-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Bm6NSUv5Xs17tL0DOd/oXMLOj6NpIWjDsHZJUuQEFlXCTyAs6RXzqEtGec8t1vMb /2l9/GEQM6bwI+UG2wY8VA== 0000950152-96-004070.txt : 19960814 0000950152-96-004070.hdr.sgml : 19960814 ACCESSION NUMBER: 0000950152-96-004070 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHART INDUSTRIES INC CENTRAL INDEX KEY: 0000892553 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED PLATE WORK (BOILER SHOPS) [3443] IRS NUMBER: 341712937 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11442 FILM NUMBER: 96609990 BUSINESS ADDRESS: STREET 1: 35555 CURTIS BLVD CITY: EASTLAKE STATE: OH ZIP: 44095 BUSINESS PHONE: 2169462525 10-Q 1 CHART INDUSTRIES, INC. QUARTERLY REPORT 1 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 June 30, 1996 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) 35555 Curtis Boulevard, Eastlake, Ohio 44095 ---------------------------------------------------------- (Address of Principal Executive Offices) (ZIP Code) Registrant's Telephone Number, Including Area Code: (216) 946-2525 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 June 30, 1996, there were 9,946,383 outstanding shares of the Company's Common Stock, $0.01 par value per share. Page 1 of 10 sequentially numbered pages. 1 2 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 6 of this Report on Form 10-Q. 2 3 CHART INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (dollars in thousands, except per share amounts)
June 30, December 31, 1996 1995 -------------------------------------------- ASSETS Current Assets Cash and cash equivalents $569 $229 Accounts receivable 19,867 26,614 Inventories 24,657 20,871 Other current assets 1,915 1,738 -------------------------------------------- Total Current Assets 47,008 49,452 Property, plant & equipment, net 15,753 11,734 Other assets, net 3,195 3,511 -------------------------------------------- TOTAL ASSETS $65,956 $64,697 ============================================ LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $8,684 $7,764 Customer advances 11,858 7,408 Billings in excess of costs plus estimated earnings 9,078 6,027 Accrued expenses and other liabilities 10,525 10,305 Current portion of long-term debt 16 2,007 -------------------------------------------- Total Current Liabilities 40,161 33,511 Long-term debt 2,004 12,566 Deferred income taxes 77 187 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, 10,151,721 and 10,094,594 shares issued at June 30, 1996 and December 31, 1995, respectively 102 101 Additional paid-in capital 17,449 17,024 Retained earnings 7,785 2,294 Treasury stock, at cost, 205,338 and 163,158 shares at June 30, 1996 and December 31, 1995, respectively (1,622) (986) -------------------------------------------- 23,714 18,433 -------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $65,956 $64,697 ============================================
The balance sheet at December 31, 1995 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. Page 3 4 CHART INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share amounts)
Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 -------------------------------------- -------------------------------------- Sales $30,612 $29,236 $65,339 $54,731 Cost of products sold 20,828 21,369 45,538 40,256 -------------------------------------- -------------------------------------- Gross Profit 9,784 7,867 19,801 14,475 Selling, general & administrative expense 4,383 4,748 9,290 9,634 -------------------------------------- -------------------------------------- Operating Income 5,401 3,119 10,511 4,841 Interest expense - net 181 462 418 925 -------------------------------------- -------------------------------------- Income Before Income Taxes 5,220 2,657 10,093 3,916 Income taxes 1,672 1,009 3,336 1,488 -------------------------------------- -------------------------------------- Net Income $3,548 $1,648 $6,757 $2,428 ====================================== ====================================== Net Income per Common Share $0.35 $0.16 $0.67 $0.24 ====================================== ====================================== Shares used in per share calculations 10,130 10,046 10,111 10,105
The accompanying notes are an integral part of these condensed consolidated financial statements. Page 4 5 CHART INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (dollars in thousands)
Three Months Ended Six Months Ended June 30, June 30, --------------------------------- ------------------------------- 1996 1995 1996 1995 --------------------------------- ------------------------------- OPERATING ACTIVITIES Net income $3,548 $1,648 $6,757 $2,428 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 721 667 1,422 1,337 Contribution of treasury stock to 401K plans 198 77 305 77 Deferred income taxes (110) (455) (110) (455) Increase (decrease) in cash resulting from changes in operating assets and liabilities: Accounts receivable 4,344 (123) 6,747 533 Inventory and other current assets (3,739) (2,254) (3,963) (4,636) Accounts payable and accrued liabilities (293) 3,695 1,140 3,150 Billings in excess of costs plus estimated earnings and customer advances 5,738 (1,324) 7,501 (1,443) --------------------------------- ------------------------------- Net Cash Provided By Operating Activities 10,407 1,931 19,799 991 INVESTING ACTIVITIES Capital expenditures (847) (592) (1,609) (926) Purchase of land and building at PSI (3,578) (3,578) Other investing activities 66 32 62 208 --------------------------------- ------------------------------- Net Cash Used In Investing Activities (4,359) (560) (5,125) (718) FINANCING ACTIVITIES Repayments of long-term debt (2,715) (338) (3,053) (676) Repayments on credit facility (12,250) (10,250) (24,000) (17,000) Borrowings on credit facility 10,250 9,750 14,500 19,000 Treasury stock and employee stock option activity (231) (83) (382) (14) Dividends/distributions paid to shareholders (700) (696) (1,399) (1,394) --------------------------------- ------------------------------- Net Cash Used In Financing Activities (5,646) (1,617) (14,334) (84) --------------------------------- ------------------------------- Net increase (decrease) in cash and cash equivalents 402 (246) 340 189 Cash and cash equivalents at beginning of period 167 641 229 206 --------------------------------- ------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $569 $395 $569 $395 ================================= ===============================
The accompanying notes are an integral part of these condensed consolidated financial statements. Page 5 6 CHART INDUSTRIES, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) June 30, 1996 Note A - Basis of Preparation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. 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, 1995. Note B - Inventories The components of inventory consist of the following:
June 30, December 31, 1996 1995 ----------------------------- Raw materials $ 11,399 $12,538 Work in process 13,878 8,784 Finished goods 12 181 LIFO reserve (632) (632) ---------------------------- $ 24,657 $20,871 ============================
Note C - Revenue Recognition Chart Industries, Inc. ("Chart" or the "Company") uses the percentage of completion method of accounting for significant contracts. In other cases, revenue is recognized using the completed contract method. Management performs a monthly assessment of major significant contracts to determine if contract costs will exceed contract revenues. For those projects where the estimated costs exceed estimated revenues, appropriate estimated losses are recorded. The effects of any change orders are accounted for when agreed to by Chart's customers. 6 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATIONS Sales for the three-month period that ended June 30, 1996, were $30.6 million versus $29.2 million for the comparable 1995 period, an increase of $1.4 million, or 4.7 percent. The growth in sales was primarily the result of the continued strength of the large cryogenic tank business at PEI. Sales of brazed aluminum heat exchangers also continued at a brisk pace in both the air separation and hydrocarbon processing equipment markets. Sales for the six months ended June 30, 1996 were $65.3 million versus $54.7 million for the comparable 1995 period, an increase of $10.6 million or 19.3 percent. As in the quarterly analysis, the increase in sales comes mainly from the cryogenic tank and brazed aluminum heat exchanger businesses. Gross profit for the three-month period that ended June 30, 1996, was $9.8 million versus $7.9 million for the comparable period in 1995, an improvement of $1.9 million, or 24.4 percent. For the first quarter of 1996, gross profit was $10 million. Gross profit for the six months ended June 30, 1996 were $19.8 million versus $14.5 million for the comparable 1995 period, an increase of $5.3 million. Strong market conditions, particularly in the air separation equipment market, and increasingly in the hydrocarbon processing equipment market, continued to support better pricing and higher throughput. A favorable sales mix at PEI also contributed to the year-over-year improvement in profitability. Gross profit margin for the three-month period that ended June 30, 1996, improved to 32.0 percent from 26.9 percent for the 1995 second quarter and 28.8 percent for the 1996 first quarter. Products supporting this improved second quarter margin performance were primarily cryogenic storage tanks, brazed aluminum heat exchangers and cold box design and fabrication. Selling, general and administrative (SG&A) expense for the three-month period that ended June 30, 1996, was $4.4 million, approximately $400,000 lower than the second quarter of 1995 and $500,000 lower than the first quarter of 1996. The decrease in SG&A expense in the second quarter of 1996 compared with the first quarter of 1996 was the result of the high level of first quarter expenses as well as decreasing employee benefit costs and commissions. As a percentage of sales, SG&A expense was 14.3 percent for the second quarter of 1996 versus 16.2 percent and 14.1 percent for the second quarter of 1995 and the first quarter of 1996, respectively. Net interest expenses for the three-month period that ended June 30, 1996, was $181,000 versus $462,000 and $237,000 for the second quarter of 1995 and first quarter of 1996, respectively. Six month interest expense was $418,000 in 1996 verus $925,000 in 1995. The company has significantly reduced its level of borrowings but expects commitment fees and amortization of loan costs to generate $75,000 per quarter of interest expense. Early in the third quarter of 1996, the company secured a $5 million IRB to fund the expansion of ALTEC's brazed aluminum heat exchanger facility in La Crosse, Wisconsin. 7 8 As a result of the foregoing, Chart reported record net income for the three-month period that ended June 30, 1996, of $3.5 million, or $.35 per share, versus $1.6 million, or $.16 per share, in the second quarter of 1995 and $3.2 million, or $.32 per share, for the first quarter of 1996. The improvement in net income from the previous quarter represents the company's eighth consecutive quarter of improved profitability. The six month 1996 net income was $6.8 million or $.67 per share, compared to $2.4 million or $.24 per share in 1995. LIQUIDITY AND CAPITAL RESOURCES Cash provided by operations during the three-month period that ended June 30, 1996, was $10.4 million compared with cash provided by operations of $1.9 million for 1995's second quarter and $9.4 million for 1996's first quarter. The six month 1996 cash provided by operations is $19.8 million compared to $1.0 million in 1995. The company's 1996 cash flow represents current earnings in addition to significant cash flow from customer advances and milestone billings on many jobs in backlog, especially the LIGO project. Capital expenditures for the second quarter of 1996 were $847,000, excluding the PSI property purchase, compared with $592,000 for the same period in 1995. The company completed the purchase of the PSI building and some adjoining land for $3.6 million as fulfillment of an agreement made at the time of the original acquisition of PSI in 1991. Increased capital expenditures in the next 12 months are expected as the company begins expansion at the ALTEC facility. These expenditures will be funded for the most part from the recent IRB. The company anticipates sufficient cash flow from operations and available borrowings to fund interest payments, dividends and capital expenditures. As of June 30, 1996, the company's borrowings on its $25 million credit facility totaled $2 million, a decrease of $2 million since March 31, 1996. BACKLOG Chart's consolidated firm order backlog at June 30, 1996 was $124.4 million versus $112.9 million at March 31, 1996. Air separation equipment bookings continued at strong levels, with orders totaling $12.1 million for the 1996 second quarter. Backlog at June 30, 1996, was $45.8 million after supporting strong quarterly sales of $13.1 million. Hydrocarbon processing equipment backlog reached $33.8 million at June 30, 1996, an increase of $14.6 million over March 31, 1996 levels. New orders during the quarter totaled $20.7 million against sales of $6.1 million. The new orders included a nitrogen rejection unit for AMOCO and numerous brazed aluminum heat exchangers and Core-in-Kettle units. The company has experienced strong demand for hydrocarbon processing equipment, including the innovative Core-in-Kettle products from the growth of the ethylene market, especially overseas. 8 9 Cryogenic and high-vacuum equipment backlog was $42.2 million at the end of the 1996 second quarter, with the LIGO project reflecting $35.1 million of this backlog. New orders totaled $2.7 million and reflect continued demand for Chart's standard cryogenic products, including helium systems and large cryopumps. Specialty products backlog totaled $2.6 million at June 30, 1996, essentially even with the first quarter of 1996. PART II. OTHER INFORMATION Item 1. Legal Proceedings. There have been no material changes since the filing of Chart's 10-K covering 1995. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. Not Applicable. (b) Reports on Form 8-K. The Company did not file a current report on Form 8-K during the second quarter ended June 30, 1996. 9 10 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: August 9, 1996 /s/Don A. Baines ----------------- ---------------- Don A. Baines Chief Financial Officer and Treasurer (Duly Authorized and Principal Financial Officer) EX-27 2 EXHIBIT 27
5 1000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 569 0 19867 0 24657 47008 15753 0 65956 40161 0 102 0 0 23612 65956 65339 65339 45538 45538 9290 0 418 10093 3336 6757 0 0 0 6757 .67 .67
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