Hanover Compressor Reports Fourth Quarter 2002 Financial Results and Records $109 Million Pre-Tax Charge as It Focuses on Core Businesses.Energy Editors/Business Editors HOUSTON--(BUSINESS WIRE)--March 4, 2003 Hanover Hanover, city, Germany Hanover, Ger. Hannover, city (1994 pop. 524,820), capital of Lower Saxony, N Germany, on the Leine River and the Midland Canal. Compressor compressor, machine that decreases the volume of air or other gas by the application of pressure. Compressor types range from the simple hand pump and the piston-equipped compressor used to inflate tires to machines that use a rotating, bladed element to achieve Company (NYSE NYSE See: New York Stock Exchange :HC), the leading provider of outsourced Outsourced is a modern day comedy of cross-cultural conflict and romance, directed by John Jeffcoat, released in 2007. Synopsis Todd Anderson (Josh Hamilton) spends his days managing a customer call center for American Novelty Products in Seattle, until his job, natural gas compression compression, external stress applied to an object or substance, tending to cause a decrease in volume (see pressure). Gases can be compressed easily, solids and liquids to a very small degree if at all. services, today reported financial results for the fourth quarter and year ended December December: see month. 31, 2002. During the fourth quarter of 2002, the company reviewed its business lines and the board of directors approved management's recommendation to exit and sell the company's California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). power generation and certain used equipment business lines. The results from these businesses are reflected as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. and prior periods have been adjusted to reflect this presentation. Additionally, in the fourth quarter, Hanover consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: the results of Belleli Energy S.r.l. ("Belleli") for the first time and recorded certain writedowns, asset impairments and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs ("unusual charges"). A summary of these changes and charges to the company's financial results is discussed below. Supplement I to the release provides a breakout of the impact of the unusual charges and Belleli on the fourth quarter 2002 results. For the fourth quarter 2002, Hanover reported a net loss of $74.9 million, or $0.93 per share. Included in the net loss for the quarter were the following items:
Impact on Earnings
Per Share
---------
Discontinued operations $(0.45)
Writedowns, asset impairments and restructuring costs (0.50)
Venezuela disruptions (0.03)
S-4 penalty interest/SEC investigation costs (0.03)
Income tax benefits from foreign exchange losses 0.08
Fourth Quarter 2002 and Year End Summary Fourth quarter 2002 revenue was $261.7 million compared with $308.3 million for the fourth quarter 2001. Net loss for the fourth quarter 2002 was $74.9 million, or $0.93 per share compared with net income of $12.0 million, or $0.14 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share in the fourth quarter 2001. Loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the fourth quarter 2002 was $38.2 million, or $0.48 per share, compared to income of $12.3 million, or $0.15 per fully diluted share a year earlier. Included in the fourth quarter net loss was pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charges of $108.5 million ($52.2 million included in discontinued operations and $56.3 million in unusual charges included in continuing operations). EBITDAR Earnings Before Interest, Taxes, Depreciation, Amortization, and Restructuring Costs - EBITDAR An indicator of a company's financial performance calculated as: = Revenue - Expenses (excluding tax, interest, depreciation, amortization, and restructuring costs) (income from continuing operations before interest expense, compressor leasing expense, distributions on mandatorily Adv. 1. mandatorily - in a manner that cannot be evaded; "the ministry considers that contributions to such a fund should be met from voluntary donations rather than from rates compulsorily levied." compulsorily, obligatorily redeemable Redeemable Eligible for redemption under the terms of an indenture. convertible preferred securities, income taxes, goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. , and depreciation and amortization) for the fourth quarter was $46.4 million, compared to $79.9 million for the same period a year earlier. EBITDAR for the period includes $17.2 million of unusual charges. Supplement II provides a reconciliation of EBITDAR to net income. For the year ended December 31, 2002, revenue was $1,028.8 million, a slight decrease from revenue of $1,041.0 million for 2001. For the year, Hanover reported a net loss of $116.1 million, or $1.46 per share, compared to net income of $72.4 million, or $0.94 per fully diluted share in 2001. Loss from continuing operations was $74.8 million for the year, or $0.94 per share, compared to income of $69.6 million, or $0.91 per fully diluted share in 2001. Included in the 2002 net loss was $182.7 million in pre-tax unusual charges, ($74.2 million in the second quarter as discussed in the company's Form 10-Q Form 10-Q See 10-Q. for that quarter and $108.5 million in the fourth quarter). EBITDAR for 2002 was $249.0 million, compared to $295.2 million in 2001. Included in EBITDAR for 2002 was $37.9 million in unusual charges, $20.7 million in the second quarter and $17.2 million in the fourth quarter. "During the fourth quarter, we performed a full review of our operations and lines of business and identified several areas where we could improve our ongoing operating performance by exiting non-core businesses and streamlining our fabrication fabrication (fab´rikā´sh  n),n the construction or making of a restoration. operations through the consolidation of facilities," said Chad Chad (chăd, chäd), Fr. Tchad, officially Republic of Chad, republic (2005 est. pop. 9,826,000), 495,752 sq mi (1,284,000 sq km), N central Africa. Deaton, President and Chief Executive Officer of Hanover. "While the charges associated with this restructuring led to negative fourth quarter and year end results, we believe these changes, along with our increased focus on capital discipline, should lead to improved operating performance. Looking at 2003, we are cautiously cau·tious adj. 1. Showing or practicing caution; careful. 2. Tentative or restrained; guarded: felt a cautious optimism that the offer would be accepted. optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that our customers' activity will continue to build throughout the year." Discontinued Operations and Writedowns In the fourth quarter 2002, Hanover recorded a pre-tax charge of $52.2 million ($36.7 million, net of tax) to write down its investment in discontinued operations to current estimated fair market values. Discontinued operations include three power generation projects in California and related inventory, and certain of the company's used equipment divisions. Hanover anticipates selling these assets in 2003. Additionally, in the fourth quarter, Hanover recorded $56.3 million in pre-tax unusual charges. Included in these charges were: (i) $34.5 million included in depreciation and amortization expense for reductions in the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of certain idle units of the company's compression fleet that are being retired and the acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. of depreciation related to certain plants and facilities expected to be sold or abandoned; (ii) $4.6 million in goodwill impairment related to the writedown writedown A reduction in the value of an asset carried on a firm's financial statements. For example, the firm's accountants, believing the inventory is overvalued, may decide to take a writedown by reducing inventory valuation. of goodwill associated with the company's pump division, which it plans to sell in 2003; and (iii) $17.2 million included in parts & service expense, selling, general and administrative ("SG&A") expense, and other expense for severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs and bad debt reserves related to non-core businesses. Revenue and Profit Fourth quarter 2002 revenue declined 15% compared to fourth quarter 2001 as growth in the international rental business was more than offset by declines in the other business lines as customers continued to reduce capital expenditures and defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. maintenance. International rental revenue increased by 9% over fourth quarter 2001 to $46.1 million and gross margin improved marginally to 62% from 61% a year earlier. The company continued to experience strong international demand, with increased activity in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , particularly Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. and Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. late in the year. In the fourth quarter 2002, international rental revenue was negatively impacted by a $2.7 million reduction in revenue related to disruptions to the company's Venezuela Venezuela (vĕnəzwā`lə, Span. vānāswā`lä), officially the Bolivarian Republic of Venezuela, republic (2005 est. pop. 25,375,000), 352,143 sq mi (912,050 sq km), N South America. operations in December caused by the unofficial un·of·fi·cial adj. Of or being a drug that is not listed in the United States Pharmacopeia or the National Formulary. national strike in the country. Domestic rental revenue for the quarter declined 6% from the fourth quarter 2001 to $79.3 million, with gross margin declining to 59% from 62% a year earlier. The parts & service and fabrication business lines continued to be impacted by the slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. by oil and gas producers. Parts & service revenue for the fourth quarter declined 29% from the fourth quarter 2001 to $51.0 million with gross margin improving to 30% from 27% for the same period a year earlier. Included in parts & service revenue for the quarter was $9.1 million in used compression equipment sales, with a 29% gross margin compared to $7.2 million in sales and a 11% gross margin for the fourth quarter 2001. Compression fabrication revenue declined 48% from the fourth quarter 2001 to $28.7 million with gross margin declining to 11% from 14% a year earlier. Production & processing equipment fabrication revenue for the quarter was $50.0 million and resulted in a gross margin of 14%, compared to $48.3 million in revenue and a gross margin of 17% for the same period in 2001. Included in production & processing equipment fabrication revenue and expense for the fourth quarter 2002 was the results of Belleli. Excluding Belleli, production & processing equipment fabrication revenue declined 28%, compared to the same period a year earlier. On November November: see month. 21, 2002, Hanover increased its ownership in Belleli to 51% and began consolidating its financial results. Belleli is an Italian-based engineering, procurement and construction  The introduction to this article is vague. To comply with Wikipedia's guidelines, it should be improved. company that
primarily engineers and manufactures desalinatization plants for use in
Europe Europe (y r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and the Middle East. In the fourth quarter, Belleli contributed
$15.5 million in revenue, $13.7 million in operating expense Operating ExpenseThe essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. , and $1.2 million in SG&A expense. Fourth quarter 2002 results were also impacted by higher SG&A expense due to the charges discussed above, the inclusion of Belleli's SG&A, and approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2.0 million in continuing administrative and legal costs associated with the SEC investigation and the company's restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of its financial statements. Depreciation and amortization expense for the quarter increased to $68.8 million, compared to $28.2 million for the same period a year ago. The increase in depreciation was primarily due to $34.5 million in writedowns, partially offset by the reduction in amortization expense of $3.7 million from the adoption of FAS 142, and $3.7 million from the change in estimated useful lives of certain types of compression equipment which began in the third quarter 2001. Fourth quarter results were positively impacted by a $6.7 million tax benefit resulting primarily from the recognition of tax benefits related to foreign exchange losses from the company's international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. . For the full year 2002, revenue declined by approximately 1%, as declining revenue in the fabrication business lines was offset by increased rental revenues. Domestic and international rental revenue increased 22% and 45%, respectively, year to year, as 2002 results included the impact of owning Production Operators Corporation ("POI") for a full year. POI was acquired from Schlumberger Schlumberger Limited is the world's largest oilfield services corporation operating in approximately 80 countries, with about 70,000 people of 140 nationalities. Schlumberger supplies a wide range of products and services from seismic acquisition and processing; formation in August 2001. Parts & service revenue increased 4% over 2001 results, but gross margin decreased from 29% in 2001 to 20% in 2002 due to an inventory writedown in the second quarter 2002 and because a greater portion of the revenue in 2002 was generated from used compressor sales which had a lower gross margin. In 2002, parts & service revenue included $62.4 million in used equipment sales at a 13% gross margin, compared to $28.0 million in 2001, with a 31% gross margin. Revenue in 2002 for compression fabrication and production & processing fabrication decreased by 49% and 19%, respectively, from 2001 revenue due to weakness in the domestic market caused by lower drilling and new well completion activity by oil and gas producers which resulted in decreased capital spending by the company's customers in 2002. Gross margins for both business units in 2002 decreased as well to 13% and 15% from 16% and 20%, respectively, in 2001 as reduced fabrication activity put pressure on margins by having less production to cover fixed overhead. 2002 results were negatively impacted, compared to 2001 results, by increased interest and leasing expense resulting from additional borrowings used for the POI acquisition and increased leasing costs due to the delay in filing registration statements related to the notes issued in connection with the company's 2001 compressor leases caused by the restatements of the company's financial statements. SG&A expense was also higher in 2002 due to increased legal and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. associated with the restatement of the company's financial statements and the SEC investigation. Liquidity and Other Hanover had capital expenditures of approximately $60 million in the fourth quarter 2002 and approximately $242 million for the full year. During 2002, the Company generated approximately $74 million in assets sales proceeds and at December 31, 2002, it had approximately $157 million outstanding under its $350 million bank credit facility and approximately $19 million in cash on its balance sheet. Effective December 31, 2002, Hanover amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. certain financial covenants under its bank credit facility and certain operating leases Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. financed with a group of lenders to allow the company more flexibility in 2003 to meet its short term liquidity needs and currently has approximately $120 million in availability it can access under the bank credit facility, based on current covenant covenant (kŭv`ənənt), agreement entered into voluntarily by two or more parties to do or refrain from doing certain acts. In the Bible and in theology the covenant is the agreement or engagement of God with man as revealed in the constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. . "In the second half of 2002, management increased the company focus on improving capital expenditure discipline, and we were able to reduce borrowings under our bank credit facility from a peak of approximately $250 million at mid year to approximately $157 million at year end, which was about equal with borrowings at year end 2001," said John Jackson John Jackson may refer to: Politics:
Total compression horsepower horsepower, unit of power in the English system of units. It is equal to 33,000 foot-pounds per minute or 550 foot-pounds per second or approximately 746 watts. at December 31, 2002 was 3,514,000, including certain units from acquired companies that Hanover has traditionally excluded from the rental utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be calculations because these units require maintenance and upgrade to meet Hanover's standards ("unavailable units"). Historically, Hanover has reported horsepower utilization excluding unavailable units but going forward the company will report on a total horsepower basis. Hanover's compression horsepower utilization rate as of December 31, 2002, on a total horsepower basis, was 78%, compared to 80% at the end of the third quarter and 84% at December 31, 2001. In the fourth quarter 2002, the company analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. its compression fleet and determined that 217 units representing approximately 35,000 horsepower should be retired and scrapped or sold. The company recorded a $18.9 million charge in the fourth quarter, included in the unusual charges for the quarter, to write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. these units. At December 31, 2002, Hanover's third-party fabrication backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. was approximately $88 million, a slight increase over year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2001 levels of $87 million. Compared to the third quarter 2002, the Company's backlog increased by 24%. Conference Call Details Hanover will host a conference call at 10:00 a.m. Eastern Time, Tuesday Tuesday: see week. , March 4, 2003 to discuss financial results for the fourth quarter and year ended December 31, 2002, and other matters. To access the call, participants should dial 913-981-4910 at least ten minutes before the scheduled start time. For those unable to participate, a replay will be available from 1:30 p.m. Eastern Time on Tuesday, March 4th, until midnight on Monday Monday: see week. , March 10th. To listen to the replay, please dial 888-203-1112 in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , or 719-457-0820 internationally, access code 763491. 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 sells and provides this equipment on a rental, contract compression, maintenance and acquisition leaseback A transaction whereby land is sold and subsequently rented by the seller from the purchaser who is the new owner. basis to natural gas production, processing and transportation companies that are increasingly seeking outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. 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 Western Hemisphere Part of Earth comprising North and South America and the surrounding waters. Longitudes 20° W and 160° E are often considered its boundaries. . Certain matters discussed in this press release are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " intended to qualify for the safe harbors Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. from liability established by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements can generally be identified as such because of the context of the statement and may 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; reduced profit margins resulting from increased pricing pressure in our business; the introduction of competing technologies by other companies; a prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. , 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; currency fluctuations; changes in economic or political conditions in the countries in which Hanover operates; adverse results of regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. inquiries or shareholder litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; inability to comply with loan and lease covenants; inability to access capital markets; and legislative changes in the various countries in which Hanover does business. A discussion of these factors is included in the Company's periodic reports filed with the Securities and Exchange Commission. 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . (Tables Follow)
HANOVER COMPRESSOR COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
(in thousands of dollars, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
2002 2001 2002 2001
-------------------------------------
Revenues:
Rentals - Domestic $79,324 $84,052 $328,600 $269,679
Rental - International 46,088 42,124 189,700 131,097
Parts, service and used
equipment 51,019 71,560 223,845 214,872
Compressor and accessory
fabrication 28,725 55,458 114,009 223,519
Production and processing
equipment fabrication 49,885 48,280 149,656 184,040
Equity in income of non-
consolidated affiliate 4,883 5,599 18,811 9,350
Other 1,773 1,178 4,189 8,403
-------------------------------------
261,697 308,251 1,028,810 1,040,960
Expenses:
Rentals - Domestic 32,456 31,866 120,740 95,203
Rentals - International 17,724 16,469 57,579 45,795
Parts, service and used
equipment 35,940 52,040 179,844 152,701
Compressor and accessory
fabrication 25,562 47,478 99,446 188,122
Production and processing
equipment fabrication 43,113 40,015 127,442 147,824
Selling, general and
administrative 46,032 29,085 153,676 92,172
Depreciation and amortization 68,814 28,229 151,181 88,823
Leasing expense 23,941 22,894 94,751 70,435
Interest expense 10,621 7,278 36,978 17,531
Distributions on mandatorily
redeemable convertible
preferred securities 1,594 1,593 6,374 6,373
Foreign currency translation 3,414 5,511 16,753 6,658
Change in fair value of
derivative financial
instruments (1,715) (1,127) (3,245) 7,596
Goodwill impairment 4,603 -- 52,103 --
Other 12,770 6,977 27,607 9,727
-------------------------------------
324,869 288,308 1,121,229 928,960
-------------------------------------
Income (loss) from continuing
operations before income taxes (63,172) 19,943 (92,419) 112,000
Provision for (benefit from)
income taxes (24,988) 7,597 (17,576) 42,388
-------------------------------------
Income (loss) from continuing
operations (38,184) 12,346 (74,843) 69,612
Discontinued operations, net of
tax (36,736) (342) (41,225) 2,965
-------------------------------------
Income (loss) before cumulative
effect of accounting change (74,920) 12,004 (116,068) 72,577
Cumulative effect of
accounting change for
derivative instruments,
net of income tax -- -- -- (164)
-------------------------------------
Net income (loss) $(74,920)$12,004 $(116,068) $72,413
=====================================
Diluted net income (loss) per
share:
Net income (loss) $(74,920)$12,004 $(116,068) $72,413
(Income) loss from
discontinued operations 36,736 342 41,225 (2,965)
Distributions on mandatorily
redeemable
convertible preferred
securities, net of
income tax -- -- -- 4,142
-------------------------------------
Net income (loss) for purposes of
computing diluted net
income (loss) per
share from continuing
operations $(38,184)$12,346 $(74,843) $73,590
=====================================
Basic earnings (loss) per
common share:
Income (loss) from
continuing operations $(0.48) $0.16 $(0.94) $0.96
Income (loss) from
discontinued operations $(0.45) $(0.01) $(0.52) $0.04
-------------------------------------
Net income (loss) $(0.93) $0.15 $(1.46) $1.00
=====================================
Diluted earnings (loss) per
common share:
Income (loss) from
continuing operations $(0.48) $0.15 $(0.94) $0.91
Income (loss) from
discontinued operations $(0.45) $(0.01) $(0.52) $0.03
-------------------------------------
Net income (loss) $(0.93) $0.14 $(1.46) $0.94
=====================================
Weighted average common and
common equivalent shares
outstanding:
Basic 80,192 79,128 79,500 72,355
Diluted 80,192 82,882 79,500 81,175
HANOVER COMPRESSOR COMPANY
SUPPLEMENT I
ANALYSIS OF IMPACT OF WRITEDOWNS AND BELLELI ON 4TH QUARTER RESULTS
(in thousands of dollars, except per share amounts)
Adjustments
-----------------
Adjusted
Three Belleli Three
Months Write Energy Months
Ended downs November Ended
December and 21 to December
31, unusual December 31,
2002 charges 31, 2002 2002
-----------------------------------
Revenues:
Rentals - Domestic $79,324 $79,324
Rental - International 46,088 46,088
Parts, service and used
equipment 51,019 51,019
Compressor and accessory
fabrication 28,725 28,725
Production and processing
equipment fabrication 49,885 $(15,360) 34,525
Equity in income of non-
consolidated affiliate 4,883 4,883
Other 1,773 (188) 1,585
-----------------------------------
261,697 (15,548) 246,149
Expenses:
Rentals - Domestic 32,456 32,456
Rentals - International 17,724 17,724
Parts, service and used
equipment 35,940 $(700) 35,240
Compressor and accessory
fabrication 25,562 25,562
Production and processing
equipment fabrication 43,113 (13,715) 29,398
Selling, general and
administrative 46,032 (6,160) (1,192) 38,680
Foreign currency translation 3,414 3,414
Change in fair value of
derivative financial
instruments (1,715) (1,715)
Other 12,770 (10,304) (92) 2,374
-----------------------------------
215,296 (17,164) (14,999) 183,133
-----------------------------------
EBITDAR and adjusted EBITDAR 46,401 17,164 (549) 63,016
Depreciation and amortization 68,814 (34,485) (342) 33,987
Goodwill impairment 4,603 (4,603) --
Leasing expense 23,941 23,941
Interest expense 10,621 (262) 10,359
Distributions on mandatorily
redeemable convertible
preferred securities 1,594 1,594
-----------------------------------
109,573 (39,088) (604) 69,881
-----------------------------------
Income (loss) from continuing
operations before income taxes (63,172) 56,252 (55) (6,865)
Provision for (benefit from) income
taxes (24,988) 16,323 5 (8,670)
-----------------------------------
Income (loss) from continuing
operations $(38,184)$39,929 $( 60) $1,805
===================================
Earnings (loss) per common
share:
Basic $(0.48) $0.50 $-- $0.02
===================================
Diluted $(0.48) $0.50 $-- $0.02
===================================
Weighted average common and common
equivalent shares outstanding:
Basic 80,192 80,192 80,192 80,192
Diluted 80,192 80,192 81,686 81,686
HANOVER COMPRESSOR COMPANY
SUPPLEMENT II
EBITDAR CALCULATION
(in thousands of dollars)
Three Months Year Ended
Ended December 31, December 31,
2002 2001 2002 2001
-------------------------------------
Revenues:
Rentals - Domestic $79,324 $84,052 $328,600 $269,679
Rental - International 46,088 42,124 189,700 131,097
Parts, service and used
equipment 51,019 71,560 223,845 214,872
Compressor and accessory
fabrication 28,725 55,458 114,009 223,519
Production and processing
equipment fabrication 49,885 48,280 149,656 184,040
Equity in income of non-
consolidated affiliate 4,883 5,599 18,811 9,350
Other 1,773 1,178 4,189 8,403
-------------------------------------
261,697 308,251 1,028,810 1,040,960
Expenses:
Rentals - Domestic 32,456 31,866 120,740 95,203
Rentals - International 17,724 16,469 57,579 45,795
Parts, service and used
equipment 35,940 52,040 179,844 152,701
Compressor and accessory
fabrication 25,562 47,478 99,446 188,122
Production and processing
equipment fabrication 43,113 40,015 127,442 147,824
Selling, general and
administrative 46,032 29,085 153,676 92,172
Foreign currency translation 3,414 5,511 16,753 6,658
Change in fair value of
derivative financial
instruments (1,715) (1,127) (3,245) 7,596
Other 12,770 6,977 27,607 9,727
-------------------------------------
215,296 228,314 779,842 745,798
-------------------------------------
EBITDAR 46,401 79,937 248,968 295,162
Depreciation and amortization 68,814 28,229 151,181 88,823
Goodwill impairment 4,603 -- 52,103 --
Leasing expense 23,941 22,894 94,751 70,435
Interest expense 10,621 7,278 36,978 17,531
Distributions on mandatorily
redeemable convertible
preferred securities 1,594 1,593 6,374 6,373
-------------------------------------
109,573 59,994 341,387 183,162
-------------------------------------
Income (loss) from continuing
operations before income taxes (63,172) 19,943 (92,419) 112,000
Provision for (benefit from)
income taxes (24,988) 7,597 (17,576) 42,388
-------------------------------------
Income (loss) from continuing
operations (38,184) 12,346 (74,843) 69,612
Discontinued operations, net of
tax (36,736) (342) (41,225) 2,965
-------------------------------------
Income (loss) before cumulative
effect of accounting change (74,920) 12,004 (116,068) 72,577
Cumulative effect of
accounting change for
derivative instruments,
net of income tax -- -- -- (164)
-------------------------------------
Net income (loss) $(74,920)$12,004 $(116,068) $72,413
=====================================
Gross profit percentage
Rentals - Domestic 59% 62% 63% 65%
Rental - International 62% 61% 70% 65%
Parts, service and used
equipment 30% 27% 20% 29%
Compressor and accessory
fabrication 11% 14% 13% 16%
Production and processing
equipment fabrication 14% 17% 15% 20%
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