UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 12, 1999
CHART INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-11442 34-1712937
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
5885 LANDERBROOK DRIVE, CLEVELAND, OH 44124
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (440) 753-1490
ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
On April 12, 1999, Chart Industries, Inc. ("Chart" or the "Company")
completed the acquisition of MVE Holdings, Inc. ("MVE")(the "Acquisition").
The Acquisition was accomplished pursuant to an Agreement and Plan of Merger
dated as of February 16, 1999, among Chart Industries, Inc., Chart
Acquisition Company and MVE Holdings, Inc. (the "Agreement"). Chart
Acquisition Company is a wholly owned subsidiary of the Company.
Headquartered in Burnsville, Minnesota, MVE manufactures vacuum-insulated
containment vessels and equipment for storing, transporting and using cryogenic
liquids. These engineered products serve worldwide customers in the industrial
gas, restaurant, medical, agricultural and liquid natural gas alternative fuel
industries. MVE's products include a wide range of standard cryogenic storage
tanks, specialty tanks, transportation equipment, medical respiratory products
(including liquid oxygen systems), equipment for producing carbonated beverages
and equipment used to store and transport biological matter and other
temperature-sensitive substances. In 1998, MVE had sales of approximately $208
million. MVE has manufacturing operations in Minnesota, Georgia, the Czech
Republic, Australia and China.
As consideration for the Acquisition, Chart Acquisition Company paid
approximately $245.2 million in cash to purchase all of MVE's common and
preferred stock, to pay off certain existing debt instruments, and to
complete a tender offer and consent solicitation for the 12-1/2 percent
senior secured notes due 2002 issued by MVE, Inc., a wholly owned subsidiary
of MVE. The tender offer and consent solicitation was priced on April 12,
1999. The purchase price and other terms of the Agreement were determined
through arms-length negotiations. There are no material relationships between
MVE and the Company or any of their affiliates, directors or officers.
Payment of the purchase price was financed by the Company from borrowings under
its Credit Agreement, dated as of April 12, 1999, between Chart Industries,
Inc., the Subsidiary Borrowers (as defined therein), the Subsidiary Guarantors
(as defined therein), the Lenders (as defined therein), The Chase Manhattan
Bank, as Administrative Agent, and National City Bank, as Documentation Agent
(the "Credit Agreement").
2
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
A) Financial Statements of the Business Acquired
MVE HOLDINGS, INC.
AUDITED CONSOLIDATED FINANCIAL STATEMENTS PAGE
Report of Independent Auditors 4
Consolidated Balance Sheets as of December 31, 1998 and 1997 5
Consolidated Statements of Operations for the Years Ended December 31, 1998
and 1997, and the Ten Months Ended December 31, 1996 6
Consolidated Statements of Stockholders' Deficit for the Years Ended
December 31, 1998 and 1997, and the Ten Months Ended December 31, 1996 7
Consolidated Statements of Cash Flows for the Years Ended December 31, 1998
and 1997, and the Ten Months Ended December 31, 1996 8
Consolidated Statements of Comprehensive Income for the Years Ended
December 31, 1998 and 1997, and the Ten Months Ended December 31, 1996 9
Notes to Consolidated Financial Statements 10
B) Pro Forma Financial Information
CHART INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
March 31, 1999 28
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Three Months Ended March 31, 1999 29
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Twelve Months Ended December 31, 1998 30
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements 31
3
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of MVE Holdings, Inc.
We have audited the accompanying consolidated balance sheets of MVE Holdings,
Inc. and subsidiaries (Holdings) as of December 31, 1998 and 1997 and the
related consolidated statements of operations, stockholder's deficit, cash flows
and comprehensive income for the years ended December 31, 1998 and 1997 and the
ten months ended December 31, 1996. These consolidated financial statements are
the responsibility of Holdings' management. Our responsibility is to express an
opinion on these consolidated 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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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, such consolidated financial statements present fairly, in all
material respects, the financial position of Holdings as of December 31, 1998
and 1997 and the results of its operations and its cash flows for the periods
then ended and for the ten month period ended December 31, 1996 in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Minneapolis, Minnesota
March 12, 1999
4
MVE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
December 31, December 31,
1998 1997
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 9,922 $ 5,864
Accounts receivable, net of allowance for doubtful accounts 32,883 28,838
Inventories 27,120 24,774
Prepaid expenses 2,637 1,319
Income tax refund receivable 1,013
Deferred income taxes 5,266 5,604
--------- ---------
Total current assets 77,828 67,412
PROPERTY, PLANT AND EQUIPMENT 69,705 48,640
Less- Accumulated depreciation and amortization (30,512) (18,765)
--------- ---------
Net property, plant and equipment 39,193 29,875
GOODWILL, net 22,327 24,471
DEFERRED INCOME TAXES 3,555 3,483
OTHER ASSETS, net 10,658 11,541
--------- ---------
Total assets $ 153,561 $ 136,782
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Current maturities of long-term debt $ 7,524 $ 9,858
Accounts payable 15,346 18,297
Accrued expenses and other liabilities 25,422 22,376
--------- ---------
Total current liabilities 48,292 50,531
LONG-TERM DEBT, net of current maturities 156,024 140,669
OTHER NONCURRENT LIABILITIES 656 94
--------- ---------
Total liabilities 204,972 191,294
MINORITY INTEREST 1,212 368
SERIES A CONVERTIBLE REDEEMABLE PREFERRED STOCK 62,643 55,388
SERIES B REDEEMABLE PREFERRED STOCK 9,955 9,050
STOCKHOLDERS' DEFICIT:
Notes receivable from shareholders (653) (2,225)
Common stock, no par value, stated value $.01 per share, 1,500,000 shares
authorized; 125,708 and 149,068 shares issued and outstanding, respectively 1 2
Additional paid-in capital 1,470 1,417
Common stock warrants 165 165
Accumulated other comprehensive income (11) (112)
Accumulated deficit (126,193) (118,565)
--------- ---------
Total stockholders' deficit (125,221) (119,318)
--------- ---------
Total liabilities and stockholders' deficit $ 153,561 $ 136,782
--------- ---------
--------- ---------
The accompanying notes are an integral part of these consolidated
financial statements.
5
MVE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, AND THE TEN MONTHS ENDED
DECEMBER 31, 1996
(IN THOUSANDS)
December 31, December 31, December 31,
1998 1997 1996
------------ ------------ ------------
NET SALES $ 207,751 $ 192,726 $ 155,746
COST OF SALES 148,096 137,736 113,875
--------- --------- ---------
Gross profit 59,655 54,990 41,871
OPERATING EXPENSES:
Selling and marketing 13,686 13,925 9,855
General and administrative 18,402 18,225 15,441
Research and development 5,301 5,989 3,047
Amortization 4,715 4,193 4,623
Other expenses (Note 11) 1,042 21,972
--------- --------- ---------
Total operating expenses 43,146 42,332 54,938
--------- --------- ---------
Operating income (loss) 16,509 12,658 (13,067)
INTEREST INCOME 430 562 145
INTEREST EXPENSE (19,345) (17,631) (13,887)
--------- --------- ---------
Net loss before income tax (provision) benefit,
minority interest and extraordinary gain (2,406) (4,411) (26,809)
INCOME TAX (PROVISION) BENEFIT (1,336) 3,398 3,197
--------- --------- ---------
Net loss before minority interest and extraordinary gain (3,742) (1,013) (23,612)
MINORITY INTEREST IN NET (INCOME) LOSS (165) (48) 949
--------- --------- ---------
Net loss before extraordinary gain (3,907) (1,061) (22,663)
EXTRAORDINARY GAIN FROM EARLY EXTINGUISHMENT OF DEBT
6,118
--------- --------- ---------
Net income (loss) 2,211 (1,061) (22,663)
PREFERRED STOCK DIVIDENDS (8,160) (7,216) (2,251)
--------- --------- ---------
NET LOSS AVAILABLE TO COMMON STOCKHOLDERS $ (5,949) $ (8,277) $ (24,914)
--------- --------- ---------
--------- --------- ---------
The accompanying notes are an integral part of these consolidated
financial statements.
6
MVE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, AND THE TEN MONTHS ENDED
DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
Notes Common Stock Addi- Total
Receivable ---------------------- tional Common Accumu- Stock-
From Number Paid - In Stock lated holder's
Shareholders of shares Amount Capital Warrants Deficit Deficit
------------- ------------ ------ --------- -------- ------- ---------
BALANCE, February 29, 1996 510,000 $ 5 $ (449) $770 $ (38,117) $ (37,791)
Notes receivable from
shareholders $(2,000) (2,000)
Preferred stock dividend (2,251) (2,251)
Purchase of common stock (602) (2,036) (2,638)
warrants
Purchase of treasury stock (268,100) (2) (33,636) (33,638)
Exchange for preferred stock (66,398) (1) (8,330) (8,331)
Deferred compensation plan 1,866 1,866
Other 71 71
Net loss (22,663) (22,663)
------- ------- ---- ------- ---- --------- ---------
BALANCE, December 31, 1996 (2,000) 175,502 2 1,417 168 (106,962) (107,375)
Interest on notes receivable
from Shareholders (225) (225)
Preferred stock dividend (7,216) (7,216)
Purchase of common stock
Warrants (3) (10) (13)
Purchase of treasury stock (25,373) (3,183) (3,183)
Exchange for preferred stock (1,061) (133) (133)
Foreign currency translation
Adjustment (30) (30)
Excess of additional pension
liability over
unrecognized (82) (82)
prior service cost
Net loss (1,061) (1,061)
------- ------- ---- ------- ---- --------- ---------
BALANCE, December 31, 1997 (2,225) 149,068 2 1,417 165 (118,677) (119,318)
Default on note receivable 1,680 (24,793) (1) (1,679) 0
Interest on notes receivable
from Shareholders (58) (58)
Notes receivable from
Shareholder (50) (50)
Restricted stock issued 1,433
Preferred stock dividend (8,160) (8,160)
Options issued 53 53
Foreign currency translation
Adjustment 259 259
Excess of additional pension
liability over unrecognized
prior service cost (158) (158)
Net income 2,211 2,211
------- ------- ---- ------- ---- --------- ---------
BALANCE, December 31, 1998 $ (653) 125,708 $ 1 $ 1,470 $165 $(126,204) $(125,221)
------- ------- ---- ------- ---- --------- ---------
------- ------- ---- ------- ---- --------- ---------
The accompanying notes are an integral part of these consolidated
financial statements.
7
MVE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, AND THE TEN MONTHS ENDED
DECEMBER 31, 1996
(IN THOUSANDS)
December 31, December 31, December 31,
1998 1997 1996
------------ ------------ ------------
OPERATING ACTIVITIES:
Net income (loss) $ 2,211 $ (1,061) $ (22,663)
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities-
Depreciation and amortization 9,480 7,611 7,791
Minority interest 165 48 (949)
Interest on exchangeable debt 63 329 274
Deferred income tax benefit 266 (4,234) (2,929)
(Gain) loss on sale of assets, net (337) 22
Loss on write-off of assets 1,042 2,768
Loss on write-off of goodwill 10,824
(Gain) loss on debt forgiveness (6,118) 95 3,722
Changes in operating assets and liabilities (Note 5) (7,164) 1,098 7,419
Changes in other non-current operating assets and liabilities 1,103 672 2,114
--------- --------- ---------
Net cash provided by operating activities 711 4,580 8,371
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (4,300) (6,372) (9,783)
Proceeds from sale of assets 839 373 107
Payment for purchase of Ferox, net of cash acquired (1,015)
Increase in other assets (350) (660) (750)
Cash acquired from acquisitions 687
--------- --------- ---------
Net cash used in investing activities (4,826) (6,659) (9,739)
FINANCING ACTIVITIES:
Borrowings under revolving credit facility 196,477 210,673 174,266
Repayments under revolving credit facility (190,779) (205,870) (174,121)
Repayments of long-term debt (4,110) (2,876) (2,489)
Borrowings of long-term debt 6,300 10 4,680
Deferred closing costs (390) (862) (314)
Proceeds from preferred stock sale 47,000
Purchase of preferred stock (493)
Purchase of treasury stock (3,183) (33,638)
Purchase of common stock warrants (13) (2,638)
Notes receivable from shareholders (50) (2,000)
Changes in other noncurrent assets and liabilities 528 52 (179)
--------- --------- ---------
Net cash provided by (used in) financing activities 7,976 (2,562) 10,567
Effect of foreign currency exchange rate changes on cash and cash
equivalents 197
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 4,058 (4,641) 9,199
CASH AND CASH EQUIVALENTS, beginning of year 5,864 10,505 1,306
--------- --------- ---------
CASH AND CASH EQUIVALENTS, end of year $ 9,922 $ 5,864 $ 10,505
--------- --------- ---------
--------- --------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest $ 17,292 $ 16,275 $ 9,037
Cash paid (received) during the year for income taxes $ 2,013 $ (1,260) $ 1,626
The accompanying notes are an integral part of these consolidated
financial statements.
8
MVE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, AND THE TEN MONTHS ENDED
DECEMBER 31, 1996
(IN THOUSANDS)
December 31, December 31, December 31,
1998 1997 1996
------------ ----------- ------------
Net Income (loss) $ 2,211 $(1,061) $(22,663)
Other comprehensive income, before tax:
Foreign currency translation adjustments 259 (30)
Minimum pension liability adjustment (158) (82)
------- ------- --------
Other comprehensive income (loss), before tax 101 (112) (22,663)
Income tax (expense) benefit related to items of other comprehensive
Income (36) 86
------- ------- --------
Other comprehensive income (loss), net of tax $ 2,276 $(1,087) $(22,663)
------- ------- --------
------- ------- --------
Related tax (expense)/benefit of other comprehensive income:
Foreign currency translation adjustments $ (93) $ 23
Minimum pension liability 57 63
------- ------- --------
Total tax (expense) benefit related to items of comprehensive income $ (36) $ 86
------- ------- --------
------- ------- --------
The accompanying notes are an integral part of these consolidated
financial statements.
9
MVE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, AND THE TEN MONTHS ENDED
DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT SHARE, WARRANT AND PER SHARE DATA)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION AND BUSINESS
The consolidated financial statements include the accounts of MVE Holdings, Inc.
and its wholly owned and majority owned subsidiaries. All intercompany balances
and transactions have been eliminated in consolidation. MVE Holdings, Inc. and
its subsidiaries are collectively referred to as Holdings or the Company.
Holdings develops, manufactures, markets and sells products which are grouped
according to four business segments: industrial, distributed, medical
respiratory and applied technologies. Industrial products include cryogenic
storage tanks and transportation equipment sold to producers, distributors and
end users of industrial gases. Distributed products include bulk CO(2)
containers used for beverage carbonization and cooking oil management systems
which provides a new and enhanced method to store and handle frying oils.
Medical respiratory products include a range of respiratory products such as
liquid oxygen systems, ambulatory oxygen systems, oxygen concentrators and
nebulizers. Applied technologies includes specialized products using cryogenic
technology for use with liquid natural gas (LNG) storage, test chambers for
rapid heat/cold testing, storage systems used to store and transport
temperature-sensitive agricultural and biological products, vacuum insulated
pipe and other end user applications.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Estimates are used for
such items as depreciable lives, tax provisions and reserves, uncollectible
accounts receivable, inventory and warranty liabilities. As better information
becomes available or accrual amounts are determinable, the recorded estimates
are revised. Consequently, operating results can be affected by revisions to
prior accounting estimates.
CASH AND CASH EQUIVALENTS
Holdings considers all highly liquid investments with original maturities of
three months or less to be cash equivalents. These investments are reflected at
cost, which approximates fair value. Accounts payable include issued checks,
which have not yet cleared Holdings' bank, totaling $994 and $3,695 at December
31, 1998 and 1997, respectively.
RECEIVABLES
Accounts receivable (A/R), net of allowance for doubtful accounts, consisted of
the following as of December 31, 1998 and 1997:
December 31, December 31,
1998 1997
------------ ------------
A/R trade $31,667 $27,601
A/R other 2,361 1,776
Notes receivable 106 289
------- -------
34,134 29,666
Allowance (1,251) (828)
------- -------
$32,883 $28,838
------- -------
------- -------
10
Allowance for doubtful accounts consisted of the following for the years ended
December 31, 1998 and 1997, and the ten months ended December 31, 1996:
Additions: Write-offs,
Beginning Charged to net of Ending
Balance Expense Recoveries Balance
--------- ---------- ----------- -------
December 31, 1996 $675 $168 $ 45 $ 888
December 31, 1997 888 434 (494) 828
December 31, 1998 828 550 (127) 1,251
INVENTORIES
Inventories include material, labor and overhead at standard cost and are stated
at the lower of cost or market. Holdings uses the first-in, first out (FIFO)
method of accounting for inventories. Inventories consist of the following:
December 31, December 31,
1998 1997
------------ ------------
Inventories at cost:
Purchased materials and subassemblies $15,517 $14,710
Work in process 8,581 6,401
Finished goods 6,352 5,115
------- -------
30,450 26,226
Reserves (3,330) (1,452)
------- -------
$27,120 $24,774
------- -------
------- -------
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost, less accumulated
depreciation. Additions and improvements to property and equipment are
capitalized at cost while maintenance and repair expenditures are charged to
operations as incurred. Depreciation is calculated principally by the
straight-line method for financial reporting purposes and accelerated methods
for income tax purposes. For financial reporting purposes, depreciation is
provided over the following estimated useful lives:
Years
-----
Buildings and improvements 10-30
Machinery and equipment 3-8
Furniture, fixtures and office equipment 3-8
Property, plant and equipment consisted of:
December 31, December 31,
1998 1997
------------ ------------
Land $ 2,865 $ 1,925
Buildings and improvements 26,011 13,750
Machinery and equipment 31,463 23,086
Furniture, fixtures and office equipment 8,746 8,995
Construction in progress 620 884
-------- --------
69,705 48,640
Less - accumulated depreciation and amortization (30,512) (18,765)
-------- --------
Net property, plant and equipment $ 39,193 $ 29,875
-------- --------
-------- --------
11
OTHER ASSETS
Other assets are being amortized on a straight-line basis over their estimated
useful lives which range from 1 to 30 years. Accumulated amortization was
$13,407 and $10,821 at December 31, 1998 and 1997 respectively.
Other assets net of accumulated amortization consist of the following:
December 31, December 31,
1998 1997
------------ ------------
Deferred financing costs $ 3,330 $ 3,993
Patents and trademarks 418 491
Noncompete agreements 4,930 5,480
Other 1,980 1,577
------- -------
$10,658 $11,541
------- -------
------- -------
FOREIGN CURRENCY TRANSLATION
Translation gains or losses resulting from translating foreign currency
financial statements are reported as a component of stockholders' deficit. Gains
and losses resulting from foreign currency transactions are included in earnings
as incurred.
REVENUE RECOGNITION
Revenue is generally recognized upon shipment of goods. At the request of
certain customers, large cryogenic tanks will be accepted by the customer at
Holdings' facilities and stored there for later shipment. In these instances,
title passes to the customer upon acceptance, and revenue is recognized at that
time.
For the year ended December 31, 1998, two of Holdings' customers represented
approximately 12% and 10%, respectively of Holdings' net sales. For the year
ended December 31, 1997, one of Holdings' customers represented approximately
11% of Holdings' net sales.
RESEARCH AND DEVELOPMENT COSTS
Holdings' policy is to charge all research and development costs to expense in
the period incurred.
WARRANTY COSTS
Holdings warrants most of its products against defects in materials and
workmanship under normal use and service for periods extending to seven years.
Warranty costs have not been material, and Holdings accrues estimated costs of
warranty obligations at the time of sale.
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of assets and liabilities and their respective tax bases and
operating loss and tax credit carryforwards. Deferred tax assets and liabilities
are measured using currently enacted tax rates. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
12
LONG-LIVED ASSETS AND GOODWILL
In fiscal 1996, Holdings adopted Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of". The Statement establishes accounting standards for
the impairment of long-lived assets, certain identifiable intangibles and
goodwill related to those assets. There was no material effect on the financial
statements from the adoption because prior impairment recognition practice was
consistent with the major provisions of the Statement. Under provisions of the
Statement, impairment losses are recognized when expected future cash flows are
less than the assets' carrying value. Accordingly, when indicators of impairment
are present, Holdings evaluates the carrying value of property, plant and
equipment, intangibles and goodwill in relation to the operating performance and
future undiscounted cash flows of the underlying business. Holdings adjusts the
net book value of the underlying assets if the sum of expected future cash flows
is less than book value. Goodwill represents the cost of acquired businesses in
excess of the fair value of net assets and is being amortized on a straight-line
basis over 5 to 20 years. Accumulated amortization was $18,684 and $16,565 at
December 31, 1998 and 1997, respectively (see Note 11).
RESTRICTED STOCK PLAN
In 1998, the Board of Directors approved a restricted stock plan (the "Plan"). A
total of 10,000 shares of Holdings' common stock are reserved for issuance upon
the exercise of options under the Plan. Under the Plan, the awards and
expiration of the awards are granted based on determination of the Plan
Committee. The Plan will terminate on July 15, 2008 unless terminated sooner by
the Board of Directors.
STOCK OPTION PLAN
In 1997, the Board of Directors approved a stock option plan (the "Plan"). A
total of 100,000 shares of Holdings' common stock were reserved for issuance
pursuant to the exercise of options granted under the Plan. Under the Plan,
options to purchase shares of Holdings' common stock may be granted at a price
not less than 100% of the fair market value of the stock at the date of grant.
All options expire ten years from the date of grant.
RECLASSIFICATIONS
Certain reclassifications have been made to prior periods' financial statements
to conform to the current year presentation. These reclassifications had no
effect on Holdings' financial position or results of operations.
CHANGE IN FISCAL YEAR
On January 17, 1997, the Board of Directors of Holdings and MVE adopted a
resolution to change the fiscal year of Holdings from the last day in February
to a calendar year. The change in fiscal year is effective for the ten months
ended December 31, 1996.
2. NEW ACCOUNTING STANDARDS:
FAS 130 establishes standards for the reporting of comprehensive income and its
components. Comprehensive income is defined as the change in equity during the
period from transactions and other events and circumstances from non-owner
sources.
FAS 131 requires Holdings to report information about its operating segments
based on how Holdings manages its operations. Holdings manages its business in
four operating segments and has restated its external reporting to reflect this
change in structure. The four reportable segments are industrial, distributed,
medical respiratory and applied technologies. See also Note 10.
13
In 1998, Holdings adopted the following new accounting standard: Statement of
Financial Accounting Standard (FAS) No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits". FAS 132 revises and standardizes
disclosures for pensions and other postretirement benefits. (See Note 8)
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 133, "Accounting for Derivative Instruments
and Hedging Activities." Holdings must adopt this standard no later than January
1, 2000. Holdings expects that this standard will not materially affect its
financial position and results of operations.
3. ACQUISITIONS:
Effective February 18, 1998, Holdings, through a subsidiary, acquired a majority
interest in Ferox, a.s., a manufacturer of cryogenic bulk storage tanks and
other cryogenic equipment located in the Czech Republic, for $400 in cash and an
agreement with the seller to make additional payments based on certain
operational results of Ferox and Holdings. The purchase price has been allocated
to the assets acquired and liabilities assumed based on their estimated fair
market values at the date of acquisition. In addition, Holdings paid to the
seller's parent the sum of $600 in cash in exchange for an agreement not to
compete. Subsequently, in various transactions, Holdings acquired additional
interests in Ferox. At December 31, 1998, Holdings owned 90% of the outstanding
capital stock of Ferox. The acquisition was accounted for under the purchase
method of accounting. The affect of the acquisition was not significant to the
Holdings financial statements.
In 1997, Holdings acquired two companies with purchase prices of $1,000 and
$300. In 1996, Holdings acquired two companies with purchase prices of $1,300
and $600. The effect of these acquisitions is not significant to Holdings'
financial statements.
4. ACCRUED EXPENSES AND OTHER LIABILITIES:
Accrued expenses and other liabilities consists of the following:
December 31, December 31,
1998 1997
------------ ------------
Employee compensation and payroll taxes $ 4,556 $ 2,814
Income taxes 1,416 2,892
Warranty 3,564 1,930
Accrued pension liability 2,657 2,374
Accrued interest 5,772 5,422
Insurance 1,872 2,092
Deposits and rebates 3,119 2,429
Accrued professional fees 839 348
Accrued freight 322 471
Other 1,305 1,604
------- -------
$25,422 $22,376
------- -------
------- -------
14
5. SUPPLEMENTAL CASH FLOW INFORMATION:
Changes in operating assets and liabilities were as follows:
December 31, December 31, December 31,
1998 1997 1996
------------ ------------ ------------
Accounts receivable $(1,774) $(2,840) $ 4,479
Inventories 2,211 4,042 (2,700)
Prepaid expenses and other (1,253) (89) (329)
Income tax refund receivable 1,013 3,517 (2,372)
Accounts payable (7,977) 680 (1,245)
Accrued expenses and other liabilities 616 (4,212) 9,586
------- ------- -------
$(7,164) $ 1,098 $ 7,419
------- ------- -------
------- ------- -------
NON-CASH INVESTING AND FINANCING ACTIVITIES
A $1,500 loan in favor of a shareholder matured on January 9, 1998 and the
shareholder defaulted. In accordance with the terms of the loan and pledge
agreement, Holdings satisfied the defaulted loan by taking possession of certain
Holdings' common stock that served as collateral for payment of the loan.
Several lease and note obligations of $148 and $364 were incurred when Holdings
entered into leases or notes for new equipment and vehicles in 1998 and 1997,
respectively.
In 1996, Holdings entered into a non-compete agreement for a total of $6,257
with a shareholder of the Company.
In 1997 and 1996, 1,061 and 66,406 shares of Common Stock were exchanged for 13
and 833 shares of 10% Class B Preferred Stock, respectively. Each share has a
liquidation preference of $10,000 plus accrued and unpaid dividends.
In 1996, Holdings purchased a building for $500 in exchange for long-term debt.
15
6. LONG-TERM DEBT:
Certain assets of Holdings, i.e.: subsidiary stock, accounts receivable
inventory, selected real estate and equipment are pledged as collateral for
long-term debt. Long-term debt consists of the following:
December 31, December 31,
1998 1997
------------ ------------
12.5% senior secured notes, due February 2002, interest payable semiannually, net of
unamortized discounts of $348 and $458 at December 31, 1998 and 1997 $111,652 $111,542
respectively.
Revolving credit facility, due October 2000, average interest rate of 7.91% at December
31, 1998 16,556 10,857
12.5% non-compete agreement, with semi-annual principal and interest payments, due
November 2006 7,557 6,864
14.125% senior subordinated notes, interest and principal due May 5, 2005 6,885 0
Bonds, Series 1996, due September 2005, semi-annual principal payments of $345, plus
interest at variable rates from 3.7% to 12%, 5.57% at December 31, 1998 4,830 5,520
Term loan, due April 2009, variable annual payments based on calculations as
specified in the agreement, interest accrued annually at 10% 3,954 0
Industrial Development Revenue Bonds, Series 1996, semi-annual principal payments of
$220, plus interest at variable rates from 2% to 9%, 3.171% at December 31, 1998,
due June 2011 3,300 3,740
Note payable, due January 1999, interest payable monthly at 4.2% 1,775 0
Term loan, due August 2002, monthly payments of $36, plus interest payable monthly at
16.2% 1,601 0
Note payable, due, March 1999, interest payable monthly at 13.9% 862 0
Capitalized leases payable in varying monthly installments through February 2003 with
interest rates ranging from 5% to 10.25% 2,047 2,415
Several notes payable with varying principal and interest payments through April 2012
with interest rates ranging from 6% to 13.5% 2,529 2,129
7% exchangeable note, including accrued interest, with principal and accrued interest
payable August 1, 1998 0 6,155
10.25% first mortgage note, payable in monthly installments of $14, including interest,
with final payment due November 2004 0 821
Revolving foreign loan, with varying principal and interest payments through 1998 with
interest rates ranging from 5.8% to 10.5% 0 400
10% subordinated debentures, interest payable semiannually, subject to 10% per year
mandatory redemption beginning 1997, balance due May 2001 0 84
-------- --------
Total long-term debt $163,548 150,527
Less- Current maturities 7,524 9,858
-------- --------
Long-term debt, net of current maturities $156,024 $140,669
-------- --------
-------- --------
On February 2, 1998, CAIRE Inc. (CAIRE), a subsidiary of Holdings, entered into
an agreement whereby a third party agreed to accept, in full payment of all
outstanding indebtedness currently owed to it by CAIRE, a cash payment of $50
and an option to purchase 820 shares of 10% Series AA Cumulative Preferred Stock
(Series AA Preferred Stock), par value $.01 per share, of CAIRE. Concurrent with
the above settlement, Holdings accepted, in full payment of all outstanding
unsecured indebtedness currently owed to it by CAIRE, 632 shares of the Series
AA Preferred Stock. Additionally, Holdings purchased all shares of CAIRE common
stock owned by the third party for an aggregate purchase price of one hundred
dollars. The Series AA Preferred Stock has a liquidation preference of $10 per
share and is subject to mandatory redemption. As a result of this restructuring,
Holdings incurred an extraordinary gain of $6,118.
16
On May 5, 1998, Holdings issued 14.125%, senior subordinated notes in the amount
of $6,300 and two common stock purchase warrants, each allowing the holder to
purchase 4,000 shares of Holdings common stock at $0.01 per share. The proceeds
from these notes will be used for working capital and general corporate
purposes. The senior subordinated notes are redeemable at the option of
Holdings, in whole or in part, on May 5, 2005, plus accrued and unpaid interest.
The senior subordinated notes contain certain covenants which restrict, among
other things, payment of dividends and additional equity issuances.
The revolving credit facility provides for borrowings and issuances of
Letters of Credit of up to $30,000 subject to a defined borrowing base of
qualified accounts receivable and eligible inventory. The revolving credit
facility is renewable annually through October 2000. Holdings is charged a
monthly fee based on an annualized rate of .375% of the unused portion of the
commitment. The interest rate is variable and contains a LIBOR and base rate
option at the election of Holdings. The rate is determined based on MVE,
Inc.'s EBITDA (earnings before interest, income taxes, depreciation and
amortization) to total of MVE Inc. debt as calculated quarterly. The
outstanding balance was subject to a weighted average borrowing rate of 7.91%
and 8.375% at December 31, 1998 and 1997, respectively. The credit facility
contains certain covenants with respect to capital expenditures, borrowings
and disposition of assets. As of December 31, 1998, Holdings was in
compliance with all covenants governing the revolving credit facility.
The senior secured notes are redeemable at the option of Holdings, in whole or
in part, on or after February 15, 2000, at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest thereon to the redemption dates indicated below:
Year Percentage
---------------------- ------------
2000 102.083%
2001 and thereafter 100.000%
The senior secured note agreement contains certain covenants which restrict
borrowings, dividends, acquisition and disposition of assets and require
Holdings to maintain certain liquidity and debt coverage ratios. As of December
31, 1998, Holdings was in compliance with its financial covenants.
The scheduled annual maturities of long-term debt at December 31, 1998 are as
follows:
Year Amount
---------------------- ------------
1999 $ 7,524
2000 20,373
2001 3,946
2002 117,809
2003 1,262
Thereafter 12,634
--------
$163,548
--------
--------
Long-term debt, including current maturities, has a carrying value at December
31, 1998 of $163,548 and a fair value of $183,489. The estimated fair value
represents the present value of debt service at rates currently available to
Holdings for issuance of debt with similar terms. Except for the above, all
financial instruments are carried at amounts that approximate estimated fair
value.
17
7. INCOME TAXES:
Income tax expense (benefit) consists of the following for the periods ended:
Fiscal Year Fiscal Year 10 Months
December 31, December 31, December 31,
1998 1997 1996
------------ ------------ ------------
Current:
Federal $ 803 $ 779 $ (198)
State 267 57 (70)
------- ------- -------
1,070 836 (268)
Deferred 266 (4,234) (2,929)
------- ------- -------
$ 1,336 $(3,398) $(3,197)
------- ------- -------
------- ------- -------
The differences between income taxes computed using the federal statutory rate
and the expense (benefit) for income taxes were as follows for the periods
ended:
Fiscal Year Fiscal Year 10 Months
December 31, December 31, December 31,
1998 1997 1996
------------ ------------ ------------
Income tax provision (benefit) at federal statutory rate $ 1,262 $(1,500) $(9,116)
Increase (reduction) attributable to:
Nondeductible goodwill 685 672 5,161
Foreign Sales Corporation benefit (238) (639) (714)
Consent and solicitation fees 422
Recapitalization fees 783
State taxes, net of federal benefit 465 (547) (132)
Debt forgiveness (2,090)
Other, net 1,252 (1,384) 399
------- ------- -------
$ 1,336 $(3,398) $(3,197)
------- ------- -------
------- ------- -------
18
The tax effects of temporary differences that give rise to the net deferred tax
asset were as follows:
December 31, December 31,
1998 1997
------------ -------------
Accrued pension $ 1,033 $ 1,020
Accrued compensation 570 620
Accrued self insurance reserve 739 913
Deferred compensation 728 823
Intangibles 1,777 1,167
Inventory reserves 973 1,111
Depreciable assets (1,360) (1,162)
Loss and credit carryforwards 3,062 3,638
Warranty reserve 804 818
Other accruals 637 576
Other 409 114
------- -------
9,372 9,638
Valuation allowance (551) (551)
------- -------
Net deferred tax asset $ 8,821 $ 9,087
------- -------
------- -------
The Company has tax loss carryforwards for income tax purposes. Such tax loss
carryforwards have been reduced in part by a valuation allowance, since
realization of a portion of the carryforwards is not deemed more likely than
not. The carryforwards of $3,062 expire as follows: $551 in 2007, $207 in 2011,
$2,156 in 2012 and $148 in 2013.
8. EMPLOYEE BENEFIT PLANS:
PENSION PLAN
Holdings maintains two noncontributory defined benefit pension plans covering
substantially all employees of its U.S. subsidiaries. The benefits to which an
employee is entitled under the plans are derived using a formula based on the
number of years of service and compensation levels during the last five years of
service before retirement. Holdings funds the plans in accordance with the
requirements of federal laws and regulations.
19
Weighted Average assumptions as of December 31:
1998 1997 1996
-------- -------- ----
Discount rate 7.0% 7.25% 7.5%
Expected return on plan assets 8.5% 8.5% 8.5%
Rate of compensation increase 4.0% 4.5% 5.0%
The components of net periodic benefit cost are as follows:
Service cost $ 912 $ 748 $565
Interest cost 987 771 $523
Expected return on plan assets (784) (650) (462)
Amortization of transition obligation (2) (2) (2)
Amortization of prior service cost 13 13 11
Amortization of net actuarial loss 67 8 0
-------- -------- ----
$ 1,193 $ 888 $635
-------- -------- ----
-------- -------- ----
Change in benefit obligation
Benefit obligation-
Beginning of year $ 12,501 $ 9,940
Service cost 912 748
Interest cost 987 771
Actuarial (gain) loss 1,605 1,226
Benefit payments (198) (184)
-------- --------
Benefit obligation-
End of year $ 15,807 $ 12,501
-------- --------
-------- --------
Change in plan assets
Fair value of plan assets-
Beginning of year $ 9,258 $ 7,657
Actual return on plan assets 954 1,302
Employer contributions 1,048 483
Benefit payments (198) (184)
-------- --------
Fair value of plan assets-
End of year $ 11,062 $ 9,258
-------- --------
-------- --------
Funded status $ (4,745) $ (3,243)
Unrecognized transition obligation 70 69
Unrecognized prior service cost 69 82
Unrecognized actuarial loss 2,340 971
-------- --------
Net amount recognized $ (2,266) $ (2,121)
-------- --------
-------- --------
Amounts recognized in the balance sheet consist of:
Accrued benefit liability $ (2,657) $ (2,374)
Intangible asset 150 171
Accumulated other comprehensive income 241 82
-------- --------
Net amount recognized $ (2,266) $ (2,121)
-------- --------
-------- --------
20
Approximately 88% of the plan assets are invested in equity securities and 12%
in cash equivalents as of December 31, 1998.
SAVINGS PLAN
Holdings has a 401(k) savings plan (the Plan) which covers all employees of its
U.S. subsidiaries who have completed one month of service and attained the age
of 21. The Plan provides for voluntary participant contributions of 1% to 15% of
each employee's wages. In 1997, Holdings began matching contributions of up to
2% of eligible employee wages. Prior to this, Holdings made matching
contributions at the discretion of the board of directors. For the years ended
December 31, 1998 and 1997, Holdings made matching contributions of $536 and
$315 to the Plan. Holdings did not make matching contributions to the Plan in
the fiscal year ended December 31, 1996.
DEFERRED COMPENSATION PLAN
During the ten months ended December 31, 1996, Holdings' Board of Directors
approved a deferred compensation plan to replace the existing plan in its
entirety. The new plan awarded deferred compensation to certain key members of
upper management with the objective of retaining their services, encouraging
profitability and rewarding them. The plan awarded 29,750 units to three
individuals which may be exchanged for Common Stock of an equal number at a
future date, given the occurrence of certain events. For the ten months ended
December 31, 1996, Holdings expensed $1,916 in connection with the adoption of
this plan.
During 1997 and subsequent to 1997, Holdings entered into agreements with the
three individuals that effectively terminated each individual's participation in
the deferred compensation plan. Pursuant to the agreements, Holdings will issue
29,750 shares of common stock of MVE to the three individuals upon the earlier
of December 31, 2006 or the occurrence of certain events. As a result of the
Company entering into these agreements, the Company reclassified the accrued
liability related to the deferred compensation plan of $1,866 as of December 31,
1996 to equity.
9. COMMITMENTS AND CONTINGENCIES:
LEASES
A portion of Holdings' operations is conducted using leased equipment and
facilities. These leases are noncancelable and renewable. Total rental expense
included in the accompanying consolidated statements of operations was
approximately $716, $718 and $702, for the years ended December 31, 1998 and
1997 and for the ten months ended December 31, 1996. The future minimum rental
payments required under these leases are $722 in 1999, $462 in 2000, $303 in
2001 and $88 in 2002.
LITIGATION
Various lawsuits, claims and proceedings of a nature considered normal to its
businesses are pending against Holdings and certain of its subsidiaries. Most
significant legal proceedings are related to matters covered by insurance. The
most significant contingencies are described below.
In 1997, a former officer of a subsidiary of Holdings and a related limited
partnership company filed a lawsuit against Holdings and certain of its
affiliates and others alleging breach of contract and other claims arising out
of such officer's separation from the subsidiary for which he was employed.
In 1997, a designer and marketer of an alternative beverage CO2 technology filed
a lawsuit against MVE, Inc. and certain other providers of cryogenic mini-bulk
carbonated systems in Johnson County, Texas, alleging business disparagement,
violations of Texas antitrust lawsuits and related claims. With respect to this
lawsuit, MVE, Inc.'s insurer has accepted coverage, subject to a reservation of
rights.
For both of these lawsuits, extensive discovery has been conducted and Holdings
believes that the claims are without merit and that the outcome of these
lawsuits will not have a material adverse effect on its operating results, cash
flow or financial position.
21
ENVIRONMENTAL MATTERS
Holdings' past and present operations include activities which are subject to
extensive federal and state environmental regulations. As a result, Holdings is
currently participating in environmental investigations and assessments under
these regulations at some of its current and former sites. In 1997, Holdings
submitted a site investigation report and Response Action Plan (RAP) to the
Minnesota Pollution Control Agency (MPCA). The soil RAP has been conditionally
approved by the MPCA. The groundwater RAP is subject to further review. These
plans include possible obligations to remove or mitigate the effects of
hazardous substances from the environment. The amount of such future costs will
depend on factors such as the unknown nature or extent of contamination, the
extent and method of the remedial actions which may be required and the
magnitude of clean-up costs.
Ongoing environmental costs are expensed as incurred. Costs incurred to date as
of the year ended December 31, 1998 were $849, of which, $666 are to be
indemnified. In accordance with the recapitalization agreement, Holdings is to
be indemnified of most environmental claims. Based upon this and subject to the
difficulty in estimating these future costs, Holdings expects that the amount it
may be required to pay in connection with environmental matters would be
indemnified and also would not have a material adverse effect on the financial
condition or results of operations.
10. SEGMENT REPORTING AND EXPORT SALES:
The operations of Holdings are divided into four business segments for financial
reporting purposes. The industrial products segment develops and manufactures
cryogenic storage tanks and transportation equipment and markets them to
producers, distributors and end users of industrial gases. The distributed
products segment develops, manufactures and markets a variety of products
utilizing similar technologies as the industrial products segment, but markets
them through distributors to various commercial markets, principally end users
of bulk liquid CO2 beverage systems. The medical respiratory products segment
develops, manufactures and markets a broad range of medical respiratory
products, including liquid oxygen systems, oxygen concentrators and medication
nebulizers, all of which are used primarily for the in-home treatment of
patients. The applied technologies segment includes storage systems for
temperature-sensitive agricultural and biological products, liquid natural gas
(LNG) storage, test chambers for rapid heat/cold testing, vacuum insulated pipe
and other emerging products. General corporate assets include cash and cash
equivalents and income taxes.
Other expenses recorded in the ten months ended December 31, 1996 are included
in operating income as follows: industrial $5,435, distributed $1,280, medical
respiratory $9,796 and corporate $5,461 (see Note 11). Financial information by
business segment as of and for the years ended December 31, 1998 and 1997, and
the ten months ended December 31, 1996 was as follows:
22
Medical Applied
Industrial Distributed Respiratory Technologies Corporate Total
---------- ----------- ----------- ------------ --------- ---------
1998
------
Customer sales $ 116,542 $ 34,111 $ 27,078 $ 30,020 $ 207,751
Intersegment sales 6,105 2,483 1,563 1,938 $ (12,089)
--------- --------- --------- --------- --------- ---------
Total sales 122,647 36,594 28,641 31,958 (12,089) 207,751
Operating income (loss) 6,672 8,201 436 4,948 (3,748) 16,509
Identifiable assets 57,152 19,087 13,774 10,111 53,437 153,561
Capital expenditures 2,033 1,459 46 90 837 4,465
Depreciation and amortization 3,695 681 769 587 3,748 9,480
1997
------
Customer sales $ 114,728 $ 27,901 $ 26,317 $ 23,780 $ 192,726
Intersegment sales 2,165 2,075 11 857 (5,108)
--------- --------- --------- --------- --------- ---------
Total sales 116,893 29,976 26,328 24,637 (5,108) $ 192,726
Operating income (loss) 8,777 7,437 (1,449) 1,847 (3,954) 12,658
Identifiable assets 41,257 13,346 17,145 10,054 54,980 136,782
Capital expenditures 4,473 1,090 281 67 1,099 7,010
Depreciation and amortization 1,885 507 794 471 3,954 7,611
10 months 1996
----------------
Customer sales $ 93,848 $ 23,522 $ 22,467 $ 15,909 $ 155,746
Intersegment sales 1,480 (1,480)
--------- --------- --------- --------- --------- ---------
Total sales 95,328 23,522 22,467 15,909 (1,480) 155,746
Operating income (loss) 4,849 3,356 (14,188) 1,499 (8,583) (13,067)
Identifiable assets 38,969 15,491 16,692 10,172 60,852 142,176
Capital additions 5,288 1,134 2,616 9 3,367 12,414
Depreciation and amortization 1,130 749 2,363 404 3,145 7,791
Export sales from Holdings' U.S. operations for the years ended December 31,
1998 and 1997, and the ten months ended December 31, 1996 were as follows:
December 31, December 31, December 31,
1998 1997 1996
------------ ------------ ------------
Canada and Mexico $12,653 $10,922 $ 6,957
Europe 16,454 12,164 12,407
Pacific 12,497 29,318 24,868
Other 9,386 8,331 7,271
------- ------- -------
Total $50,990 $60,735 $51,503
------- ------- -------
------- ------- -------
23
11. OTHER EXPENSES:
In 1998, MVE exited the oxygen concentrator market to focus on its liquid oxygen
market using its cryogenic resources. As a result, Holdings incurred a $1,042
loss on the write-off of the assets associated with this product line.
Other expense recorded in the ten months ended December 31, 1996 include the
following:
Recapitalization Expenses $ 3,545
Deferred compensation plan (Note 9) 1,916
Discontinue AURA product line 1,280
Debt forgiveness 3,722
Goodwill write-offs 10,824
Other 685
-------
$21,972
-------
-------
RECAPITALIZATION EXPENSES
In 1996, Holdings incurred $3,545 of expenses related to recapitalization of
Holdings. These expenses related to consent and solicitation of the holders of
the senior secured notes and legal and accounting fees.
DISCONTINUANCE OF AURA PRODUCT LINE
In 1996, Holdings wrotedown $1,280 of fixed and other assets, net of debt
forgiveness, related to the discontinuance of the AURA product line, which was
included in the distributed products segment. Prior to December 1996, Holdings
had an agreement with a third party to participate in a joint venture to produce
and market its AURA product line. In December 1996, Holdings and the joint
venture partner agreed to discontinue all AURA operating and marketing
activities.
DEBT FORGIVENESS
Prior to December 1996, the Company made loans to a major supplier of components
for its medical oxygen concentrators. The loans were to be repaid through future
purchase credits from the supplier. In December 1996, the Company entered into a
new agreement with the supplier, which forgave $3,722 of the debt.
GOODWILL WRITE-DOWN
In December 1996, Holdings recorded a goodwill write-down of $10,824 ($4,750 in
industrial products and $6,074 in the medical respiratory products segment). In
connection with the change in ownership in 1996, management undertook a
strategic review of all business units. As a result of the review, goodwill was
determined to have been impaired because of the financial condition of certain
medical respiratory and industrial business units and Holdings' inability to
generate future operating income from these business units. Moreover,
anticipated future cash flow of these business units indicates that the
recoverability of the goodwill is not reasonably assured. Prior to December of
1996, goodwill was amortized using the straight-line method over twenty years.
12. PREFERRED STOCK AND RECAPITALIZATION
On August 28, 1996 MVE Investors, LLC purchased 4,700 shares of Holdings 12.5%
Series A Cumulative Redeemable Convertible Participating Preferred Stock, par
value $100 per share, for the purchase price of $47,000. Holdings used the
proceeds of this transaction to purchase a substantial portion of certain
Holdings shareholders' common stock. Each share has a liquidation preference of
$10,000 plus accrued and unpaid dividends. The shareholders shall be entitled to
one vote for each share of Common Stock assuming conversion of the preferred
stock to common.
24
Following this recapitalization, MVE Investors, LLC holds shares of Series A
Redeemable Preferred Stock which are convertible into 374,633 shares of Holdings
Common Stock, or approximately 74.9% of the Common Stock outstanding on a fully
diluted basis. As of December 31, 1998 and 1997, Holdings had accrued, but
unpaid dividends of $15,643 and $8,388 relating to Series A Preferred Stock,
respectively.
In exchange for 1,061 shares of Common Stock held by certain shareholders,
Holdings issued 13 shares of 10% Series B Redeemable Preferred Stock in 1997.
Each such share has a liquidation preference of $10,000 plus accrued and unpaid
dividends. Also, 49 shares of Series B Redeemable Preferred Stock was purchased
for $10,000 per share. In 1996, 66,406 shares of Common Stock were exchanged for
833 shares of the Series B Redeemable Preferred Stock. This class of stock is
subject to mandatory redemption and is non-voting. As of December 31, 1998 and
1997, Holdings had accrued, but unpaid dividends of $1,984 and $1,079 relating
to Series B Preferred Stock, respectively.
In 1997, Holdings purchased 430 of its outstanding warrants for $30.10944 per
warrant. In 1996, Holdings purchased 79% of its outstanding warrants for
$30.10944 per warrant.
13. FISCAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 1996 (UNAUDITED)
December 31,
1996
------------
Net sales $190,782
Cost of sales 138,578
---------
Gross profit 52,204
Operating expenses:
Selling and Marketing 11,789
General and administrative 15,910
Research and development 3,510
Amortization 5,548
Other expenses 21,972
---------
Total operating expenses 58,729
---------
Operating loss (6,525)
Interest expense (16,530)
---------
Net loss before income tax benefit and minority interest (23,055)
Income tax benefit 1,616
---------
Net loss before minority interest (21,439)
Minority interest in net loss 1,077
---------
Net loss $ (20,362)
---------
---------
14. RELATED PARTY TRANSACTIONS
Holdings purchased from MVE, Inc. 850 shares of $.01 par common stock in MVE
Restaurant Services, Inc. for $500.
On November 11, 1998, Holdings loaned a shareholder $50 to be repaid on or
before July 1, 2005. Interest accrues quarterly at 8%. The loan is secured by
Holdings Common Stock owned by the shareholder.
Holdings loaned two shareholders $2,000 on August 27, 1996, to be repaid to
Holdings on or before August 27, 2003. On January 9, 1998, one of the notes
matured and the shareholder defaulted. In accordance with the terms of the loan
and pledge agreement, Holdings satisfied the defaulted loan by taking possession
of certain Holdings' common stock that served as collateral for payment of the
loan. Simple interest accrues on the principal amount at an annual rate of 8%.
Principal of $500 and $2,000 and accrued interest of $102 and $225 was
outstanding at December 31, 1998 and 1997, respectively. The loan is secured by
Holdings Common Stock owned by the shareholder.
A director of Holdings has an agreement with the Company which pays an annual
fee of $75 in exchange for consulting services. This agreement has a term of one
year, renewable at the option of Holdings.
25
Two shareholders have management agreements with the Company which pay a
quarterly fee of $44 each plus expenses. The company paid $387 and $401 related
to these agreements in the years ended December 31, 1998 and 1997.
15. SUBSEQUENT EVENTS
AGREEMENT AND PLAN OF MERGER
On February 16, 1999, Holdings entered into a merger agreement with Chart
Industries, Inc. (Chart). Under the agreement, Holdings shall become a wholly
owned subsidiary of Chart. The transaction is expected to be complete within 60
days. The closing is subject to certain regulatory approvals and satisfaction of
usual and customary closing conditions. The purchase price is approximately $240
million including assumed debt. As part of the merger agreement, Chart will
retain 20% of the stock of the cooking oil management business. The remaining
80% of the stock will be distributed to the current shareholders of Holdings.
26
B) UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The accompanying Unaudited Pro Forma Condensed Consolidated Financial Statements
give effect to the Acquisition in a business combination accounted for by the
purchase method of accounting and have been prepared based upon certain
assumptions and include adjustments as detailed in the Notes to Unaudited Pro
Forma Condensed Consolidated Financial Statements. The fair values reflected in
the Unaudited 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 Unaudited Pro Forma Condensed Consolidated Balance Sheet has been prepared
assuming the Acquisition took place as of March 31, 1999 and allocates the total
consideration, including estimated direct costs of the Acquisition, to the fair
values of assets and liabilities of MVE.
The Unaudited Pro Forma Condensed Consolidated Statements of Operations have
been prepared assuming the Acquisition took place as of January 1, 1998 and 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 MVE, nor do they assume increases in corporate general and
administrative expenses which may have resulted from the Company managing MVE
for the periods presented.
The accompanying Unaudited Pro Forma Condensed Consolidated Financial
Statements should be read in conjunction with the Unaudited Condensed
Consolidated Financial Statements of the Company and the related notes
thereto as included in the Company's Form 10-Q for the three months ended
March 31, 1999 and with the Consolidated Financial Statements of the Company
and the related notes thereto as included in the Company's Form 10-K for the
year ended December 31, 1998. Such pro forma information is based on
historical data with respect to the Company and MVE. 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
periods 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.
27
CHART INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
MARCH 31, 1999
(DOLLARS IN THOUSANDS)
PRO FORMA ADJUSTMENTS
CHART MVE SPIN-OFF
MARCH 31, 1999 MARCH 31, 1999 RTI (1) OTHER TOTAL
-------------- -------------- --------- ----- -----
ASSETS
Current Assets
Cash and cash equivalents $ 2,493 $ 6,763 $ (2) $ (7,155)(2) $ 2,099
Accounts receivable, net 39,223 23,672 (321) (133)(4) 62,441
Inventories, net 32,912 29,138 (726) 323 (4) 61,647
Other current assets 7,596 9,741 (396) (650)(4) 16,291
-------- --------- ------- -------- ---------
Total Current Assets 82,224 69,314 (1,445) (7,615) 142,478
Property, plant and equipment, net 40,966 37,598 (1,647) 7,000 (5) 83,917
Goodwill, net 34,054 21,765 139,851 (3) 195,670
Deferred taxes, net 3,556 131 3,687
Deferred financing costs 6,270 (2) 6,270
Other assets 10,032 9,848 (474) (8,392)(6) 11,014
-------- --------- ------- -------- ---------
TOTAL ASSETS $167,276 $ 142,081 $(3,435) $137,114 $ 443,036
-------- --------- ------- -------- ---------
-------- --------- ------- -------- ---------
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 12,632 $ 14,871 $ (410) $ 27,093
Customer advances 16,569 16,569
Billings in excess of contract revenue 1,715 1,715
Accrued expenses and other liabilities 24,200 19,382 142 $ 18,754 (7) 62,478
Current portion of long-term debt 474 7,025 (12) (2,465)(2) 5,022
-------- --------- ------- -------- ---------
Total Current Liabilities 55,590 41,278 (280) 16,289 112,877
Long-term debt 15,497 154,981 (41) 96,400 (2) 266,837
Deferred income taxes 1,153 1,153
Other non-current liabilities 102 102
Minority interest 1,137 1,137
Series A convertible redeemable preferred
stock 64,601 (64,601)(8)
Series B redeemable preferred stock 10,195 (10,195)(8)
Shareholders' Equity (Deficit) 95,036 (130,213) (3,114) 99,221 (9) 60,930
-------- --------- ------- -------- ---------
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY (DEFICIT) $167,276 $ 142,081 $(3,435) $137,114 $ 443,036
-------- --------- ------- -------- ---------
-------- --------- ------- -------- ---------
28
CHART INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO FORMA ADJUSTMENTS
CHART MVE SPIN-OFF
MARCH 31, 1999 MARCH 31, 1999 RTI (1) OTHER TOTAL
-------------- -------------- --------- ----- -----
Sales $ 44,588 $ 39,977 $ (735) $ 83,830
Cost of products sold 32,271 28,845 (640) 60,476
-------- --------- ------- ---------
Gross profit 12,317 11,132 (95) 23,354
Selling, general & administrative expense 7,592 9,749 (751) $ 480 (10)
117 (11)
224 (12) 17,411
-------- --------- ------- -------- ---------
Operating income (loss) 4,725 1,383 656 (821) 5,943
Interest (expense) income - net (328) (4,676) 1 277 (13) (4,726)
-------- --------- ------- -------- ---------
Income (loss) before income taxes 4,397 (3,293) 657 (544) 1,217
Income tax expense (benefit) 1,495 (1,417) 263 (23)(14) 318
-------- --------- ------- -------- ---------
Net income (loss) before minority interest
and extraordinary item 2,902 (1,876) 394 (521) 899
Minority interest in net income (47) (47)
-------- --------- ------- -------- ---------
Net income (loss) before extraordinary item $ 2,902 $ (1,923) $ 394 $ (521) $ 852
-------- --------- ------- -------- ---------
-------- --------- ------- -------- ---------
Net income (loss) before extraordinary item
per share $ .12 $ .04
-------- ---------
-------- ---------
Shares used in per share calculations 23,644 23,644
-------- ---------
-------- ---------
Net income (loss) before extraordinary item
per share - assuming dilution $ .12 $ .04
-------- ---------
-------- ---------
Shares used in per share calculations --
assuming dilution 23,841 23,841
-------- ---------
-------- ---------
29
CHART INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO FORMA ADJUSTMENTS
CHART MVE SPIN-OFF
MARCH 31, 1999 MARCH 31, 1999 RTI (1) OTHER TOTAL
-------------- -------------- --------- ----- -----
Sales $229,423 $ 207,751 $(1,614) $ 435,560
Cost of products sold 151,766 148,096 (1,028) 298,834
-------- --------- ------- -------- ---------
Gross profit 77,657 59,655 (586) 136,726
Selling, general & administrative expense 33,502 43,146 (2,214) $ 1,921 (10)
467 (11)
896 (12) 77,718
-------- --------- ------- -------- ---------
Operating income (loss) 44,155 16,509 1,628 (3,284) 59,008
Interest (expense) income - net (901) (18,915) (26) 1,347 (13) (18,495)
-------- --------- ------- -------- ---------
Income (loss) before income taxes 43,254 (2,406) 1,602 (1,937) 40,513
Income tax expense (benefit) 15,039 1,336 593 (6)(14) 16,962
-------- --------- ------- -------- ---------
Net income (loss) before minority interest
and extraordinary item 28,215 (3,742) 1,009 (1,931) 23,551
Minority interest in net income (165) (165)
-------- --------- ------- -------- ---------
Net income (loss) before extraordinary item $ 28,215 $ (3,907) $ 1,009 $ (1,931) $ 23,386
-------- --------- ------- -------- ---------
-------- --------- ------- -------- ---------
Net income (loss) before extraordinary
item per share $ 1.17 $ .97
-------- ---------
-------- ---------
Shares used in per share calculations 24,084 24,084
-------- ---------
-------- ---------
Net income (loss) before extraordinary
item per share -- assuming dilution $ 1.16 $ .96
-------- ---------
-------- ---------
Shares used in per share calculations --
assuming dilution 24,426 24,426
-------- ---------
-------- ---------
30
CHART INDUSTRIES, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On April 12, 1999, the Company completed the acquisition of MVE. The Acquisition
was accomplished pursuant to the Agreement. A copy of the Agreement is filed as
an Exhibit hereto.
As consideration for the Acquisition, Chart Acquisition Company paid
approximately $245.2 million in cash to purchase all of MVE's common and
preferred stock, to pay off certain existing debt instruments, and to complete a
tender offer and consent solicitation for the 12-1/2 percent senior secured
notes due 2002 issued by MVE, Inc., a wholly owned subsidiary of MVE. The tender
offer and consent solicitation was priced on April 12, 1999. The purchase price
and other terms of the Agreement were determined through arms-length
negotiations. There are no material relationships between MVE and the Company or
any of their affiliates, directors or officers.
Payment of the purchase price was financed by the Company from borrowings under
its Credit Agreement, dated as of April 12, 1999, between Chart Industries,
Inc., the subsidiary Borrowers (as defined therein), the Subsidiary Guarantors
(as defined therein), the Lenders (as defined therein), The Chase Manhattan
Bank, as Administrative Agent, and National City Bank, as Documentation Agent
(the "Credit Agreement").
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET ADJUSTMENTS
The accompanying Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
March 31, 1999 gives effect to the Acquisition as if such Acquisition occurred
on March 31, 1999 by combining the Company's and MVE's March 31, 1999 historical
balances. The fair 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 reflect the spin-off of MVE's Restaurant Technologies, Inc. ("RTI")
business and the Company's on-going 20 percent investment in RTI of
$202,000 as if the spin-off of RTI occurred on January 1, 1998.
(2) To reflect the financing of the Acquisition as follows (dollars in
thousands):
Borrowings under Chart Credit Agreement (at interest rates
ranging from 6.5 percent to 7.0625 percent) $ 250,000
Purchase price, including direct acquisition costs (84,876)
Retirement of certain existing MVE debt (at interest rates
ranging from 7.5 percent to 14.125 percent):
Current portion of long term debt (2,465)
Long term debt, excluding current portion (141,917)
Deferred financing costs incurred by Chart related to
the establishment of the Credit Agreement (6,270)
Tender offer and consent solicitation fees (9,627)
Payment of former Chart credit facility (12,000)
---------
Net decrease in cash $ (7,155)
---------
---------
31
(3) To reflect the excess of acquisition costs over the estimated fair
value of net assets acquired (goodwill). The purchase price and
purchase price allocation are summarized as follows (dollars in
thousands):
Purchase price:
Cash paid $ 82,673
Direct acquisition costs 2,203
---------
84,876
Allocated to:
Historical book value of MVE's net assets (liabilities) $(130,213)
Adjustments to assets and liabilities:
Spin-off RTI (3,114)
Investment in RTI 202
Eliminate MVE historical goodwill (21,765)
Acquired in-process research and development 21,600
Other asset revaluations 508
Adjustments to liabilities assumed (18,754)
Redemption of redeemable preferred stock 74,796
---------
Fair value of MVE's net assets (liabilities) (76,740)
---------
Excess purchase price over fair value of MVE's
net assets (liabilities) -- goodwill $161,616
---------
---------
(4) To reflect fair value adjustments to the carrying value of accounts
receivable, inventories and other current assets.
(5) To reflect the estimated step-up in property, plant and equipment
values to fair value based on preliminary appraisals.
(6) To reflect $5.9 million of fair value adjustments to the carrying value
of other assets, primarily non-compete agreements no longer enforceable
after the Acquisition, and $2.5 million to write-off deferred financing
costs related to certain existing MVE debt instruments that were
retired subsequent to the Acquisition. The charge to write-off these
deferred financing costs has not been included in the Unaudited Pro
Forma Condensed Consolidated Statements of Operations since it is
non-recurring in nature.
(7) To reflect $13.4 million of restructuring reserves related to the
restructuring plan for MVE's operations, $3.7 million for increasing
the recorded pension liability to the projected benefit obligation
based on the latest actuarial valuations, and $1.7 million of other
liabilities assumed.
(8) To reflect the redemption of MVE's redeemable preferred stock.
(9) To reflect the elimination of MVE's accumulated stockholder's deficit
of $133.3 million, the estimated write-off of acquired in-process
research and development of $21.6 million and the estimated charge of
$12.5 million for total costs related to certain existing MVE debt
instruments that were retired subsequent to the Acquisition. The
charges related to acquired in-process research and development and
early extinguishment of debt have not been included in the Unaudited
Pro Forma Condensed Consolidated Statements of Operations since they
are non-recurring in nature.
32
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS ADJUSTMENTS
The accompanying Unaudited Pro Forma Condensed Consolidated Statements of
Operations for the three months ended March 31, 1999 and for the year ended
December 31, 1998 give effect to the Acquisition as if such Acquisition occurred
on January 1, 1998 by combining the Company's and MVE's historical results of
operations for the three month period ended March 31, 1999 and for the twelve
month period ended December 31, 1998.
(10) To reflect amortization expense relative to the Company's new basis in
net assets acquired in conjunction with the Acquisition as if the
Acquisition had occurred January 1, 1998. The amortization expense is
resultant from the amortization on a straight-line basis, over 40
years, of the $161.6 million in goodwill related to the Acquisition.
The goodwill amortization created by this transaction is not
tax-deductible.
(11) To reflect depreciation expense on the step-up in historical value of
MVE's plant and equipment to reflect estimated fair value as if the
Acquisition had occurred January 1, 1998. The depreciation expense is
resultant from the depreciation on a straight-line basis, over periods
ranging from five to ten years, of the estimated $7.0 million step-up
of plant and equipment related to the Acquisition.
(12) To reflect amortization expense of deferred financing costs incurred by
the Company related to the establishment of the Credit Agreement as if
the Acquisition had occurred January 1, 1998. The amortization expense
is resultant from the amortization on a straight-line basis, over 7
years, of the $6.3 million in deferred financing costs incurred.
(13) To reflect a reduction in interest expense assuming the Acquisition had
occurred January 1, 1998. Interest expense has been calculated based on
the Company's borrowings of $250 million under the Credit Agreement
used to fund total consideration paid in conjunction with the
Acquisition and includes the retirement of certain of MVE's existing
debt.
(14) To reflect the tax benefit of an effective rate of 36.3 percent for
deductible expenses such as depreciation expense and interest expense.
The Company's management believes that this effective rate is
indicative of the Company's tax position assuming the Acquisition had
occurred on January 1, 1998. The goodwill amortization created by this
transaction is not tax deductible.
33
C) EXHIBITS
NUMBER DESCRIPTION
- ------ -----------
2.1 Agreement and Plan of Merger, dated as of February 16, 1999, among
Chart Industries, Inc., Chart Acquisition Company and MVE Holdings,
Inc.*
2.2 Agreement and Plan of Merger, dated as of February 25, 1999, among
Chart Industries, Inc., Chart Acquisition Company and MVE Investors,
LLC.*
10.1 Credit Agreement, dated as of April 12, 1999, between Chart Industries,
Inc., the Subsidiary Borrowers (as defined therein), the Subsidiary
Guarantors (as defined therein), the Lenders (as defined therein), The
Chase Manhattan Bank, as Administrative Agent, and National City Bank,
as Documentation Agent.*
10.2 Indemnification and Warrant Purchase Agreement, dated as of April 12,
1999, among Chart Industries, Inc., MVE Holdings, Inc. and each of the
former members of MVE Investors, LLC listed on the signature pages
thereto.*
10.3 Form of Promissory Note.*
10.4 Form of Mortgage, Assignment of Rents, Security Agreement and Fixture
Filing.*
10.5 Warrant Agreement, dated as of April 12, 1999, between Chart
Industries, Inc. and each of the persons listed on the signature pages
thereto.*
10.6 Escrow Agreement, dated as of April 12, 1999, by and among MVE
Holdings, Inc., Chart Industries, Inc., Chart Acquisition Company, ACI
Capital I, LLC, in its own capacity and, with respect to the Class B
Escrow Amount (as defined therein), as agent and attorney-in-fact for
each of the former members of MVE Investors, LLC, listed therein, and
Firstar Bank of Minnesota, N.A.*
23.1 Consent of Deloitte & Touche LLP.
* Previously filed.
34
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: June 23, 1999
-------------
35
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
2.1 Agreement and Plan of Merger, dated as of February 16, 1999, among
Chart Industries, Inc., Chart Acquisition Company and MVE Holdings,
Inc.*
2.2 Agreement and Plan of Merger, dated as of February 25, 1999, among
Chart Industries, Inc., Chart Acquisition Company and MVE Investors,
LLC.*
10.1 Credit Agreement, dated as of April 12, 1999, between Chart Industries,
Inc., the Subsidiary Borrowers (as defined therein), the Subsidiary
Guarantors (as defined therein), the Lenders (as defined therein), The
Chase Manhattan Bank, as Administrative Agent, and National City Bank,
as Documentation Agent.*
10.2 Indemnification and Warrant Purchase Agreement, dated as of April 12,
1999, among Chart Industries, Inc., MVE Holdings, Inc. and each of the
former members of MVE Investors, LLC listed on the signature pages
thereto.*
10.3 Form of Promissory Note.*
10.4 Form of Mortgage, Assignment of Rents, Security Agreement and Fixture
Filing.*
10.5 Warrant Agreement, dated as of April 12, 1999, between Chart
Industries, Inc. and each of the persons listed on the signature pages
thereto.*
10.6 Escrow Agreement, dated as of April 12, 1999, by and among MVE
Holdings, Inc., Chart Industries, Inc., Chart Acquisition Company, ACI
Capital I, LLC, in its own capacity and, with respect to the Class B
Escrow Amount (as defined therein), as agent and attorney-in-fact for
each of the former members of MVE Investors, LLC, listed therein, and
Firstar Bank of Minnesota, N.A.*
23.1 Consent of Deloitte & Touche LLP.
* Previously filed.
36