintenance
of certain financial ratios and restrictions on dividends.
The aggregate maturities of long-term debt are as follows (in thousands):
YEAR ENDING AUGUST 31:
1997 $1,382
1998 899
1999 7,648
2000 74
2001 13
-------
$10,016
=======
5. LEASES
Office space, production facilities, and certain equipment are leased under
agreements which are classified as operating leases for financial reporting
purposes. The facilities leases provide for renewal options of up to five and
ten years at approximately the same rates. Total rental expense charged to
operations for the years ended August 31, 1996, 1995 and 1994 was $784,000,
$853,000 and $828,000, respectively.
22
23
The Company's assets held under capital leases, which are included in property
and equipment, consist of the following at August 31:
1996 1995
---- ----
Machinery and equipment $628,003 $418,039
Less accumulated depreciation 110,481 52,824
-------- --------
$517,522 $365,215
======== ========
Future minimum lease payments under capital and noncancelable operating leases
are as follows (in thousands):
CAPITAL OPERATING
LEASES LEASES
------ ------
YEAR ENDING AUGUST 31:
1997 $180 $ 860
1998 180 360
1999 155 359
2000 80 42
2001 20 13
---- ------
Total minimum lease payments 615 $1,634
======
Less interest 124
----
Present value of minimum lease payments $491
====
Depreciation expense relating to assets held under capital leases for the years
ended August 31, 1996, 1995 and 1994 was $98,323, $36,023 and $16,801,
respectively.
Subsequent to August 31, 1996, the property located at 3811 Joliet Street,
Denver, Colorado, was sold and a new lease agreement between the Company and the
new owners became effective. Under the terms of the lease, the Company is
obligated to pay a minimum rent of $38,841 per month for 10 years (subject to
increases based on an inflation index), property taxes and insurance. This lease
replaces the Company's lease with the prior owners which had one year remaining
with rent of $41,666 per month, and is not included in the future minimum lease
payments shown above.
6. EQUIPMENT LEASING
During the year ended August 31, 1996, the Company entered into lease agreements
under which equipment manufactured by the Company is leased to customers. These
leases have been classified as operating leases by the Company.
Future minimum lease payments under noncancelable operating leases are as
follows (in thousands):
YEAR ENDING AUGUST 31:
1997 $ 81
1998 74
----
$155
====
23
24
7. COMMON STOCK, PREFERRED STOCK, WARRANTS, AND OPTIONS
In connection with a term loan and subordinated note payable, the Company issued
warrants to purchase 197,456 shares of its Class A common stock and 543,372
shares of its Class B common stock for $.86112 per share (the original
warrants). At April 15, 1992, the Company issued warrants to purchase a total of
38,323 additional shares of Class B common stock at $5 per share (the new
warrants) to the holders of the original Class A and Class B warrants in
exchange for the removal of a feature of the original warrants whereby the
holders had the option to require the Company to purchase the warrants or the
stock issued pursuant to the warrants. During 1995, the Company increased the
number of original warrants to purchase an additional 1,443 shares of its Class
A common stock and 16,854 shares of its Class B common stock and reduced the
exercise price to $.8352 per share as a result of antidilutive provisions which
were invoked when the Company issued the shares of common stock described below.
In addition, the new warrants were increased to purchase an additional 1,189
shares of Class A common stock and the exercise price was reduced to $4.8496 per
share. The holders of the original warrants, as amended, and the new warrants
have a "cashless exercise right," whereby the holders may reduce the number of
shares to be received to pay the exercise price, such reduction to be equal to
the exercise price to be paid divided by the then fair market value per share.
These warrants expire August 29, 2003. During the years ended August 31, 1996,
1995 and 1994, warrants for 191,766, 150,000 and 75,925 shares, respectively,
were exercised, using the cashless exercise option, which resulted in the
issuance of 154,169, 118,918 and 56,974 shares, respectively, of Class A common
stock.
In 1992, 130,000 outstanding options and warrants to acquire shares of Gulf &
Mississippi Corporation, which had acquired the Company in a reverse
acquisition, were converted into options and warrants to purchase the same
number of shares of Class A common stock of the Company. Warrants to purchase
100,000 shares of the Company's Class A common stock at $3.6956 per share
expired July 9, 1995 and options to purchase 30,000 shares of the Company's
Class A common stock at $16 per share are exercisable prior to November 5, 1996.
The options were issued pursuant to the Company's 1986 Non-Qualified Stock
Option Plan, which provides for an aggregate of 50,000 shares of common stock to
be issued under the Plan.
In connection with the 1992 public offering, the Company sold a warrant to
purchase 10,000 shares of Class A common stock at $5.50 per share for $100 to
one of the underwriters. The warrant is exercisable for a period of five years
commencing August 13, 1993.
In March 1993, in conjunction with a debt restructuring, the Company was
advanced $650,000 from stockholders, treated as junior subordinated notes. In
consideration for the advances, these stockholders received warrants to purchase
130,000 shares of Class A common stock at $7.90 per share. The warrants are
exercisable for a period of five years commencing March 12, 1993. The warrants'
fair value of $55,000 at time of issuance, as determined by an independent
appraiser, was capitalized as a deferred expense and is being amortized to
expense over five years.
24
25
In November 1993, the Company amended certain of its debt agreements with
respect to certain covenants. Under the terms of these amendments, the Company
issued warrants to purchase 35,000 shares of the Company's Class B common stock
and warrants to purchase 17,500 shares of the Company's Class A common stock.
The warrants were exercisable at a price of $6.38 per share and expire on August
29, 2003. The warrants' fair value at time of issuance, as determined by the
Company, was $22,000. During 1995, the Company increased the number of warrants
to purchase an additional 1,086 shares of its Class B common stock and 542
shares of its Class A common stock and reduced the exercise price to $6.19 per
share as a result of antidilutive provisions which were invoked when the Company
issued the shares of common stock described below.
During the year ended August 31, 1994, the Company exchanged 67,838 shares of
its Series A Preferred Stock for the junior subordinated notes and related
current interest notes totaling approximately $678,000. The Series A Preferred
Stock provides for a cumulative cash dividend of 12% of the aggregate
liquidation value, as defined, per annum through August 31, 1995, increasing 1%
per annum thereafter to a maximum of 18%. However, all dividends in excess of
12% per annum shall not be paid in cash, but shall be paid by issuing additional
shares of Series A Preferred Stock. The Series A Preferred Stock shall be
redeemable, in whole or in part, at the option of the Company by resolution of
its Board of Directors, at any time and from time to time, at the liquidation
value of such shares, plus all dividends payable on such shares up to the date
fixed for redemption. In consideration for the exchange, the Company issued
warrants to purchase up to 65,000 shares of the Company's Class A common stock,
at an exercise price of $3.55 per share. The warrants expire January 29, 2000.
The warrants' fair value of $13,000 at time of issuance, as determined by an
independent appraiser, was capitalized as a deferred expense and is being
amortized to expense over five years.
As described in Note 10, in June 1994, the Company received $780,000 from a
limited partnership to fund the development of a 500 gallon per day TADOPTR. The
partnership received warrants as a part of the transaction to purchase 200,000
shares of Class A common stock at $3.00 per share. The warrants expire March 20,
2000. The warrants' fair value, as determined by an independent appraiser, was
$60,000 at the time of issuance.
On November 29, 1994, the Company entered into a Purchase Agreement with a group
of purchasers which provided for the sale of 800,000 shares of Class A common
stock and warrants to purchase 700,000 shares of Class A common stock in the
future at an exercise price of $4.00 per share. The aggregate purchase price for
the shares and warrants was approximately $2,700,000. The purchase was completed
in two closings, on December 20, 1994 and January 30, 1995, from which the
Company realized net proceeds of approximately $2,300,000. Warrants for 507,503
and 192,497 shares are exercisable for a period of five years commencing
December 20, 1994 and January 30, 1995, respectively. The warrants' fair value,
as determined by the Company, was $70,000 at the time of issuance.
On May 18, 1995, the Company agreed, among other things, to reduce the exercise
price of the warrants referred to in the preceding paragraph to $3.00 per share
and the purchasers agreed to exercise a portion of the warrants. On June 8,
1995, the purchasers exercised warrants to purchase 539,900 shares of Class A
common stock, from which the Company realized net proceeds of approximately
$1,600,000.
In connection with the aforementioned Purchase Agreement, the Company also
issued warrants to purchase 25,000 shares of Class A common stock at an exercise
price of $4.00 per share. The warrants expire December 20, 1999. The warrants'
fair value, as determined by the Company, was $2,500 at the time of issuance.
The Company's 1992 Employee Incentive and Non-Qualified Stock Option Plan (the
1992 Plan) was adopted effective April 1, 1992. The 1992 Plan provides for up to
187,500 shares of the Company's Class A common stock pursuant to the exercise of
stock options which may be granted to employees and directors. Options may be
issued at not less than the fair market value on the date of grant.
25
26
Information for each of the three years in the period ended August 31, 1996,
with respect to activity of the 1992 Plan, is as follows:
NUMBER OF EXERCISE
OPTIONS PRICE
--------- ---------
Options outstanding at August 31, 1993 26,000 $4.00-6.75
Granted in 1994 19,500 $3.00-6.38
-------
Options outstanding at August 31, 1994 45,500 $3.00-6.75
Granted in 1995 58,000 $ 5.38
Forfeited in 1995 (17,500) $4.00-6.38
-------
Options outstanding at August 31, 1995 86,000 $3.00-6.75
Granted in 1996 96,500 $ 4.50
Forfeited in 1996 (52,000) $4.50-6.38
-------
Options outstanding at August 31, 1996 130,500 $3.00-6.75
-------
The Company's 1995 Incentive and Non-Qualified Stock Option Plan (the 1995 Plan)
was adopted effective November 16, 1995. The 1995 Plan provides for up to
300,000 shares of the Company's Class A common stock pursuant to the exercise of
stock options which may be granted to employees and directors. Options may be
issued at not less than the fair market value on the date of grant. No options
have been granted under the 1995 Plan at August 31, 1996.
The Company adopted the 1993 Non-Employee Director Stock Option Program (the
Program) effective September 1, 1993, whereby each director who is not an
officer or employee of the Company is entitled to receive options to purchase
500 shares of the Company's Class A common stock for each fiscal quarter served
as a director, commencing with the quarter ending November 30,1993. Eligible
directors are limited to a total of 20,000 shares under the Program. The
purchase price is determined based on the fair market value of outstanding
shares as of the last business day of the applicable fiscal quarter (the Award
Date). Options are exercisable for a period of ten years subsequent to the Award
Date. In connection with the Program, the Company has reserved 40,000 authorized
and unissued shares of Class A common stock for issuance and delivery upon
exercise of the options.
Information for each of the three years in the period ended August 31, 1996,
with respect to activity of the Program is as follows:
NUMBER OF EXERCISE
OPTIONS PRICE
------- -----
Options outstanding at August 31, 1993 -
Granted in 1994 3,000 $2.50 - 6.13
------
Options outstanding at August 31, 1994 3,000 $2.50 - 6.13
Granted in 1995 4,000 $3.75 - 4.25
------
Options outstanding at August 31, 1995 7,000 $2.50 - 6.13
Granted in 1996 4,000 $3.50 - 4.75
------
Options outstanding at August 31, 1996 11,000 $2.50 - 6.13
======
26
27
8. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets at August 31 are as follows:
1996 1995
---- ----
(IN THOUSANDS)
Deferred tax liabilities:
Prepaid expenses $ 9 $ 35
Deferred tax assets:
Inventory obsolescence 56 37
Warranty 52 75
Inventory capitalization 23 25
Accrued liabilities 64 50
Tax basis of assets in excess of book basis 35 87
Other 4 6
----- ----
Total deferred tax assets 234 280
Valuation allowance for deferred tax assets (225) (245)
----- ----
Net deferred tax assets 9 35
----- ----
$ - $ -
===== ====
Components of income tax expense (benefit) are as follows:
CURRENT DEFERRED TOTAL
------- -------- -----
(IN THOUSANDS)
1996
Federal $ 389 $(26) $ 363
State - - -
----- ---- -----
$ 389 $(26) $ 363
===== ==== =====
1995
Federal $ 194 $ - $ 194
State - - -
----- ---- -----
$ 194 $ - $ 194
===== ==== =====
1994
Federal $(403) $ - $(403)
State - - -
----- ---- -----
$(403) $ - $(403)
===== ==== =====
A reconciliation between the actual income tax expense (benefit) and income
taxes computed by applying the statutory tax rates is as follows:
1996 1995 1994
---- ---- ----
(IN THOUSANDS)
Computed "expected" tax expense (benefit) $334 $189 $(442)
Goodwill and other permanent differences 99 86 -
Other (70) (81) 39
---- ---- -----
Actual tax expense (benefit) $363 $194 $(403)
==== ==== =====
The Company has net operating loss carryforwards for state income tax purposes
of approximately $2,668,000 which expire in various amounts from 2008 to 2009.
Net operating loss carryforwards of approximately $1,048,000 and $977,000 are
used for state income tax purposes in 1996 and 1995, respectively.
27
28
9. EMPLOYEE BENEFIT PLAN
The Company's 401(k) savings plan provides for both employee and employer
contributions. Employees who have reached the age of 21 years and who have
completed one year of service are eligible to participate in the Plan. Employees
may contribute up to 15% of their annual compensation limited to the maximum
contribution allowable under Internal Revenue Service guidelines. The employer
matches 25% of each employee's contribution, up to $1,000. Employee
contributions vest immediately, while amounts contributed by the employer vest
based upon the employee's term of service. Contributions for the years ended
August 31, 1996, 1995 and 1994 were $68,000, $52,000 and $41,000, respectively.
10. RELATED PARTY TRANSACTIONS
In June 1994, the Company entered into an arrangement with a limited partnership
in which the partnership would contribute $780,000 to the Company for the
development of a 500 gallon per day TADOPTR. A director of the Company is a
general partner of the limited partnership. In exchange for this funding, the
Company issued warrants to purchase 200,000 shares of Class A common stock at
$3.00 per share, and entered into a Royalty Rights and Technology Development
Agreement with the partnership pursuant to which royalties of between 1% and 5%
of net revenues from the sale of TADOPTRs will be paid to the partnership until
the partnership receives an aggregate of $1,600,000, after which the royalties
decrease to between 0.6% and 0.75% of net revenues. The royalties are payable
for a period of 20 years from the execution of the agreement. In addition, the
partnership was given a security interest in the Company's rights in the TADOPTR
to secure the royalty payments. The Company was obligated to spend funds
provided by the partnership for the development of a 500 gallon per day TADOPTR
over a period of 12 to 18 months. For the years ended August 31, 1996 and 1995,
the Company incurred approximately $455,000 and $325,000, respectively, in costs
for this development, for which it has been fully reimbursed under this
agreement.
In fiscal year 1992, the Company entered into an agreement with an affiliate of
several of the Company's principal stockholders pursuant to which such entity
provides a variety of management advisory services to the Company. The
agreement, which terminates on August 30, 1997, provides for monthly payments of
approximately $10,000 by the Company. At August 31, 1996 and 1995, the Company
has accrued management advisory fees of approximately $324,000 related to the
agreement.
In connection with the Purchase Agreement described in Note 7, the Company
issued warrants to purchase 700,000 and 25,000 shares of Class A common stock to
two entities within the purchaser group in which two directors of the Company
have a financial interest.
In June 1995, a limited liability company agreement was signed between Cryenex,
Inc. (Cryenex), a wholly owned subsidiary of the Company, and an affiliate of
Jack B. Kelley, Inc. for the establishment of a limited liability company,
Applied LNG Technologies USA, LLC (ALT), to develop turnkey projects utilizing
liquefied natural gas. Cryenex is a 49% owner of ALT, and accounts for its
investment using the equity method, under which Cryenex's share of income and
losses of ALT is reflected in income as earned and distributions will be
credited against the investment when received. As of August 31, 1995, Cryenex's
investment of $49,000 was reduced to zero. Under terms of the agreement, Cryenex
agreed to provide certain services to ALT, reimbursable to Cryenex, in an amount
up to $490,000. During the fiscal years ended August 31, 1996 and 1995, Cryenex
has provided services to ALT in the amount of $189,000 and $83,000,
respectively. In addition, during the fiscal year ended August 31, 1996, revenue
resulting from sales to ALT amounted to approximately $1,344,000. At August 31,
1996 and 1995, receivables from ALT represented $1,423,000 and $83,000,
respectively.
28
29
11. FAIR VALUES OF FINANCIAL INSTRUMENTS
FASB No. 107, Disclosures about Fair Value of Financial Instruments, requires
the disclosure of the fair value of all financial instruments, both on and off
balance sheet, for which it is practicable to estimate their value. Financial
instruments are generally defined as cash, equity instruments or investments and
contractual obligations to pay or receive cash or another financial instrument.
In defining fair value, the Statement indicates quoted market prices are the
preferred means of estimating the value of a specific instrument, but in cases
where market quotes are not available, fair values should be determined using
various valuation techniques such as discounted cash flow calculations. Those
techniques are significantly affected by the assumptions used, including the
discount rate and estimates of future cash flows. In that regard, the derived
fair value estimates cannot be substantiated by comparison to independent
markets and, in many cases, could not be realized in immediate settlement of the
instrument. FASB No. 107 excludes certain financial instruments and all
nonfinancial instruments from its disclosure requirements. Accordingly, the
aggregate fair value amounts do not represent the underlying value of the
Company.
29
30
B) PRO FORMA FINANCIAL INFORMATION
The accompanying Pro Forma Condensed Consolidated Financial Statements have been
prepared based upon certain assumptions and include adjustments as detailed in
the Notes to Pro Forma Condensed Consolidated Financial Statements. The
estimated fair market values reflected in the Pro Forma Condensed Consolidated
Financial Statements are based on preliminary estimates and assumptions and are
subject to revision as more information regarding asset and liability valuations
becomes available. In management's opinion, the preliminary allocation reflected
herein is not expected to be materially different from the final allocation.
The Pro Forma Condensed Consolidated Statements of Operations do not assume any
additional profitability resulting from the application of the Company's revenue
enhancement measures or cost reduction programs to the historical results of
Cryenco, nor do they assume increases in corporate general and administrative
expenses which may have resulted from the Company managing Cryenco for the
periods presented.
The accompanying Pro Forma Condensed Consolidated Financial Statements should be
read in conjunction with the Condensed Consolidated Financial Statements of the
Company and the related notes thereto as included in the Company's Form 10-Q as
of June 30, 1997. Such pro forma information is based on historical data with
respect to the Company and Cryenco. The pro forma information is not necessarily
indicative of the results that might have occurred had such transactions
actually taken place at the beginning of the period specified and is not
intended to be a projection of future results. The pro forma information
presented herein is provided to comply with the requirements of the Securities
and Exchange Commission. The pro forma information does not reflect any
adjustments to reflect the manner in which the acquired entity is being or will
be operated under the control of the Company.
CHART INDUSTRIES, INC.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS PAGE
----
Pro Forma Condensed Consolidated Balance Sheet
as of June 30, 1997 31
Pro Forma Condensed Consolidated Statement of Operations
for the six months ended June 30, and May 31, 1997 32
Pro Forma Condensed Consolidated Statement of Operations for
the twelve months ended December 31, and November 30, 1996 33
Notes to Pro Forma Condensed Consolidated Financial Statements 34-35
30
31
CHART INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(dollars in thousands, except per share amounts)
CHART CRYENCO PRO FORMA
ASSETS JUNE 30, 1997 MAY 31, 1997 ADJUSTMENTS TOTAL
------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents $ 41 $ 426 $ 467
Restricted cash 4,597 4,597
Accounts receivable 21,993 4,510 26,503
Inventories 19,984 5,558 25,542
Other current assets 5,478 2,766 8,244
------------------------------------------------------------------------------
Total Current Assets 52,093 13,260 65,353
Property, plant & equipment, net 20,864 3,784 24,648
Goodwill 1,649 5,114 $ 8,863 (2) 15,626
Other assets, net 675 306 981
------------------------------------------------------------------------------
TOTAL ASSETS $ 75,281 $ 22,464 $ 8,863 $ 106,608
==============================================================================
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable 5,755 1,490 7,245
Customer advances 15,359 15,359
Billings in excess of contract revenue 2,325 2,325
Accrued expenses and other liabilities 13,641 1,754 150 (1) 15,545
Current portion of long-term debt 2,896 294 3,190
------------------------------------------------------------------------------
Total Current Liabilities 39,976 3,538 150 43,664
Long-term debt 4,238 6,964 20,239 (1) 31,441
Deferred income taxes 591 591
Shareholders' Equity
Common stock 102 71 (71) (4) 102
Additional paid-in capital 18,710 14,027 (14,027) (4) 18,710
Warrants 169 267 (3) 436
Retained earnings (deficit) 21,735 (2,305) 2,305 (4) 21,735
Treasury stock (10,071) (10,071)
------------------------------------------------------------------------------
30,476 11,962 (11,526) 30,912
------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 75,281 $ 22,464 $ 8,863 $ 106,608
==============================================================================
31
32
CHART INDUSTRIES, INC AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, AND MAY 31, 1997
(In thousands, except per share data)
CHART CRYENCO PRO FORMA
JUNE 30, 1997 MAY 31, 1997 ADJUSTMENTS TOTAL
----------------------------------------------------
Sales $ 84,198 $ 13,871 $ 98,069
Cost of products sold 58,556 11,454 70,010
----------------------------------------------------
Gross profit 25,642 2,417 28,059
Selling, general & administrative expenses 11,712 1,631 $ 111 (5) 13,454
----------------------------------------------------
Operating income 13,930 786 (111) 14,605
Interest (income) expense, net 18 450 860 (6) 1,328
----------------------------------------------------
Income before income taxes 13,912 336 (971) 13,277
Income taxes 4,730 124 (292)(7) 4,562
----------------------------------------------------
Net income $ 9,182 $ 212 $ (679) $ 8,715
====================================================
Net income per common share $ 0.62 N/A N/A $ 0.59
====================================================
Shares used in per share calculations 14,846 N/A N/A 14,846
32
33
CHART INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, AND NOVEMBER 30, 1996
(in thousands, except per share amounts)
CHART CRYENCO
DECEMBER 31, NOVEMBER 30, PRO FORMA
1996 1996 ADJUSTMENTS TOTAL
------------------------------------------------------------------
Sales $ 148,400 $ 30,648 $ 179,048
Cost of products sold 103,398 23,996 127,394
------------------------------------------------------------------
Gross profit 45,002 6,652 51,654
Selling, general & administrative expenses 21,745 4,556 $ 222 (5) 26,523
------------------------------------------------------------------
Operating income 23,257 2,096 (222) 25,131
Interest expense-net 623 980 1,720 (6) 3,323
------------------------------------------------------------------
Income before income taxes 22,634 1,116 (1,942) 21,808
Income taxes 7,605 413 (602) (7) 7,416
------------------------------------------------------------------
Net income $ 15,029 $ 703 $ (1,340) $ 14,392
==================================================================
Net income per common share $ 0.99 N/A N/A $ 0.95
=================================================================
Shares used in per share calculations 15,186 N/A N/A 15,186
33
34
CHART INDUSTRIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On July 31, 1997, the Company completed its acquisition of Cryenco from the
shareholders of Cryenco by means of a merger between Cryenco and Chart
Acquisition Company, Inc., a wholly-owned subsidiary of the Company. The
Merger was accomplished pursuant to the Merger Agreement. A copy of the
Merger Agreement is filed as an Exhibit hereto.
Cryenco manufactures vacuum-jacketed containment systems and related products
for the transportation, storage and dispensing of LNG, LCNG and liquefied
argon, oxygen and nitrogen. Cryenco's products include cryogenic transport
trailers, large cryogenic storage tanks, cryogenic intermodal containers,
LNG/LCNG fueling stations, fuel gas modules and cryostats for MRI and
low-temperature research.
Total consideration for the Merger consisted of the payment to the shareholders
of Cryenco of $19.7 million to purchase the outstanding common stock and
certain warrants of Cryenco and of $685,000 to redeem the outstanding preferred
stock of Cryenco. Pursuant to the Merger Agreement, the Company also entered
into the Amended Warrant Agreements between the Company, Cryenco, and the
holders of certain other warrants for the purchase of the common stock of
Cryenco (the "Cryenco Warrants"). The Amended Warrant Agreements convert the
Cryenco Warrants into warrants for the purchase of the Company's Common Stock,
par value $.01 per share, at the conversion ratio provided for in the Merger
Agreement. The Cryenco Warrants and the Amended Warrant Agreements are
filed as Exhibits hereto.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET ADJUSTMENTS
The accompanying Pro Forma Condensed Consolidated Balance Sheet as of June 30,
1997 gives effect to the Merger by combining the Company's June 30, 1997
balances with Cryenco's May 31, 1997 balances to conform the different fiscal
year ends. The estimated fair market values reflected herein are based on
preliminary estimates and assumptions and are subject to revision as more
information becomes available. In management's opinion, the preliminary
allocation is not expected to be materially different from the final
allocation.
(1) To record the total consideration paid for preferred and common stock
and common stock warrants including estimated transaction costs.
(2) Preliminary allocation of purchase price was made to goodwill pending
final valuations when available.
34
35
(3) Recognition of the Company's common stock warrants at fair value
exchanged for Cryenco common stock warrants.
(4) To eliminate Cryenco common stock, preferred stock, additional paid in
capital and retained deficit.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
ADJUSTMENTS
The accompanying Pro Forma Condensed Consolidated Statements of Operations for
the six months ended June 30, 1997 and the year ended December 31, 1996 give
effect to the Merger as if such merger occurred on January 1, 1996 by combining
the indicated periods of the Company with the six month period ended May
31, 1997 and the twelve month period ended November 30, 1996 for Cryenco to
conform the different fiscal year ends.
(5) To record adjustment to amortization expense relative to the
Company's new basis in net assets acquired in conjunction with the
Merger as if said merger had occurred January 1, 1996. The
amortization expense of $111,000 and $222,000 for the six months
ended June 30, 1997 and the year ended December 31, 1996,
respectively, is resultant from the amortization, over a 40-year
life, of the $8,863,000 in additional goodwill recorded in
conjunction with the Merger.
(6) To record additional interest expense of $860,000 and $1,720,000 for
the six months ended June 30, 1997 and the year ended December 31,
1996, respectively, which would have been incurred by the Company
assuming the Merger had occurred January 1, 1996. Interest expense
has been calculated based on the $20.2 million utilization on the
available line of credit used to fund total consideration in
conjunction with the Merger.
(7) To record the tax benefit reflecting an effective rate of 30.9
percent. This adjustment reflects a tax benefit of $292,000 and
$602,000 for the six months ended June 30, 1997 and the year ended
December 31, 1996, respectively. The Company's management believes
that this effective rate is indicative of the Company's tax position
assuming the Merger had occurred on January 1, 1996. The goodwill
amortization created by this transaction is not tax deductible.
35
36
C) EXHIBITS
Number Description
------ -----------
2.1 Plan and Agreement of Merger, dated April 30, 1997, among
Chart Industries, Inc. ("Chart"), Greenville Tube
Corporation, Chart Acquistion Company, Inc. and Cryenco
Sciences, Inc. ("Cryenco").*
4.2 Common Stock Purchase Warrant (Right to Purchase 36,086
Shares of Convertible Non-Voting Common Stock of Cryenco)
between Cryenco and Chemical Bank.
4.3 Common Stock Purchase Warrant (Right to Purchase 7,317
Shares of Convertible Non-Voting Common Stock of Cryenco)
between Cryenco and Chemical Bank.
4.4 Amendment to Warrant Agreement, dated as of July 31, 1997,
by and between The Chase Manhattan Bank (f/k/a Chemical
Bank), Cryenco, and Chart.
4.5 Common Stock Purchase Warrant (Right to Purchase 32,195
Shares of Convertible Non-Voting Common Stock of Cryenco)
between Cryenco and the CIT Group/Equity Investments, Inc.
("CIT").
4.6 Common Stock Purchase Warrant (Right to Purchase 18,042
Shares of Voting Common Stock of Cryenco) between Cryenco
and CIT.
4.7 Amendment to Warrant Agreement, dated as of July 31, 1997,
by and between CIT, Cryenco and Chart.
4.8 Warrant Agreement, dated as of June 8, 1994, between
Cryenco and Cryogenic TADOPTR Company, L.P. ("TADOPTR"),
for the purchase of up to 200,000 shares of Cryenco Common
Stock.
4.9 Amendment No. 1 to Warrant Agreement, dated as of July 31,
1997, by and between TADOPTR, Cryenco, and Chart.
- --------
* The Registrant agrees by this filing to supplementally furnish a copy of the
Exhibits and Schedules to this Stock Purchase Agreement to the Commission upon
request.
36
37
4.10 Warrant Agreement, dated as of December 20, 1994, between
Cryenco and The Edgehill Corporation ("Edgehill"), for the
purchase of up to 25,000 shares of Cryenco Common Stock.
4.11 Certificate for 25,000 Warrants for the purchase of
Cryenco Common Stock, dated as of December 20, 1994.
4.12 Amendment No. 1 to Warrant Agreement, dated as of July 31,
1997, by and between Edgehill, Cryenco, and Chart.
4.13 Warrant Agreement, dated as of March 12, 1993, between
Cryenco and Don M. Harwell ("Harwell"), for the purchase of
up to 50,000 shares of Cryenco Common Stock.
4.14 Certificate for 50,000 Warrants for the purchase of Cryenco
Common Stock, dated as of March 12, 1993.
4.15 Warrant Agreement, dated as of January 26, 1995, between
Cryenco and Harwell, for the purchase of up to 25, 000
shares for the purchase of Cryenco Common Stock.
4.16 Certificate for 25,000 Warrants for the purchase of Cryenco
Common Stock, dated as of January 26, 1995.
4.17 Amendment No. 1 to Warrant Agreement, dated as of July 31,
1997, by and between Harwell, Cryenco, and Chart.
4.18 Class A Common Stock Purchase Warrant, dated January 30,
1995, between Cryenco and International Capital Partners
("ICP"), for the purchase of up to 116,000 shares of
Cryenco Common Stock.
4.19 Class A Common Stock Purchase Warrant, dated January 30,
1995, between Cryenco and International Capital Partners
("ICP"), for the purchase of up to 44,000 shares of Cryenco
Common Stock.
4.20 Amendment No. 1 to Warrant Agreement, dated as of July 31,
1997, by and between ICP, Cryenco and Chart.
4.21 Warrant Agreement, dated as of March 12, 1993, between
Cryenco and Mezzanine Capital Corporation Limited ("MCC"),
for the purchase of up to 30,000 shares of Cryenco Common
Stock.
4.22 Certificate for 30,000 Warrants for the purchase of Cryenco
Common Stock, dated as of March 12, 1993.
4.23 Warrant Agreement, dated as of January 26, 1995, between
Cryenco and MCC, for the purchase of up to 15, 000 shares
of Cryenco Common Stock.
37
38
4.24 Certificate for 15,000 Warrants for the purchase of Cryenco
Common Stock, dated as of January 26, 1995.
4.25 Amendment No. 1 to Warrant Agreement, dated as of July 31,
1997, by and between MCC (in liquidation), Cryenco, and
Chart.
4.26 Warrant Agreement, dated as of March 12, 1993, between
Cryenco and Alfred Schechter ("Schechter"), for the
purchase of up to 50,000 shares of Cryenco Common Stock.
4.27 Certificate for 50,000 Warrants for the purchase of Cryenco
Common Stock, dated as of March 12, 1993.
4.28 Warrant Agreement, dated as of January 26, 1995, between
Cryenco and Schechter, for the purchase of up to 25,000
shares of Cryenco Common Stock.
4.29 Certificate for 25,000 Warrants for the purchase of
Cryenco Common Stock, dated as of January 26, 1995.
4.30 Amendment No. 1 to Warrant Agreement, dated as of July 31,
1997, by and between Schechter, Cryenco, and Chart.
10.20 Credit Agreement by and between Chart, ALTEC International
Limited Partnership, ALTEC, Inc., Chart Management Company,
Inc., Chart Industries Foreign Sales Corporation,
Greenville Tube Corporation, and Process Systems
International Inc. (collectively, the "Borrowing Group");
National City Bank and NBD Bank (collectively, the
"Banks"); and National City Bank as Agent for the Banks,
dated July 29, 1997.
10.21 Revolving Note for $27,000,000.00, dated July 29, 1997,
executed by the Borrowing Group for National City Bank.
10.22 Revolving Note for $18,000,000.00, dated July 29, 1997,
executed by the Borrowing Group for NBD Bank.
10.23 Pledge Agreement for Shares of CHD, Inc., dated July 29,
1997, executed by ALTEC, Inc., and Chart Management
Company, Inc. for National City Bank as Agent for the
Banks.
23.1 Consent of Ernst & Young LLP.
38
39
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS CURRENT REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THERUNTO DULY AUTHORIZED.
CHART INDUSTRIES, INC.
By: /s/ DON A. BAINES
DON A. BAINES
CHIEF FINANCIAL OFFICER AND
TREASURER
Dated: August 14, 1997
39
40
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION PAGE
2.1 Plan and Agreement of Merger, dated April 30, 1997,
among Chart Industries, Inc. ("Chart"), Greenville
Tube Corporation, Chart Acquisition Company, Inc. and
Cryenco Sciences, Inc. ("Cryenco").
4.2 Common Stock Purchase Warrant (Right to Purchase
36,086 Shares of Convertible Non-Voting Common Stock
of Cryenco) between Cryenco and Chemical Bank.
4.3 Common Stock Purchase Warrant (Right to Purchase 7,317
Shares of Convertible Non-Voting Common Stock of
Cryenco) between Cryenco and Chemical Bank.
4.4 Amendment to Warrant Agreement, dated as of July 31,
1997, by and between The Chase Manhattan Bank (f/k/a
Chemical Bank), Cryenco, and Chart.
4.5 Common Stock Purchase Warrant (Right to Purchase
32,195 Shares of Convertible Non-Voting Common Stock
of Cryenco) between Cryenco and the CIT Group/Equity
Investments, Inc. ("CIT").
4.6 Common Stock Purchase Warrant (Right to Purchase
18,042 Shares of Voting Common Stock of Cryenco)
between Cryenco and CIT.
4.7 Amendment to Warrant Agreement, dated as of July 31,
1997, by and between CIT, Cryenco and Chart.
4.8 Warrant Agreement, dated as of June 8, 1994, between
Cryenco and Cryogenic TADOPTR Company, L.P.
("TADOPTR"), for the purchase of up to 200,000 shares
of Cryenco Common Stock.
4.9 Amendment No. 1 to Warrant Agreement, dated as of July
31, 1997, by and between TADOPTR, Cryenco, and Chart.
4.10 Warrant Agreement, dated as of December 20, 1994,
between Cryenco and The Edgehill Corporation
("Edgehill"), for the purchase of up to 25,000 shares
of Cryenco Common Stock.
40
41
4.11 Certificate for 25,000 Warrants for the purchase of
Cyrenco Common Stock, dated as of December 20, 1994.
4.12 Amendment No. 1 to Warrant Agreement, dated as of July
31, 1997, by and between Edgehill, Cryenco, and Chart
4.13 Warrant Agreement, dated as of March 12, 1993, between
Cryenco and Don M. Harwell ("Harwell"), for the
purchase of up to 50,000 shares of Cryenco Common
Stock.
4.14 Certificate for 50,000 Warrants for the purchase of
Cryenco Common Stock, dated as of March 12, 1993.
4.15 Warrant Agreement, dated as of January 26, 1995,
between Cryenco and Harwell, for the purchase of up to
25, 000 shares for the purchase of Cryenco Common
Stock.
4.16 Certificate for 25,000 Warrants for the purchase of
Cryenco Common Stock, dated as of January 26, 1995.
4.17 Amendment No. 1 to Warrant Agreement, dated as of July
31, 1997, by and between Harwell, Cryenco, and Chart.
4.18 Class A Common Stock Purchase Warrant, dated January
30, 1995, between Cryenco and International Capital
Partners ("ICP"), for the purchase of up to 116,000
shares of Cryenco Common Stock.
4.19 Class A Common Stock Purchase Warrant, dated January
30, 1995, between Cryenco and International Capital
Partners ("ICP"), for the purchase of up to 44,000
shares of Cryenco Common Stock.
4.20 Amendment No. 1 to Warrant Agreement, dated as of July
31, 1997, by and between ICP, Cryenco and Chart.
4.21 Warrant Agreement, dated as of March 12, 1993, between
Cryenco and Mezzanine Capital Corporation Limited
("MCC"), for the purchase of up to 30,000 shares of
Cryenco Common Stock.
4.22 Certificate for 30,000 Warrants for the purchase of
Cryenco Common Stock, dated as of March 12, 1993.
4.23 Warrant Agreement, dated as of January 26, 1995,
between Cryenco and MCC, for the purchase of up to 15,
000 shares of Cryenco Common Stock.
4.24 Certificate for 15,000 Warrants for the purchase of
Cryenco Common Stock, dated as of January 26, 1995.
41
42
4.25 Amendment No. 1 to Warrant Agreement, dated as of July
31, 1997, by and between MCC (in liquidation),
Cryenco, and Chart.
4.26 Warrant Agreement, dated as of March 12, 1993, between
Cryenco and Alfred Schechter ("Schechter"), for the
purchase of up to 50,000 shares of Cryenco Common
Stock.
4.27 Certificate for 50,000 Warrants for the purchase of
Cryenco Common Stock, dated as of March 12, 1993.
4.28 Warrant Agreement, dated as of January 26, 1995,
between Cryenco and Schechter, for the purchase of up
to 25,000 shares of Cryenco Common Stock.
4.29 Certificate for 25,000 Warrants for the purchase of
Cryenco Common Stock, dated as of January 26, 1995.
4.30 Amendment No. 1 to Warrant Agreement, dated as of July
31, 1997, by and between Schechter, Cryenco, and
Chart.
10.20 Credit Agreement by and between Chart, ALTEC
International Limited Partnership, ALTEC, Inc., Chart
Management Company, Inc., Chart Industries Foreign
Sales Corporation, Greenville Tube Corporation, and
Process Systems International Inc.; National City Bank
and NBD Bank (collectively, the "Banks"); and National
City Bank as Agent for the Banks, dated July 29, 1997.
10.21 Revolving Note for $27,000,000.00, dated July 29, 1997,
executed by the Borrowing Group for National City Bank.
10.22 Revolving Note for $18,000,000.00, dated July 29, 1997,
executed by the Borrowing Group for NBD Bank.
10.23 Pledge Agreement for Shares of CHD, Inc., dated July 29,
1997, by ALTEC, Inc., and Chart Management Company, Inc.
for National City Bank as Agent for the Banks.
23.1 Consent of Ernst & Young LLP.