<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-13071
HANOVER COMPRESSOR COMPANY
(Exact name of registrant as specified in its charter)
Delaware 75-2344249
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12001 North Houston Rosslyn
Houston, Texas 77086
(Address of principal executive offices)
(281) 447-8787
(Registrant's telephone number, including area code)
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
As of November 11, 1997, there were 28,335,821 shares of the Company's common
stock, $0.001 par value, outstanding.
<PAGE> 2
HANOVER COMPRESSOR COMPANY
CONSOLIDATED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
December 31, September 30, 1997
ASSETS 1996 (Unaudited)
---- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,322 $ 11,286
Accounts receivable, net 28,012 40,498
Inventory 18,134 32,547
Costs and estimated earnings in excess of billings
on uncompleted contracts 7,774 7,446
Prepaid taxes 4,372 5,993
Other current assets 1,025 3,621
-------------- ------------------
Total current assets 66,639 101,391
-------------- ------------------
Property, plant and equipment:
Compression equipment 296,060 400,229
Land and buildings 5,236 9,228
Transportation and shop equipment 10,788 13,493
Other 3,892 5,827
-------------- ------------------
315,976 428,777
Accumulated depreciation 49,570 69,651
-------------- ------------------
Net property, plant and equipment 266,406 359,126
-------------- ------------------
Intangible and other assets 8,342 9,358
$ 341,387 $ 469,875
============== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 492 $ 571
Accounts payable, trade 9,051 17,742
Accrued liabilities 8,214 11,503
Advance billings 6,701 8,299
Billings on uncompleted contracts in excess of
costs and estimated earnings 668 6,903
-------------- ------------------
Total current liabilities 25,126 45,018
Long-term debt 122,756 124,013
Other obligations 1,161 921
Deferred income taxes 15,449 17,388
-------------- ------------------
Total liabilities 164,492 187,340
-------------- ------------------
Commitments and contingencies
Stockholders' equity:
Common stock, $.001 par value; 100 million shares authorized;
22,938,541 and 28,367,168 (unaudited) shares issued,
respectively 23 28
Additional paid-in capital 171,342 268,948
Notes receivable - employee stockholders (6,770) (10,748)
Retained earnings 12,518 24,525
Treasury stock - 31,347 common shares, at cost (218) (218)
-------------- ------------------
Total stockholders' equity 176,895 282,535
-------------- ------------------
$ 341,387 $ 469,875
============== ==================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
HANOVER COMPRESSOR COMPANY
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months Nine months
Ended September 30, Ended September 30,
------------------- -------------------
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Rentals and maintenance $ 20,245 $ 28,101 $ 57,367 $ 78,677
Compressor fabrication 7,295 14,046 14,141 35,519
Production equipment fabrication 7,527 9,311 19,182 26,672
Other 179 9 459 721
------------ ----------- ----------- ------------
35,246 51,467 91,149 141,589
------------ ----------- ----------- ------------
Expenses:
Rentals and maintenance 7,619 10,749 21,741 30,410
Compressor fabrication 6,428 10,877 12,266 29,374
Production equipment fabrication 5,357 6,636 14,042 18,862
Selling, general and administrative 3,916 5,051 11,536 14,458
Depreciation and amortization 5,379 7,497 15,030 20,802
Interest expense 1,624 2,167 4,361 7,837
------------ ----------- ----------- ------------
30,323 42,977 78,976 121,743
------------ ----------- ----------- ------------
Income before income taxes 4,923 8,490 12,173 19,846
Provision for income taxes 1,954 3,353 4,817 7,839
------------ ----------- ----------- ------------
Net income $ 2,969 $ 5,137 $ 7,356 $ 12,007
============ =========== =========== ============
Net income available to stockholders:
Net income $ 2,969 $ 5,137 $ 7,356 $ 12,007
Dividends on Series A and Series B
preferred stock (513) - (1,539) -
Net income available to
stockholders 2,456 5,137 5,817 12,007
Weighted average common
equivalent shares outstanding 22,675 30,200 22,577 26,421
------------ ----------- ----------- ------------
Earnings per common share $ 0.11 $ 0.17 $ 0.26 $ 0.45
============ =========== =========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
HANOVER COMPRESSOR COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1996 1997
---- ----
<S> <C>
Cash flows from operating activities:
Net income $ 7,356 $ 12,007
Adjustments:
Depreciation and amortization 15,030 20,802
Amortization of debt issuance and debt discount 406 765
Gain on sale of assets (239) (294)
Deferred income taxes 3,144 1,939
Changes in assets and liabilities, net of effects of
business combinations:
Accounts receivable (5,054) (12,486)
Inventory (5,607) (14,413)
Costs and estimated earnings versus billings on
uncompleted contracts 1,218 6,563
Accounts payable and other liabilities 1,706 11,980
Advance billings 547 1,598
Other (2,157) (4,457)
----------- ------------
Net cash provided by operating activities 16,350 24,004
Cash flows from investing activities:
Capital expenditures (58,315) (115,487)
Proceeds from sale of fixed assets 2,523 1,239
Cash used for business acquisitions (6,489) -
----------- ------------
Net cash used in investing activities (62,281) (114,248)
Cash flows from financing activities:
Proceeds from long-term debt 45,000 87,000
Issuance of common stock 1,084 93,860
Debt issuance costs (481) (1,412)
Repayment of long-term debt (584) (86,425)
Other 177 1,185
----------- ------------
Net cash provided by financing activities 45,196 94,208
----------- ------------
Net increase/(decrease) in cash and cash equivalents (735) 3,964
Cash and cash equivalents at beginning of period 2,989 7,322
----------- ------------
Cash and cash equivalents at end of period $ 2,254 $ 11,286
=========== ============
Supplemental disclosure of cash flow information:
Interest paid $ 4,005 $ 6,491
Income taxes paid $ 2,543 $ 5,362
Supplemental disclosure of noncash transactions:
Common stock issued in exchange for notes receivable $ 2,300 5,163
Acquisitions of businesses:
Property, plant and equipment acquired $ 6,714 -
Common stock issued $ (225) -
Preferred stock dividend $ (1,539) -
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
HANOVER COMPRESSOR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Notes
Additional receivable
Common stock paid-in Treasury employee Retained
Shares Amount capital Stock stockholders' earnings
------ ------ ------- ----- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 22,938,541 $ 23 $ 171,342 $ (218) $ (6,770) $ 12,518
Nine months ended September 30, 1997
(unaudited):
Issuance of common stock 5,163,843 5 92,443
Issuance of common stock to employees 264,784 0 5,163 (5,163)
Repayment of shareholder notes 1,185
Net income 12,007
----------- ------- ---------- -------- ----------- ----------
Balance at September 30, 1997 (unaudited) 28,367,168 $ 28 $ 268,948 $ (218) $ (10,748) $ 24,525
=========== ======= ========== ======== =========== ==========
</TABLE>
See accompanying note to consolidated financial statements.
<PAGE> 6
HANOVER COMPRESSOR COMPANY
Notes to Consolidated Financial Statements
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Hanover
Compressor Company (the "Company") included herein have been prepared in
accordance with generally accepted accounting principles for interim financial
information and in conjunction with the rules and regulations of the Securities
and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The Company believes, however, the
disclosures are adequate to make the information presented not misleading. It
is the opinion of management that the information furnished includes all
adjustments, consisting only of normal recurring adjustments, which are
necessary to present fairly the financial position, results of operations, and
cash flows of the Company for the periods indicated. It is suggested the
financial statement information included herein should be read in conjunction
with the consolidated financial statements and the notes thereto included in
the Prospectus dated June 30, 1997, constituting part of the Company's
Registration Statement on Form S-1 (No. 333-24953) under the Securities Act of
1933 filed with the Securities and Exchange Commission. These interim results
are not necessarily indicative of results for a full year.
2. INVENTORIES
Inventory consisted of the following amounts (in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1996 1997
---- ----
(unaudited)
<S> <C> <C>
Parts and supplies $ 11,582 $ 17,660
Work in progress 6,219 10,171
Finished goods 333 4,716
-------- -----
$ 18,134 $ 32,547
====== ======
</TABLE>
3. COMMON STOCK
In February, 1997, the Company issued 5,152 shares of common stock to a trust
for the benefit of a member of the Company's outside legal counsel for $75,000.
On July 7, 1997, the Company completed its initial public offering of 5,158,691
shares of its Common Stock (including 992,024 shares of Common Stock pursuant
to an over-allotment option), which provided the Company with net proceeds of
approximately $93.8 million of which approximately $87.4 million were used to
partially repay indebtedness with the balance utilized for working capital.
Pursuant to a stock purchase plan, the Company awarded 264,784 shares of
restricted stock to various members of management for notes receivable of
$5,163,000. The notes bear interest at prime rate and have been recorded as a
reduction of stockholders' equity.
<PAGE> 7
4. STOCK OPTIONS
Pursuant to a stock option plan, the Company granted various employees the
right to purchase 1,015,422 shares of Common Stock at an exercise price of
$19.50 per share. The options vest over a four-year period from date of grant.
The options are exercisable over a ten-year period from date of grant.
5. RECENT ACCOUNTING PRONOUNCEMENT
In 1997, Statement of Financial Accounting Standards No. 128 (FAS 128),
Earnings per Share, was issued. FAS 128 is effective for periods ended after
December 15, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. The following table presents pro forma earnings per common share
amounts computed using FAS 128:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Pro forma earnings per common share:
Basic $.12 $.18 $.28 $.49
Diluted $.11 $.17 $.26 $.45
</TABLE>
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company is a leading provider of a broad array of natural gas
compression rental, operations and maintenance services in the United States
and select international markets. The Company's operations consist of
providing gas compression services through renting, maintaining and operating
natural gas compressors and engineering, fabricating and selling gas
compression and oil and gas production equipment. As of September 30, 1997,
the Company had a fleet of 1,945 compression rental units with an aggregate
capacity of approximately 719,000 horsepower. The Company's products and
services are essential to the production, transportation, processing and
storage of natural gas and are provided primarily to energy producers and
processors.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1996
REVENUES
The Company's total revenues increased by $16.2 million, or 46%, to $51.5
million during the three months ended September 30, 1997 from $35.3 million
during the three months ended September 30, 1996. The increase resulted from
growth of the Company's natural gas compressor rental fleet as well as
increased demand for both compressor equipment and production equipment
fabrication.
Revenues from rentals and maintenance increased by $7.9 million, or 39%, to
$28.1 million during the three months ended September 30, 1997 from $20.2
million during the three months ended September 30, 1996. Domestic revenues
from rentals and maintenance increased by $5.2 million, or 30%, to $22.4
million during the three months ended September 30, 1997 from $17.2 million
during the three months ended September 30, 1996. International revenues from
rentals and maintenance increased by $2.7 million, or 90%, to $5.7 million
during the three months ended September 30, 1997 from $3.0 million during the
three months ended September 30, 1996. The increase in both domestic and
international rental and maintenance revenues resulted primarily from expansion
of the Company's rental fleet. Domestic horsepower in the rental fleet
increased by 37% from approximately 473,000 horsepower at September 30, 1996 to
approximately 646,000 horsepower at September 30, 1997. In addition,
international horsepower increased by 52% from approximately 48,000 horsepower
at September 30, 1996 to approximately 73,000 horsepower at September 30, 1997.
Revenues from the fabrication and sale of compressor equipment to third
parties increased by $6.8 million, or 93%, to $14.1 million during the three
months ended September 30, 1997 from $7.3 million during the three months ended
September 30, 1996. During the three months ended September 30, 1997, an
aggregate of approximately 51,000 horsepower of compression equipment was
fabricated, 53% of which was placed in the rental fleet and 47% of which was
sold to third party customers. During
<PAGE> 9
the three months ended September 30, 1996, approximately 36,000 horsepower was
fabricated, 61% of which was placed in the Company's rental fleet and 39% of
which was sold to third party customers. The increase in horsepower produced
resulted from increased demand in the overall natural gas compression market.
In addition, the increase in compressor equipment fabrication revenue resulted
from a shift in production of compression equipment for the Company's rental
fleet to production of such equipment for sale to third parties for the three
months ended September 30, 1997 as compared to the three months ended September
30, 1996.
Revenues from the fabrication and sale of production equipment increased by
$1.8 million, or 24%, to $9.3 million during the three months ended September
30, 1997 from $7.5 million during the three months ended September 30, 1996.
The increase in revenues reflects increased demand for such equipment,
primarily in the Gulf of Mexico.
EXPENSES
Rentals and maintenance operating expenses increased by $3.1 million, or
41%, to $10.7 million during the three months ended September 30, 1997 from
$7.6 million during the three months ended September 30, 1996. The increase
results primarily from the corresponding 39% increase in revenues from rentals
and maintenance during the three months ended September 30, 1997 over the
corresponding period in 1996.
Operating expenses of compressor fabrication increased by $4.5 million, or
69%, to $10.9 million during the three months ended September 30, 1997 from $6.4
million during the three months ended September 30, 1996. This expense increase
was a result of the corresponding increase in compressor fabrication revenue.
In addition, gross margin for compressor fabrication was 12% and gross profit
was $0.9 million for the three months ended September 30, 1996 as compared to
23% gross margin and $3.2 million gross profit for the three months ended
September 30, 1997. This increase in gross margin resulted primarily from
recognition of higher than projected gross margins on the completion of several
fabrication projects during the three months ended September 30, 1997. The
Company believes that this gross margin level is not indicative of any future
period performance. In addition, the operating expenses attributable to
production equipment fabrication increased by $1.3 million, or 24%, to $6.6
million during the three months ended September 30, 1997 from $5.3 million
during the three months ended September 30, 1996. This increase also resulted
from the corresponding increase in production equipment fabrication revenue.
Selling, general and administrative expenses increased $1.1 million, or 29%,
to $5.0 million during the three months ended September 30, 1997 from $3.9
million during the three months ended September 30, 1996. The increase in
these expenses resulted from the increased activity in each of the Company's
three business segments as described above.
Depreciation and amortization increased by $2.1 million, or 39%, to $7.5
million during the three months ended September 30, 1997 from $5.4 million
during the three months ended September 30, 1996. The increase in these
expenses resulted from expansion of the rental fleet and other capital
<PAGE> 10
expenditures which increased the amount invested in property, plant and
equipment from approximately $290 million at September 30, 1996 to
approximately $429 million at September 30, 1997.
INTEREST EXPENSE
Interest expense increased by $0.5 million, or 33%, to $2.1 million during
the three months ended September 30, 1997 from $1.6 million during the three
months ended September 30, 1996. The interest expense increase resulted from
new indebtedness incurred to finance the increase in inventory and capital
expenditures for property, plant and equipment.
INCOME TAXES
The provision for income taxes increased by $1.4 million, or 72%, to $3.4
million during the three months ended September 30, 1997 from $2.0 million
during the three months ended September 30, 1996. The increase resulted
primarily from the corresponding increase in income before taxes. The
effective income tax rate during the three months ended September 30, 1997 and
1996 was 40%.
NET INCOME
Net income increased $2.2 million, or 73%, to $5.1 million during the three
months ended September 30, 1997 from $2.9 million during the three months ended
September 30, 1996 for the reasons discussed above.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1996
REVENUES
The Company's total revenues increased $50.4 million, or 55%, to $141.6
million during the nine months ended September 30, 1997 from $91.2 million
during the nine months ended September 30, 1996. The increase resulted from
growth of the Company's natural gas compressor rental fleet as well as
increased demand for both compressor equipment and production equipment
fabrication.
Revenues from rentals and maintenance increased by $21.3 million, or 37%, to
$78.7 million during the nine months ended September 30, 1997 from $57.4
million during the nine months ended September 30, 1996. Domestic revenues
from rentals and maintenance increased by $14.0 million, or 28%, to $63.3
million during the nine months ended September 30, 1997 from $49.3 million
during the nine months ended September 30, 1996. International revenues from
rentals and maintenance increased by $7.3 million, or 90%, to $15.4 million
during the nine months ended September 30, 1997 from $8.1 million during the
nine months ended September 30, 1996. The increase in both domestic and
international rental and maintenance revenues resulted primarily from expansion
of the Company's rental fleet.
Revenues from the fabrication and sale of compressor equipment to third
parties increased by $21.4 million, or 151%, to $35.5 million during the nine
months ended September 30, 1997 from $14.1 million during the nine months ended
September 30, 1996. During the nine months ended September 30, 1997, an
aggregate of approximately 128,000 horsepower of compression equipment was
fabricated, 45% of which was placed in the rental fleet and 55% of which was
sold to third party customers. During the
<PAGE> 11
nine months ended September 30, 1996, approximately 85,000 horsepower was
fabricated, 67% of which was placed in the rental fleet and 33% of which was
sold to third party customers. The increase in horsepower produced resulted
from increased demand in the overall natural gas compression market. In
addition, the increase in compressor equipment fabrication revenue resulted
from a shift in production of compression equipment for the Company's rental
fleet to production of such equipment for sale to third parties for the nine
months ended September 30, 1997 as compared to the nine months ended September
30, 1996.
Revenues from the fabrication and sale of production equipment increased by
$7.5 million, or 39%, to $26.7 million during the nine months ended September
30, 1997 from $19.2 million during the nine months ended September 30, 1996.
The increase in revenues reflects increased demand for such equipment,
primarily in the Gulf of Mexico.
EXPENSES
Rentals and maintenance operating expenses increased by $8.7 million, or
40%, to $30.4 million during the nine months ended September 30, 1997 from
$21.7 million during the nine months ended September 30, 1996. This increase
results primarily from the corresponding 37% increase in revenues from rentals
and maintenance during the nine months ended September 30, 1997 over the
corresponding period in 1996.
Operating expenses of compressor fabrication increased by $17.1 million, or
140%, to $29.4 million during the nine months ended September 30, 1997 from
$12.3 million during the nine months ended September 30, 1996. This expense
increase was a result of the corresponding increase in compressor fabrication
revenue. In addition, gross margin for compressor fabrication was 13% and gross
profit was $1.9 million for the nine months ended September 30, 1996 as compared
to 17% gross margin and $6.1 million for the nine months ended September 30,
1997. This increase in gross margin was a result of the recognition of higher
than projected gross margins on the completion of several fabrication projects
during the three months ended September 30, 1997 as previously discussed. In
addition, the operating expenses attributable to production equipment
fabrication increased by $4.8 million, or 34%, to $18.9 million during the nine
months ended September 30, 1997 from $14.1 million during the nine months ended
September 30, 1996. This expense increase was also a result of the
corresponding increase in production equipment fabrication revenue.
Selling, general and administrative expenses increased $2.9 million, or 25%,
to $14.4 million during the nine months ended September 30, 1997 from $11.5
million during the nine months ended September 30, 1996. The increase in these
expenses resulted from the increased activity in each of the Company's three
business segments as described above.
Depreciation and amortization increased by $5.8 million, or 38%, to $20.8
million during the nine months ended September 30, 1997 from $15.0 million
during the nine months ended September 30, 1996. The increase resulted from
rental fleet expansion and other capital expenditures.
<PAGE> 12
INTEREST EXPENSE
Interest expense increased by $3.5 million, or 80%, to $7.8 million during
the nine months ended September 30, 1997 from $4.3 million during the nine
months ended September 30, 1996. The increase resulted from additional
indebtedness incurred to finance the increase in inventory and capital
expenditures for property, plant and equipment.
INCOME TAXES
The provision for income taxes increased by $3.0 million, or 63%, to $7.8
million during the nine months ended September 30, 1997 from $4.8 million
during the nine months ended September 30, 1996. The increase resulted from
the corresponding increase in income before income taxes. The effective income
tax rate during the nine months ended September 30, 1997 and 1996 was 40%.
NET INCOME
Net income increased $4.7 million, or 63%, to $12.0 million during the nine
months ended September 30, 1997 from $7.3 million during the nine months ended
September 30, 1996 for the reasons discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically utilized internally generated funds and equity
and debt financing to finance the growth of its compressor fleet and maintain
sufficient compression and production equipment inventory. Cash flows from
operating activities, before changes in assets and liabilities, were $35.2
million for the nine months ended September 30, 1997 as compared to $25.7
million for the nine months ended September 30, 1996. Capital expenditures for
property, plant and equipment were $115.5 million for the nine months ended
September 30, 1997 as compared to $64.8 million for the nine month period ended
September 30, 1996. Inventory increased $14.4 million during the nine months
ended September 30, 1997 due to increases in compressor and production
equipment fabrication operations and compression rental operations. Bank
borrowings were $87.0 million for the nine months ended September 30, 1997 as
compared to $45.0 million for the nine months ended September 30, 1996.
On July 7, 1997, the Company completed the initial public offering of its
common stock. The net proceeds to the Company from the offering amounted to
$93.8 million, of which $87.4 million were used to partially repay indebtedness
with the balance used for working capital. The Company believes its available
credit facilities plus available cash and internally generated funds will be
sufficient to meet liquidity and capital expenditure forecasts assuming no
material acquisitions.
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Statement Regarding Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports Submitted on Form 8-K; none.
All other items specified by Part II of this report are inapplicable and have
been omitted.
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HANOVER COMPRESSOR COMPANY
Date: November 14, 1997
By:
/s/ Michael J. McGhan
- ---------------------------------------
Michael J. McGhan
President and Chief Executive Officer
Date: November 14, 1997
By:
/s/ Curtis A. Bedrich
- ---------------------------------------
Curtis A. Bedrich
Chief Financial Officer
<PAGE> 15
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
11 Statement Regarding Computation of Per Share Earnings
27 Financial Data Schedule
<PAGE> 1
HANOVER COMPRESSOR COMPANY
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months Nine months
Ended September 30, Ended September 30,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary Earnings Per Common Share:
Net income, as reported 2,969 5,137 7,356 12,007
Dividends on preferred stock (513) - (1,539) -
-------- ------- -------- --------
Net income available for common
stockholders 2,456 5,137 5,817 12,007
-------- ------- -------- --------
Weighted average common shares outstanding 20,534 28,336 20,415 24,719
Common equivalent shares 1,486 1,864 1,446 1,702
Cheap stock 655 - 716 -
-------- ------- -------- -------
Total common and common equivalent shares 22,675 30,200 22,577 26,421
-------- ------- -------- -------
Earnings per common share 0.11 0.17 0.26 0.45
======== ======= ======== =======
</TABLE>
(1)Net effect of dilutive stock options and warrants, calculated using the
treasury stock method using average market price. Fully diluted earnings
per share is not presented since it is the same as primary earnings per
share. The effect of convertible redeemable preferred stock is antidilutive
for 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE HANOVER COMPRESSOR COMPANY FINANCIAL STATEMENTS AS OF AND FOR THE THREE
MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 11,286
<SECURITIES> 0
<RECEIVABLES> 41,204
<ALLOWANCES> 706
<INVENTORY> 32,547
<CURRENT-ASSETS> 101,391
<PP&E> 428,777
<DEPRECIATION> 69,651
<TOTAL-ASSETS> 469,875
<CURRENT-LIABILITIES> 45,018
<BONDS> 0
0
0
<COMMON> 268,976
<OTHER-SE> 13,559
<TOTAL-LIABILITY-AND-EQUITY> 469,875
<SALES> 23,357
<TOTAL-REVENUES> 51,467
<CGS> 17,513
<TOTAL-COSTS> 40,810
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,167
<INCOME-PRETAX> 8,490
<INCOME-TAX> 3,353
<INCOME-CONTINUING> 5,137
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,137
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
