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, 2003 |
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 of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
| 5885 Landerbrook Dr., Suite 150, 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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
At March 31, 2003, there were 25,893,876 outstanding shares of the Company’s Common Stock, par value $.01 per share.
Page 1 of 21 sequentially numbered pages.
INDEX
| Page | ||||||
| Part I. Financial Information |
||||||
| Item 1: |
Financial Statements |
|||||
| Condensed Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002 |
3 | |||||
| Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2003 and 2002 |
4 | |||||
| Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002 |
5 | |||||
| Notes to Unaudited Condensed Consolidated Financial Statements |
6-13 | |||||
| Item 2: |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14-17 | ||||
| Item 3: |
18 | |||||
| Item 4: |
18 | |||||
| Part II. Other Information |
||||||
| Item 1: |
18 | |||||
| Item 3: |
18 | |||||
| Item 6: |
18 | |||||
| 19 | ||||||
| 19-20 | ||||||
| 21 | ||||||
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
| March 31, 2003 |
December 31, 2002 |
|||||||
| (Unaudited) |
||||||||
| ASSETS |
||||||||
| Current Assets |
||||||||
| Cash and cash equivalents |
$ |
13,614 |
|
$ |
7,225 |
| ||
| Accounts receivable, net |
|
40,980 |
|
|
44,732 |
| ||
| Inventories, net |
|
50,557 |
|
|
51,914 |
| ||
| Other current assets |
|
22,584 |
|
|
27,588 |
| ||
| Total Current Assets |
|
127,735 |
|
|
131,459 |
| ||
| Property, plant and equipment, net |
|
50,486 |
|
|
56,889 |
| ||
| Goodwill, net |
|
76,977 |
|
|
77,232 |
| ||
| Other assets, net |
|
12,884 |
|
|
13,714 |
| ||
| TOTAL ASSETS |
$ |
268,082 |
|
$ |
279,294 |
| ||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT |
||||||||
| Current Liabilities |
||||||||
| Accounts payable |
$ |
25,764 |
|
$ |
23,084 |
| ||
| Customer advances and billings in excess of contract revenue |
|
8,816 |
|
|
10,037 |
| ||
| Accrued expenses and other liabilities |
|
33,644 |
|
|
38,262 |
| ||
| Current maturities of long-term debt |
|
43,415 |
|
|
43,998 |
| ||
| Current portion of long-term debt |
|
218,741 |
|
|
218,741 |
| ||
| Total Current Liabilities |
|
330,380 |
|
|
334,122 |
| ||
| Long-term debt |
|
2,085 |
|
|
1,161 |
| ||
| Other long-term liabilities |
|
28,763 |
|
|
25,628 |
| ||
| Shareholders’ Deficit |
||||||||
| Preferred stock, 1,000,000 shares authorized, none issued or outstanding |
||||||||
| Common stock, par value $.01 per share – 60,000,000 shares
authorized, |
|
261 |
|
|
257 |
| ||
| Additional paid-in capital |
|
46,476 |
|
|
45,792 |
| ||
| Retained deficit |
|
(134,164 |
) |
|
(116,086 |
) | ||
| Accumulated other comprehensive loss |
|
(4,897 |
) |
|
(10,799 |
) | ||
| Treasury stock, at cost, 202,287 and 153,648 shares at March 31, 2003 |
|
(822 |
) |
|
(781 |
) | ||
|
|
(93,146 |
) |
|
(81,617 |
) | |||
| TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT |
$ |
268,082 |
|
$ |
279,294 |
| ||
The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars and shares in thousands, except per share amounts)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Sales |
$ |
66,239 |
|
$ |
67,708 |
| ||
| Cost of sales |
|
49,169 |
|
|
50,949 |
| ||
| Gross profit |
|
17,070 |
|
|
16,759 |
| ||
| Selling, general and administrative expense |
|
15,407 |
|
|
16,506 |
| ||
| Employee separation and plant closure costs |
|
766 |
|
|
1,143 |
| ||
| Loss on insolvent subsidiary |
|
13,682 |
|
|||||
| Equity loss (income) in joint venture |
|
3 |
|
|
(109 |
) | ||
|
|
29,858 |
|
|
17,540 |
| |||
| Operating loss |
|
(12,788 |
) |
|
(781 |
) | ||
| Other income (expense): |
||||||||
| Gain on sale of assets |
|
182 |
|
|||||
| Interest expense, net |
|
(4,015 |
) |
|
(4,089 |
) | ||
| Financing costs amortization expense |
|
(817 |
) |
|
(1,324 |
) | ||
| Derivative contracts valuation (expense) income |
|
(178 |
) |
|
68 |
| ||
| Foreign currency (expense) income |
|
(50 |
) |
|
189 |
| ||
|
|
(4,878 |
) |
|
(5,156 |
) | |||
| Loss before income taxes and minority interest |
|
(17,666 |
) |
|
(5,937 |
) | ||
| Income tax expense (benefit) |
|
409 |
|
|
(2,529 |
) | ||
| Loss before minority interest |
|
(18,075 |
) |
|
(3,408 |
) | ||
| Minority interest, net of taxes |
|
3 |
|
|
45 |
| ||
| Net loss |
$ |
(18,078 |
) |
$ |
(3,453 |
) | ||
| Net loss per common share — basic and assuming dilution |
$ |
(0.70 |
) |
$ |
(0.14 |
) | ||
| Shares used in per share calculations — basic and assuming dilution |
|
25,867 |
|
|
24,849 |
| ||
The accompanying notes are an integral part of these unaudited 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, |
||||||||
| 2003 |
2002 |
|||||||
| OPERATING ACTIVITIES |
||||||||
| Net loss |
$ |
(18,078 |
) |
$ |
(3,453 |
) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Loss on insolvent subsidiary |
|
13,682 |
|
|||||
| Gain on sale of assets |
|
(182 |
) |
|||||
| Depreciation and amortization |
|
2,607 |
|
|
2,770 |
| ||
| Financing costs amortization |
|
817 |
|
|
1,324 |
| ||
| Financing costs expensed |
|
814 |
|
|
2,515 |
| ||
| Employee separation and plant closure costs |
|
357 |
|
|
234 |
| ||
| Other non-cash operating activities |
|
316 |
|
|
20 |
| ||
| Increase (decrease) in cash resulting from changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
|
1,390 |
|
|
5,334 |
| ||
| Inventory and other current assets |
|
4,318 |
|
|
1,204 |
| ||
| Accounts payable and other current liabilities |
|
2,235 |
|
|
(8,882 |
) | ||
| Customer advances and billings in excess of contract revenue |
|
(1,292 |
) |
|
(799 |
) | ||
| Net Cash Provided By Operating Activities |
|
6,984 |
|
|
267 |
| ||
| INVESTING ACTIVITIES |
||||||||
| Capital expenditures |
|
(550 |
) |
|
(1,198 |
) | ||
| Proceeds from sale of assets |
|
225 |
|
|||||