SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
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 NUMBER 1-11442
CHART INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 34-1712937
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
5885 LANDERBROOK DR., CLEVELAND, OHIO 44124
(Address of Principal Executive Offices) (ZIP Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (440) 753-1490
NOT APPLICABLE
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No____
At March 31, 1999, there were 23,745,872 outstanding shares of the Company's
Common Stock, $0.01 par value per share.
Page 1 of 14 sequentially numbered pages.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The information required by Rule 10-01 of Regulation S-X is set
forth on pages 3 through 8 of this Report on Form 10-Q.
2
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
MARCH 31, DECEMBER 31,
1999 1998
---- ----
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 2,493 $ 2,169
Accounts receivable, net 39,223 37,336
Inventories, net 32,912 29,803
Other current assets 7,596 6,803
-------- --------
Total Current Assets 82,224 76,111
Property, plant & equipment, net 40,966 40,536
Goodwill, net 34,054 31,568
Other intangible assets, net 10,032 9,990
-------- --------
TOTAL ASSETS $167,276 $158,205
-------- --------
-------- --------
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 12,632 $ 11,540
Customer advances 16,569 13,011
Billings in excess of contract revenue 1,715 2,194
Accrued expenses and other liabilities 24,200 25,783
Current portion of long-term debt 474 431
-------- --------
Total Current Liabilities 55,590 52,959
Long-term debt 15,497 10,894
Deferred income taxes 1,153 1,198
Shareholders' Equity
Preferred stock, 1,000,000 shares authorized, none
issued or outstanding
Common stock, par value $.01 per share - 30,000,000
shares authorized, 24,423,927 and 24,321,917 shares
issued at March 31, 1999 and December 31, 1998,
respectively 244 243
Additional paid-in capital 43,911 43,367
Retained earnings 58,071 56,352
Accumulated other comprehensive income (930) (358)
Treasury stock, at cost, 678,055 and 732,452
shares at March 31, 1999 and December 31, 1998,
respectively (6,260) (6,450)
-------- --------
95,036 93,154
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $167,276 $ 158,205
-------- --------
-------- --------
The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
MARCH 31,
-------------------------
1999 1998
---- ----
Sales $44,588 $56,104
Cost of products sold 32,271 35,544
------- -------
Gross profit 12,317 20,560
Selling, general & administrative expense 7,592 8,341
------- -------
Operating income 4,725 12,219
Interest income (expense) - net (328) 190
------- -------
Income before income taxes 4,397 12,409
Income taxes 1,495 4,467
------- -------
Net income $ 2,902 $ 7,942
------- -------
------- -------
Net income per share $ 0.12 $ 0.33
------- -------
------- -------
Net income per share - assuming dilution $ 0.12 $ 0.32
------- -------
------- -------
Shares used in per share calculations 23,644 24,222
Shares used in per share calculations - assuming dilution 23,841 24,624
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31,
--------------------------
1999 1998
---- ----
OPERATING ACTIVITIES
Net income $ 2,902 $ 7,942
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,779 1,297
Deferred income taxes (203)
Contribution of stock to employee benefit plans 367 577
Increase (decrease) in cash resulting from changes
in operating assets and liabilities:
Accounts receivable (1,095) (228)
Inventory and other current assets (3,046) (191)
Accounts payable and other current liabilities (889) 701
Billings in excess of contract revenue and
customer advances 3,243 (2,183)
-------- --------
Net Cash Provided By Operating Activities 3,058 7,915
INVESTING ACTIVITIES
Capital expenditures (1,775) (4,832)
Acquisition of Northcoast Cryogenics,
net of cash acquired (2,995)
Acquisition of Chart Marston (35,324)
Other investing activities (308) 12
-------- --------
Net Cash Used In Investing Activities (5,078) (40,144)
FINANCING ACTIVITIES
Borrowings on credit facility 23,250 18,471
Repayments on credit facility (18,500)
Principal payments on long-term debt (1,270) (101)
Treasury stock and stock option transactions (354) (1,098)
Dividends paid to shareholders (1,183) (1,212)
-------- --------
Net Cash Provided By Financing Activities 1,943 16,060
-------- --------
Net decrease in cash and cash equivalents (77) (16,169)
Effect of exchange rate changes on cash 401
Cash and cash equivalents at beginning of period 2,169 22,095
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,493 $ 5,926
-------- --------
-------- --------
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
CHART INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
March 31, 1999
NOTE A - BASIS OF PREPARATION
The accompanying unaudited condensed consolidated financial statements of
Chart Industries, Inc. ("Chart" or the "Company") 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-month period
ended March 31, 1999 are not necessarily indicative of the results that may
be expected for the year ending December 31, 1999. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Chart Industries, Inc. and Subsidiaries' Annual Report on Form 10-K
for the year ended December 31, 1998.
NOTE B - INVENTORIES
The components of inventory consist of the following:
MARCH 31, DECEMBER 31,
1999 1998
---- ----
(DOLLARS IN THOUSANDS)
Raw materials and supplies $15,370 $14,785
Work in process 16,664 13,955
Finished goods 1,088 1,273
LIFO reserve (210) (210)
------- -------
$32,912 $29,803
------- -------
------- -------
NOTE C - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share:
THREE MONTHS ENDED
MARCH 31,
---------------------------
1999 1998
---- ----
(DOLLARS AND SHARES
IN THOUSANDS,EXCEPT
PER SHARE AMOUNTS)
Numerator:
Net income: $ 2,902 $ 7,942
Denominator:
Denominator for basic earnings per share -
weighted average shares 23,644 24,222
Effect of dilutive securities:
Employee stock options and warrants 197 402
------- -------
Dilutive potential common shares 23,841 24,624
------- -------
------- -------
Net income per share $ 0.12 $ 0.33
------- -------
------- -------
Net income per share - assuming dilution $ 0.12 $ 0.32
------- -------
------- -------
6
NOTE D - REVENUE RECOGNITION
For the majority of the Company's contracts, revenue is recognized when
products are completed or shipped. For certain significant contracts, the
Company uses the percentage of completion method of accounting. Earned
revenue is based on the percentage that incurred costs to date bear to total
estimated costs at completion after giving effect to the most current
estimates. The cumulative impact of revisions in total cost estimates during
the progress of work is reflected in the period in which these changes become
known. Earned revenue reflects the original contract price adjusted for
agreed upon claims and change orders, if any. Losses expected to be incurred
on contracts in process, after consideration of estimated minimum recoveries
from claims and change orders, are charged to income as soon as such losses
are known.
NOTE E - ACQUISITIONS
On March 15, 1999, the Company acquired a group of privately held companies,
collectively known as Northcoast Cryogenics, for approximately $3.0 million
in cash and $720,000 in Chart Common Stock. Additional contingent
consideration will be issued in an amount equal to three percent of the net
sales of Northcoast Cryogenics, as defined in the purchase agreement, with
respect to each fiscal year or partial fiscal year during the three-year
period beginning March 15, 1999, subject to possible extension for one
additional year. The preliminary allocation of the purchase price included in
the March 31, 1999 condensed consolidated balance sheet is based upon
management's best estimates and may be subject to further revisions.
On March 27, 1998, the Company, through its wholly-owned subsidiary Chart
Marston Limited ("Chart Marston"), acquired the net assets of the industrial
heat exchanger division of IMI Marston Limited, a wholly-owned subsidiary of
IMI plc., for 21 million Pounds Sterling (approximately U.S. $35.3 million).
The Company borrowed 11 million Pounds Sterling (approximately U.S. $18.5
million) to fund the acquisition.
NOTE F - COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Financial Accounting Standards
Board Statement No. 130, "Reporting Comprehensive Income." Statement 130
establishes new rules for the reporting and display of comprehensive income
and its components; however, the adoption of Statement 130 had no impact on
the Company's net income or shareholders' equity. Statement 130 requires
foreign currency translation adjustments to be included in other
comprehensive income.
The Company did not incur any foreign currency translation adjustments prior
to its acquisition of Chart Marston on March 27, 1998. As a result, total
comprehensive income for the three months ended March 31, 1999 and 1998 was
$2,330 and $8,016, respectively.
NOTE G - OPERATING SEGMENTS
The Company has three reportable segments: Process Systems and Equipment
("PS&E"), Distribution, Storage and Applications ("DS&A")and Special
Products. The Company's reportable segments are business units that offer
different products. The reportable segments are each managed separately
because they manufacture and distribute distinct products with different
production processes. The PS&E segment consists of three operating units that
sell brazed aluminum heat exchangers and coldboxes to industrial gas, natural
gas and petrochemical processing companies who use them for the liquefaction
and separation of industrial and natural gases. The DS&A segment consists of
four operating units that sell cryogenic tanks, trailers, intermodal
containers, railcars, pumps, valves and vacuum jacketed piping systems to
various companies for the storage and transportation of both industrial and
natural gases.
7
NOTE G - OPERATING SEGMENTS (CONTINUED)
The Special Products segment consists of two operating units that sell
thermal vacuum systems, space simulation systems used to test satellites and
large vacuum chambers for telescope mirror aluminizing to the aerospace
industry, government agencies, universities and national research facilities,
and one operating unit that sells small diameter stainless steel tubing to
distributors requiring quick delivery. Due to the nature of the products that
each operating segment sells, there are no intersegment revenues.
The Company evaluates performance and allocates resources based on profit or
loss from operations before interest expense and income taxes.
THREE MONTHS ENDED MARCH 31, 1999
-------------------------------------------------------------------------
SPECIAL
PS&E DS&A PRODUCTS HEADQUARTERS TOTALS
------------ -------------- ------------- ------------------- -----------
(DOLLARS IN THOUSANDS)
Revenues from external customers. . . . . $25,364 $12,240 $6,984 $44,588
Operating income (loss) before interest
expense and income taxes . .. . . . . . 3,259 833 1,045 $(412) 4,725
THREE MONTHS ENDED MARCH 31, 1998
-------------------------------------------------------------------------
SPECIAL
PS&E DS&A PRODUCTS HEADQUARTERS TOTALS
------------ -------------- ------------- ------------------- -----------
(DOLLARS IN THOUSANDS)
Revenues from external customers. . . . . $28,313 $16,754 $11,037 $56,104
Operating income (loss) before interest
expense and income taxes. . . . . . . . 8,139 3,101 1,684 $(705) 12,219
NOTE H - SUBSEQUENT EVENT
On April 12, 1999, the Company completed its acquisition of MVE Holdings,
Inc.("MVE"). Under the terms of the merger agreement, a wholly owned Chart
subsidiary paid approximately $240 million in cash to purchase all of MVE's
common and preferred stock, to pay off existing debt instruments, and to
complete the tender offer and consent solicitation for the 12-1/2 percent
senior secured notes due 2002 issued by MVE, Inc. The Company negotiated a
$300 million senior secured credit facility (the "Senior Credit Facility") with
Chase Manhattan Bank to fund the acquisition. The Senior Credit Facility
bears interest at a rate based on LIBOR and contains certain restrictive
covenants.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
The Company's performance this quarter continued to reflect the adverse
effects of the worldwide slowdown for new plant construction in the
industrial gas market. As previously reported, business conditions were very
competitive, particularly in the PS&E segment, and have resulted in lower
prices and operating margins. With backlog and current order intake down for
heat exchangers and coldboxes, the Company has taken steps to reduce
throughput for the first six to nine months of this year. Based upon past
cycles in the industrial gas new construction market and current customer
input, the Company expects, but provides no assurance that, some improvement
in order intake for the PS&E segment will occur in the second half of 1999.
In the meantime, the Company is aggressively pursuing and winning the
majority of orders being placed by its customers.
8
The DS&A segment remained stable during this past quarter. Although sales
from this segment were down quarter over quarter, orders increased and
backlog strengthened. These stabilizing characteristics bode well for Chart
going forward, since the Company's recent acquisitions of MVE and Northcoast
Cryogenics will add significantly to the sales of this segment and Chart's
opportunity for growth. The Company believes that several of the newly
acquired product lines have significant potential for growth, particularly in
Europe.
Sales for the first quarter of 1999 were $44.6 million versus $56.1 million
for the first quarter of 1998, a decrease of $11.5 million, or 20.5 percent.
Sales from the PS&E segment, which accounted for 56.9 percent of total sales
in the first quarter of 1999, decreased $2.9 million from the first quarter
of 1998. Sales from the DS&A segment and the Special Products segment
decreased $4.5 million and $4.1 million, respectively, compared with the
year-ago quarter.
Gross profit for the first quarter of 1999 was $12.3 million versus $20.6
million for the first quarter of 1998, a decline of $8.2 million, or 40.1
percent. Gross profit margin for the first quarter of 1999 was 27.6 percent
versus 36.6 percent for the first quarter of 1998. The decline in gross
profit margin occurred primarily in the PS&E segment, where the margin
decrease was greater than 14 percentage points, reflecting low margin orders
received in 1998. The Asian economic situation, softness in the industrial
gas market, and a strong U.S. dollar compared to the Japanese yen adversely
affected pricing and order volume.
Selling, general and administrative ("SG&A") expense for the first quarter of
1999 was $7.6 million, a decrease of $750,000 from the first quarter of 1998.
The first quarter of 1999 includes $1.5 million of SG&A expense for Chart
Marston, which was not included in the Company's results of operations for
the first quarter of 1998. The decrease from the first quarter of 1998 is
primarily a result of the sales decline. SG&A expense as a percentage of
sales increased to 17.0 percent for the first quarter of 1999 from 14.9
percent for the first quarter of 1998.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations for the first quarter of 1999 was $3.1 million
compared with $7.9 million in the first quarter of 1998. The Company's 1999
first-quarter operating cash flow primarily represents current earnings plus
depreciation and amortization, and is down due to the $5.0 million decrease
in net income from the first quarter of 1998.
Capital expenditures for the first quarter of 1999 were $1.8 million compared
with $4.8 million in the first quarter of 1998, which included $3.5 million
for the purchase of previously leased land and buildings at the Cryenco
facility.
On March 15, 1999, the Company completed its acquisition of a group of
privately held companies, collectively known as Northcoast Cryogenics, for
approximate $3.0 million in cash and $720,000 in Chart Common Stock. The
preliminary allocation of the purchase price included in the March 31, 1999
condensed consolidated balance sheet is based upon management's best
estimates and may be subject to further revisions.
Net interest expense for the first quarter of 1999 was $330,000 versus net
interest income of $190,000 for the first quarter of 1998. As of March 31,
1999, the Company had borrowings of $12.0 million on its $45 million credit
facility. This credit facility was retired in April 1999 when the Company
entered into the Senior Credit Facility.
9
BACKLOG
Chart's consolidated firm order backlog at March 31, 1999 was $87.7 million,
a decrease of $8.5 million from $96.1 million at December 31, 1998. MVE added
approximately $22 million to Chart's backlog effective April 12, 1999. Orders
for the first quarter of 1999 totaled $34.9 million, compared with orders of
$47.3 million for the fourth quarter of 1998.
PS&E backlog at March 31, 1999, was $50.6 million, down from $63.7 million at
December 31, 1998. Orders for the first quarter of 1999 totaled $12.3
million, compared with $24.6 million in the fourth quarter of 1998. Chart
continues to win the majority of new orders placed in this worldwide market.
However, overall order activity remains sluggish compared to historical
levels.
DS&A backlog at March 31, 1999, was $30.8 million, compared with $25.2
million at December 31, 1998. Northcoast Cryogenics added $1.2 million to the
DS&A backlog at March 31, 1999. Orders for the first quarter of 1999 totaled
$16.7 million, compared with $15.7 million for the fourth quarter of 1998.
The largely domestic market for DS&A equipment continues to remain strong.
The acquisition of MVE will enhance the Company's presence in this area and
lessen its exposure to the more cyclical PS&E business.
Special Products backlog at March 31, 1999, was $6.2 million, down from $7.3
million at December 31, 1998. Orders for the first quarter of 1999 totaled
$5.9 million, compared with $6.9 million for the fourth quarter of 1998.
RECENT EVENTS
On April 12, 1999, the Company completed its acquisition of MVE Holdings,
Inc. Under the terms of the merger agreement, a wholly owned Chart subsidiary
paid approximately $240 million in cash to purchase all of MVE's common and
preferred stock, to pay off existing debt instruments, and to complete the
tender offer and consent solicitation for the 12-1/2 percent senior secured
notes due 2002 issued by MVE, Inc.
To finance the acquisition, the Company negotiated a $300 million senior
secured credit facility with Chase Manhattan Bank. The Senior Credit Facility
bears interest at a rate based on LIBOR and contains certain restrictive
covenants. The Company forecasts sufficient cash flow from operations and
available borrowings to fund the increased principal and interest payments as
a result of the acquisition, as well as dividends and capital expenditures.
In conjunction with the purchase of MVE, Chart expects to record, in the
second quarter of 1999, a non-cash charge of approximately $22 million for
the write-off of acquired in-process research and development and a charge of
approximately $6 million, net of taxes, as an extraordinary item for the
early extinguishment of the MVE 12-1/2 percent senior secured notes due 2002.
As previously announced, the acquisition of MVE provides considerable
opportunities for consolidation and restructuring of Chart's industrial tank
business. Senior managers from MVE, Chart's Process Engineering ("PEI") and
CVI divisions, and Chart's wholly owned subsidiary Cryenco are working to
finalize consolidation and restructuring plans in order to achieve the
desired synergies of the acquisition. Chart expects these restructuring and
consolidation decisions to be completed within the next 60 days. Final
determination of these additional cash and non-cash restructuring charges
will be announced and taken in the second and third quarters of 1999.
10
YEAR 2000 READINESS DISCLOSURE
The Year 2000 Problem is the result of the inability of hardware, software
and control systems to properly recognize and process two-digit references to
specific years, beginning with the year 2000. The Year 2000 problem could
result in system failures or miscalculations causing disruptions of the
operations of the Company, its suppliers and its customers.
In 1997, the Company completed a preliminary assessment of its critical
software systems and determined that all of these systems could be made
compliant. In June 1998, the Company initiated a formal assessment plan for
all non-critical software systems by identifying a lead person at each of its
locations to be responsible for ensuring that the location will be compliant.
The first phase of the formal assessment plan, which was completed in the
third quarter of 1998, included an inventory of all information technology
systems and control systems with embedded chip technology. Results of the
inventory indicated that all information technology systems are or should be
compliant by the year 2000, primarily because none of these systems involve
internally developed software and compliant versions are readily available.
The Company produces a limited number of products utilizing control systems
with embedded chip technology, and is contacting the vendors who provide
these embedded chips to determine compliance. This project will be completed
in the second quarter of 1999. Based upon the Company's review of systems
using embedded chip technology within its existing facilities, the Company is
reasonably sure that its facilities are materially year 2000 compliant. The
Company believes that the third parties whose Year 2000 Problems pose the
greatest risks for the Company include its banks that maintain depository
accounts, its payroll processing company, its suppliers of the major
materials used in production processes, its utility providers and its
providers of freight services. The Company has communicated with these third
parties to determine if they have an effective plan in place to address the
Year 2000 Problem, and has received positive responses from the majority of
these third parties. However, the Company provides no assurance that these
third parties will be year 2000 compliant or that their noncompliance will
not have a material adverse effect on the Company.
The Company currently estimates that it will spend less than $1 million to
ensure that its information technology systems are compliant, of which more
than half has been committed or spent through March 31, 1999. Accordingly,
the Company expects cash flow from operations and available borrowings to be
sufficient to fund these expenditures.
Based upon the results of year 2000 compliance efforts underway, the Company
believes that all critical information technology systems and control systems
with embedded chip technology will be compliant and will allow the Company to
continue to operate beyond the year 2000 without a material adverse effect on
its results of operations or financial position. However, unanticipated
problems which may be identified in the ongoing year 2000 preparation program
could result in an undetermined financial risk. Based upon the Company's
assessment of its year 2000 compliance and the indicated compliance of the
third parties it has contacted to date, the Company is developing contingency
plans as deemed necessary.
FORWARD-LOOKING STATEMENTS
The Company is making this statement in order to satisfy the "safe harbor"
provisions contained in the Private Securities Litigation Reform Act of 1995.
This Quarterly Report on Form 10-Q includes forward-looking statements
relating to the business of the Company. Forward-looking statements contained
herein or in other statements made by the Company are made based on
management's expectations and beliefs concerning future events impacting the
Company and are subject to
11
uncertainties and factors relating to the Company's operations and business
environment, all of which are difficult to predict and many of which are
beyond the control of the Company, that could cause actual results of the
Company to differ materially from those matters expressed or implied by
forward-looking statements. The Company believes that the following factors,
among others, could affect its future performance and cause actual results of
the Company to differ materially from those expressed or implied by
forward-looking statements made by or on behalf of the Company: (a) general
economic, business and market conditions; (b) competition; (c) decreases in
spending by its industrial customers; (d) the loss of a major customer or
customers; (e) ability of the Company to identify, consummate and integrate
the operations of suitable acquisition targets; (f) ability of the Company to
manage its fixed-price contract exposure; (g) the Company's relations with
its employees; (h) the extent of product liability claims asserted against
the Company; (i) variability in the Company's operating results; (j) the
ability of the Company to attract and retain key personnel; (k) the costs of
compliance with environmental matters (l) the ability of the Company to
protect its proprietary information; and (m) disruption of the Company's
business or operations resulting from the Year 2000 Problem.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
RECENT SALES OF UNREGISTERED SECURITIES
On March 5, 1999, the Company issued a total of 47,734 shares of Common Stock
under its Voluntary Deferred Compensation Plan to certain employees of the
Company in consideration of salary amounts foregone by the employees in an
approximate aggregate amount of $356,000. The transactions were exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to Section 4(2) of the Securities Act.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
See the Exhibit Index on page 14 of this Form 10-Q.
(b) Reports on Form 8-K.
During the quarter ended March 31, 1999, the Company filed a
Current Report on Form 8-K dated February 17, 1999 to report the
issuance of a news release announcing the signing of a
definitive merger agreement to acquire MVE Holdings, Inc. and a
Current Report on Form 8-K dated February 25, 1999 to report the
issuance of a news release announcing the results of operations
for the quarter and year ended December 31, 1998.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Chart Industries, Inc.
(Registrant)
Date: May 14, 1999 /s/ DON A. BAINES
------------------- -------------------------------------
Don A. Baines
Chief Financial Officer and
Treasurer
13
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- -------------- ------------------------
10.1 Agreement and Plan of Merger, dated as of March 15,
1999, by and among Chart Industries, Inc., NCI
Acquisition Corp., NCI Sales and Leasing, Inc., Mark A.
Bauman and Patrick J. Flynn
10.2 Asset Purchase Agreement, dated as of March 15, 1999,
by and among Northcoast of Texas Cryogenics, Inc.,
Northcoast of Kansas Cryogenics, Inc., Mark A. Bauman
and Patrick J. Flynn and Northcoast Acquisition Corp
10.3 Stock Purchase Agreement, dated as of March 15, 1999,
by and between Mark A. Bauman and Northcoast
Acquisition Corp
10.4 Employment Agreement, dated as of March 15, 1999, by
and between Northcoast Acquisition Corp. and Mark A.
Bauman
27 Financial Data Schedule
14