| Innovative Valve Technologies, Inc. | |||
| Ticker: | IVTC | 14900 Woodham Drive, Suite A-125 | |
| Exchange: | NASDAQ-National Market | Houston, TX 77073 | |
| Industry: | Wholesale (SIC Code 5085) | (281) 821-9407 | |
| Type of Shares: | Common Shares | Filing Date: | 7/18/97 | |
| U.S. Shares: | 3,350,000 | Offer Date: | 10/22/97 | |
| Non-U.S. Shares: | 0 | Filing Range: | $11.00 - $13.00 | |
| Primary Shares: | 3,350,000 | Offer Price: | $13.00 | |
| Secondary Shares: | 0 | Gross Spread: | $0.91 | |
| Offering Amount: | $40,200,000 | Selling: | $0.52 | |
| Expenses: | - | Reallowance: | $0.10 | |
| Shares Out After: | - |
| Manager | Tier | Phone |
| Smith Barney Inc. | Lead Manager | (212) 723-7300 |
| Montgomery Securities | Co-manager | (415) 627-2100 |
| Issuer's Law Firm: | Baker & Botts |
| Bank's Law Firm: | Morgan, Lewis & Bockius |
| Auditor: | Arthur Andersen |
| Registrar/Transfer Agent: | ChaseMellon Shareholder Services, L.L.C. |
Dollar amounts in U.S. millions except for per share data | |||||
| 3 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 12/31/96 | 3/31/97 | 3/31/96 | 3/31/97 | ||
| Revenue: | $76.23 | $20.73 | $17.22 | Assets: | $66.74 |
| Net Income: | $1.98 | $0.28 | $0.43 | Curr Assets: | |
| EPS: | Liabilities: | $62.02 | |||
| Prior EPS: | Curr Liabilities: | ||||
| Cash Flow/Oper: | Equity: | $4.72 | |||
| Cash Flow/Fin: | Cash: | ||||
| Cash Flow/Inv: | |||||
| Business Description |
| The company was formed in March 1997 to create the leading provider of comprehensive maintenance, repair, replacement and value-added distribution services for industrial valves and related process-system components in North America. Many of the Company's customers are large, Fortune 500 industrial companies. The Company provides them with repair services both for valves and other process-system components continuing to operate under pressure while the repair is made (an "on-line" repair) and for valves and other process-system components that have been temporarily removed from a process system (an "off-line" repair). The Company believes its approach to making on-line seal repairs of leaking rising stem valves ("RSVs") that were manufactured with compressible packing material distinguishes it from other on-line repair companies and is safer, more effective and more cost-efficient than conventional on-line repair methods. An important part of the Company's business strategy will be to roll out its new technology, the proprietary SafeSeal system, through the operations of the other Acquired Businesses and other businesses acquired in the future. The Company performs off-line repairs both at the customer's plant (an "on-site" repair) and in the Company's repair facilities (an "in-shop" repair). The Company also uses its facilities to (i) assemble new valves, actuators and other components into packaged systems for sale, rebuild previously used valves (other than safety valves) to their original specifications for sale and fabricate other process-system components for sale and (ii) test and certify new and rebuilt valves and systems as meeting the specifications of its customers and manufacturers and applicable industry standards. |
| Competition |
| The markets for the Company's repair and distribution services generally are highly competitive. The Company believes the principal competitive factors in a distributor's sale of new valves and other process-system components directly to industries in the distributor's market include price and the ability of the distributor to offer on a timely basis a wide selection of the new, better-performing valves and other components the original equipment manufacturers ("OEMs") have designed to meet the needs of these industries. Factors affecting delivery time include inventory size and whether, in the case of pressure safety, relief and safety-relief valves (collectively, "PRVs") and certain other valves, the OEM or the distributor assembles, sets, tests and seals, or otherwise customizes, the valve. In the case of repair services, the Company believes the principal competitive factors are quality and availability of service (including emergency service and documentation of valve histories), price, use of OEM-approved replacement parts, familiarity with the OEMs' products and local brand equity of the repair business. In its distribution operations, the Company competes with the direct sales forces and distribution networks of OEMs offering the same or comparable lines of products. It competes for repair services business with other repair services businesses, OEMs and customers' in-house maintenance crews. Some of its competitors may have lower overhead cost structures and, consequently, may be able to provide their services at lower rates than the Company. The Company's competitors for on-line leak sealing services include two national competitors and several regional competitors. The Company believes the industrial valve repair and distribution sectors of the industrial valve industry are subject to consolidation, and that a number of competitors may attempt to consolidate these sectors. Some of these competitors may have greater resources than the Company to finance acquisition and internal growth opportunities and may be willing to pay higher prices than the Company for the same opportunities. Consequently, the Company may encounter significant competition in its efforts to achieve its growth objectives, particularly through its acquisition strategy. |
| Business Plan |
| The company intends to become the leading North American provider of comprehensive repair and distribution services by emphasizing growth through acquisitions of other repair an ddistribution services businesses and implementing a national operating strategy aimed at increasing internalt growth, enhancing profitability and achieving cost efficiencies. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used to fund the cash portion of the purchase price for two Acquired Businesses, to pay additional consideration in connection with the acquisition of SSI of one of the other Acquired Businesses, to redeem preferred stock of SSI and to repay outstnading indebtedness of Invatec and the Acquired Businesses. |
| Name of Shareholder | % Owned Before | % Owned After |
| William E. Haynes | 100.00% | |
| Services, Inc. | 18.40% | |
| Charles F. Schugart | 16.80% | |
| Denny A. Rigas | 14.00% | |
| John L. King | 7.00% | |
| Douglas R. Harrington, Jr. | 7.00% | |
| Frank L. Lombard | 6.10% |
| Officer Name | Title | Age |
| William E. Haynes | Director, Chairman of the Board, President and Chief Executive Officer | 54 |
| Joe Chatham | President and Chief Operating Officer of Harley | 40 |
| Pliney Olivier | President of GSV | 51 |
| Thomas Santacroce | President of ICE/VARCO | 50 |
| Curry B. Walker | President of Plant Specialties | 61 |
| Kevin M. Stern | President of SSI | 32 |
| Ed S. Ries | President of Steam Supply | 53 |
| Lee Roy Jordan | President of SVS | 56 |
| Charles F. Schugart | Senior Vice President -- Chief Financial Officer, Treasurer and Secretary | 37 |
| Denna A. Rigas | Senior Vice President -- Technology and Marketing | 53 |
| John L. King | Vice President -- Corporate Development | 27 |
| Frank L. Lombard | Vice President -- Corporate Development | 54 |
| Timothy M. LeFevre | Vice President -- Corporate Marketing Programs | 35 |
| Douglas R. Harrington, Jr. | Vice President and Corporate Controller | 32 |