-----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, BMKpt8X6/69NtN776fuky8mQ6jfxkAylHl4NdRYobMi93IoWgBhzcmv5oNGblEjy w0oA1nZUXVflXpjR8UAnPQ== 0000899243-02-000862.txt : 20020415 0000899243-02-000862.hdr.sgml : 20020415 ACCESSION NUMBER: 0000899243-02-000862 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020328 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANOVER COMPRESSOR CO / CENTRAL INDEX KEY: 0000909413 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 752344249 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13071 FILM NUMBER: 02593324 BUSINESS ADDRESS: STREET 1: 12001 N HOUSTON ROSSLYN CITY: HOUSTON STATE: TX ZIP: 77086 BUSINESS PHONE: 2814478787 MAIL ADDRESS: STREET 1: 12001 NORTH HOUSTON ROSSLYN CITY: HOUSTON STATE: TX ZIP: 77086 FORMER COMPANY: FORMER CONFORMED NAME: HANOVER COMPRESSOR CO DATE OF NAME CHANGE: 19960716 8-K 1 d8k.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ----------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): March 28, 2002 HANOVER COMPRESSOR COMPANY (Exact Name of Registrant as Specified in Charter) Delaware 1-13071 76-0625124 (State or Other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.) 12001 North Houston Rosslyn 77086 Houston, Texas 77086 (Zip Code) (Address of Principal Executive Offices) Registrant's telephone number, including area code: (281) 447-8787 ITEM 5. OTHER EVENTS. Hanover Compressor Company (NYSE: HC), a leading provider of outsourced natural gas compression services, today reported increases in revenue, cash flow (consolidated net income before interest expense, leasing expense, distributions on mandatorily redeemable convertible preferred securities, income tax, and depreciation and amortization) and earnings per common share for the year ended December 31, 2001, compared to the prior year. For the fourth quarter, revenue and cash flow increased over the prior year while earnings per common share declined. The Company also revised its financial targets for 2002, estimating that full year 2002 earnings per fully diluted common share will be between $1.36 and $1.42. The Company said it was comfortable with analysts' consensus estimate of full year 2002 EPS of $1.38. For the first quarter of 2002, the Company estimates EPS will be between $.25 and $.29. The Company's EPS estimates discussed above exclude $0.03 to $0.06 per share in continuing legal costs relating to the Company's accounting review related to the previously announced restatement of its financial results for 2000 and the nine months ended September 30, 2001 and foreign currency losses, primarily in South America. In the fourth quarter, revenue increased 53 percent to $320.3 million compared with $209.5 million in the year-earlier period. Cash flow increased 31 percent to $78.6 million compared with $60.4 million in the fourth quarter 2000. Net income declined 20 percent to $11.8 million, compared with $14.8 million in the previous fourth quarter. Fully diluted earnings per common share decreased 33 percent to $0.14, compared with fully diluted EPS of $0.21 a year earlier. The fourth quarter 2001 included certain charges totaling $8.6 million after tax, or $0.10 per share. These charges included: currency devaluations primarily in Argentina; an impairment of a minority investment in a technology company formed to develop remote monitoring and data collection services for the compression services industry that declared bankruptcy this month; and legal and other settlement-related costs. For the full year 2001, total revenue increased 90 percent to $1,078.2 million from $566.1 million in the prior year. Cash flow increased 55 percent to $302.1 million from $194.9 million the previous year. Net income grew 42 percent to $72.6 million compared with $51.2 million in 2000. Fully diluted earnings per common share increased 23 percent to $0.95 compared with fully diluted EPS of $0.77 the previous year. As announced on February 26, 2002, the Company will restate its financial results for the year ended December 31, 2000 and the nine months ended September 30, 2001 to reflect changes in its accounting treatment for certain transactions. As a result, the Company will restate previously reported net income for the year ended December 31, 2000 from $58.7 million to $51.2 million and for the nine months ended September 30, 2001 from $64.5 million to $63.1 million. In addition, the Company has recorded additional adjustments for depreciation and amortization and property taxes totaling $2.2 million after tax, or $0.03 per share, that relate to the nine months ended September 30, 2001. Accordingly, net income for the nine months will be reduced from $63.1 million to $60.9 million. Compression rental revenue, which generated over 60 percent of the Company's gross profit for the year ended December 31, 2001, increased 70 percent from quarter to quarter and 57 percent year over year. Related compression parts and service segment revenue was up 23 percent quarter to quarter and 90 percent year over year. Compressor fabrication revenue increased 60 percent quarter to quarter and 148 percent year over year. Production and processing equipment fabrication revenue increased 49 percent quarter to quarter and 133 percent year over year. The Company said that despite the current cyclical downturn affecting the energy industry, the Company anticipates further growth during 2002. The Company believes that this growth will be driven by the expansion and integration of the businesses acquired during 2001 and further outsourcing-related growth as the Company's diversified customer base increasingly fills its compression services requirements by hiring specialists to fulfill their compression and related gas handling needs, thereby enabling the Company's customers to redeploy capital to their core exploration and production activities and enhancing operating efficiency and return on capital. The Company's rental fleet totaled 3.6 million horsepower at December 31, 2001, an increase of 66 percent over 2000, reflecting the impact of both acquisitions and continued organic growth in customer demand for outsourced compression services. Due to the additional demand on the Company's accounting staff relative to the Company's previously announced restatement of earnings, the Company will submit a Notification of Late Filing of Form 10-K to the Securities and Exchange Commission and will file its 10-K as soon as practicable but no later than April 16, 2001. The Company will host a conference call at 1:30 p.m. ET, Thursday, March 28, to discuss financial results. To access the call, participants should dial 913/981- 4900 ten minutes before the scheduled start time. For those unable to participate, a replay will be available from 5:00 p.m. ET on Thursday, March 28, until midnight on Wednesday, April 3. To listen to the replay, please call 719/457-0820, access code 446222. A copy of the press release issued by Hanover with respect to these matters is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Business Acquired. Not applicable. (b) Pro Forma Financial Information. Not applicable. (c) Exhibits. 99.1 Press Release, issued March 28, 2002 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 hereunto duly authorized. HANOVER COMPRESSOR COMPANY Date: March 28, 2002 By: /s/ Michael J. McGhan --------------------- Name: Michael J. McGhan Title: President and Chief Executive Officer EXHIBIT INDEX Exhibit Number Description - ------ ----------- 99.1 Press Release, issued March 28, 2002 EX-99.1 3 dex991.txt PRESS RELEASE DATED 3/28/2002 EXHIBIT 99.1 CONFERENCE CALL SCHEDULED FOR 1:30 P.M. ET, THURSDAY, MARCH 28TH HANOVER COMPRESSOR REPORTS INCREASES IN REVENUE AND CASH FLOW FOR 4TH QUARTER AND FOR THE YEAR ENDING 2001 HOUSTON--March 28, 2002--Hanover Compressor Company (NYSE: HC), a leading provider of outsourced natural gas compression services, today reported increases in revenue, cash flow (consolidated net income before interest expense, leasing expense, distributions on mandatorily redeemable convertible preferred securities, income tax, and depreciation and amortization) and earnings per common share for the year ended December 31, 2001, compared to the prior year. For the fourth quarter, revenue and cash flow increased over the prior year while earnings per common share declined. "During 2001, Hanover completed two strategic acquisitions complementing our strong asset base and extending our leadership position in the market for outsourced natural gas compression services," said Michael J. McGhan, President and Chief Executive Officer. "These acquisitions contributed to a significant increase in our international rental revenue, which increased by over 80 percent in the fourth quarter compared to the year-earlier period. While reporting increases in revenue and cash flow for the fourth quarter, higher expenses, including certain charges discussed below, had an adverse affect on earnings. "Given our considerable growth over the last few years, our focus during 2002, as previously announced, will be on the continued successful integration of recent acquisitions, realizing operating and capital efficiencies and shifting capital to higher return projects. Hanover intends to reduce its full year 2002 capital expenditures to a self-funded level enabling the Company to reduce its financial leverage ratios while generating significant growth," added McGhan. In the fourth quarter, revenue increased 53 percent to $320.3 million compared with $209.5 million in the year-earlier period. Cash flow increased 31 percent to $78.6 million compared with $60.4 million in the fourth quarter 2000. Net income declined 20 percent to $11.8 million, compared with $14.8 million in the previous fourth quarter. Fully diluted earnings per common share decreased 33 percent to $0.14, compared with fully diluted EPS of $0.21 a year earlier. The fourth quarter 2001 included certain charges totaling $8.6 million after tax, or $0.10 per share. These charges included: currency devaluations primarily in Argentina; an impairment of a minority investment in a technology company formed to develop remote monitoring and data collection services for the compression services industry that declared bankruptcy this month; and legal and other settlement-related costs. For the full year 2001, total revenue increased 90 percent to $1,078.2 million from $566.1 million in the prior year. Cash flow increased 55 percent to $302.1 million from $194.9 million the previous year. Net income grew 42 percent to $72.6 million compared with $51.2 million in 2000. Fully diluted earnings per common share increased 23 percent to $0.95 compared with fully diluted EPS of $0.77 the previous year. As announced on February 26, 2002, the Company will restate its financial results for the year ended December 31, 2000 and the nine months ended September 30, 2001 to reflect changes in its accounting treatment for certain transactions. As a result, the Company will restate previously reported net income for the year ended December 31, 2000 from $58.7 million to $51.2 million and for the nine months ended September 30, 2001 from $64.5 million to $63.1 million. In addition, the Company has recorded additional adjustments for depreciation and amortization and property taxes totaling $2.2 million after tax, or $0.03 per share, that relate to the nine months ended September 30, 2001. Accordingly, net income for the nine months will be reduced from $63.1 million to $60.9 million. Compression rental revenue, which generated over 60 percent of the Company's gross profit for the year ended December 31, 2001, increased 70 percent from quarter to quarter and 57 percent year over year. Related compression parts and service segment revenue was up 23 percent quarter to quarter and 90 percent year over year. Compressor fabrication revenue increased 60 percent quarter to quarter and 148 percent year over year. Production and processing equipment fabrication revenue increased 49 percent quarter to quarter and 133 percent year over year. Despite the current cyclical downturn affecting the energy industry, management anticipates further growth during 2002. Management believes that this growth will be driven by the expansion and integration of the businesses acquired during 2001 and further outsourcing-related growth as the Company's diversified customer base increasingly fills its compression services requirements by hiring specialists to fulfill their compression and related gas handling needs, thereby enabling the Company's customers to redeploy capital to their core exploration and production activities and enhancing operating efficiency and return on capital. The Company's rental fleet totaled 3.6 million horsepower at December 31, 2001, an increase of 66 percent over 2000, reflecting the impact of both acquisitions and continued organic growth in customer demand for outsourced compression services. Due to the additional demand on the Company's accounting staff relative to the Company's previously announced restatement of earnings, Hanover will submit a Notification of Late Filing of Form 10-K to the Securities and Exchange Commission and will file its 10-K as soon as practicable but no later than April 16, 2001. Conference Call Details - ------------------------ The Company will host a conference call at 1:30 p.m. ET, Thursday, March 28, to discuss financial results. To access the call, participants should dial 913/981- 4900 ten minutes before the scheduled start time. For those unable to participate, a replay will be available from 5:00 p.m. ET on Thursday, March 28, until midnight on Wednesday, April 3. To listen to the replay, please call 719/457-0820, access code 446222. About Hanover Compressor - ------------------------- Hanover Compressor Company (www.hanover-co.com) is the global market leader in full service natural gas compression and a leading provider of service, financing, fabrication and equipment for contract natural gas handling applications. Hanover provides this equipment on a rental, contract compression, maintenance and acquisition leaseback basis to natural gas production, processing and transportation companies that are increasingly seeking outsourcing solutions. Founded in 1990 and a public company since 1997, Hanover's customers include premier independent and major producers and distributors throughout the Western Hemisphere. # # # Certain matters discussed in this press release are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because of the context of the statement and will include words such as "believes," "anticipates," "expects," "estimates," or words of similar import. Similarly, statements that describe Hanover's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those anticipated as of the date of this press release. These risks and uncertainties include: the loss of market share through competition; the introduction of competing technologies by other companies; a prolonged, substantial reduction in oil and gas prices which could cause a decline in the demand for Hanover's compression and oil and gas production equipment; new governmental safety, health and environmental regulations which could require Hanover to make significant capital expenditures; inability to successfully integrate acquired businesses; and changes in economic or political conditions in the countries in which Hanover operates. The forward-looking statements included in this press release are only made as of the date of this press release, and Hanover undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. A discussion of these factors is included in the Company's periodic reports filed with the Securities and Exchange Commission. Hanover Compressor Company Consolidated Statement of Income (in thousands of dollars, except per share amounts) Three months ended Twelve months ended December 31, December 31, 2001 2000 2001 2000 -------- ---------- ---------- --------- Revenues: Rentals $126,176 $ 74,305 $ 400,776 $254,515 Parts, service and used equipment 83,799 67,910 251,816 132,203 Compressor fabrication 55,458 34,671 223,519 90,270 Production and processing equipment fabrication 48,280 32,376 184,040 79,121 Equity in income of non- consolidated affiliates 5,599 1,565 9,350 3,518 Other 977 (1,347) 8,708 6,454 -------- -------- ---------- -------- 320,289 209,480 1,078,209 566,081 -------- -------- ---------- -------- Three months ended Twelve months ended December 31, December 31, 2001 2000 2001 2000 -------- ---------- -------- --------- Expenses: Rentals 48,335 25,888 140,998 87,992 Parts, service and used equipment 60,865 46,926 172,743 89,128 Compressor fabrication 47,478 30,425 188,122 76,754 Production and processing equipment fabrication 40,015 25,720 147,824 62,684 Selling, general and administrative 32,387 20,151 100,980 54,632 Depreciation and amortization 28,078 16,052 90,560 52,882 Lease expense 22,641 15,888 70,182 45,484 Interest expense 7,285 3,219 17,540 8,685 Translation 5,511 - 6,658 - Distributions on mandatorily redeemable convertible preferred securities 1,593 1,593 6,373 6,369 Other 7,093 - 18,819 - -------- -------- ---------- -------- 301,281 185,862 960,799 484,610 -------- -------- ---------- -------- Income before income taxes 19,008 23,618 117,410 81,471 Provision for income taxes 7,222 8,787 44,609 30,307 -------- -------- ---------- -------- Net income before cumulative effect of accounting change 11,786 14,831 72,801 51,164 Cumulative effect of accounting change for derivative instruments, net of income tax - - (164) - -------- -------- ---------- -------- Net income $ 11,786 $ 14,831 $ 72,637 $ 51,164 -------- -------- ---------- -------- Diluted net income per share: Net Income before cumulative effect of accounting change $ 11,786 $ 14,831 $ 72,801 $ 51,164 Distributions on mandatorily redeemable convertible preferred securities, net of income tax - 4,142 - Change in accounting method - - (164) - -------- -------- ---------- -------- Net income for purposes of computing diluted net income per share $ 11,786 $14,831 $ 76,779 $ 51,164 -------- -------- ---------- -------- Three months ended Twelve months ended December 31, December 31, 2001 2000 2001 2000 -------- ---------- -------- --------- Weighted average common equivalent shares outstanding: Basic 79,128 66,356 72,355 61,831 -------- -------- ---------- -------- Diluted 82,882 70,529 81,175 66,366 -------- -------- ---------- -------- Earnings per common share: Basic $ 0.15 $ 0.22 $ 1.00 $ 0.83 -------- -------- ---------- -------- Diluted $ 0.14 $ 0.21 $ 0.95 $ 0.77 -------- -------- ---------- -------- -----END PRIVACY-ENHANCED MESSAGE-----