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United States Securities and Exchange Commission

Washington, D.C. 20549

Form 10-K

(Mark One)

For the fiscal year ended December 31, 2003

OR

For the transition period from              to             

Commission file number 1-11442

Chart Industries, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (440) 753-1490

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.01 per share

Title of Class

Warrants to Purchase Common Stock

Title of Class

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 þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark if the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No þ

As of March 15, 2004, the registrant had 5,354,128 shares of Common Stock outstanding.

As of June 30, 2003, the last business day of the Company’s most recently completed second fiscal quarter, the aggregate market value of Common Stock of the registrant held by non-affiliates was $3,452,214 (based upon the average bid and asked price of $0.18 per share of the registrant’s pre-bankruptcy Common Stock on the OTC Pink Sheets on June 30, 2003). For purposes of this calculation, the registrant deems the 7,157,796 shares of the registrant’s pre-bankruptcy Common Stock held by all of its Directors and executive officers as of such date to be the shares of Common Stock held by affiliates.

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes þ No ¨

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement to be used in connection with its Annual Meeting of Stockholders planned to be held on May 20, 2004 are incorporated by reference into Part III of this Form 10-K.

Except as otherwise stated, the information contained in this Form 10-K is as of December 31, 2003.

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Forward-Looking Statements

Chart Industries, Inc. (the “Company” or “Chart”) is making this statement in order to satisfy the “safe harbor” provisions contained in the Private Securities Litigation Reform Act of 1995. This Annual Report on Form 10-K includes forward-looking statements relating to the business of the Company. In some cases, forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “believes,” “projects,” “forecasts,” “continue” or the negative of such terms or comparable terminology. Forward-looking statements contained herein (including future cash contractual obligations) or in other statements made by the Company are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company’s operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those matters expressed or implied by forward-looking statements. The Company believes that the following factors, among others (including those described in Item 7 below under “Certain Factors that May Affect Future Results and Financial Condition”), could affect its future performance and the liquidity of the Company’s equity securities and cause actual results of the Company to differ materially from those expressed or implied by forward-looking statements made by or on behalf of the Company:

PART I

General

The Company was organized in June 1992 as a Delaware corporation to serve as a holding company for the operations described herein. As used herein, the terms “Company” or “Chart” mean Chart Industries, Inc., its subsidiaries and its predecessors, unless the context otherwise indicates. The Company’s executive offices are located at 5885 Landerbrook Drive, Suite 205, Cleveland, Ohio 44124, and its telephone number is (440) 753-1490.

The Company manufactures standard and engineered equipment primarily used for low-temperature and cryogenic applications. The Company has developed an expertise in cryogenic systems and equipment, which operate at low temperatures sometimes approaching absolute zero (0° Kelvin; -273° Centigrade; -459° Fahrenheit). The majority of the Company’s products, including vacuum-insulated containment vessels, heat exchangers, cold boxes and other cryogenic components, are used throughout the liquid-gas supply chain for the purification, liquefaction, distribution, storage and use of industrial gases and hydrocarbons.

On April 12, 1999, the Company acquired the common stock of MVE Holdings, Inc. (“MVE”) for approximately $2.2 million in cash, redeemed the preferred stock of MVE for approximately $74.6 million and paid approximately $156.1 million to retire MVE’s existing debt obligations. The acquisition of MVE significantly increased the size of the Company and provided other markets for the Company to serve, principally those served by the Company’s Distribution and Storage and Biomedical segments.

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Chapter 11 Filing and Emergence

On July 8, 2003, the Company and all of its then majority-owned U.S. subsidiaries filed voluntary petitions for reorganization relief under Chapter 11 of the U.S. Bankruptcy Code to implement an agreed upon senior debt restructuring plan through a pre-packaged plan of reorganization. None of the Company’s non-U.S. subsidiaries were included in the filing in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). On September 15, 2003, the Company (as reorganized, the “Reorganized Company” or “Reorganized Chart”) and all of its then majority-owned U.S. subsidiaries emerged from Chapter 11 proceedings pursuant to the Amended Joint Prepackaged Reorganization Plan of Chart Industries, Inc. and Certain Subsidiaries, dated September 3, 2003 (the “Reorganization Plan”), which the Bankruptcy Court confirmed by an order entered on September 4, 2003. Under the Reorganization Plan, the Company’s senior debt of $255.7 million and related interest and fees of $1.9 million were converted into a $120.0 million secured term loan, with the balance of the existing senior debt being cancelled in return for an initial 95 percent equity ownership position in the Reorganized Company, and Chart’s $40.0 million secured debtor-in-possession financing facility was amended and restated as a $40.0 million post-bankruptcy secured revolving credit facility. On September 15, 2003, all of the Company’s common stock, warrants, options and other rights to acquire the Company’s common stock were cancelled, and the Company’s former stockholders received five percent of the initial equity of the Reorganized Company and the opportunity to acquire up to an additional five percent of equity through the exercise of new warrants.

The Company’s emergence from Chapter 11 bankruptcy proceedings resulted in a new reporting entity and the adoption of fresh-start accounting in accordance with the American Institute of Certified Public Accountants (“AICPA”) Statement of Position 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code” (“SOP 90-7”) (“Fresh-Start accounting”). The Company used September 30, 2003 as the date for adopting Fresh-Start accounting in order to coincide with the Company’s normal financial closing for the month of September 2003. Upon adoption of Fresh-Start accounting, a new reporting entity was deemed to be created and the recorded amounts of assets and liabilities were adjusted to reflect their estimated fair values. Accordingly, the reported historical financial statements of the Company prior to the adoption of Fresh-Start accounting (the “Predecessor Company”) for periods ended prior to September 30, 2003 are not necessarily comparable to those of the Reorganized Company. In this Annual Report on Form 10-K, references to the Company’s nine-month period ended September 30, 2003 and all periods ended prior to September 30, 2003 refer to the Predecessor Company.

SOP 90-7 requires that financial statements for the period following the Chapter 11 filing through the bankruptcy confirmation date distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, revenues, expenses, realized gains and losses and provisions for losses directly associated with the reorganization and restructuring of the business, including adjustments to fair value assets and liabilities and the gain on the discharge of pre-petition debt, are reported separately as reorganization items, net, in the other (income) expense section of the Predecessor Company’s consolidated statement of operations.

Fresh-Start Adjustments: In accordance with Fresh-Start accounting, all assets and liabilities were recorded at their respective fair values as of September 30, 2003. Such fair values represent the Company’s best estimates based on independent appraisals and valuations.

To facilitate the calculation of the enterprise value of the Reorganized Company, the Company developed a set of five-year financial projections. Based on these financial projections, the enterprise value was determined by a financial advisor, using various valuation methods, including (i) a comparison of the Company and its projected performance to the market values of comparable companies, (ii) a review and analysis of several recent transactions of companies in similar industries to the Company, and (iii) a calculation of the present value of the future cash flows derived from the financial projections, including an assumption for a terminal value, discounted back at the Reorganized Company’s estimated weighted average cost of capital. The estimated enterprise value is highly dependent upon achieving the future financial results set forth in the projections as well as the realization of certain other assumptions, none of which are guaranteed. For Fresh-Start accounting purposes, the estimated enterprise value of the Reorganized Company was calculated to be $190.4 million. In applying Fresh-Start accounting, adjustments to reflect the fair value of assets and liabilities, on a net basis, and the restructuring of the Company’s capital structure and resulting discharge of the senior lender’s pre-petition debt, resulted in net other income of $5.7 million in the third quarter of 2003. The reorganization value exceeded the fair value of the Reorganized Company’s assets and liabilities, and this excess is reported as reorganization value in excess of amounts allocable to identifiable assets in the Reorganized Company’s consolidated balance sheet.

Segments and Products

The Company’s operations are organized within three segments: Biomedical, Distribution and Storage and Energy and Chemicals. Further information about these segments is located in Note L to the Company’s consolidated financial statements included in Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference.

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Biomedical Segment

The Biomedical segment, which accounted for 25 percent of the Company’s sales in 2003, consists of various product lines built around the Company’s core competencies in cryogenics but with a focus on the medical and biological end users of the liquids and gases instead of the large producers and distributors of cryogenic liquids. The Company’s products in the Biomedical segment include the following:

Medical Products

The medical oxygen product line is comprised of a limited range of medical respiratory products, including liquid oxygen systems, ambulatory oxygen systems and oxygen concentrators, all of which are used for the in-home supplemental oxygen treatment of patients with chronic obstructive pulmonary diseases, such as bronchitis, emphysema and asthma.

Individuals for whom supplemental oxygen is prescribed generally purchase or rent an oxygen system from a home healthcare provider or medical equipment dealer. The provider/dealer or physician usually selects which type of oxygen system to recommend to its customers: liquid oxygen systems, oxygen concentrators or high-pressure oxygen cylinders. Of these modalities, liquid oxygen is generally believed by physicians to offer greater long-term therapeutic benefits by providing the option of increased patient ambulation.

As part of its medical products, the Company has also developed a telemetry product line that focuses primarily on providing distribution routing data to distributors of home health care oxygen. The Company expects this business will expand into other areas of liquid distribution, such as beverage carbon dioxide (“CO₂”) and micro-bulk industrial gases, as the product gains market visibility. The routing data provided has proven to lower distribution costs and make the supply of liquid oxygen more competitive than the existing modes of supply.

The Company’s primary competitor in the medical products line is Puritan-Bennett, a division of Tyco International, Ltd. The Company believes that competition for liquid oxygen systems is based primarily upon product performance, reliability, ease-of-service and price and focuses its marketing strategies on these considerations.

Biological Storage Systems

This product line consists of vacuum-insulated containment vessels for the storage of biological materials. The primary markets for this product line include medical laboratories, pharmaceutics, research facilities, blood and tissue banks, veterinary laboratories, large-scale repositories and artificial insemination, particularly in the beef and dairy industry.

The number of competitors for biological storage systems includes only a few companies worldwide. These products are sold through multiple channels of distribution specifically applicable to each market sector. The distribution channels range from highly specialized cryogenic storage systems providers to general supply and catalogue distribution operations to breeding service providers. Historically, competition in this field has been focused on design, reliability and price. Additionally, the Company believes its understanding of the end-user’s applications and concerns enables the Company to sell a “total value” package. Alternatives to vacuum insulated containment vessels include mechanical, electrically powered refrigeration.

Magnetic Resonance Imaging (“MRI”) Components

The basis of the MRI technique is that the magnetic properties of certain nuclei of the human body can be detected, measured and converted into images for analysis. MRI equipment uses high-strength magnetic fields, applied radio waves and high-speed computers to obtain cross-sectional images of the body. The major components of the MRI assembly are a series of concentric thermal shields and a supercooled electromagnet immersed in a liquid helium vessel (a “cryostat”) that maintains a constant, extremely low temperature (4° Kelvin; -452° Fahrenheit) to achieve superconductivity. The Company manufactures large cryostats, various cryogenic interfaces, electrical feed-throughs and various other MRI components that are used to transfer power and/or cryogenic fluids from the exterior of the MRI unit to the various layers of the cryostat and superconducting magnet.

The Company currently sells all of its MRI components to General Electric Company (“GE”), a leading worldwide manufacturer of MRI equipment.

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Distribution and Storage Segment

Through its Distribution and Storage segment, which accounted for 48 percent of the Company’s sales in 2003, the Company is a leading supplier of cryogenic equipment to the global bulk and packaged industrial gas markets. Demand for the products supplied by this segment is driven primarily by the significant installed base of users of cryogenic liquids as well as new applications and distribution technologies for cryogenic liquids. The Company’s products span the entire spectrum of the industrial gas market from small customers requiring cryogenic packaged gases to large users requiring custom engineered cryogenic storage systems. The Company’s products in the Distribution and Storage segment include the following:

Cryogenic Bulk Storage Systems

The Company is a leading supplier of cryogenic bulk storage systems of various sizes ranging from 500 gallons to 100,000 gallons. Using sophisticated vacuum insulation systems placed between inner and outer vessels, these bulk storage systems are able to store and transport liquefied industrial gases and hydrocarbon gases at temperatures from -100° Fahrenheit to temperatures nearing absolute zero. End use customers for the Company’s cryogenic storage tanks include industrial gas producers, chemical producers, manufacturers of electrical components and businesses in the oil and natural gas industries. Prices for the Company’s cryogenic bulk storage systems range from $20,000 to $500,000. Global industrial gas producers, including Air Liquide, Air Products and BOC, are the principal customers for the Company’s cryogenic bulk storage systems. Additionally, in the North American market industrial gas distributors such as Airgas are significant customers. On a worldwide basis, the Company competes primarily with Harsco in this product area. In the European and Asian markets, the Company competes with several suppliers owned by global industrial gas producers.

Cryogenic Packaged Gas Systems

The Company is a leading supplier of cryogenic packaged gas systems of various sizes ranging from 160 liters to 2,000 liters. Cryogenic liquid cylinders are used extensively in the packaged gas industry to allow smaller quantities of liquid to be easily delivered to the customers of the industrial gas distributors on a full-for-empty or fill on site basis. Principal customers for the Company’s liquid cylinders are the same global industrial gas producers and the North American industrial gas distributors who purchase the Company’s cryogenic bulk storage systems. The Company competes on a worldwide basis primarily with Harsco in this product area. The Company has developed two technologies in the packaged gas product area: ORCA^® Micro-Bulk systems and Tri-fecta^® Laser Gas assist systems. ORCA^® Micro-Bulk systems bring the ease of use and distribution economics of bulk gas supply to customers formerly supplied by high pressure or cryogenic liquid cylinders. The ORCA^® Micro-Bulk system is the substantial market leader in this growing product line. The Tri-fecta^® Laser Gas assist system was developed to meet the “assist gas” performance requirements for new high powered lasers being used in the metal fabrication industry.

Cryogenic Systems and Components

The Company’s line of cryogenic components, including vacuum-insulated pipe, engineered bulk gas installations and specialty liquid nitrogen end-use equipment are recognized in the market for their reliability, quality and performance. These products are sold to the Company’s heat exchanger and cold box customers in the industrial gas and hydrocarbon processing industries, as well as to a diverse group of customers in those and other industries. The Company competes with a number of suppliers of cryogenic systems and components, including Acme Cryogenics, Vacuum Barriers and others.

Beverage Liquid CO₂ Systems

This product line consists primarily of vacuum-insulated, bulk liquid CO₂ containers used for beverage carbonation in restaurants, convenience stores and cinemas, in sizes ranging from 100 pounds to 750 pounds of liquid CO₂ storage. The Company also manufactures and markets non-insulated, bulk fountain syrup containers for side-by-side installation with its CO₂ systems. The Company’s beverage systems are sold to national restaurant chains, soft drink companies and CO₂ distributors. The Company’s primary competitors for its bulk liquid CO₂ beverage delivery systems are producers of high-pressure gaseous CO₂ systems and sellers of bulk liquid CO₂ beverage systems.

The Company has also begun to market cryogenic and non-cryogenic nitrogen dispensing systems for use in conjunction with the Company’s beverage liquid CO₂ systems for the dispensing of draught beer. These mixed gas dispense systems serve a major share of the beverage market in the United Kingdom, and the Company is leading the market penetration of these systems in North America.

Cryogenic Services

The Company operates three locations providing installation, service and maintenance of cryogenic products including storage tanks, liquid cylinders, cryogenic trailers, cryogenic pumps and vacuum-insulated pipe.

Energy and Chemicals Segment

The Company’s principal products within the Energy and Chemicals segment, which accounted for 27 percent of sales in 2003, are focused on process equipment, primarily heat exchangers, coldboxes and liquefied natural gas (“LNG”) fuel systems, used by major natural gas, petrochemical processing and industrial gas companies in the production of their products.

Heat Exchangers

The Company is the leading designer and manufacturer of cryogenic heat exchangers. Using technology pioneered by the Company, heat exchangers are incorporated into systems such as cold boxes to facilitate the progressive cooling and liquefaction of air or hydrocarbon mixtures for the subsequent recovery or purification of component gases. In hydrocarbon processing industries, heat exchangers allow producers to obtain purified hydrocarbon by-products, such as methane, ethane, propane and ethylene, which are commercially marketable for various industrial or residential uses. In the industrial gas market, heat exchangers are used to obtain high purity atmospheric gases, such as oxygen, nitrogen and argon, which have numerous diverse industrial applications. Heat exchangers are customized to the customer’s requirements and range in price from approximately $30,000 for a relatively simple unit to as high as $10 million for a major project.

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Management anticipates the return of demand for its heat exchangers in 2004, resulting substantially from anticipated increased activity in the LNG, petrochemical and natural gas segments of the hydrocarbon processing market. In particular, management believes that continuing efforts by petroleum producing countries to make better use of stranded natural gas and previously flared gases, as well as efforts to broaden their industrial base, present a promising source of demand for the Company’s heat exchangers and cold box systems. Demand for heat exchangers in developed countries is expected to continue as firms upgrade their facilities for greater efficiency and regulatory compliance. Historic demand for heat exchangers has cycled to very low levels and typically recovered to new peak requirements. To more effectively balance the Company’s production capacity with worldwide demand, the Company now operates only one heat exchanger facility, located in the United States. The Company announced the closure of its heat exchanger manufacturing facility in Wolverhampton, United Kingdom, in 2002 and completed the closure in the first quarter of 2003.

The Company’s principal competitors for heat exchangers are Linde, Sumitomo, Kobe and Nordon. Management believes that the Company is the only producer of large brazed aluminum heat exchangers in the United States and is the leader in the global heat exchanger market. Major customers for the Company’s heat exchangers in the industrial gas market include Air Liquide, Air Products, MG Industries and Praxair. In the hydrocarbon processing market, major customers include BP Amoco/Arco, Exxon/Mobil, Chevron/Texaco, Conoco/Phillips and contractors such as ABB Lummus, Bechtel and KBR.

Cold Boxes

The Company is a leading designer and fabricator of cold boxes. Cold boxes are highly engineered systems used to significantly reduce the temperature of gas mixtures to the point where component gases liquefy and can be separated and purified for further use in multiple industrial, scientific and commercial applications. In the industrial gas market, cold boxes are used to separate air into its major atmospheric components, including nitrogen, oxygen and argon, where the gases are used in a diverse range of applications such as the quick-freezing of food, wastewater treatment and industrial welding. In the hydrocarbon processing market, the Company’s cold box systems are used in natural gas processing and in the petrochemical industry. The construction of a cold box generally consists of one or more heat exchangers and other equipment packaged in a “box” consisting of metal framing and a complex system of piping and valves. Cold boxes, which are designed and fabricated to order, sell in the price range of $500,000 to $10 million, with the majority of cold boxes priced between $1 million and $2 million.

The Company has a number of competitors for fabrication of cold boxes, including Linde, Air Products and many smaller fabrication-only facilities around the world. Principal customers for the Company’s cold boxes include Air Liquide, ABB Lummus, BP Amoco/Arco, Bechtel, Lurgi, Stone and Webster, and KBR.

LNG Alternative Fuel Systems

This product line consists of vacuum-insulated containers for LNG storage, cryogenic pumps and liquid dispensers for vehicle fueling systems and LNG and liquid/compressed natural gas (“LCNG”) refueling systems for centrally fueled fleets of vehicles powered by natural gas, such as fleets operated by metropolitan transportation authorities, refuse haulers and heavy-duty truck fleets. Competition for LNG fueling and storage systems is based primarily on product design, customer support and service, dependability and price. Although there are alternatives to LNG as a fuel, the Company is not aware of any viable alternatives to vacuum-insulated containers for LNG fueling and storage systems.

Market Overview

The Company is committed to being the preferred global supplier of standard and engineered equipment required throughout the cryogenic liquid supply chain. This liquid supply chain spans all the major market steps and includes cryogenic liquid production, purification, distribution, storage and many end-user applications where cryogenic liquids are finally converted into the desired gases. To achieve this goal, the Company serves a wide variety of markets including industrial gas, hydrocarbon processing, alternative transportation fuels, home healthcare and biomedical research, to name just a few.

The industrial gas market is the largest market served by the Company. The top world producers of industrial gases have been among the Company’s largest customers for each of the last three years. Producers of industrial gases separate atmospheric air into its component gases using cryogenic processes. The resultant liquid gases are then stored and transported for ultimate use by a wide variety of customers in the petrochemical, electronics, glass, paper, metals, food, fertilizer, welding, enhanced oil recovery and medical industries. Industrial gas producers use heat exchangers and cold boxes to produce liquid gases. Cryogenic tanks and components, including pumps, valves and piping, are also used to store, transport and distribute liquid gases to end users.

The hydrocarbon processing market consists of petrochemical and natural gas processors. Natural gas processing involves the separation and purification of natural gas for the production of liquid gas end products such as methane, ethane, propane and butane, and by-products such as helium, all of which have numerous commercial and industrial applications. In the petrochemical industry, cryogenic separation and purification processes are required to produce ethylene (the basic building block of plastics), propylene and numerous other primary hydrocarbons having industrial uses. Like the industrial gas market, the hydrocarbon processing market uses all of the categories of the Company’s cryogenic products in the gas separation and purification processes and the subsequent storage and distribution of liquid gases. Major customers for the Company’s products in the hydrocarbon processing markets are large multinational firms in the oil and gas industry, and large engineering and construction concerns.

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The home healthcare and biomedical research markets are served principally by the Company’s Biomedical segment. Management expects these markets to continue to grow due to the aging of the baby-boomer generation and initiatives in response to bio-terrorism, which include the use of biological agents as weapons. The aging of the U.S. population is anticipated to create an increase in the number of home-health patients (and healthcare patients in general), especially as home-based care is seen as more cost-effective than institutional care. This factor, coupled with an increased focus on quality of care, is expected to increase the demand for respiratory therapy and home-based oxygen devices, which the Biomedical segment’s products service. Similarly, the development of initiatives in response to acts of bio-terrorism should drive greater demand for the Company’s biological storage products, in particular for storing tissue and bacteria samples. Growth in this market is further driven by pharmaceutical research and developmental expenses, and increases in National Institute of Health funding and genomics research funding.

Management believes that global expansion of the markets that the Company serves provides an attractive opportunity for growth. Prior to 2003, the sources of the Company’s international business principally have been its large domestic-based customers, who are aggressively expanding into international markets, and large foreign-based companies with significant U.S. operations. This trend continued in 2003, but the Company’s international operations in Australia, China, Czech Republic, Germany and the United Kingdom also experienced increases in their local markets as they expanded to include customers that are principally foreign-based. This overall growth in international markets is due to several factors, including rapid growth in the use of industrial gases in developing countries, particularly in Asia, the use of LNG as an alternative vehicle fuel and power-generating feedstock, the migration from high-pressure cylinders to liquid cylinders and the use of telemetry to improve distribution logistics. This growth has led to an overall increase in the percentage of the Company’s international sales, which were 49 percent in 2003, compared with 33 percent in 2002 and 34 percent in 2001. Further information about the Company’s international business, deferred taxes and long-lived assets is located in Notes A, F and L, respectively, to the Company’s consolidated financial statements included in Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference.

Engineering and Product Development

The Company’s engineering and product development activities are focused on developing new and improved solutions and equipment for the users of cryogenic liquids. The Company’s engineering, technical and marketing employees actively assist customers in specifying their needs and in determining appropriate products to meet those needs. Portions of the Company’s engineering expenditures typically are charged to customers, either as separate items or as components of product cost.

Competition

Management believes the Company can compete effectively around the world and that it is a leading competitor in its markets. Competition is based primarily on performance and the ability to provide the design, engineering and manufacturing capabilities required in a timely and cost-efficient manner. Contracts are usually awarded on a competitive bid basis. Quality, technical expertise and timeliness of delivery are the principal competitive factors within the industry. Price and terms of sale are also important competitive factors. Because reliable market share data is not available, it is difficult to estimate the Company’s exact position in its markets, although the Company believes it ranks among the leaders in each of the markets it serves.

Marketing

The Company markets its products and services throughout the world primarily through 114 direct sales personnel and through independent sales representatives and distributors. The technical and custom design nature of the Company’s products requires a professional, highly trained sales force. While each salesperson and sales representative is expected to develop a highly specialized knowledge of one product or group of products within a segment of the Company, each salesperson and certain sales representatives are now able to sell many products from different segments to a single customer. The Company uses independent sales representatives and distributors to market its products and services in certain foreign countries that the Company serves and in certain North American markets. These independent sales representatives supplement the Company’s direct sales force in dealing with language and cultural matters. The Company’s domestic and foreign independent sales representatives earn commissions on sales, which vary by product type.

Backlog

The dollar amount of the Company’s backlog at December 31, 2003 and 2002 was $49.6 million and $68.7 million, respectively. Backlog is comprised of the portion of firm signed purchase orders or other written contractual commitments received from customers that the Company has not recognized as revenue under the percentage of completion method or based upon shipment. All of the Company’s December 31, 2003 backlog is scheduled to be recognized as sales during 2004. Backlog can be significantly affected by the timing of orders for large products, particularly in the Energy and Chemicals segment, and the amount of backlog at December 31, 2003 described above is not necessarily indicative of future backlog levels or the rate at which backlog will be recognized as sales. Further information about the Company’s backlog, including backlog by segment, is located in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Annual Report on Form 10-K, which is incorporated herein by reference.

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Customers

The Company sells its products to gas producers, distributors and end-users across the industrial gas, hydrocarbon and chemical processing industries in countries all over the world. Approximately 49 percent, 33 percent and 34 percent of sales were international in 2003, 2002 and 2001, respectively. While no single customer exceeded ten percent of consolidated sales in 2003, 2002 or 2001, sales to the Company’s top ten customers accounted for 43 percent, 41 percent and 40 percent of consolidated sales in 2003, 2002 and 2001, respectively. The Company’s sales to particular customers fluctuate from period to period, but the gas producer customers of the Company’s Energy and Chemicals segment tend to be a consistently large source of revenue for the Company. To minimize credit risk from trade receivables, the Company reviews the financial condition of potential customers in relation to established credit requirements before sales credit is extended and monitors the financial condition of customers to help ensure timely collections and to minimize losses. Additionally, for certain domestic and foreign customers, particularly in the Energy and Chemicals segment, the Company requires advance payments, letters of credit and other such guarantees of payment. Certain customers also require the Company to issue letters of credit or performance bonds, particularly in instances where advance payments are involved, as a condition of placing the order. The Company believes its relationships with its customers are generally good, but were strained by the prolonged restructuring of the Company’s senior debt and the resultant reorganization under Chapter 11 of the U.S. Bankruptcy Code.

Patents and Trademarks

Although the Company has a number of patents, trademarks and licenses related to its business, no one of them or related group of them is considered by the Company to be of such importance that its expiration or termination would have a material adverse effect on the Company’s business. In general, the Company depends upon technological capabilities, manufacturing quality control and application of know-how, rather than patents or other proprietary rights, in the conduct of its business.

Raw Materials and Suppliers

The Company manufactures most of the products it sells. The raw materials used in manufacturing include aluminum sheets, bars, plate and piping, stainless steel strip, heads, plate, piping, valves and gauges, palladium oxide, carbon steel heads and plate and nine percent nickel steel heads and plate. Most raw materials are available from multiple sources of supply. The Company believes its relationships with its raw material suppliers and other vendors are generally good, but were strained by the prolonged restructuring of the Company’s senior debt and the resultant reorganization under Chapter 11 of the U.S. Bankruptcy Code. These relationships were improved by the fact that the Company paid all vendors in full for both pre-petition and post-petition liabilities during its reorganization.

Commodity metals used by the Company have experienced fluctuations in price. The Company has generally been able to recover the costs of price increases through its contracts with customers. The Company foresees no acute shortages of any raw materials that would have a material adverse effect on its operations.

Employees

As of December 31, 2003, the Company had 1,524 employees, including 1,044 domestic employees and 480 international employees. These employees consisted of 457 salaried, 433 union hourly and 634 non-union hourly employees. The salaried employees included 87 engineers and draft-persons and 370 other professional, technical and clerical personnel.

The Company is a party to three collective bargaining agreements through its operating subsidiaries. The agreement with the International Association of Machinists and Aerospace Workers covering 196 employees at the Company’s La Crosse, Wisconsin heat exchanger facility expires February 3, 2007. The agreement with the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers covering 44 employees at the Company’s Plaistow, New Hampshire facility expires August 25, 2006. In 2004, the Company also entered into a final settlement and termination of bargaining relationship agreement with its Plaistow employees related to the pending closure of this facility. The agreement with the United Steel Workers covering 193 employees at the Company’s New Prague, Minnesota facility expires January 15, 2006. Since the acquisition of each of its operating units, the Company has not had any work stoppages or strikes. The Company believes its relationships with its employees are generally good.

Environmental Matters

The Company’s operations involve and have involved the handling and use of substances, such as various cleaning fluids used to remove grease from metal, that are subject to federal, state and local environmental laws and regulations. These regulations impose limitations on the discharge of pollutants into the soil, air and water, and establish standards for their handling, management, use, storage and disposal. The Company monitors and reviews its procedures and policies for compliance with environmental laws and regulations. The Company’s management is familiar with these regulations, and supports an ongoing program to maintain the Company’s adherence to required standards.

The Company is involved with environmental compliance, investigation, monitoring and remediation activities at certain of its owned manufacturing facilities and at one owned facility that is leased to a third party, and, except for these continuing remediation efforts, believes it is currently in substantial compliance with all known environmental regulations. The Company

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accrues for certain environmental remediation-related activities for which commitments or remediation plans have been developed and for which costs can be reasonably estimated. These estimates are determined based upon currently available facts regarding each facility. Actual costs incurred may vary from these estimates due to the inherent uncertainties involved. Future expenditures relating to these environmental remediation efforts are expected to be made over the next 10 to 15 years as ongoing costs of remediation programs. Although the Company believes it has adequately provided for the cost of all known environmental conditions, the applicable regulatory agencies could insist upon different and more costly remediative measures than those the Company believes are adequate or required by existing law. The Company believes that any additional liability in excess of amounts accrued which may result from the resolution of such matters will not have a material adverse effect on the Company’s financial position, liquidity, cash flows or results of operations.

Available Information

The Company’s Internet website address is www.chart-ind.com. The Company makes available free of charge on www.chart-ind.com its annual, quarterly and current reports, proxy statements and other documents as soon as reasonably practical after the Company electronically files such material with, or furnishes it to, the SEC. However, the information found on the Company’s website is not part of this Annual Report on Form 10-K or any other report or statement that the Company files with the SEC. The public may read and copy any material that the Company files with the SEC at the SEC’s Public Reference Room located at 450 Fifth Street, NW, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains a website, www.sec.gov, that contains reports, proxy statements and other information filed by the Company with the SEC.

The Company occupies 18 principal facilities totaling approximately 1.7 million square feet, with the majority devoted to manufacturing, assembly and storage. Of these manufacturing facilities, approximately 1.5 million square feet are owned and 0.2 million square feet are occupied under operating leases. The Company considers its manufacturing facilities more than sufficient to meet its current and planned operational needs. The Company leases approximately 6,800 square feet for part of its executive offices in Cleveland, Ohio. The Company’s owned facilities in the United States are subject to mortgages securing the Company’s senior term loan and revolving credit facilities.

As further described in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note D to the Company’s consolidated financial statements included in Items 7 and 8, respectively, of this Annual Report on Form 10-K, which are incorporated herein by reference, as a result of its operational restructuring activities, the Company is in the process of closing its Biomedical segment manufacturing and office facility in Burnsville, Minnesota and warehouse and sales office in Solingen, Germany, and its Distribution and Storage manufacturing facility in Plaistow, New Hampshire. The Company is currently attempting to sell its Burnsville, Minnesota manufacturing and office facility and a vacant building located at its New Prague, Minnesota facility. The proceeds of such sales will be used to pay down debt outstanding under an industrial revenue bond and the balance will be available for working capital purposes.

9

The following table sets forth certain information about facilities occupied by the Company as of March 2004:

10

The Company was named as a defendant in several similar civil cases pending related to an accident occurring on December 7, 2000 at a nursing home outside Dayton, Ohio. A nitrogen tank was connected to the nursing home’s oxygen system resulting in the immediate death of four elderly patients and injuries to three additional patients from inhaling the nitrogen. The seven claims originally filed against the Company in these cases included negligence, strict product liability, failure to warn, negligence per se, breach of warranty, punitive damages, wrongful death, loss of consortium and negligent infliction of emotional distress. The allegations underlying the claims include defective or deficient manufacture, construction, design, labeling, formulation and warnings with regard to a cylinder. Certain co-defendants were criminally indicted in this matter. The Company, however, was never indicted. The trial in the criminal matter of the State of Ohio vs. BOC Gases, et al., was heard in May 2002. The trial lasted three days and resulted in a directed verdict in favor of the defendants. A second criminal trial, State of Ohio vs. I.H.S. Carriage-by-the-Lake, concluded in October 2002. I.H.S. Carriage-by-the-Lake, Inc. (“IHS”) plead guilty to four counts of involuntary manslaughter. IHS was fined $60,000 and ordered to undergo a three-year court-ordered operational change. The Company was subsequently dismissed from three of the civil cases. On February 10, 2004, the plaintiffs dismissed the four remaining cases.

In March 2003, the Company completed the closure of its Wolverhampton, United Kingdom manufacturing facility, operated by CHEL, and all current heat exchanger manufacturing is being conducted at the Company’s LaCrosse, Wisconsin facility. On March 28, 2003, CHEL filed for a voluntary administration under the U.K. Insolvency Act of 1986. CHEL’s application for voluntary administration was approved on April 1, 2003 and an administrator was appointed. Additionally, CHEL’s net pension plan obligations increased significantly, primarily due to a decline in plan asset values and interest rates, resulting in an estimated plan deficit of approximately $12 million. Based on the Company’s financial condition, in March 2003 the Company determined not to advance funds to CHEL in amounts necessary to fund CHEL’s obligations. CHEL did not have the necessary funds to enable it to fund its net pension plan deficit, pay remaining severance due to former employees or pay other creditors. As a result, the trustees of the CHEL pension plan requested a decision to wind-up the plan from a United Kingdom pension regulatory board, which approved the wind-up as of March 28, 2003. At the present time, the Company is unable to determine the financial impact of the April 1, 2003 approval of insolvency administration for CHEL and the related wind-up of CHEL’s United Kingdom pension plan. The Company can provide no assurance that claims will not be asserted against the Company for these obligations of CHEL. To the extent the Company has significant liability with respect to CHEL’s obligations as a result of CHEL’s insolvency, such liability could have a material adverse impact on the Company’s liquidity and its financial position.

On July 8, 2003, the Company and all of its then majority-owned U.S. subsidiaries filed voluntary petitions for reorganization relief under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware to implement an agreed upon senior debt restructuring plan through a pre-packaged plan of reorganization. None of the Company’s non-U.S. subsidiaries were included in the filing in the Bankruptcy Court. On September 15, 2003, the Company (as reorganized, the “Reorganized Company”) and all of its majority-owned U.S. subsidiaries emerged from Chapter 11 proceedings pursuant to the Amended Joint Prepackaged Reorganization Plan of Chart Industries, Inc. and Certain Subsidiaries, dated September 3, 2003 (the “Reorganization Plan”), which the Bankruptcy Court confirmed by an order entered on September 4, 2003. Under the Reorganization Plan, the Company’s senior debt of $255.7 million and related interest and fees of $1.9 million were converted into a $120.0 million secured term loan, with the balance of the existing senior debt being cancelled in return for an initial 95 percent equity ownership position in the Reorganized Company, and the Company’s $40.0 million secured debtor-in-possession financing facility was amended and restated as a $40.0 million post-bankruptcy secured revolving credit facility. In addition, on September 15, 2003, all of the Company’s common stock, warrants, options and other rights to acquire the Company’s common stock were cancelled, and the Company’s former stockholders received five percent of the initial equity of the Reorganized Company and the opportunity to acquire up to an additional five percent of equity through the exercise of new warrants. Further information concerning the Company’s Chapter 11 reorganization is set forth in the Reorganization Plan and the related Confirmation Order of the Bankruptcy Court, which were filed as exhibits to the Company’s Current Reports on Form 8-K and Form 8-K/A, each dated September 4, 2003. The Company continues to resolve a number of proofs of claim asserted in the bankruptcy proceedings, including a finder’s fee claim asserted in the amount of $2.3 million by a former significant stockholder of the Company, against which the Company has filed an objection in the U.S. Bankruptcy Court and will vigorously defend if necessary.

The Company is a party to other legal proceedings incidental to the normal course of its business. Based on the Company’s historical experience in litigating these actions, as well as the Company’s current assessment of the underlying merits of the actions and applicable insurance, management believes that the final resolution of these matters will not have a material adverse affect on the Company’s financial position, liquidity, cash flows or results of operations.

11

Not applicable.

Executive Officers of the Registrant

Certain information as of March 30, 2004 regarding each of the Company’s executive officers is set forth below:

Samuel F. Thomas has been Chief Executive Officer and President of the Company since October 2003. Prior to joining the Company, Mr. Thomas was Executive Vice President of Global Consumables at ESAB Holdings Ltd. (“ESAB”), a manufacturer of consumables and equipment for welding and cutting processes and applications, headquartered in London, United Kingdom. In addition to his most recent position at ESAB, Mr. Thomas was responsible for several other divisions within ESAB at various times during his employment. Prior to joining ESAB in February 1999, Mr. Thomas was Vice President of Friction Products for Federal Mogul, Inc. Mr. Thomas completed the Advanced Management Program at INSEAD in Fontainebleau, France and also holds a BSME degree from the Rensselaer Polytechnic Institute in Troy, New York.

Michael F. Biehl has been the Chief Financial Officer and Treasurer of the Company since July 2001. Prior to joining the Company, Mr. Biehl served as Vice President, Finance and Treasurer at Oglebay Norton Company, a publicly held company that provides industrial minerals to a broad range of industries. Prior to joining Oglebay Norton in 1992, Mr. Biehl worked in the audit practice of Ernst & Young, LLP in Cleveland, Ohio from 1978 to 1992. Mr. Biehl, a Certified Public Accountant, holds a BBA in Accounting from Ohio University and an MBA from Northwestern University’s Kellogg Graduate School of Management.

Charles R. Lovett has been Vice President of Manufacturing for the Company since October 2002. Mr. Lovett has served in various roles with the Company and its predecessors since 1978, including Vice President, Manufacturing, Koch Process Systems, Inc. until 1988, Vice President, Operations, AMW Industries until January 1991, President, Process Systems International, Inc. until 1994, President, Process Engineering, Inc. until 1999, and Vice President, Operations, Ferox a.s. in the Czech Republic. Mr. Lovett holds a Bachelors degree in Mechanical Engineering Technology from the University of Dayton.

Directors of the Registrant

Certain information as of March 30, 2004 regarding each of the Company’s Directors is set forth below:

William T. Allen.    Mr. Allen has served as a Director of the Company since September 2003. Mr. Allen is a Managing Director at TRG, a turnaround and crisis management firm.

Oliver C. Ewald.    Mr. Ewald was appointed as a Director of the Company in February 2004. Mr. Ewald is a Principal at the Audax Group, a private investment management firm that specializes in investing in middle market companies and managing equity and debt funds for investment in companies at various stages of business growth.

Michael P. Harmon.    Mr. Harmon has served as a Director of the Company since September 2003. He is a Senior Vice President in the Principal Activities Group of Oaktree Capital Management, LLC (“Oaktree”), a private investment management firm that specializes in inefficient markets and alternative investments.

Arthur S. Holmes.    Mr. Homes has served as a Director of the Company since its formation in June 1992. Mr. Holmes retired as Chairman and Chief Executive Officer of the Company in late 2003.

Stephen A. Kaplan.    Mr. Kaplan has served as a Director of the Company since September 2003. He is a principal of Oaktree and the co-head of Oaktree’s Principal Activities Group.

Samuel F. Thomas.    Mr. Thomas has been Chief Executive Officer, President and a Director of the Company since October 2003.

Timothy J. White.    Mr. White has served as a Director of the Company since September 2003. He is a Managing Director at the Audax Group.

PART II

Market Information and Dividends

Prior to April 4, 2003, the Predecessor Company’s common stock was traded on the New York Stock Exchange (“NYSE”) under the symbol “CTI.” The Predecessor Company was notified on April 4, 2003 that its common stock was being immediately suspended from trading on the NYSE and that the delisting of the Predecessor Company’s common stock from the NYSE was pending the completion of applicable procedures due to the Company’s inability to meet the NYSE continued listing criteria. From April 4, 2003 through September 15, 2003, the Predecessor Company’s common stock was traded on the over-the-counter (“OTC”) market Pink Sheets under the symbol “CTIT.” Upon the Predecessor Company’s emergence from Chapter 11 bankruptcy proceedings on September 15, 2003, all previously issued common stock was cancelled and new common stock was issued. Trading in the Reorganized Company’s new common stock commenced on the OTC market in October 2003 and is currently quoted on the OTC Bulletin Board under the symbol “CIDI.”

The high and low sales prices per share for the Reorganized Company’s common stock reported on the OTC Market in the fourth quarter of 2003 are set forth in the table below. These prices do not include retail mark-ups, mark-downs or commissions.

The Company did not pay any dividends in 2003 or 2002 and has no present intention of paying cash dividends to its shareholders in the future.

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Limitations on the Payment of Dividends

Under the Company’s senior term loan and revolving credit facility, the Company is restricted from paying cash dividends on its common stock, but is permitted to pay dividends payable in shares of common stock upon the approval of the Company’s Board of Directors.

Related Stockholder Matters

Shareholders of record on February 29, 2004 numbered 936. The Company estimates that an additional 3,500 shareholders own stock held for their accounts at brokerage firms and financial institutions.

The following table sets forth selected financial data of the Company for each of the five years in the period ended December 31, 2003. The data was derived from the annual audited consolidated financial statements of the Company for the relevant years and includes the operations of acquired businesses after their date of acquisition, including for periods after April 12, 1999, the operations of MVE.

SELECTED FINANCIAL DATA

(Dollars in thousands, except per share amounts)

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Chapter 11 Filing and Emergence

On July 8, 2003, the Company and all of its then majority-owned U.S. subsidiaries filed voluntary petitions for reorganization relief under Chapter 11 of the U.S. Bankruptcy Code to implement an agreed upon senior debt restructuring plan through a pre-packaged plan of reorganization. None of the Company’s non-U.S. subsidiaries were included in the filing in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). On September 15, 2003, the Company (as reorganized, the “Reorganized Company” or Reorganized Chart”) and all of its then majority-owned U.S. subsidiaries emerged from Chapter 11 proceedings pursuant to the Amended Joint Prepackaged Reorganization Plan of Chart Industries, Inc. and Certain Subsidiaries, dated September 3, 2003 (the “Reorganization Plan”), which the Bankruptcy Court confirmed by an order entered on September 4, 2003. Under the Reorganization Plan, the Company’s senior debt of $255.7 million and related interest and fees of $1.9 million were converted into a $120.0 million secured term loan, with the balance of the existing senior debt being cancelled in return for an initial 95 percent equity ownership position in the Reorganized Company, and Chart’s $40.0 million secured debtor-in-possession financing facility was amended and restated as a $40.0 million post-bankruptcy secured revolving credit facility. On September 15, 2003, all of the Company’s common stock, warrants, options and other rights to acquire the Company’s common stock were cancelled, and the Company’s former stockholders received five percent of the initial equity of the Reorganized Company and the opportunity to acquire up to an additional five percent of equity through the exercise of new warrants.

The Company’s emergence from Chapter 11 bankruptcy proceedings resulted in a new reporting entity and the adoption of fresh-start accounting in accordance with the American Institute of Certified Public Accountants (“AICPA”) Statement of Position 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code” (“SOP 90-7”) (“Fresh-Start accounting”). The Company used September 30, 2003 as the date for adopting Fresh-Start accounting in order to coincide with the Company’s normal financial closing for the month of September 2003. Upon adoption of Fresh-Start accounting, a new reporting entity was deemed to be created and the recorded amounts of assets and liabilities were adjusted to reflect their estimated fair values. Accordingly, the reported historical financial statements of the Company prior to the adoption of Fresh-Start accounting (the “Predecessor Company”) for periods ended prior to September 30, 2003 are not necessarily comparable to those of the Reorganized Company. In this Annual Report on Form 10-K, references to the Company’s nine-month period ended September 30, 2003 and all periods ended prior to September 30, 2003 refer to the Predecessor Company.

SOP 90-7 requires that financial statements for the period following the Chapter 11 filing through the bankruptcy confirmation date distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, revenues, expenses, realized gains and losses and provisions for losses directly associated with the reorganization and restructuring of the business, including adjustments to fair value assets and liabilities and the gain on the discharge of pre-petition debt, are reported separately as reorganization items, net, in the other (income) expense section of the Predecessor Company’s consolidated statement of operations for the nine months ended September 30, 2003.

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Overview

The Company finished 2003 with some positive momentum, after experiencing several challenges during the year. The most significant challenge was the Company’s reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Company had been in a highly leveraged situation ever since its acquisition of MVE Holdings, Inc. (“MVE”) in April 1999. Due to declines in early 1999 in the markets served by the Company’s Energy and Chemicals and Distribution and Storage segments, the Company violated in the second quarter of 1999 loan covenants under its original $300.0 million consolidated credit and revolving loan facility entered into in April 1999 (the “Old Credit Facility”). From that point forward until the Company’s emergence from Chapter 11 proceedings on September 15, 2003, executive management of the Company invested significant efforts to find solutions to the Company’s high-leverage situation, ranging from seeking permanent and temporary amendments to the Old Credit Facility, generating cash through the sales of certain non-core assets, attempting to raise capital through both new equity and debt financing and ultimately by reorganizing under the U.S. Bankruptcy Code with a prepackaged plan.

Coupled with the Company’s high-leverage situation, the Company experienced prolonged downturns in its core markets over the past several years. This resulted in the Company carrying an overall cost structure that was too high, primarily due to the numerous facilities occupied by the Company and the related fixed costs. Starting in 2002, the Company implemented a restructuring plan to identify the core manufacturing facilities it would occupy in response to the depressed market environment and its high leverage, resulting in the closure or planned closure of the non-core facilities. The Company continued to carry out its restructuring plan during 2003 as it completed the closures of two facilities in the first quarter of 2003 and one facility in the third quarter of 2003. The Company also announced the closures of two additional facilities that it expects to complete during 2004. As a result of these efforts, the Company expects to have reduced the overall number of facilities it occupies from 22 in late 2001 to 14 by the end of 2004. Management believes these operational restructuring efforts will position the Company for significant improvements in operating performance and enable the Company to better weather future downturns in its markets.

Due to the extended periods of time from receipt of customer orders to final completion and shipment of products, particularly in the Energy and Chemicals segment, the Company believes that signed customer orders are a significant indicator of its future financial performance. As a result, the Company measures and internally reports orders on a daily basis in an effort to stay current with market trends and make corresponding timely decisions regarding material purchases, headcount and other operating issues. Management believes the Company’s more recent strong 2003 fourth quarter and 2004 first quarter orders, particularly in the Energy and Chemicals segment, rather than orders received during the nine months ended September 30, 2003, better reflect the Company’s current opportunities and the overall market activity.

As a result of the bankruptcy reorganization, the operational restructuring activities and the belief that the markets served by the Energy and Chemicals segment will recover in 2004 from their prolonged slump, the Company believes it is well positioned for sales and earnings growth in 2004 in comparison to the very challenging year ended December 31, 2003. Management believes it will be able to operate within the covenant constraints and payment obligations of its current credit agreements, with its efforts directed toward enhancing the value of the business for the Company’s shareholders.

15

Presentation of Combined 2003 Results of Operations

Due to the adoption of Fresh-Start accounting as of September 30, 2003, Reorganized Chart’s balance sheet, statement of operations and statement of cash flows have not been prepared on a consistent basis with, and are therefore generally not comparable to, those of the Predecessor Company prior to the application of Fresh-Start accounting. In accordance with SOP 90-7, Reorganized Chart’s balance sheet, statement of operations and statement of cash flows have been presented separately from those of the Predecessor Company.

Reorganized Chart’s results of operations, other than cost of sales – fresh-start fair value adjustment, interest expense, net and financing costs amortization, were generally not significantly affected by the adoption of Fresh-Start accounting. Therefore, the Predecessor Company’s 2003 amounts have been combined with Reorganized Chart’s 2003 amounts for comparison and analysis purposes in this Item 7. See the table below for reference:

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Operating Results

The following table sets forth the percentage relationship that each line item in the Company’s consolidated statements of operations represents to sales in the three months ended December 31, 2003, the nine months ended September 30, 2003 and the years ended December 31, 2002 and 2001.

Orders and Backlog

The Company considers orders to be those for which the Company has received a firm signed purchase order or other written contractual commitment from the customer. Backlog is comprised of the portion of firm signed purchase orders or other written contractual commitments received from customers that the Company has not recognized as revenue under the percentage of completion method or based upon shipment. The dollar amount of the Company’s backlog at December 31, 2003 and 2002 was $49.6 million and $68.7 million, respectively. The decrease is primarily attributable to the completion by the Energy and Chemicals segment in 2003 of a significant order received in 2002 from Bechtel related to a Trinidad LNG project. All of the Company’s December 31, 2003 backlog is scheduled to be recognized as sales during 2004. Backlog can be significantly affected by the timing of orders for large products, particularly in the Energy and Chemicals segment, and the amount of backlog at December 31, 2003 described above is not necessarily indicative of future backlog levels or the rate at which backlog will be recognized as sales.

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The table below sets forth orders and backlog by segment for the last three years.

The Company believes its 2003 orders of $254.1 million decreased from 2002 orders of $286.4 million generally due to customer concerns of uncertainty relating to the prolonged debt restructuring initiatives and resultant Chapter 11 reorganization, particularly within the Energy and Chemicals segment. During 2003, the Biomedical segment continued its annual trend of increasing order performance primarily fueled by strong demand for medical products that offset a large decline in orders of MRI components. The Company expects the strong medical products demand to continue throughout 2004. Orders in the Distribution and Storage segment increased in 2003 as engineered tank and packaged gas products experienced a slight recovery from 2002. The Energy and Chemicals segment showed a significant decrease in orders in 2003 compared with 2002, in part due to the large order received in 2002 from Bechtel for additional phases of the Trinidad LNG project.

During 2002, the Biomedical segment experienced very strong order performance primarily fueled by strong demand for MRI and medical products. Orders in the Distribution and Storage segment significantly decreased in 2002 compared with 2001 due to the worldwide slowdown experienced by the manufacturing sectors of the industrialized world and the further reductions in capital expenditures in the consolidating global industrial gas industry. The Energy and Chemicals segment showed a significant increase in orders in 2002 after a cyclical order low in 2001. Strengthening of the worldwide hydrocarbon market, as evidenced by the large order received in 2002 from Bechtel for additional phases of the Trinidad LNG project, led this resurgence in orders.

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Segment Information

The following table sets forth sales, gross profit and gross profit margin for the Company’s three operating segments for the last three years.

Years Ended December 31, 2003 and 2002

Sales for 2003 were $265.6 million versus $276.4 million for 2002, a decrease of $10.8 million, or 3.9 percent. Sales in 2003 were negatively impacted by the Company’s prolonged debt restructuring initiatives and the resultant reorganization under Chapter 11 of the U.S. Bankruptcy Code, as certain customers reduced order quantities, delayed signing significant new orders, did not automatically renew supply contracts that expired in 2003, and simply placed business with other competitors, due to the uncertainty created by the Company’s leverage situation and bankruptcy filing. The Company believes its Energy and Chemicals segment experienced the most significant negative impact of the Chapter 11 filing, since products in this segment frequently have extended production times and significant dollar values.

Sales in the Biomedical segment decreased the least in comparison with 2002, by $1.1 million or 1.6 percent, with 2003 sales of $66.6 million versus sales of $67.7 million in 2002. The Biomedical segment sales decline occurred in MRI components, which were down $6.9 million in comparison to 2002 as this product line’s primary customer continued to take volume away from the Company and shift it to European and Asian competitors. Management believes this trend will continue in 2004, although not at the same pace experienced in 2003. Sales of the Company’s biological storage systems and medical products increased $4.7 million and $1.2 million in 2003, respectively, in comparison to 2002, primarily on higher volume. Distribution and Storage segment sales were $128.1 million in 2003 versus $135.5 million in 2002, a decrease of $7.4 million or 5.5 percent. Continued weakness in the global industrial gas market led to a decline in 2003 of $14.9 million in cryogenic bulk storage systems sales when compared with 2002. This decline was partially offset by an increase of $7.4 million in sales of cryogenic packaged gas systems and beverage liquid CO₂ systems based upon higher volumes. Sales in the Energy and Chemicals segment decreased $2.2 million, or 3.0 percent, from 2003 sales of $70.9 million compared with 2002 sales of $73.1 million. Heat exchanger and cold box system sales, the largest product lines within this segment, increased $6.1 million from 2002 driven by volume and price increases in the hydrocarbon processing market. Sales of LNG fueling systems, still a relatively new market for the Company, decreased by $8.4 million in 2003 when compared with 2002 due to lower volume primarily as a result of a decline in the economies of west coast and south central states and the Company’s financial difficulties.

Gross profit for 2003 was $71.8 million, relatively flat in comparison with gross profit of $70.8 million for 2002. Gross profit margin increased from 25.6 percent in 2002 to 27.0 percent in 2003, although the changes by operating segment varied. As a result of applying Fresh Start accounting, the Company was required to estimate the gross profit associated with work-in-process and finished goods inventory on hand at September 30, 2003 and increase the value of these inventories by such gross profit as of that date. The adjustment to increase the inventory value, which totaled $5.4 million, was included in reorganization items, net, in the other income (expense) section of the Company’s consolidated statement of operations for the nine months ended

19

September 30, 2003, but the reversal of this adjustment as the inventory was sold was included as a component of cost of sales in the Company’s consolidated statement of operations for the three months ended December 31, 2003. This non-cash Fresh Start accounting adjustment had the effect of reducing the Company’s 2003 gross profit and gross profit margin by $5.4 million and 2.0 percent, respectively. The dollar value of this adjustment and its percentage reduction on gross profit margin by operating segment in 2003 is as follows: $3.2 million and 4.8 percent for the Biomedical segment, and $2.2 million and 1.7 percent for the Distribution and Storage segment. A similar adjustment for inventory in the Energy and Chemicals segment was not necessary due to the Company using the percentage of completion method for revenue recognition in this segment.

Gross profit margin in the Biomedical segment in 2003 decreased eight points compared with 2002, primarily due to the Fresh Start accounting adjustment described above. Pricing and manufacturing costs for medical and biological storage systems products were relatively consistent in 2003 in comparison with 2002, while gross profit margin in MRI cryostat components decreased in the year over year comparison due to lower pricing and unabsorbed overhead costs due to less volume manufactured. Distribution and Storage segment 2003 gross profit margin increased approximately three percentage points in comparison with gross profit margin in 2002. The two-point reduction in 2003 gross profit margin due to the Fresh Start accounting adjustment described above was more than offset by significant reductions in manufacturing overhead costs due to facility closure restructuring projects completed in 2003. Gross profit margin in the Energy and Chemicals segment in 2003 increased seven percentage points compared with 2002 due to improved pricing in the hydrocarbon processing market, cost savings recognized due to the closures of the Company’s Wolverhampton, United Kingdom heat exchanger manufacturing facility and Westborough, Massachusetts engineering facility, and the inclusion in 2002 of a non-cash inventory valuation charge of $0.6 million as part of cost of sales for the write-down to fair value of inventory at the Company’s Wolverhampton, United Kingdom facility.

Selling, general and administrative (“SG&A”) expense for 2003 was $58.4 million versus $65.7 million for 2002, a decrease of $7.3 million, or 11.1 percent. As a percentage of sales, SG&A expense was 22.0 percent for 2003, down from 23.8 percent for 2002. In 2003, the Company recorded $6.4 million, or 2.4 percent of sales, of professional expenses related to its efforts to restructure its senior debt, compared with $4.9 million, or 1.7 percent of sales, in 2002. The Company also recorded $3.7 million of environmental remediation expense in 2002, or 1.3 percent of sales, as the Company increased its reserve for potential environmental remediation activities based upon the results of a Phase II environmental review in connection with the sale of substantially all the assets and liabilities of the Company’s stainless steel tubing business. Finally, additional SG&A expense savings were realized in 2003 as the Company eliminated a significant number of salaried employees as part of its operational restructuring efforts.

Pursuant to the annual impairment test requirements of SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”), the Company recorded a goodwill impairment charge of $92.4 million in the fourth quarter of 2002. The Company did not record a comparable goodwill impairment charge in 2003. This charge is discussed in more detail under the caption “Years Ended December 31, 2002 and 2001.”

In 2002 the Company embarked on an aggressive manufacturing facility reduction plan designed to consolidate excess capacity and reduce overall operating costs, closing its Distribution and Storage segment manufacturing facilities in Costa Mesa, California and Columbus, Ohio and announcing the closure of the Company’s Energy and Chemicals segment manufacturing facility in Wolverhampton, United Kingdom, which was completed in the first quarter of 2003. In 2003, the Company continued this manufacturing facility reduction plan and engaged restructuring consultants to assist in the selection of other facilities to close and in the implementation of these closure activities. These actions resulted in the closure in September 2003 of the Company’s Energy and Chemicals segment sales and engineering office in Westborough, Massachusetts and the announcements in December 2003 and January 2004 of the closure of the Company’s Distribution and Storage segment manufacturing facility in Plaistow, New Hampshire and the Biomedical segment manufacturing and office facility in Burnsville, Minnesota, respectively. In each of these facility closure situations, the Company is not exiting the product lines manufactured at those sites, but is moving manufacturing to other facilities with available capacity, most notably New Prague, Minnesota for engineered tank production and Canton, Georgia for medical production. The Company expects to incur capital expenditures in 2004 of approximately $1.5 million for improvements and additions to the Canton, Georgia facility, and expects to substantially complete the closures of these two sites by the end of 2004. These facility closures will result in further employee separation and plant closure costs in 2004, currently estimated to be approximately $4.0 million, and may put some negative short-term pressure on sales but should better position these segments going forward. The Company is currently attempting to sell its Burnsville, Minnesota facility and a vacant building located at the New Prague, Minnesota facility and expects to complete these sales by 2005 and the second quarter of 2004, respectively. The land and building related to the Burnsville facility are included in property, plant and equipment, net, in the Company’s consolidated balance sheet as of December 31, 2003 since the decision to sell the facility was made in January 2004. The building at the New Prague facility has been classified as held for sale at December 31, 2003 in the Company’s consolidated balance sheet included in Item 8 of this Annual Report on Form 10-K. The proceeds of such sales will be used to pay down debt outstanding under an industrial revenue bond and the balance will be available for working capital purposes. In addition to the headcount reductions resulting from these plant closures, during 2003 the Company reduced headcount in many other areas throughout the Company.

During 2003, the Company recorded employee separation and plant closure costs of $1.9 million related to the manufacturing facility reduction efforts and overall headcount reduction programs described above compared with $13.9 million in 2002. The total charges for 2003 and 2002 included $1.3 million of income and $3.1 million of expense, respectively, for contract termination costs, $2.5 million and $4.2 million respectively, for severance and other benefits related to terminating

20

certain employees at these and other sites and $0.7 million and $3.7 million respectively, for other associated costs. The income recorded as part of the lease-termination costs includes $1.7 million related to the settlement of facility leases in Costa Mesa, California and Denver, Colorado upon negotiations with the respective landlords entered into during the Company’s Chapter 11 bankruptcy proceedings. This was partially offset by $0.4 million in additional expenses for other facility closures. In 2002, the charges included $2.9 million of actuarially determined pension expense related to the curtailment of the Wolverhampton, United Kingdom defined benefit pension plan. Additionally, for 2003 and 2002, the Company recorded non-cash inventory valuation charges of $0.5 and $1.5 million, respectively, included in cost of sales for the write-off of inventory at these sites. At December 31, 2003, the Company had a reserve of $3.4 million remaining for the closure of these facilities, primarily for lease termination and severance costs. A table summarizing the employee separation and plant closure costs recorded by the Company in 2003 and 2002 and the remaining reserve for each facility is disclosed in Note D of the Company’s consolidated financial statements.

The Company recorded $0.1 million of equity expense and $0.4 million of equity income in its Coastal Fabrication joint venture in 2003 and 2002, respectively. The Company also received $0.8 million and $0.5 million of cash dividend distributions from the joint venture in 2003 and 2002, respectively. On February 27, 2004, the Company’s Coastal Fabrication joint venture executed an agreement to redeem the joint venture partner’s 50 percent equity interest for cash consideration of $0.2 million and the possibility of additional consideration being paid based upon the number of direct labor manufacturing hours performed at the Company’s New Iberia, Louisiana facility during 2004. As a result of the elimination of the joint venture partner and the assumption of 100 percent of control by the Company, the Company will consolidate the operating results of Coastal Fabrication effective February 27, 2004.

On July 3, 2003, the Company sold certain assets and liabilities of its former Greenville Tube, LLC stainless steel tubing business, which the Company previously reported as a component of its Energy and Chemicals operating segment. The Company received gross proceeds of $15.5 million, consisting of $13.5 million in cash and $2.0 million in a long-term subordinated note, and recorded a gain of $3.7 million in July 2003. In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company has classified the assets of its stainless steel tubing business as assets held for sale on its consolidated balance sheet as of December 31, 2002 and the operating results of this business as a discontinued operation on its consolidated statements of operations for the nine-month period ended September 30, 2003 and the years ended December 31, 2002 and 2001.

As part of closing its Columbus, Ohio manufacturing facility, the Company sold its cryopump and valves product lines in the second quarter of 2003 for net proceeds of $2.3 million and recorded a $0.9 million gain in other income, and sold various fixed assets of the Columbus, Ohio facility in the first quarter of 2003 for net proceeds of $0.2 million and recorded a $0.2 million gain in other income. The Company sold its cryogenic pump product line during the second quarter of 2002 for net proceeds of $2.3 million and recorded a gain of $1.4 million in other income.

Net interest expense for 2003 was $11.3 million compared with $17.6 million for 2002, decreasing significantly due to the refinancing of the Company’s debt. The Company recorded interest expense on amounts outstanding under the term loan portion and revolving credit loan portion of the Old Credit Facility and under the Series 1 and Series 2 Incremental Revolving Credit Facilities until July 8, 2003, the date the Company filed its Chapter 11 petitions, but not thereafter. As a result, interest expense for the three- and nine-month periods ended September 30, 2003 does not include approximately $3.8 million that would have been payable under the terms of these facilities had the Company not filed for Chapter 11 protection.

The Old Credit Facility required the Predecessor Company to enter into two interest rate derivative contracts (collars) in March 1999 to manage interest rate risk exposure relative to the term loan portions of the Old Credit Facility. One of these collars expired and was settled on June 28, 2002. The other collar, in the amount of $25.5 million at December 31, 2003, continues to be outstanding after the bankruptcy and expires in March 2006. The fair value of the contract related to the collar outstanding at December 31, 2003 is a liability of $1.2 million and is recorded in accrued interest. The change in fair value of the contracts related to the collars during 2003 and 2002 of $0.3 million and $1.6 million, respectively, is recorded in derivative contracts valuation expense. The Company’s interest rate collars do not qualify as hedges under the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 133 requires such collars to be recorded in the consolidated balance sheet at fair value. Changes in their fair value must be recorded in the consolidated statement of operations.

Financing costs amortization expense was $1.7 million for the nine months ended September 30, 2003 and $3.2 million for the year ended December 31, 2002. The Company recorded financing costs amortization expense related to the Old Credit Facility until July 8, 2003, the date the Company filed its Chapter 11 petitions, but not thereafter. The Company does not expect to record any financing costs amortization expense subsequent to September 30, 2003 related to its post-bankruptcy credit facilities.

The Company recorded $0.1 million of foreign currency remeasurement gain in 2003 and $1.1 million of loss in 2002. These foreign currency remeasurement losses result from certain of the Company’s subsidiaries entering into transactions in currencies other than their functional currency.

The Company recorded income tax expense of $2.9 million and $11.1 million in 2003 and 2002, respectively. The 2003 income tax expense of $2.9 million primarily reflects the income tax expense associated with foreign earnings, the charge for

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Fresh-Start accounting adjustments and a reduction in tax accruals for prior tax periods. The expected income tax benefit on the Company’s 2002 pre-tax loss was completely offset by a charge of $32.6 million to increase the valuation allowance to fully reserve all of the Company’s net deferred tax assets resulting from the Company’s performance, its cumulative tax loss position and management’s assessment that it is more likely than not that the net deferred tax assets will not be realized. Although these net deferred tax assets have been fully reserved, they are still available to be utilized by the Company to offset income taxes payable should the Company generate sufficient taxable income in the future.

Fresh-Start Adjustments: The Predecessor Company recorded a net gain of $5.7 million, included in reorganization items, net, in its consolidated statement of operations for the nine months ended September 30, 2003, as the impact of adopting Fresh-Start accounting. This net gain was comprised of certain adjustments to reflect the fair value of assets and liabilities, on a net basis, resulting in a net charge of $38.6 million, certain adjustments to reflect the restructuring of the Predecessor Company’s capital structure and resulting discharge of the senior lenders pre-petition debt, resulting in a net gain of $52.2 million and charges of $7.9 million for advisory fees and severance directly related to the reorganization. In accordance with Fresh-Start accounting, all assets and liabilities were recorded at their estimated fair values as of September 30, 2003. Such fair values represented the Company’s best estimates based on independent appraisals and valuations.

As a result of the foregoing, the Company incurred a net loss of $7.1 million in 2003, compared with a net loss of $130.8 million in 2002.

Years Ended December 31, 2002 and 2001

Sales for 2002 were $276.4 million versus $305.3 million for 2001, a decrease of $28.9 million, or 9.5 percent. A significant decrease of $44.3 million in Distribution and Storage segment sales, primarily driven by lower volume resulting from the continued economic slowdown experienced in 2002 in the industrial sectors of the worldwide economy, was slightly offset by sales growth in the Biomedical and Energy and Chemicals segments of $9.7 million and $5.7 million, respectively.

The Biomedical segment sales increase was largely driven by a $4.7 million increase in sales of medical oxygen products and biological storage systems, combined with an increase of $5.0 million in MRI cryostat components. Sales in the Distribution and Storage segment decreased significantly in 2002 when compared to 2001, with declines of $25.2 million and $12.3 million in cryogenic bulk storage systems and cryogenic systems and components, respectively, combined with a decrease of $7.2 million in cryogenic packaged gas systems and beverage liquid CO₂ systems. The Energy and Chemicals segment sales, while improving slightly compared with 2001, still reflected the significant and extended downturn in new production equipment for the industrial gas market. Heat exchanger and cold box system sales, the largest product lines within this segment, increased $5.2 million in 2002 from 2001 driven by volume and price increases in the hydrocarbon processing market. Sales of LNG fueling systems, a relatively new product line for the Company, were flat in 2002 when compared with 2001.

Gross profit for 2002 was $70.8 million versus $79.0 million for 2001. Gross profit margin decreased slightly, from 25.9 percent in 2001 to 25.6 percent in 2002, although the changes by operating segment varied. The Biomedical segment 2002 gross profit margin increased two percentage points compared with 2001 primarily due to the inclusion in 2001 of a non-cash inventory valuation charge of $1.9 million included in cost of sales for the write-down to fair value of inventory related to a product line that was sold by the Company. Gross profit margin in the Distribution and Storage segment in 2002 declined approximately two percentage points when compared with 2001 primarily due to lower manufacturing volume in the cryogenic bulk storage systems and cryogenic systems and components product lines. In spite of higher volumes in the heat exchanger and cold box product lines, the Energy and Chemicals segment gross profit margin remained flat in 2002 due to the lower prices on highly competitive projects and the inclusion in 2002 of a non-cash inventory valuation charge of $0.6 million included in cost of sales for the write-down to fair value of inventory at the Company’s Wolverhampton, United Kingdom facility.

SG&A expense for 2002 was $65.7 million versus $55.1 million for 2001, an increase of $10.6 million, or 19.2 percent. As a percentage of sales, SG&A expense was 23.8 percent for 2002, up from 18.0 percent for 2001. In 2002 the Company recorded $4.9 million, or 1.8 percent of sales, of professional expenses related to its efforts to restructure its senior debt, compared with $0.3 million, or 0.1 percent of sales, in 2001. The Company also recorded $3.7 million of environmental remediation expense in 2002, or 1.3 percent of sales, as the Company increased its reserve for potential environmental remediation activities based upon the results of a Phase II environmental review in connection with the sale of substantially all the assets and liabilities of the Company’s stainless steel tubing business. Additionally, overall increases in medical and workers’ compensation costs in 2002 added an additional $0.8 million of SG&A expense when compared with 2001.

Due to the Company’s adoption of SFAS No. 142, “Goodwill and Other Intangible Assets,” in the first quarter of 2002, the Company is no longer recording goodwill amortization. In 2001, the Company recorded goodwill amortization expense of $5.0 million. During the second quarter of 2002, the Company completed the transitional impairment tests of SFAS No. 142 and determined that the fair value of each reporting unit exceeded the carrying value, including goodwill, of such reporting unit as of January 1, 2002. As such, the Company was not required to record a cumulative effect charge as of January 1, 2002 for the adoption of SFAS No. 142.

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The Company performed its annual impairment test of goodwill as of October 1, 2002 using discounted cash flow techniques and values of comparable businesses. These tests resulted in the fair value of the Company’s Distribution and Storage reporting unit being less than its carrying value including goodwill, which caused the Company to advance to step two of SFAS No. 142 and engage a valuation specialist to provide valuations of the Distribution and Storage reporting unit’s tangible and identifiable intangible assets. Although those procedures confirmed the value of the reporting unit’s tangible assets exceeded their carrying value, goodwill of the Distribution and Storage reporting unit was determined to be impaired. As a result, in 2002 the Company recorded a non-cash impairment charge of $92.4 million, or $3.69 per diluted share, to write off non-deductible goodwill. This non-cash charge was due to the combination of a reduction in the overall estimated enterprise value of the Company, attributable to Chart’s high-leverage situation and recent financial performance, and a reduction in the specific estimated value of the Distribution and Storage reporting unit, caused by the worldwide slowdown experienced by the manufacturing sectors of the industrialized world, reductions in capital expenditures in the consolidating global industrial gas industry, and a lowering of expectations for future performance of this segment for these same reasons. Goodwill comprised 27.7 percent of total assets at December 31, 2002 and arose primarily from an acquisition in 1999.

In response to the continued weakness of the Company’s core markets and its poor overall operating performance, in 2002 the Company embarked on an aggressive manufacturing facility reduction plan designed to consolidate excess capacity and reduce overall operating costs. The first step of this plan was the closure of the Company’s Denver, Colorado Distribution and Storage segment manufacturing facility, which was substantially completed during the second quarter of 2002. The second step in this plan was the closure of the Company’s Distribution and Storage segment manufacturing facilities in Costa Mesa, California and Columbus, Ohio. The Costa Mesa plant closure was finalized in the fourth quarter of 2002, and the Columbus plant closure was completed in the first quarter of 2003. The third step of this plan, announced in December 2002, was the closure of the Company’s Energy and Chemicals segment manufacturing facility in Wolverhampton, United Kingdom. Closure of this plant was announced in 2002 and was completed in the first quarter of 2003. In addition to these plant closures, during 2002 the Company reduced headcount in many SG&A departments throughout the Company.

During 2002, the Company recorded employee separation and plant closure costs of $13.9 million related to the manufacturing facility reduction efforts and overall headcount reduction programs described above. The total charges included $3.1 million for contract termination costs, $4.2 million for severance and other benefits related to terminating certain employees at these and other sites, $3.7 million for other facility-related closure costs and $2.9 million of actuarially determined pension expense related to the curtailment of the Wolverhampton, United Kingdom defined benefit pension plan. Additionally, in 2002 the Company recorded non-cash inventory valuation charges of $1.5 million included in cost of sales for the write-off of inventory at these sites. A table summarizing the employee separation and plant closure costs recorded by the Company in 2002 and the remaining reserve for each facility is disclosed in Note D of the Company’s consolidated financial statements.

During 2001, the Company recorded employee separation and plant closure costs of $2.4 million. The total charges included $1.6 million related to the closure of the Company’s Ottawa Lake, Michigan facility and two smaller sites within the cryogenic services business of the Distribution and Storage segment, $0.4 million for terminating 25 employees at the Company’s Wolverhampton, United Kingdom, heat exchanger manufacturing facility and $0.4 million for terminating 45 other employees throughout the Company. The cryogenic services business charges of $1.6 million included $0.5 million for lease termination and facility-related closure costs, $0.6 million for writing off certain leasehold improvements and fixed assets, $0.1 million for terminating 32 employees, and $0.4 million for moving costs and other charges.

The Company recorded $0.4 million of equity income in its Coastal Fabrication joint venture in 2002, compared with equity income of $0.5 million in 2001. The Company also received a $0.5 million cash dividend distribution from the joint venture in 2002.

The Company sold its cryogenic pump product line in 2002 for net proceeds of $2.3 million and recorded a gain of $1.4 million in other income. The Company sold its minority interest in Restaurant Technologies Inc. for net proceeds of $2.4 million in 2001, resulting in a gain of $0.5 million in other income.

Net interest expense for 2002 was $17.6 million compared with $21.6 million for 2001, reflecting lower overall interest rates in 2002 compared with 2001. The Company recorded a cumulative effect of a change in accounting principle, net of income taxes, of $0.1 million as an adjustment to operations as of January 1, 2001 related to the Company’s interest rate collars and the adoption of SFAS No. 133, “Accounting for Derivative Investments and Hedging Activities.” An interest rate collar covering $76.0 million of the Company’s debt expired and was settled on June 28, 2002. The fair value of the contract related to the collar outstanding at December 31, 2002 was a liability of $2.1 million and was recorded in accrued interest. The change in fair value of the contracts related to the collars during 2002 and 2001 of $1.6 million and $2.9 million, respectively, is recorded in derivative contracts valuation expense.

The Company recorded $1.1 million and $0.1 million of foreign currency remeasurement loss in 2002 and 2001, respectively. These foreign currency remeasurement losses result from certain of the Company’s subsidiaries entering into transactions in currencies other than their functional currency.

The Company recorded income tax expense of $11.1 million and $0.4 million, respectively, in 2002 and 2001. The expected income tax benefit on the Company’s 2002 pre-tax loss was completely offset by a charge of $32.6 million to increase the

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valuation allowance to fully reserve all of the Company’s net deferred tax assets resulting from the Company’s performance, its cumulative tax loss position and management’s assessment that it was more likely than not that the net deferred tax assets would not be realized.

As a result of the foregoing, the Company incurred a net loss of $130.8 million in 2002, compared with a net loss of $5.2 million in 2001.

Liquidity and Capital Resources

Sources and Uses of Cash: Cash provided by operations was $24.5 million, $5.3 million and $7.5 million in 2003, 2002 and 2001, respectively. By strengthening the Company’s credit and collections policy and procedures in the third quarter of 2003, the Company was able to improve the timeliness of its cash collections on customer trade receivables. Additionally, the closure of several manufacturing facilities and an improved focus on inventory levels resulted in a significant reduction in cash used for inventory. Finally, the Company’s successful reorganization under the Bankruptcy Code enabled it to return to normal payment terms with most of its vendors, rather than the cash on delivery and other accelerated payment terms the Company was required to use earlier in 2003. These efforts all contributed to the positive cash earnings and cash provided by working capital improvements that occurred in 2003 and that management believes will continue in 2004. The Company’s 2002 operating cash flow resulted primarily from the receipt of an income tax refund of $9.3 million, due to a change in the tax law allowing a five-year carry-back of net operating losses, as the Company managed its normal working capital requirements to an approximately neutral position in 2002. In 2001, the Company generated cash flow from positive cash earnings as well as reductions in both inventory and accounts receivable.

Capital expenditures in 2003, 2002 and 2001 were $2.4 million, $2.9 million and $7.9 million, respectively. The Company limited its capital expenditures in 2003 and 2002 to a maintenance level in order to conserve cash. The Company’s 2001 capital expenditures related primarily to the Distribution and Storage segment, where new equipment was necessary as a result of the Company’s operational reorganization plan initiated in 1999. The Company expects capital expenditures in 2004 to be in the range of $8.0 million to $10.0 million, with the majority of these expenditures occurring in the second and third quarters of the year, as the Company begins to reinvest in its remaining facilities, expand the Canton, Georgia facility to accommodate the transfer of medical manufacturing to that facility and significantly expand the Company’s operations in China.

During 2003, the Company sold certain assets and liabilities of its former Greenville Tube, LLC stainless steel tubing business for cash proceeds of $13.5 million and a long-term subordinated note of $2.0 million, and certain fixed assets of its cryopump and valves product lines from its closed Columbus, Ohio manufacturing facility for net proceeds of $2.5 million. Proceeds from the sales of these assets were used to fund certain senior debt interest payments and pay certain professional fees and provided the Company with increased liquidity for identified working capital requirements and other corporate needs and obligations.

In 2003, the Company used $12.6 million of cash for its debt restructuring initiatives, compared with $6.7 million and $0.9 million used in 2002 and 2001. The majority of the cash used in 2003 was for various professional service firms, primarily bankruptcy attorneys and financial advisors, who assisted the Company with the Chapter 11 reorganization process. The majority of the cash used in 2002 and 2001 was for payments to the Company’s senior lenders for various amendments to the Old Credit Facility. The Company was required to delay until January 2004, when their fee applications were approved by the U.S. Bankruptcy Court, payments of approximately $1.2 million in bankruptcy related fees to various professional service providers. Other than these payments, the Company does not expect to use a significant amount of cash for debt restructuring initiatives in 2004.

The Company generated $5.0 million of cash flow from operating activities in the three months ended December 31, 2003 and was forecasting it would build a large cash balance by December 31, 2003. Additionally, the Company believes that cash forecasted to be generated by operations and the ability to borrow cash, if necessary, under its new term loan agreement and revolving credit facility (collectively, the “Credit Facility”), will be sufficient to satisfy its working capital, capital expenditure, restructuring and debt related cash requirements for 2004. As a result, in December 2003 the Company made a $10.0 million prepayment on the term loan portion of its Credit Facility. The prepayment reduced all future scheduled quarterly amortization payments on a pro-rata basis.

Debt Instruments and Related Covenants: The Old Credit Facility contained certain covenants and conditions which imposed limitations on the Predecessor Company and its operating units, including meeting certain financial tests and the quarterly maintenance of certain financial ratios on a consolidated basis such as: minimum net worth, maximum leverage, minimum pre-tax interest coverage ratio, minimum fixed charge coverage ratio and minimum earnings before interest, taxes, depreciation, amortization and restructuring charges. As of December 31, 2002 and June 30, 2003, the Predecessor Company was in default under its Old Credit Facility and its Series 1 Incremental Revolving Credit Facility entered into in November 2000 and its Series 2 Incremental Revolving Credit Facility entered into in April 2001 (collectively, the “Incremental Credit Facility”) due to violations of these financial covenants. Following December 31, 2002, the Predecessor Company also was in default under the Old Credit Facility as a result of its failure to make principal payments when due and the insolvency of CHEL. The Predecessor Company’s senior lenders amended the Old Credit Facility and Incremental Credit Facility on April 2, 2003 to waive all defaults existing at December 31, 2002 and through April 30, 2003 and to defer until April 30, 2003 $6.5

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million in scheduled term debt amortization payments and $9.8 million in Incremental Credit Facility amortization payments originally due on March 31, 2003. The Predecessor Company’s senior lenders further amended the Old Credit Facility and Incremental Credit Facility as of April 30, 2003 to extend the waiver of defaults obtained on April 2, 2003 through June 30, 2003 and to defer the interest and principal payments to June 30, 2003. The Predecessor Company’s senior lenders further amended the Old Credit Facility and Incremental Credit Facility as of June 30, 2003 to extend the waiver of defaults obtained on April 30, 2003 through July 15, 2003 and to defer the interest and principal payments to July 15, 2003

On July 8, 2003, the Predecessor Company and all of its then majority-owned U.S. subsidiaries filed voluntary petitions for reorganization relief under Chapter 11 of the U.S. Bankruptcy Code to implement an agreed upon senior debt restructuring plan through a pre-packaged plan of reorganization. None of the Company’s non-U.S. subsidiaries were included in the filing in the United States Bankruptcy Court for the District of Delaware. The Predecessor Company’s Chapter 11 bankruptcy filing was also an event of default under the Old Credit Facility.

In conjunction with the filing of its Reorganization Plan, on July 17, 2003, the Predecessor Company entered into a debtor-in-possession credit facility (the “DIP Credit Facility”) with certain of its senior lenders. The DIP Credit Facility provided a revolving credit line of $40.0 million, of which $30.0 million could also be used for the issuance of letters of credit. On August 13, 2003 the Bankruptcy Court entered a final order approving the DIP Credit Facility. The Predecessor Company issued certain letters of credit but did not borrow any funds under the DIP Credit Facility, which matured on September 15, 2003, the bankruptcy consummation date.

On September 15, 2003, the Company and all of its then majority-owned U.S. subsidiaries emerged from Chapter 11 proceedings pursuant to the Reorganization Plan, which the Bankruptcy Court confirmed by an order entered on September 4, 2003. Under the Reorganization Plan, the Predecessor Company’s senior debt of $255.7 million and related interest and fees of $1.9 million were converted into a $120.0 million secured term loan, with the balance of the existing senior debt being cancelled in return for an initial 95 percent equity ownership position in the Reorganized Company, and the Predecessor Company’s $40.0 million secured DIP Credit Facility was amended and restated as a $40.0 million post-bankruptcy secured revolving credit facility. On September 15, 2003, all of the Predecessor Company’s common stock, warrants, options and other rights to acquire the Predecessor Company’s common stock were cancelled, and the Predecessor Company’s former stockholders received five percent of the initial equity of the Reorganized Company and the opportunity to acquire up to an additional five percent of equity through the exercise of new warrants.

The Credit Facility entered into by the Company on September 15, 2003 grants a security interest in substantially all of the assets of the Company to the agent bank as representative of the senior lenders. The Credit Facility provides a term loan of $120.0 million with final maturity in 2009 and a revolving credit line of $40.0 million that expires on September 15, 2008, of which $30.0 million may be used for the issuance of letters of credit. Under the terms of the Credit Facility, term loans bear interest, at the Company’s option, at rates equal to the prime rate plus 2.50 percent or LIBOR plus 3.50 percent and the revolving credit line bears interest, at the Company’s option, at rates equal to the prime rate plus 1.50 percent or LIBOR plus 2.50 percent. The Company is also required to pay a commitment fee of 0.375 percent per annum on the unused amount of the revolving credit line of the Credit Facility.

The Credit Facility contains certain covenants and conditions which impose limitations on the Company and its operating units, including a restriction on the payment of cash dividends and a requirement to meet certain financial tests and to maintain on a quarterly basis certain consolidated financial ratios, including maximum leverage (calculated as total debt less cash divided by earnings before interest, taxes, depreciation, amortization and restructuring charges (“EBITDAR”)), minimum interest coverage ratio (calculated as EBITDAR divided by interest expense), minimum fixed charge coverage ratio (calculated as EBITDAR less capital expenditures divided by the sum of interest expense, scheduled debt payments and taxes paid), minimum EBITDAR and maximum capital expenditures. The Credit Facility also contains a feature whereby if the Company generates cash from operations above a pre-defined calculated amount, the Company is required to use a portion of that cash to make a pre-payment on the term loan portion of the Credit Facility.

At December 31, 2003, the Company had borrowings outstanding of $109.8 million under the term loan portion of the Credit Facility and letters of credit outstanding and bank guarantees totaling $18.0 million supported by the revolving credit line portion of the Credit Facility.

Cash Requirements: The Company does not anticipate any unusual cash requirements for working capital needs in 2004. In order to complete its operational restructuring activities, particularly the closures of the Plaistow, New Hampshire and Burnsville, Minnesota facilities, the Company forecasts that it will use approximately $2.5 million of cash, excluding capital expenditure requirements discussed above, for one-time employee termination benefits, contract termination costs and other associated facility closure costs. Based upon current actuarial estimates, the Company also expects to contribute approximately $3.0 million in cash to its four defined benefit pension plans to meet ERISA minimum funding requirements.

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The Company’s known contractual obligations as of December 31, 2003 and cash requirements resulting from those obligations are as follows: