<PAGE> 1
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended March 31, 1998
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 1-12815
CHICAGO BRIDGE & IRON COMPANY N.V.
Incorporated in The Netherlands IRS Identification Number: Not Applicable
Koningslaan 34
1075 AD Amsterdam
The Netherlands
31-20-5789588
(Address and telephone number of principal executive offices)
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 for 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
----- -----
The number of shares outstanding of a single class of common stock as of
March 31, 1998 - 12,267,852
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Page
----
<S> <C>
Consolidated Financial Statements
Statements of Income
Three Months Ended March 31, 1998 and 1997 3
Balance Sheets
March 31, 1998 and December 31, 1997 4
Statements of Cash Flows
Three Months Ended March 31, 1998 and 1997 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Results of Operations and Financial Condition 7
PART II. OTHER INFORMATION 9
SIGNATURE PAGE 10
</TABLE>
2
<PAGE> 3
CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
1998 1997
<S> <C> <C>
Revenues $ 189,881 $ 150,396
Cost of revenues 172,993 134,050
--------- ---------
Gross profit 16,888 16,346
Selling and administrative expenses 11,792 11,217
Management Plan charge - 16,662
Other operating income, net (328) (191)
--------- ---------
Income (loss) from operations 5,424 (11,342)
Interest expense (993) (1,329)
Other income 230 398
--------- ---------
Income (loss) before taxes and minority interest 4,661 (12,273)
Income tax expense (benefit) 1,305 (5,361)
--------- ---------
Income (loss) before minority interest 3,356 (6,912)
Minority interest in income 6 63
--------- ---------
Net income (loss) $ 3,350 $ (6,975)
========= =========
Net income (loss) per common share (1)
Basic and Diluted $ 0.27 $ (0.56)
Weighted average common shares outstanding (1)
Basic and Diluted 12,404,359 12,517,552
Dividends on common shares
Amount $ 736 N/A
Per share $ 0.06 N/A
</TABLE>
(1) Net income (loss) per common share and the weighted average
common shares outstanding for 1997 are presented as if the
Offering and the Reorganization had occurred at the beginning
of the year.
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.
3
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1998 1997
<S> <C> <C>
Current assets
Cash and cash equivalents $ 21,022 $ 10,240
Accounts receivable, net of allowance for doubtful
accounts of $1,440 in 1998 and $1,909 in 1997 128,703 157,785
Contracts in progress with earned revenues
exceeding related progress billings 78,179 63,172
Other current assets 17,622 17,157
-------- --------
Total current assets 245,526 248,354
-------- --------
Property and equipment 119,269 121,798
Goodwill 18,417 18,539
Other non-current assets 12,694 11,959
-------- --------
Total assets $395,906 $400,650
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 2,576 $ 1,158
Accounts payable 52,468 52,904
Accrued liabilities 40,184 46,518
Contracts in progress with progress billings
exceeding related earned revenues 61,999 72,810
Income taxes payable 5,711 5,160
-------- --------
Total current liabilities 162,938 178,550
-------- --------
Long-term debt 57,000 44,000
Minority interest in subsidiaries 5,021 5,273
Other non-current liabilities 68,555 69,001
-------- --------
Total liabilities 293,514 296,824
-------- --------
Shareholders' equity
Common stock, NLG .01 par value; 50,000,000 authorized shares;
issued: 12,517,552 in 1998 and 1997;
outstanding: 12,267,852 in 1998 and 12,517,552 in 1997 74 74
Additional paid-in capital 93,691 93,691
Retained earnings 17,326 14,712
Treasury stock, at cost: 249,700 shares in 1998 (3,698) -
Cumulative translation adjustment (5,001) (4,651)
-------- --------
Total shareholders' equity 102,392 103,826
-------- --------
Total liabilities and shareholders' equity $395,906 $400,650
======== ========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.
4
<PAGE> 5
CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $3,350 $(6,975)
Adjustments to reconcile net income to net cash provided by
operating activities
Management Plan charge - 16,662
Depreciation and amortization 4,467 4,205
(Decrease) in deferred income taxes (76) (5,907)
Gain on sale of fixed assets (328) (1,016)
Change in operating assets and liabilities (see below) (5,345) (2,457)
------- -------
Net cash provided by operating activities 2,068 4,512
------- -------
Cash flows from capital investment activities
Proceeds from sale of fixed assets and assets held for sale 873 5,418
Capital expenditures (2,143) (11,214)
------- -------
Net cash (used in) capital investment activities (1,270) (5,796)
------- -------
Cash flows from financing activities
Increase/(decrease) in notes payable 1,418 (66)
Net borrowings under Revolving Credit Facility 13,000 -
Net borrowings from former Parent Company - 12,325
Purchase of treasury stock (3,698) -
Dividends paid (736) -
------- -------
Net cash provided from financing activities 9,984 12,259
------- -------
Increase in cash and cash equivalents 10,782 10,975
Cash and cash equivalents, beginning of the period 10,240 11,864
------- -------
Cash and cash equivalents, end of the period $21,022 $22,839
======= =======
Change in operating assets and liabilities
Decrease in receivables, net $29,082 $11,384
(Increase) in contracts in progress, net (25,818) (13,670)
(Increase) in other current assets (465) (2,294)
Increase/(decrease) in accounts payable & accrued liabilities (6,770) 6,264
Increase/(decrease) in income taxes payable 551 (2,048)
Other, net (1,925) (2,093)
------- -------
Total $(5,345) $(2,457)
======= =======
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.
5
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(IN THOUSANDS)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements for Chicago Bridge
& Iron Company N.V. and Subsidiaries (the "Company") have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures, normally included in financial statements
prepared in accordance with generally accepted accounting principles, have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. The accompanying unaudited interim consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the 1997 Annual Report on
Form 10-K of the Company.
In the opinion of the Company, all adjustments necessary to present fairly the
financial position of the Company and the results of its operations and cash
flows for the period then ended have been included. The results of operations
for such interim periods are not necessarily indicative of the results for the
full year.
2. LONG-TERM DEBT
The weighted average interest rate on $57,000 of borrowings under the Company's
revolving credit facility was 6.32% at March 31, 1998.
3. COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Three Months
Ended March 31,
1998 1997
<S> <C> <C>
Net income (loss) $3,350 $(6,975)
Other comprehensive income, net of tax
Cumulative translation adjustment (350) (14)
------ -------
Comprehensive income (loss) $3,000 $(6,989)
====== =======
</TABLE>
6
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
The following discussion and analysis should be read in conjunction with the
consolidated financial statements and accompanying notes.
RESULTS OF OPERATIONS
For the three months ended March 31, 1998, new business taken grew to $211.1
million, compared with $205.5 million in the first quarter of 1997. The most
significant awards during the quarter included a turnkey chemical storage
facility in the United States and a crude oil export terminal in Qatar.
Approximately 60% of the new business taken during the quarter was for contracts
awarded outside of North America. New business taken increased 55% in the
Europe, Africa and Middle East (EAME) area, 44% in the Central and South America
(CSA) area and 4% in North America, but declined 62% in the Asia Pacific (AP)
area as a result of the Asian economic downturn. Backlog at March 31, 1998,
increased $33.8 million or 6% to $568.6 million, compared with the $534.8
million backlog reported at March 31, 1997, and was $13.6 million higher than
the $555.0 million backlog reported at year-end 1997.
Revenues for the first quarter of 1998 increased 26% to $189.9 million, compared
with $150.4 million in the first quarter of 1997. The increase was due
primarily to a greater volume of work put in place by CB&I Constructors, the
Company's major North American unit based in Houston, and by subsidiaries in the
EAME and CSA areas.
Gross profit for the three months ended March 31, 1998, amounted to $16.9
million, or 8.9% of revenues, compared with $16.3 million, or 10.9% of revenues,
in the prior year quarter. Gross profit increases in the Company's EAME area
were offset by lower gross profit generated by CB&I Constructors and in the
Company's AP area. During the current quarter, CB&I Constructors executed a
large number of lower margin contracts, which resulted from the higher costs
associated with last year's operational difficulties in Houston.
Selling and administrative expenses for the quarter ended March 31, 1998,
increased slightly to $11.8 million but were lower as a percent of revenues
compared with the prior year quarter.
Income from operations for the first quarter of 1998 was $5.4 million compared
with $5.3 million for the first quarter of 1997, excluding the one-time,
non-cash Management Plan charge. Including the one-time, non-cash Management
Plan charge the Company reported an operating loss of $11.3 million in the
first quarter of 1997.
Interest expense was $1.0 million for the first three months of 1998 compared
with $1.3 million in the comparable period of 1997. The decrease was due to
lower debt levels and lower interest rates. Other income consisted primarily
of interest earned on cash balances at foreign subsidiaries.
For the three months ended March 31, 1998, income tax expense increased to $1.3
million or an effective income tax rate of 28.0% compared to a net income tax
benefit of $5.4 million in the
7
<PAGE> 8
comparable period of the prior year. The 1997 income tax benefit was mainly
attributable to the one-time, non-cash Management Plan charge. Excluding the
Management Plan charge, income tax expense would have been $1.2 million or an
effective income tax rate of 28.2% for the first three months of 1997.
Net income for the three months ended March 31, 1998 was $3.4 million or $0.27
per share, compared with net income of $3.1 million or $0.25 per share for the
same period in 1997, excluding the effect of a one-time, non-cash Management
Plan charge of $16.7 million ($10.1 million after tax) related to the
contribution of common shares to a management compensation program in connection
with the Company's initial public offering. Including the one-time, non-cash
Management Plan charge, the Company reported a net loss in the first quarter of
1997 of $7.0 million or $0.56 per share.
FINANCIAL CONDITION
For the three months ended March 31, 1998, the Company generated cash from
operations of $2.1 million. Capital expenditures during the first quarter of
1998 were $2.1 million. In addition, the Company used available funds to
purchase 249,700 shares of its common stock at a cost of $3.7 million.
Contract capital (accounts receivable plus net contracts in progress less
accounts payable) was further reduced by $2.8 million from December 31, 1997.
At March 31, 1998, the Company had $21.0 million of cash and cash equivalents,
which included $7.0 million of temporary cash investments in the United States
available to repay debt. Long-term debt increased during the quarter to $57
million from $44 million at December 31, 1997.
The Company continues to be impacted by a petrochemical project in Tuban, West
Java, Indonesia. Progress on the Tuban project has been delayed pending the
completion of permanent financing which has been impacted by the Asian
financial crisis. At March 31, 1998, the Company's backlog related to this
project was approximately $50 million and the Company and its affiliates had
approximately $33 million of net receivables outstanding. The Company has
reduced the project work force, and has adjusted the material supply schedule.
While the Company believes the delay will have an impact on 1998 revenues, it
also believes that ultimately the project will get permanent financing and that
the Company will resume its work.
Management anticipates that by utilizing cash generated from operations and
funds provided under the Revolving Credit Facility, the Company will be able to
meet its working capital and capital expenditure needs for at least the next 24
months.
The discussion and analysis contains certain forward-looking statements that
involve a number of risks and uncertainties. Actual events or results may
differ materially from the Company's expectations. In addition to matters
described herein, including the Tuban project, operating risks, risks
associated with fixed price contracts, fluctuating revenues and cash flow and
competitive conditions, as well as risk factors listed from time to time in the
Company's reports filed with the Securities and Exchange Commission (including,
but not limited to its Registration Statement on Form S-1 [File No.333-18065],
as amended), may affect the actual results achieved by the Company.
8
<PAGE> 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material developments in the legal proceedings as described
in Note 7 of the Notes to Consolidated Financial Statements submitted with the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.5 The Company's Management Plan, as amended.
27. Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file a current report on Form 8-K during the
three months ended March 31, 1998.
9
<PAGE> 10
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.
Chicago Bridge & Iron Company N.V.
/s/ Timothy J. Wiggins
---------------------------------------
By: Chicago Bridge & Iron Company B.V.
Its: Managing Director
Timothy J. Wiggins
Managing Director
(Principal Financial Officer)
Date: May 11, 1998
10
<PAGE> 1
EXHIBIT 10.5
CHICAGO BRIDGE & IRON
MANAGEMENT DEFINED CONTRIBUTION PLAN
(as amended through March 31, 1998)
Preamble
This Plan, effective March 26, 1997, shall be known as the CHICAGO BRIDGE
& IRON MANAGEMENT DEFINED CONTRIBUTION PLAN (the "Plan"). The object of the
Plan is to provide certain select management employees of Chicago Bridge & Iron
Company N.V. and its subsidiaries ("CBI") with an ownership interest in the
equity of the Company.
The Plan is not intended to be qualified under Section 401(a) of the
Internal Revenue Code (the "Code").
ARTICLE I
Definitions
Section 1.1 "Beneficiary" shall mean the person or persons (including a
trust or estate) who are entitled to receive any benefit payable hereunder by
reason of the death of a Participant, as designated pursuant to Section 11.1.
Section 1.2 "Board" shall mean the Managing Director of the Company.
Section 1.3 "Change of Control" shall mean:
(i) when any "person" or "group" of persons (as such terms are used
in Section 13 of the Exchange Act), other than Praxair, Inc., a Delaware
corporation ("Praxair") or the Company or any majority owned subsidiary of
Praxair or the Company, becomes the "beneficial owner" (as such term is
used in Section 13 of the Exchange Act) of 25% or more of the total voting
power of the Company's outstanding securities;
(ii) upon the consummation of (A) any merger or other business
combination of the company with or into another company pursuant to which
the stockholders of the Company as the case may be, do not own, immediately
after the transaction, more than 50% of the voting power and the value of
the stock of the Company that survives, or (B) the sale, exchange or other
disposition of all or substantially all of the assets of the Company; or
(iii) if, during any period of two years or less, individuals who at
the beginning of such period constituted the Supervisory Board of the
Company, as the case may be, cease for any reason to constitute at least a
majority thereof; provided that any new member of the Supervisory Board who
is nominated for election to, the Supervisory Board with the approval of at
least 75% of the other
<PAGE> 2
members then still in office who were members at the beginning of the
period shall be treated as though having been a member at the beginning of
such period.
Section 1.4 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
Section 1.5 "Committee" shall mean the committee appointed in accordance
with Section 8.1.
Section 1.6 "Company" shall mean Chicago Bridge & Iron Company N.V. or
any intermediate holding company which owns all or a majority of the
outstanding voting securities of Chicago Bridge & Iron Company N.V., and which,
at the time of the first contribution to the Trust, is a majority-owned
subsidiary of Praxair, Inc.
Section 1.7 "Distribution Date" shall mean any date on which a
Participant receives a dividend distribution with respect to Stock held in his
Stock Account.
Section 1.8 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
Section 1.9 "Effective Date" shall mean March 26, 1997.
Section 1.10 "Employee" shall mean each officer and each other key
employee of any Employer or any of its majority-owned subsidiaries.
Section 1.11 "Employer" shall mean the Company and any successor to the
Company, and its majority-owned subsidiaries.
Section 1.12 "Participant" shall mean any Employee who is designated as a
Participant by the Committee pursuant to Article II.
Section 1.13 "Plan" shall mean this Chicago Bridge & Iron Management
Defined Contribution Plan, as described herein and as hereinafter amended.
Section 1.14 "Plan Year" shall mean any calendar year or part thereof
beginning on the Effective Date.
Section 1.15 "Publicly Traded" shall mean any time at which the Stock is
registered under Section 12 of the Securities Exchange Act of 1934, as amended.
Section 1.16 "Stock" shall mean the class of the Company's common stock
that has the highest voting rights and dividend rights of any class of common
stock.
Section 1.17 "Stock Account" shall mean a separate account to which is
credited a Participant's interest in Stock held in the Trust.
<PAGE> 3
Section 1.18 "Termination of Employment" shall mean (a) the resignation
of an Employee for any reason, (b) the dismissal of an Employee, or (c) the
death, retirement or Total Disability of an Employee.
Section 1.19 "Totally Disabled" or "Total Disability" shall mean a mental
or physical condition of a Participant which the Committee, on the basis of
information satisfactory to it, finds to be a permanent condition which renders
such member unfit to perform the duties of an Employee, as such duties shall be
determined by the Committee. Any determination of whether a Participant is
Totally Disabled shall be made under rules uniformly applied to all
Participants.
Section 1.20 "Trust" shall mean the legal entity created by a trust
agreement (and any amendments thereto) between the Employer and the Trustee.
Section 1.21 "Trustee" shall mean any corporation, individual or
individuals who shall accept the appointment as Trustee to execute the duties
of the Trustee as specifically set forth in the trust agreement between the
Trustee and the Employer.
Section 1.22 "Unallocated Stock Account" shall mean a separate account
established under Section 4.1 to hold Stock that is not allocated to the Stock
Account of any particular Participant and dividend distributions received with
respect to such Stock.
ARTICLE II
Eligibility and Participation
Each Employee designated by the Committee shall be a Participant in the
Plan from the date on which he is so designated until the earlier of (i) his
Termination of Employment or (ii) the date he receives a distribution of all of
the Stock in his Stock Account.
ARTICLE III
Contributions
The Employer shall establish and contribute to the Trust 925,670 shares of
Stock as of the effective Date. The Employer may contribute additional shares
of Stock from time to time at its sole discretion. Stock contributions shall
initially be credited to the Unallocated Stock Account, unless the Committee
shall otherwise direct that any such Stock shall be allocated directly to the
Stock Account of one or more Participants.
<PAGE> 4
ARTICLE IV
Allocation of Contributions
Section 4.1 Establishment of Accounts. The Committee shall establish and
maintain a Stock Account and related records in the name of each Participant,
and a separate account (the Unallocated Stock Account) to which any
contribution made without specific allocation and any forfeitures of Stock
occurring hereunder shall be credited pending allocation to Participants. The
Unallocated Stock Account shall also hold dividends paid with respect to any
shares of Stock held therein until such dividends are payable pursuant to the
Plan.
Section 4.2 Allocations to Participants' Accounts. The Committee shall
designate the number of shares of Stock allocable to the Stock Account of each
Participant at the time it designates an Employee as a Participant. The number
of shares so allocated shall be subtracted from the Unallocated Stock Account
(in which case any dividends paid on such Stock prior to allocation to the
Participant's Stock Account shall also be credited to such Stock Account, and
shall be distributed to the Participant as soon as practicable thereafter) or
credited to such Stock Account directly upon contribution by the Company.
Notwithstanding the foregoing, any Stock remaining in the Unallocated Stock
Account as of the last day of each Plan Year (whether due to unallocated
contributions or forfeitures) and any dividend paid and received on Stock
credited to the Unallocated Stock Account shall, as to forfeitures, be
allocated during such Plan Year to the successor of the Participant whose Stock
has been forfeited, in such amount as the Committee shall deem appropriate in
its sole discretion, and any remaining forfeited Stock and all unallocated
contributions of Stock and such dividends shall be allocated among the Stock
Accounts of each Participant who is an Employee of the Employer on the last day
of such Plan Year in the proportion that each Participant's Stock Account bears
to the total of all Participants' Stock Accounts.
Section 4.3 Voting or Tender of Stock. Each Participant shall be
entitled to direct the Trustee on a confidential basis, according to a process
which the Committee shall prescribe and for which it shall be responsible and
the Company bear all costs, as to the manner in which voting rights will be
exercised with respect to any corporate matter which involves the voting of
such shares allocated to the Participant's Stock Account, or as to the tender
and exchange of such shares in response to any offer made for such shares. Any
shares held in a Participant's Stock Account which may be voted, tendered and
exchanged at the direction of such Participant in accordance with the
immediately preceding sentence with respect to which the Trustee does not
receive voting directions shall not be voted, tendered or exchanged.
<PAGE> 5
ARTICLE V
Account Valuations and Adjustments
Section 5.1 Adjustments for Net Changes in Stock Accounts. Any cash
dividends on shares of Stock allocated to a Participant's Stock Account,
including any amount advanced by the Company in anticipation of a refund of
Netherlands withholding taxes relating to such dividends, regardless whether
such amounts constitute employee compensation, shall be paid or distributed (i)
by the Trustee if received by the Trustee, or (ii) by the Company or its agent
directly on behalf of the Trustee if not received by the Trustee, to each
Participant no later than ten (10) days following the end of the calendar
quarter in which such dividend is paid. In the event amounts were advanced by
the Company in anticipation of a refund on withholding taxes relating to
dividends, the Trustee shall remit to the Company, promptly upon receipt
thereof, any withholding tax refund amount subsequently received by the Trustee
from the Company's transfer agent or other payor thereof. The Plan and Trust
shall not be charged with interest on any such advances. In the event of a
Stock split, Stock dividend, combination of shares, or any other change or
exchange for other securities by reclassification, reorganization, merger,
consolidation, recapitalization or otherwise, the Stock credited to any Stock
Account (including the Unallocated Stock Account) shall be appropriately
adjusted to reflect such event(s) and the rights of each Participant to any
new, additional, or different shares of stock or securities resulting from such
event(s). If and when any event(s) described in the preceding sentence occur,
all Plan provisions shall apply to such new, additional, or different shares or
securities.
Section 5.2 Treatment of Expenses. All expenses incurred by the
Committee and the Trustee in connection with administering this Plan and the
Trust shall be paid by Employer. Any taxes on the Trust related to income
credited to or attributable to the payment of cash dividends, or other
adjustments to, Stock Accounts described in Section 5.1 shall be paid from the
assets of the Trust and charged against the Stock Account to which the income
is allocated as though it were payable directly to the Participant.
ARTICLE VI
Distribution
Except as provided herein, the Trustee shall distribute and release to the
Committee for distribution to, or cause the Company to issue a certificate for
shares to distribute to, Participant (or, if applicable, his Beneficiary) all
amounts and all shares of Stock credited to his Stock Account within thirty
(30) days following the date on which a Participant becomes 100% vested.
<PAGE> 6
ARTICLE VII
Vesting
Subject to the provisions of this Article VII, a Participant's interest in
his Stock Account shall become vested on the earliest to occur of (i) his
death, (ii) his termination of employment due to Total Disability, (iii) the
third anniversary of the date on which the Stock first becomes Publicly Traded,
(iv) a Change of Control, (v) involuntary termination for any reason other than
wilful misconduct or gross negligence, or (vi) any other date designated by the
Committee. Any Participant who voluntarily terminates employment with the
Employer and each of its subsidiaries by which he is employed prior to vesting
in his Stock Account as provided in the preceding sentence shall forfeit the
amounts credited to his Stock Account.
ARTICLE VIII
Organization of Plan Committee;
Administration of Plan
Section 8.1 The Committee. The Plan shall be administered by a Committee
composed of not less than 3 members, appointed by the Board, each of whom may
be a member of the Board or an Employee. Each member of the Committee shall
serve at the will of the Board and without compensation. Any member of the
Committee may resign by giving written notice to the Board not less than thirty
(30) days before the effective date of his resignation. Any member of the
Committee may be removed, with or without cause, at any time by the Board. The
Board shall fill vacancies in the Committee as soon as is reasonably possible
after a vacancy occurs and, until a new appointment is made, the remaining
members shall have full authority to act.
Section 8.2 Committee Action, Rules and Expenses. The Committee shall
appoint a chairman and a secretary from its members approved by a majority of
its members. Action by the Committee shall be taken by a vote of the majority
of its members present at a meeting, at which a quorum is present, or signed by
a majority of its members in writing without a meeting. A quorum shall consist
of that number of members constituting a majority of the Committee. The
Committee may establish such rules as may be necessary or desirable for its own
operations. The proper expenses of the Committee in the performance of its
duties, shall be paid by the Employer.
Section 8.3 Plan Administered by Committee. The Committee shall
administer the Plan and shall have complete control in and responsibility for
the administration thereof, including the keeping of records of the Plan and
Trust. In exercising any of its discretionary powers with respect to the
administration of the Plan, the Committee shall act in a uniform and
nondiscretionary manner. The Board shall have no responsibility for the
operation of the Plan, except as otherwise provided herein. The Committee
shall
<PAGE> 7
have all powers which are reasonably necessary to carry out its responsibilities
under the Plan including, but not limited to, the power to construe the Plan and
to determine all questions that shall arise thereunder, and shall also have all
the powers elsewhere in the Plan conferred upon it.
Notwithstanding the foregoing, however, in the event of any dispute or
controversy arising over whether any individual employee has become vested in
or has forfeited any interest in Stock under this Plan upon termination of
employment, the rights of such individual under this Plan, if any, shall be
determined by the Compensation Committee of the Supervisory Board of the
Company, or any subcommittee or individual member of such body delegated by it
for this purpose, in which case such body shall have full discretion and its
decision shall be final and binding on all parties.
Section 8.4 Power of Delegation. The Committee may allocate among its
members or delegate to any person who is not a member of the Committee any
administrative responsibility which it has hereunder. Any delegation or
allocation of a responsibility pursuant to this Section shall be evidenced by
the minutes of the meeting of the Committee at which such delegation or
allocation was approved or, if no such meeting was held, by the writing under
which such action was taken.
Section 8.5 Communication By Committee. Decisions and directions of the
Committee may be communicated to the Trustee, a Participant, a Beneficiary, an
Employer or any other person who is to receive such decision or direction by a
document signed by any one or more members of the Committee (or persons other
than members) so authorize, and such decision or direction of the Committee may
be relied upon by the recipient as being the decision or direction of the
Committee. The Committee may authorize one or more of its members, or a
designee who is not a member, to sign on behalf of the entire Committee.
ARTICLE IX
Provisions Relating to Interests in Stock
Section 9.1 Registration Rights. The Company shall, if necessary,
register the shares of Stock held under the Trust and any shares distributed
from the Trust, under the Securities Act of 1933, as amended, and satisfy any
and all applicable state securities law requirements, such that the shares of
Stock may be freely sold by the Trust or any other holder thereof without
material limitation.
Section 9.2 Listing on Stock Exchange. The Company shall take such
action as shall be necessary to cause any Stock issued in connection with the
Plan and not previously listed to be listed on any such exchange or trading
market on which shares of the class of the Stock is then listed.
<PAGE> 8
ARTICLE X
Amendments
The Board reserves the right at any time and from time to time to modify,
alter, amend or terminate the Plan, but no such action shall adversely affect
the rights of any Participant or reduce or otherwise impair the rights of a
Participant in respect of Stock allocated to his Stock Account. No
modification or amendment of the Plan may be made which would cause or permit
any part of the assets of the Trust Fund to be used for, or diverted to,
purposes other than for the exclusive benefit of Participants or their
Beneficiaries, or which would cause any part of the assets of the Trust Fund to
revert to or become the property of an Employer, and any amendment,
modification, alteration or termination of the Trust Agreement shall only by
made pursuant to the terms of the Trust Agreement.
ARTICLE XI
Section 11.1 Designation of Beneficiaries. A Participant may designate a
Beneficiary or Beneficiaries (in any order of priority) by written notice filed
with the Committee, and may change his designated Beneficiary at any time by
designating a new Beneficiary or Beneficiaries in the same manner, and no
notice need be given to any prior designated Beneficiary. If no Beneficiary as
designated or provided for above shall survive a deceased Participant, the
Participant's Stock Account shall be distributable to the Participant's estate.
Section 11.2 Plan Creates No Employment Rights. This Plan shall not be
deemed to constitute a contract between the Employer and any Employee or other
person whether or not in the employ of the Employer, nor shall anything herein
contained be deemed to give an Employee or any other person, whether or not in
the employ of the Employer, any right to be retained in the employ of the
Employer, or to interfere with the right of the Employer to discharge an
Employee at any time and to treat him without any regard to the effect which
such treatment might have upon him as a Participant in the Plan, or any right
to any payment whatsoever, except to the extent expressly provided for
hereunder.
Section 11.3 Limit on Employer Liability. No person shall have any right
or interest in the Trust other than as provided herein. All distributions
under the Plan shall be paid or provided solely from the Trust except to the
extent otherwise provided herein and the Trust Agreement. Any final
distribution to any Participant or Beneficiary in accordance with the
provisions of the Plan shall be in full satisfaction of all claims against the
Trust, the Trustee, the Committee, the Employer, and the Board with respect to
the Plan or Trust.
<PAGE> 9
Section 11.4 Plan Headings. The headings in this Plan have been inserted
for convenience of reference only, and are to be ignored in any construction of
the provisions hereof.
Section 11.5 Number and Gender. In the construction of this Plan, the
masculine shall include the feminine and the singular the plural, and vice
versa, in all cases where such meanings would be appropriate.
Section 11.6 Separability of Provisions. If any provision of this Plan or
the application of such provision to any person or circumstance shall be held
invalid, the remainder of this Plan (and the application of such provision to
any person or circumstance other than the person or circumstance to which it is
held invalid) shall not be affected thereby.
Section 11.7 Interpretation of Provisions. The Employer intends this
Plan to be a nonqualified stock bonus plan. Accordingly, the Plan and Trust
Agreement shall be interpreted and applied in a manner consistent with this
intent, and to the extent not inconsistent therewith, in accordance with the
laws of the State of Illinois, without regard to its rules or provisions of law
regarding conflict of laws.
IN WITNESS WHEREOF, and as evidence of the adoption of this Plan effective
as of March 26, 1997 by the Company, it has caused the same to be signed by its
duly authorized officer.
CHICAGO BRIDGE & IRON COMPANY N.V.
By: Chicago Bridge & Iron Company B.V.,
its sole Managing Director
By: /s/ Timothy J. Wiggins
----------------------
its Managing Director
ATTEST:
/s/ Robert H. Wolfe
- -------------------
Secretary
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 1998, AND THE INCOME STATEMENT FOR THE THREE MONTHS ENDED
MARCH 31, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
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<ALLOWANCES> 1,440
<INVENTORY> 2,574
<CURRENT-ASSETS> 245,526
<PP&E> 154,194
<DEPRECIATION> (34,925)
<TOTAL-ASSETS> 395,906
<CURRENT-LIABILITIES> 162,938
<BONDS> 57,000
0
0
<COMMON> 74
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<TOTAL-LIABILITY-AND-EQUITY> 395,906
<SALES> 0
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<CGS> 0
<TOTAL-COSTS> 172,993
<OTHER-EXPENSES> (328)
<LOSS-PROVISION> (469)
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<INCOME-PRETAX> 4,661
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