x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED]
|
¨
|
TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO
FEE REQUIRED]
|
Delaware
|
20-5657551
|
(State
or other jurisdiction of incorporation of organization)
|
(I.R.S.
Employer Identification
Number)
|
Common Stock $0.01 par value per
share
|
The NASDAQ Stock Market,
Inc
|
|
(Title
of Class)
|
(Name
of Exchange on Which
Registered)
|
Large
Accelerated Filer ¨
|
Accelerated
Filer x
|
Non-accelerated
Filer (Do not check if a smaller reporting company) ¨
|
Smaller
reporting company ¨
|
Page
|
||
PART
I
|
||
Item
1.
|
Business
|
3
|
Item
1A.
|
Risk
Factors
|
9
|
Item
1B.
|
Unresolved
Staff Comments
|
10
|
Item
2.
|
Properties
|
10
|
Item
3.
|
Legal
Proceedings
|
11
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
11
|
PART
II
|
||
Item
5.
|
Market for
Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchase of
Equity Securities
|
12
|
Item
6.
|
Selected
Financial Data
|
14
|
Item
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
15
|
Item
7A.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
22
|
Item
8.
|
Financial
Statements and Supplementary Data
|
23
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
45
|
Item
9A.
|
Controls
and Procedures
|
45
|
Item
9B.
|
Other
Information
|
45
|
PART
III
|
||
Item
10.
|
Directors,
Executive Officers and Corporate Governance
|
46
|
Item
11.
|
Executive
Compensation
|
47
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
47
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
47
|
Item
14.
|
Principal
Accountant Fees and Services
|
47
|
PART
IV
|
||
Item
15.
|
Exhibits
and Financial Statement Schedules
|
48
|
Signatures
and Certifications
|
51
|
Term
|
Definition
|
|
ABC
|
American
Bailey Corporation
|
|
AIG
|
Ammonia Injection Grid | |
CAAA
|
Clean
Air Act Amendments of 1990
|
|
CAIR
|
Clean
Air Interstate Rule
|
|
CAVR
|
Clean
Air Visibility Rule
|
|
CDT
|
Clean
Diesel Technologies, Inc.
|
|
CFD
|
Computational
Fluid Dynamics
|
|
Common
Shares
|
Shares
of the Common Stock of Fuel Tech
|
|
Common
Stock
|
Common
Stock of Fuel Tech
|
|
EPA
|
Environmental
Protection Agency
|
|
EPRI
|
Electric
Power Research Institute
|
|
FUEL
CHEM®
|
A
trademark used to describe Fuel Tech’s fuel and flue gas treatment
processes, including its TIFI™ Targeted In-Furnace Injection™ technology
to control slagging, fouling, corrosion and a variety of sulfur
trioxide-related issues.
|
|
GSG
|
Graduated
Straightening Grid
|
|
Investors
|
The
purchasers of Fuel Tech securities pursuant to a Securities Purchase
Agreement as of March 23, 1998.
|
|
Loan
Notes
|
Nil-coupon,
non-redeemable convertible unsecured loan notes of Fuel
Tech
|
|
NOx
|
Oxides
of nitrogen
|
|
NOxOUT
CASCADE®
|
A
trademark used to describe Fuel Tech’s combination of NOxOUT and
SCR.
|
|
NOxOUT®
Process
|
A
trademark used to describe Fuel Tech’s SNCR process for the reduction of
NOx.
|
|
NOxOUT-SCR®
|
A
trademark used to describe Fuel Tech’s direct injection of urea as a
catalyst reagent.
|
|
NOxOUT
ULTRA®
|
A
trademark used to describe Fuel Tech’s process for generating ammonia for
use as SCR reagent.
|
|
Rich
Reagent Injection Technology (RRI)
|
An
SNCR-type process that broadens the NOx reduction capability of the NOxOUT
Process at a cost similar to NOxOUT. RRI can also be applied on a
stand-alone basis.
|
|
SCR
|
Selective
Catalytic Reduction
|
|
SIP
Call
|
State
Implementation Plan Regulation
|
|
SNCR
|
Selective
Non-Catalytic Reduction
|
|
TCI™
Targeted Corrosion Inhibition™
|
A
FUEL CHEM program designed for high-temperature slag and corrosion
control, principally in waste-to-energy boilers.
|
|
TIFI™
Targeted In-Furnace Injection™
|
A
proprietary technology that enables the precise injection of a chemical
reagent into a boiler or furnace as part of a FUEL CHEM
program.
|
|
·
|
Fuel
Tech's NOxOUT process is a Selective Non-Catalytic Reduction (SNCR)
process that uses non-hazardous urea as the reagent rather than ammonia.
The NOxOUT process on its own is capable of reducing NOx by up to 25% -
50% for utilities and by potentially significantly greater amounts for
industrial units in many types of plants with capital costs ranging from
$5 - $20/kW for utility boilers and with total annualized operating costs
ranging from $1,000 - $2,000/ton of NOx
removed.
|
|
·
|
Fuel
Tech’s NOxOUT CASCADE process uses a catalyst in addition to the NOxOUT
process to achieve performance similar to SCR. Capital costs
for NOxOUT CASCADE systems can range from $30 - $75/kW which is
significantly less than that of SCRs, which can cost $300/kW or more,
while operating costs are competitive with those experienced by SCR
systems.
|
|
·
|
Fuel
Tech’s NOxOUT-SCR process utilizes urea as a catalyst reagent to achieve
NOx reductions of up to 85% from smaller stationary combustion sources
with capital and operating costs competitive with equivalently sized,
standard SCR systems.
|
|
·
|
Fuel
Tech’s NOxOUT ULTRA process is designed to convert urea to ammonia safely
and economically for use as a reagent in the SCR process for NOx
reduction. Recent local hurdles in the ammonia permitting
process have raised concerns regarding the safety of ammonia storage in
quantities sufficient to supply SCR. In addition, the
Department of Homeland Security has characterized anhydrous ammonia as a
Toxic Inhalation Hazard (TIH) commodity. This is contributing
to new restrictions by rail carriers on the movement of anhydrous ammonia
and to an escalation in associated rail transport and insurance
rates. Overseas, new coal-fired power plants incorporating SCR
systems are expected to be constructed at a rapid rate in China, and Fuel
Tech’s NOxOUT ULTRA process is believed to be a market leader for the safe
delivery of ammonia, particularly near densely populated cities, major
waterways, harbors or islands, or where the transport of anhydrous or
aqueous ammonia is a safety
concern.
|
|
·
|
Fuel
Tech has licensed the Rich Reagent Injection Technology from Reaction
Engineering International and Electric Power Research
Institute. The technology has been proven in full-scale field
studies on cyclone-fired units to reduce NOx by 40% - 60%. The
technology is a generic SNCR process, whose applicability is outside the
temperature range of the NOxOUT process. The technology is seen
as an add-on to Fuel Tech’s NOxOUT systems, thus potentially broadening
the NOx reduction of the combined system to up to 60% with minimal
additional capital requirement.
|
|
·
|
Under
an exclusive licensing agreement with FGC Corporation, Fuel Tech sells
flue gas conditioning systems incorporating FGC Corporation technology for
utility applications in all geographies outside the United States and
Canada. Flue gas conditioning systems improve the efficiency of
particulate collectors, also known as electrostatic precipitators
(ESP). These conditioning systems represent a far lower capital
cost approach to improving ash particulate capture versus the alternative
of installing larger ESPs or fabric filter technology to meet opacity
levels.
|
|
·
|
As
a result of the acquisitions of substantially all of the assets of
Tackticks, LLC and FlowTack, LLC in the fourth quarter of 2008, Fuel Tech
now provides process design optimization, performance testing and
improvement, and catalyst selection services for SCR systems on coal-fired
boilers. In addition, other related services, including
start-ups, maintenance support and general consulting services for SCR
systems, as well as ammonia injection grid design and tuning, to help
optimize catalyst performance and catalyst management services to help
optimize catalyst life, are now offered to customers around the
world. Fuel Tech also specializes in both physical experimental
models, which involve construction of scale models through which fluids
are tested, and computational fluid dynamics models, which simulate fluid
flow by generating a virtual replication of real-world geometry and
operating inputs. We design flow corrective devices, such as
turning vanes, ash screens, static mixers and our patent pending Graduated
Straightening Grid. Our models help clients optimize
performance in flow critical equipment, such as selective catalytic
reactors in SCR systems, where the effectiveness and longevity of
catalysts are of utmost concern. The Company’s modeling
capabilities are also applied to other power plant systems where proper
flow distribution and mixing are important for performance, such as flue
gas desulphurization scrubbers, electrostatic precipitators, air heaters,
exhaust stacks and carbon injection systems for mercury
removal.
|
(i)
|
Lack
of Diversification
|
-
|
The
Air Pollution Control technology segment, which includes the NOxOUT,
NOxOUT CASCADE, GSG, NOxOUT ULTRA and NOxOUT-SCR processes for the
reduction of NOx emissions in flue gas from boilers, incinerators,
furnaces and other stationary combustion sources;
and
|
-
|
The
FUEL CHEM technology segment, which uses chemical processes, including
TIFI Targeted In-Furnace Injection technology, to control slagging,
fouling and corrosion, as well as the formation of sulfur trioxide,
ammonium bisulfate, particulate matter (PM2.5),
carbon dioxide, NOx and unburned carbon in fly ash of furnaces and
boilers.
|
(ii)
|
Competition
|
(iii)
|
Dependence
on and Change in Air Pollution Control Regulations and
Enforcement
|
Fuel
Tech's business is significantly impacted by and dependent upon the
regulatory environment surrounding the electricity generation
market. Our business will be adversely impacted to the extent
that regulations are repealed or amended to significantly reduce the level
of required NOx reduction, or to the extent that regulatory authorities
delay or otherwise minimize enforcement of existing
laws. Additionally, long-term changes in
environmental regulation that threaten or preclude the use of
coal or other fossil fuels as a primary fuel source for electricity
production, based on the theory that gases emitted therefrom
impact climate change through a greenhouse effect, and result in the
reduction or closure of a significant number of fossil fuel-fired power
plants, may adversely affect the Company's business, financial condition
and results of operations. See also the text above under the
caption “Regulations and
Markets” in the Air Pollution Control
segment overview.
|
(iv)
|
Protection
of Patents and Proprietary
Rights
|
(v)
|
Foreign
Operations
|
(vi)
|
Product
Pricing and Operating Results
|
(vii)
|
Raw
Material Supply and Pricing
|
(ix)
|
Customer
Access to Capital Funds
|
(x)
|
Customer
Concentration
|
-
|
The
Stamford, Connecticut building lease term, for approximately 7,000 square
feet, runs from February 1, 2004 to January 31, 2010. The
facility houses certain administrative functions such as Investor
Relations, Benefit Plan Administration and certain APC sales
functions.
|
-
|
The
Beijing, China building lease term, for approximately 4,000 square feet,
runs from September 1, 2007 to August 31, 2009. This facility
serves as the operating headquarters for our Beijing Fuel Tech
operation. Fuel Tech has the option to extend the lease term at
a market rate to be agreed upon between Fuel Tech and the
lessor.
|
-
|
The
Durham, North Carolina building lease term, for approximately 16,000
square feet, runs from November 1, 2005 to April 30, 2014. This
facility houses the former Tackticks and FlowTack
operations. Fuel Tech has no option to extend the
lease.
|
2008
|
High
|
Low
|
||||||
Fourth
Quarter
|
$ | 18.95 | $ | 6.05 | ||||
Third
Quarter
|
24.76 | 14.52 | ||||||
Second
Quarter
|
27.16 | 17.55 | ||||||
First
Quarter
|
22.94 | 14.15 |
2007
|
High
|
Low
|
||||||
Fourth
Quarter
|
$ | 34.48 | $ | 16.89 | ||||
Third
Quarter
|
35.85 | 20.65 | ||||||
Second
Quarter
|
38.20 | 21.65 | ||||||
First
Quarter
|
29.68 | 22.54 |
For the years ended December 31,
|
||||||||||||||||||||
CONSOLIDATED
STATEMENT of
OPERATIONS DATA |
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||
(in
thousands of dollars, except for share and per-share data)
|
||||||||||||||||||||
Revenues
|
$ | 81,074 | $ | 80,297 | $ | 75,115 | $ | 52,928 | $ | 30,832 | ||||||||||
Cost
of sales
|
44,345 | 42,471 | 38,429 | 27,118 | 16,566 | |||||||||||||||
Selling,
general and administrative and other costs and expenses
|
30,112 | 27,087 | 25,953 | 18,655 | 14,130 | |||||||||||||||
Operating
income
|
6,617 | 10,739 | 10,733 | 7,155 | 136 | |||||||||||||||
Net
income
|
3,602 | 7,243 | 6,826 | 7,588 | 1,572 | |||||||||||||||
Basic
income per Common Share
|
$ | 0.15 | $ | 0.33 | $ | 0.32 | $ | 0.38 | $ | 0.08 | ||||||||||
Diluted
income per Common Share
|
$ | 0.15 | $ | 0.29 | $ | 0.28 | $ | 0.33 | $ | 0.07 | ||||||||||
Weighted-average
basic shares outstanding
|
23,608,000 | 22,280,000 | 21,491,000 | 20,043,000 | 19,517,000 | |||||||||||||||
Weighted-average
diluted shares outstanding
|
24,590,000 | 24,720,000 | 24,187,000 | 23,066,000 | 22,155,000 |
December 31
|
||||||||||||||||||||
CONSOLIDATED
BALANCE SHEET DATA
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||
(in
thousands of dollars)
|
||||||||||||||||||||
Working
capital
|
$ | 44,346 | $ | 45,143 | $ | 38,715 | $ | 19,590 | $ | 11,292 | ||||||||||
Total
assets
|
88,873 | 87,214 | 65,660 | 44,075 | 23,828 | |||||||||||||||
Long-term
obligations
|
1,389 | 1,255 | 500 | 448 | 505 | |||||||||||||||
Total
liabilities
|
15,056 | 23,975 | 18,005 | 14,939 | 4,873 | |||||||||||||||
Stockholders'
equity (1)
|
73,817 | 63,239 | 47,655 | 29,136 | 18,955 |
(1)
|
Stockholders’
equity includes principal amount of nil coupon non-redeemable perpetual
loan notes. See Note 5 to the consolidated financial
statements.
|
|
-
|
Fuel
Tech recorded $5,815 in stock compensation expense in 2008 in accordance
with SFAS 123(R), as discussed in Note 6 to the consolidated financial
statements. This amount represented a $1,024 increase over
2007, attributable to stock option awards to Directors and certain Fuel
Tech employees in 2008 and the on-going expense recognition related to
stock options awarded in prior
years.
|
-
|
Fuel
Tech invested approximately $2,000 in personnel and other costs, including
expenses associated with the start-up of the Company’s Beijing, China
office, in the areas of Engineering, Sales, Marketing and Administration
to ensure the Company’s financial and operational infrastructure are able
to accommodate anticipated future
growth.
|
-
|
Partially
offsetting this unfavorable variance was a reduction in annual incentive
expenses of $1,500 as the minimum income threshold for the year ended
December 31, 2008 was not met and, thus, no 2008 bonus payments were made
under the Company’s incentive
plan.
|
-
|
Fuel
Tech recorded $4,791 in stock compensation expense in 2007 in accordance
with Statement 123(R), as discussed in Note 6 to the consolidated
financial statements. This amount represented a $2,986 increase
over 2006 attributable to the awarding of stock options to all Fuel Tech
employees in December 2006 and to an increase in the fair value of the
options granted, which was driven by an increase in the price of Fuel
Tech’s Common Stock.
|
-
|
Partially
offsetting this unfavorable variance was a reduction in revenue-related
expenses of $2,100 as Fuel Tech aligned the focus of all employees under a
common incentive plan in
2007.
|
Payments
due by period in thousands of dollars
|
||||||||||||||||||||
Contractual
Cash
Obligations |
Total
|
Less
than 1
year
|
2-3
years
|
4-5
years
|
Thereafter
|
|||||||||||||||
Operating
Leases
|
$ | 1,720 | $ | 663 | $ | 527 | $ | 468 | $ | 62 |
Commitment
expiration by period in thousands of dollars
|
||||||||||||||||||||
Commercial
Commitments |
Total
|
Less
than 1
year
|
2-3
years
|
4-5
years
|
Thereafter
|
|||||||||||||||
Short-term
debt
|
$ | 2,188 | $ | 2,188 | $ | - | $ | - | $ | - |
|
-
|
in
support of the warranty period defined in the contract;
or
|
|
-
|
in
support of the system performance criteria that are defined in the
contract.
|
Commitment
expiration by period in thousands of dollars
|
||||||||||||||||||||
Commercial
Commitments |
Total
|
Less
than 1 year
|
2-3
years
|
4-5
years
|
Thereafter
|
|||||||||||||||
Standby
letters of credit and bank guarantees
|
$ | 5,865 | $ | 1,794 | $ | 3,388 | $ | 683 | $ | - |
Commitment
expiration by period in thousands of dollars
|
||||||||||||||||||||
Commercial
Commitments |
Total
|
Less
than 1 year
|
2-3
years
|
4-5
years
|
Thereafter
|
|||||||||||||||
FIN
48 Obligations
|
$ | 713 | $ | - | $ | - | $ | - | $ | 713 |
2008
|
2007
|
|||||||
December
31
|
||||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 28,149 | $ | 30,473 | ||||
Short-term
investments
|
- | 1,998 | ||||||
Accounts
receivable, net of allowance for doubtful accounts of $80 and $150,
respectively
|
23,365 | 31,856 | ||||||
Inventories
|
1,014 | 186 | ||||||
Deferred
income taxes
|
767 | 1,589 | ||||||
Prepaid
expenses and other current assets
|
4,718 | 1,761 | ||||||
Total
current assets
|
58,013 | 67,863 | ||||||
Property
and equipment, net of accumulated depreciation of $12,588 and $10,091,
respectively
|
17,515 | 11,302 | ||||||
Goodwill
|
5,158 | 2,119 | ||||||
Other
intangible assets, net of accumulated amortization of $1,504 and $1,320,
respectively
|
2,543 | 1,088 | ||||||
Deferred
income taxes
|
2,412 | 2,552 | ||||||
Other
assets
|
3,232 | 2,290 | ||||||
Total
assets
|
$ | 88,873 | $ | 87,214 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Short-term
debt
|
$ | 2,188 | $ | 2,051 | ||||
Accounts
payable
|
8,196 | 13,632 | ||||||
Accrued
liabilities:
|
||||||||
Employee
compensation
|
510 | 2,304 | ||||||
Other
accrued liabilities
|
2,773 | 4,733 | ||||||
Total
current liabilities
|
13,667 | 22,720 | ||||||
Other
liabilities
|
1,389 | 1,255 | ||||||
Total
liabilities
|
15,056 | 23,975 | ||||||
Stockholders'
equity:
|
||||||||
Common
stock, $.01 par value, 40,000,000 shares authorized, 24,110,967 and
22,410,064 shares issued, respectively
|
241 | 224 | ||||||
Additional
paid-in capital
|
118,588 | 111,459 | ||||||
Accumulated
deficit
|
(45,280 | ) | (48,882 | ) | ||||
Accumulated
other comprehensive income
|
187 | 166 | ||||||
Nil
coupon perpetual loan notes
|
81 | 272 | ||||||
Total
stockholders' equity
|
73,817 | 63,239 | ||||||
Total
liabilities and stockholders' equity
|
$ | 88,873 | $ | 87,214 |
2008
|
2007
|
2006
|
||||||||||
For
the years ended December 31
|
||||||||||||
Revenues
|
$ | 81,074 | $ | 80,297 | $ | 75,115 | ||||||
Costs
and expenses:
|
||||||||||||
Cost
of sales
|
44,345 | 42,471 | 38,429 | |||||||||
Selling,
general and administrative
|
28,012 | 24,950 | 23,901 | |||||||||
Research
and development
|
2,100 | 2,137 | 2,052 | |||||||||
74,457 | 69,558 | 64,382 | ||||||||||
Operating
income
|
6,617 | 10,739 | 10,733 | |||||||||
Interest
expense
|
(135 | ) | (24 | ) | - | |||||||
Interest
income
|
741 | 1,634 | 1,011 | |||||||||
Other
income (expense)
|
(226 | ) | 81 | 24 | ||||||||
Income
before taxes
|
6,997 | 12,430 | 11,768 | |||||||||
Income
taxes
|
(3,395 | ) | (5,187 | ) | (4,942 | ) | ||||||
Net
income
|
$ | 3,602 | $ | 7,243 | $ | 6,826 | ||||||
Net
income per Common Share:
|
||||||||||||
Basic
|
$ | 0.15 | $ | 0.33 | $ | 0.32 | ||||||
Diluted
|
$ | 0.15 | $ | 0.29 | $ | 0.28 | ||||||
Weighted-average
number of Common Shares outstanding:
|
||||||||||||
Basic
|
23,608,000 | 22,280,000 | 21,491,000 | |||||||||
Diluted
|
24,590,000 | 24,720,000 | 24,187,000 |
Common
Stock
|
Additional
Paid-in
|
Accumulated
|
Accumulated
Other
Comprehensive
|
Treasury
Stock
|
Nil Coupon
Perpetual
|
|||||||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Income
(Loss)
|
Shares
|
Amount
|
Loan Notes
|
Total
|
||||||||||||||||||||||||||||
Balance
at January 1, 2006
|
20,424 | $ | 204 | $ | 91,559 | $ | (62,870 | ) | $ | (39 | ) | - | $ | - | $ | 282 | $ | 29,136 | ||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||||||
Net
income
|
6,826 | 6,826 | ||||||||||||||||||||||||||||||||||
Foreign currency
translation adjustments
|
118 | 118 | ||||||||||||||||||||||||||||||||||
Comprehensive
income
|
6,944 | |||||||||||||||||||||||||||||||||||
Exercise
of stock options and warrants
|
1,662 | 17 | 3,809 | 3,826 | ||||||||||||||||||||||||||||||||
Conversion
of nil coupon perpetual loan notes into Common Shares
|
1 | 5 | (5 | ) | - | |||||||||||||||||||||||||||||||
Tax
benefit from stock compensation expense
|
5,944 | 5,944 | ||||||||||||||||||||||||||||||||||
Stock
compensation expense
|
1,805 | 1,805 | ||||||||||||||||||||||||||||||||||
Balance
at December 31, 2006
|
22,087 | $ | 221 | $ | 103,122 | $ | (56,044 | ) | $ | 79 | - | $ | - | $ | 277 | $ | 47,655 | |||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||||||
Net
income
|
7,243 | 7,243 | ||||||||||||||||||||||||||||||||||
Foreign currency
translation adjustments
|
87 | 87 | ||||||||||||||||||||||||||||||||||
Comprehensive
income
|
7,330 | |||||||||||||||||||||||||||||||||||
Exercise
of stock options and warrants
|
322 | 3 | 909 | 912 | ||||||||||||||||||||||||||||||||
Conversion
of nil coupon perpetual loan notes into Common Shares
|
1 | 5 | (5 | ) | - | |||||||||||||||||||||||||||||||
Effect
of FIN 48 adoption
|
(81 | ) | (81 | ) | ||||||||||||||||||||||||||||||||
Tax
benefit from stock compensation expense
|
1,482 | 1,482 | ||||||||||||||||||||||||||||||||||
Stock
compensation expense
|
4,791 | 4,791 | ||||||||||||||||||||||||||||||||||
Issuance
of deferred shares of stock
|
1,150 | 1,150 | ||||||||||||||||||||||||||||||||||
Balance
at December 31, 2007
|
22,410 | $ | 224 | $ | 111,459 | $ | (48,882 | ) | $ | 166 | - | $ | - | $ | 272 | $ | 63,239 | |||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||||||
Net
income
|
3,602 | 3,602 | ||||||||||||||||||||||||||||||||||
Foreign currency
translation adjustments
|
21 | 21 | ||||||||||||||||||||||||||||||||||
Comprehensive
income
|
3,623 | |||||||||||||||||||||||||||||||||||
Exercise
of stock options and warrants
|
1,657 | 17 | 602 | 619 | ||||||||||||||||||||||||||||||||
Conversion
of nil coupon perpetual loan notes into Common Shares
|
44 | 191 | (191 | ) | - | |||||||||||||||||||||||||||||||
Tax
benefit from stock compensation expense
|
548 | 548 | ||||||||||||||||||||||||||||||||||
Stock
compensation expense
|
5,815 | 5,815 | ||||||||||||||||||||||||||||||||||
Issuance of deferred shares of stock | 73 | 73 | ||||||||||||||||||||||||||||||||||
Reclassification
of liability award
|
(100 | ) | (100 | ) | ||||||||||||||||||||||||||||||||
Balance
at December 31, 2008
|
24,111 | $ | 241 | $ | 118,588 | $ | (45,280 | ) | $ | 187 | - | $ | - | $ | 81 | $ | 73,817 |
2008
|
2007
|
2006
|
||||||||||
For
the years ended December 31
|
||||||||||||
OPERATING
ACTIVITIES
|
||||||||||||
Net
income
|
$ | 3,602 | $ | 7,243 | $ | 6,826 | ||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||
Depreciation
|
2,810 | 2,353 | 1,961 | |||||||||
Amortization
|
184 | 115 | 118 | |||||||||
Effect
of FIN 48 adoption
|
- | (81 | ) | - | ||||||||
Loss
on equipment disposals/impaired assets
|
35 | 18 | - | |||||||||
Deferred
income tax
|
962 | 1,716 | (1,235 | ) | ||||||||
Stock
compensation expense
|
5,815 | 4,791 | 1,805 | |||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Accounts
receivable
|
8,491 | (15,132 | ) | (3,491 | ) | |||||||
Inventories
|
(828 | ) | 17 | 155 | ||||||||
Prepaid
expenses, other current assets and other noncurrent assets
|
(3,899 | ) | (906 | ) | (1,046 | ) | ||||||
Accounts
payable
|
(5,436 | ) | 6,000 | 1,139 | ||||||||
Accrued
liabilities and other noncurrent liabilities
|
(3,720 | ) | (2,081 | ) | 1,927 | |||||||
Other
|
31 | 46 | - | |||||||||
Net
cash provided by operating activities
|
8,047 | 4,099 | 8,159 | |||||||||
INVESTING
ACTIVITIES
|
||||||||||||
Proceeds
from sales of short-term investments
|
1,998 | 6,002 | - | |||||||||
Purchases
of short-term investments
|
- | - | (2,000 | ) | ||||||||
Purchases
of property, equipment and patents
|
(9,839 | ) | (9,715 | ) | (2,017 | ) | ||||||
Acquisition
of businesses
|
(3,928 | ) | - | - | ||||||||
Net
cash used in investing activities
|
(11,769 | ) | (3,713 | ) | (4,017 | ) | ||||||
FINANCING
ACTIVITIES
|
||||||||||||
Proceeds
from short-term borrowings
|
137 | 2,051 | - | |||||||||
Issuance
of deferred shares
|
73 | 1,150 | - | |||||||||
Proceeds
from exercise of stock options and warrants
|
619 | 912 | 3,826 | |||||||||
Excess
tax benefit for stock-based compensation
|
548 | 1,482 | 5,944 | |||||||||
Net
cash provided by financing activities
|
1,377 | 5,595 | 9,770 | |||||||||
Effect
of exchange rate fluctuations on cash
|
21 | 87 | 118 | |||||||||
Net
increase (decrease) in cash and cash equivalents
|
(2,324 | ) | 6,068 | 14,030 | ||||||||
Cash
and cash equivalents at beginning of year
|
30,473 | 24,405 | 10,375 | |||||||||
Cash
and cash equivalents at end of year
|
$ | 28,149 | $ | 30,473 | $ | 24,405 | ||||||
Supplemental
Cash Flow Information:
|
||||||||||||
Cash
paid for:
|
||||||||||||
Interest
|
$ | 135 | $ | 24 | $ | - | ||||||
Income
taxes paid
|
$ | 5,905 | $ | 173 | $ | 217 |
1.
|
ORGANIZATION
AND SIGNIFICANT ACCOUNTING
POLICIES
|
Year
|
Balance
at
January
1
|
Charged
to costs
and
expenses
|
(Deductions)/Other
|
Balance
at
December
31
|
||||||||||||
2006
|
$ | 150 | - | - | $ | 150 | ||||||||||
2007
|
$ | 150 | - | - | $ | 150 | ||||||||||
2008
|
$ | 150 | - | $ | (70 | ) | $ | 80 |
Amortization
|
||||||||||
Description
of Other Intangible
|
period
|
2008
|
2007
|
|||||||
Customer
list
|
3-15
years
|
$ | 1,548 | $ | 1,198 | |||||
Patent
asset
|
10
years
|
1,170 | 1,110 | |||||||
Covenant
not to compete
|
5-6
years
|
336 | 100 | |||||||
Technologies
|
3-8
years
|
603 | - | |||||||
Miscellaneous
|
3-7
years
|
390 | - | |||||||
Total
cost
|
4,047 | $ | 2,408 | |||||||
Less
accumulated amortization
|
(1,504 | ) | (1,320 | ) | ||||||
Total
net intangible asset value
|
$ | 2,543 | $ | 1,088 |
Description
of Property and
Equipment
|
Depreciable
life
|
2008
Cost
|
2007
Cost
|
|||||||
Land
|
$ | 1,440 | $ | 1,440 | ||||||
Building
|
39
years
|
4,857 | 4,857 | |||||||
Leasehold
Improvements
|
3-39 years
|
4,719 | - | |||||||
Field
equipment
|
3-4
years
|
13,714 | 10,405 | |||||||
Computer
equipment and software
|
2-3
years
|
3,527 | 2,996 | |||||||
Furniture
and fixtures
|
3-10
years
|
1,823 | 1,673 | |||||||
Vehicles
|
3
years
|
22 | 22 | |||||||
Total
cost
|
$ | 30,102 | $ | 21,393 | ||||||
Less
accumulated depreciation
|
(12,587 | ) | (10,091 | ) | ||||||
Total
net book value
|
$ | 17,515 | $ | 11,302 |
Year
|
Balance
at
January
1
|
Charged
to costs and expenses
|
(Deductions)/Other
|
Balance
at
December
31
|
||||||||||||
2006
|
$ | 45 | $ | 215 | - | $ | 260 | |||||||||
2007
|
$ | 260 | - | - | $ | 260 | ||||||||||
2008
|
$ | 260 | - | - | $ | 260 |
2008
|
2007
|
2006
|
||||||||||
Basic
weighted-average shares
|
23,608,000 | 22,280,000 | 21,491,000 | |||||||||
Conversion
of unsecured loan notes
|
43,000 | 45,000 | 46,000 | |||||||||
Unexercised
options and warrants
|
939,000 | 2,395,000 | 2,650,000 | |||||||||
Diluted
weighted-average shares
|
24,590,000 | 24,720,000 | 24,187,000 |
2.
|
CONSTRUCTION
CONTRACTS IN PROGRESS
|
2008
|
2007
|
|||||||
Costs
incurred on uncompleted contracts
|
$
|
18,220
|
$
|
17,050
|
||||
Estimated
earnings
|
14,882
|
15,247
|
||||||
Earned
revenue
|
33,102
|
32,296
|
||||||
Less
billings to date
|
(28,773)
|
(16,303)
|
||||||
Total
|
$
|
4,330
|
$
|
15,993
|
||||
Classified
as follows:
|
||||||||
Costs
and estimated earnings in excess of billings on uncompleted
contracts
|
$
|
5,552
|
$
|
16,813
|
||||
Billings
in excess of costs and estimated earnings on uncompleted
contracts
|
(1,223)
|
(821)
|
||||||
Total
|
$
|
4,330
|
$
|
15,993
|
3.
|
TAXATION
|
Origin
of income (loss) before taxes
|
2008
|
2007
|
2006
|
|||||||||
United
States
|
$ | 8,353 | $ | 13,242 | $ | 13,279 | ||||||
Foreign
|
(1,356 | ) | (812 | ) | (1,511 | ) | ||||||
Income
before taxes
|
$ | 6,997 | $ | 12,430 | $ | 11,768 |
2008
|
2007
|
2006
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ | 1,395 | $ | 1,401 | $ | 144 | ||||||
State
|
411 | 588 | 29 | |||||||||
Other
|
(84 | ) | - | 60 | ||||||||
Total
current
|
$ | 1,722 | $ | 1,989 | $ | 233 | ||||||
Deferred:
|
||||||||||||
Federal
|
1,612 | 3,183 | 4,314 | |||||||||
State
|
61 | 15 | 180 | |||||||||
Change
in valuation allowance
|
- | - | 215 | |||||||||
Total
deferred
|
1,673 | 3,198 | 4,709 | |||||||||
Income
tax expense
|
$ | 3,395 | $ | 5,187 | $ | 4,942 |
2008
|
2007
|
2006
|
||||||||||
Provision
at the U.S. federal statutory rate
|
$ | 2,449 | $ | 4,351 | $ | 4,119 | ||||||
State
taxes, net of federal benefit
|
311 | 405 | 187 | |||||||||
Foreign
losses without tax benefit
|
391 | 284 | 588 | |||||||||
Research
credits
|
(77 | ) | (63 | ) | (229 | ) | ||||||
Other
|
321 | 210 | 62 | |||||||||
Valuation
allowance adjustment
|
- | - | 215 | |||||||||
Income
tax expense
|
$ | 3,395 | $ | 5,187 | $ | 4,942 |
2008
|
2007
|
2006
|
||||||||||
Provision
at the U.S. federal statutory rate
|
35.0 | % | 35.0 | % | 35.0 | % | ||||||
State
taxes, net of federal benefit
|
4.4 | % | 3.3 | % | 1.6 | % | ||||||
Foreign
losses without tax benefit
|
5.6 | % | 2.3 | % | 5.0 | % | ||||||
Research
credits
|
(1.1 | )% | (.5 | )% | (1.9 | )% | ||||||
Other
|
4.6 | % | 1.6 | % | .5 | % | ||||||
Valuation
allowance adjustment
|
- | % | - | % | 1.8 | % | ||||||
Income
tax expense
|
48.5 | % | 41.7 | % | 42.0 | % |
2008
|
2007
|
|||||||
Deferred
tax assets:
|
||||||||
Stock
compensation expense
|
$ | 4,238 | $ | 2,306 | ||||
Research
and development credit
|
492 | 1,302 | ||||||
Equipment
|
- | 648 | ||||||
Alternative
minimum tax credit
|
275 | 275 | ||||||
Warranty
reserve
|
101 | 176 | ||||||
Accounts
receivable
|
30 | 57 | ||||||
Vacation
accrual
|
45 | 40 | ||||||
Deferred
rent liability
|
49 | 33 | ||||||
Effect
of FIN 48 adoption
|
13 | 7 | ||||||
Intangible
assets
|
11 | - | ||||||
Net
operating loss carryforwards
|
84 | - | ||||||
Total
deferred tax assets
|
5,338 | 4,844 | ||||||
Deferred
tax liabilities:
|
||||||||
Equipment
|
(975 | ) | - | |||||
Prepaid
expenses
|
(361 | ) | - | |||||
Patents
|
(94 | ) | (76 | ) | ||||
Goodwill
|
(469 | ) | (367 | ) | ||||
Total
deferred tax liabilities
|
(1,899 | ) | (443 | ) | ||||
Net
deferred tax asset before valuation allowance
|
$ | 3,349 | $ | 4,401 | ||||
Valuation
allowances for deferred tax assets
|
(260 | ) | (260 | ) | ||||
Net
deferred tax asset
|
$ | 3,179 | $ | 4,141 |
Current
assets
|
$ | 767 | $ | 1,589 | ||||
Long-term
assets
|
2,412 | 2,552 | ||||||
Net
deferred tax asset
|
$ | 3,179 | $ | 4,141 |
Description
|
Balance
|
|||
Balance
at January 1, 2008
|
$ | 678 | ||
Increases
in positions taken in a prior period
|
- | |||
Decreases
in positions taken in a prior period
|
- | |||
Increases
in positions taken in a current period
|
35 | |||
Decreases
in positions taken in a current period
|
- | |||
Decreases
due to settlements
|
- | |||
Decreases
due to lapse of statute of limitations
|
- | |||
Balance
at December 31, 2008
|
$ | 713 |
4.
|
COMMON
SHARES
|
5.
|
NIL
COUPON NON-REDEEMABLE CONVERTIBLE UNSECURED LOAN
NOTES
|
6.
|
STOCK-BASED
COMPENSATION AND WARRANTS
|
2008
|
2007
|
2006
|
||||||||||
Expected
dividend yield
|
0.00 | % | 0.00 | % | 0.00 | % | ||||||
Risk-free
interest rate
|
2.85 | % | 4.39 | % | 4.64 | % | ||||||
Expected
volatility
|
59.3 | % | 57.4 | % | 60.7 | % | ||||||
Expected
life of option
|
5.2
years
|
5.2
years
|
5.2
years
|
2008
|
2007
|
2006
|
||||||||||||||||||||||
Number
of
Options
|
Weighted-
Average
Exercise Price
|
Number
of
Options
|
Weighted-
Average
Exercise Price
|
Number
of
Options
|
Weighted-
Average
Exercise Price
|
|||||||||||||||||||
Outstanding
at beginning of year
|
2,464,325 | $ | 15.03 | 2,414,200 | $ | 13.02 | 2,799,000 | $ | 4.29 | |||||||||||||||
Granted
|
757,250 | 18.05 | 310,500 | 25.80 | 1,094,000 | 22.06 | ||||||||||||||||||
Exercised
|
(171,125 | ) | 3.61 | (188,875 | ) | 4.83 | (1,332,925 | ) | 2.88 | |||||||||||||||
Expired
or forfeited
|
(145,125 | ) | 18.69 | (71,500 | ) | 20.82 | (145,875 | ) | 5.91 | |||||||||||||||
Outstanding
at end of year
|
2,905,325 | $ | 16.30 | 2,464,325 | $ | 15.03 | 2,414,200 | $ | 13.02 | |||||||||||||||
Exercisable
at end of year
|
1,461,700 | $ | 12.92 | 955,825 | $ | 7.11 | 711,450 | $ | 5.22 | |||||||||||||||
Weighted-average
fair value of options granted during the year
|
$ | 9.65 | $ | 14.01 | $ | 12.53 |
Number
of
Options
|
Weighted-
Average
Exercise Price
|
Weighted-
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic Value
|
||||||||||
Outstanding
on January 1, 2008
|
2,464,325 | $ | 15.03 | ||||||||||
Granted
|
757,250 | 18.05 | |||||||||||
Exercised
|
(171,125 | ) | 3.61 | $ | 2,106 | ||||||||
Expired
or forfeited
|
(145,125 | ) | 18.69 | ||||||||||
Outstanding
on December 31, 2008
|
2,905,325 | $ | 16.30 |
7.49
years
|
$ | 4,044 | |||||||
Exercisable
on December 31, 2008
|
6.44
years
|
$ | 3,798 |
Options Outstanding
|
Options Exercisable
|
||||||||||||||||||
Range of
|
Number of
|
Weighted-
Average Remaining
|
Weighted-
Average
|
Number of
|
Weighted-
Average |
||||||||||||||
Exercise Prices
|
Options
|
Contractual Life
|
Exercise Price
|
Options
|
Exercise Price
|
||||||||||||||
$ | 1.47 - $ 5.51 | 451,700 |
4.89
years
|
$ | 4.19 | 446,200 | $ | 4.17 | |||||||||||
$ | 5.52 - $ 11.03 | 536,125 |
6.40
years
|
$ | 7.96 | 380,250 | $ | 7.56 | |||||||||||
$ | 11.04 - $ 22.06 | 792,000 |
8.57
years
|
$ | 16.19 | 167,500 | $ | 14.09 | |||||||||||
$ | 22.07 - $ 27.57 | 1,125,500 |
8.31
years
|
$ | 25.22 | 467,750 | $ | 25.20 | |||||||||||
$ | 1.47 - $ 27.57 | 2,905,325 |
7.49
years
|
$ | 16.30 | 1,461,700 | $ | 12.92 |
Non-Vested Stock
Outstanding
|
Weighted-Average
Grant Date Fair Value
|
|||||||
Outstanding
on January 1, 2008
|
1,508,500 | $ | 11.08 | |||||
Granted
|
757,250 | 9.65 | ||||||
Released
|
(682,000 | ) | 10.36 | |||||
Expired
or forfeited
|
(140,125 | ) | 10.36 | |||||
Outstanding
on December 31, 2008
|
1,443,625 | $ | 10.75 |
Year
of Payment
|
Amount
|
|||
2009
|
$ | 663 | ||
2010
|
279 | |||
2011
|
249 | |||
2012
|
251 | |||
Thereafter
|
278 |
Year
of Payment
|
Amount
|
|||
2009
|
$ | 81 | ||
2010
|
7 | |||
2011
|
- | |||
2012
|
- | |||
Thereafter
|
- |
-
|
The
Stamford, Connecticut building lease term, for approximately 7,000 square
feet, runs from February 1, 2004 to January 31, 2010. The
facility houses certain administrative functions such as Investor
Relations, Benefit Plan Administration and certain APC sales
functions.
|
-
|
The
Beijing, China building lease term, for approximately 4,000 square feet,
runs from September 1, 2007 to August 31, 2009. This facility
serves as the operating headquarters for our Beijing Fuel Tech
operation. Fuel Tech has the option to extend the lease term at
a market rate to be agreed upon between Fuel Tech and the
lessor.
|
-
|
The
Durham, North Carolina building lease term, for approximately 16,000
square feet, runs from November 1, 2005 to April 30, 2014. This
facility houses the former Tackticks and FlowTack
operations. Fuel Tech has no option to extend the
lease.
|
|
-
|
in
support of the warranty period defined in the contract;
or
|
|
-
|
in
support of the system performance criteria that are defined in the
contract.
|
2008
|
2007
|
2006
|
||||||||||
Aggregate
product warranty liability at beginning of year
|
$ | 464 | $ | 472 | $ | 247 | ||||||
Net
aggregate accruals related to product warranties
|
(45 | ) | 88 | 280 | ||||||||
Aggregate
reductions for payments
|
(154 | ) | (96 | ) | (55 | ) | ||||||
Aggregate
product warranty liability at end of year
|
$ | 265 | $ | 464 | $ | 472 |
-
|
The
Air Pollution Control technology segment, which includes the
NOxOUT®,
NOxOUT CASCADE®,
GSG, NOxOUT ULTRA®
and NOxOUT-SCR®
processes for the reduction of NOx emissions in flue gas from boilers,
incinerators, furnaces and other stationary combustion sources;
and
|
-
|
The
FUEL CHEM technology segment, which uses chemical processes for the
control of slagging, fouling, corrosion, opacity, acid plume and sulfur
trioxide-related issues in furnaces and boilers through the addition of
chemicals into the fuel using TIFI™ Targeted In-Furnace Injection™
technology.
|
For the year ended
December 31, 2008
|
Air Pollution Control
Segment
|
FUEL CHEM
Segment
|
Other
|
Total
|
||||||||||||
Revenues
from external customers
|
$ | 44,393 | $ | 36,681 | $ | - | $ | 81,074 | ||||||||
Cost
of sales
|
24,365 | 19,979 | 1 | 44,345 | ||||||||||||
Gross
margin
|
20,028 | 16,702 | (1 | ) | 36,729 | |||||||||||
Selling,
general and administrative
|
- | - | 28,012 | 28,012 | ||||||||||||
Research
and development
|
- | - | 2,100 | 2,100 | ||||||||||||
Operating
income (loss)
|
$ | 20,028 | $ | 16,702 | $ | (30,113 | ) | $ | 6,617 |
For the year ended
December 31, 2007
|
Air Pollution Control
Segment
|
FUEL CHEM
Segment
|
Other
|
Total
|
||||||||||||
Revenues
from external customers
|
$ | 47,750 | $ | 32,547 | $ | - | $ | 80,297 | ||||||||
Cost
of sales
|
25,775 | 16,619 | 77 | 42,471 | ||||||||||||
Gross
margin
|
21,975 | 15,928 | (77 | ) | 37,826 | |||||||||||
Selling,
general and administrative
|
- | - | 24,950 | 24,950 | ||||||||||||
Research
and development
|
- | - | 2,137 | 2,137 | ||||||||||||
Operating
income (loss)
|
$ | 21,975 | $ | 15,928 | $ | (27,164 | ) | $ | 10,739 |
For the year ended
December 31, 2006
|
Air Pollution Control
Segment
|
FUEL CHEM
Segment
|
Other
|
Total
|
||||||||||||
Revenues
from external customers
|
$ | 46,454 | $ | 28,661 | $ | - | $ | 75,115 | ||||||||
Cost
of sales
|
26,328 | 11,932 | 169 | 38,429 | ||||||||||||
Gross
margin
|
20,126 | 16,729 | (169 | ) | 36,686 | |||||||||||
Selling,
general and administrative
|
- | - | 23,901 | 23,901 | ||||||||||||
Research
and development
|
- | - | 2,052 | 2,052 | ||||||||||||
Operating
income (loss)
|
$ | 20,126 | $ | 16,729 | $ | (26,122 | ) | $ | 10,733 |
For
the years ended December 31
|
2008
|
2007
|
2006
|
|||||||||
Revenues:
|
||||||||||||
United
States
|
$ | 68,433 | $ | 67,534 | $ | 57,628 | ||||||
Foreign
|
12,641 | 12,763 | 17,487 | |||||||||
$ | 81,074 | $ | 80,297 | $ | 75,115 |
December
31,
|
2008
|
2007
|
2006
|
|||||||||
Assets:
|
||||||||||||
United
States
|
$ | 81,241 | $ | 79,132 | $ | 62,190 | ||||||
Foreign
|
7,632 | 8,082 | 3,470 | |||||||||
$ | 88,873 | $ | 87,214 | $ | 65,660 |
For the quarters ended:
|
March 31
|
June 30
|
September 30
|
December 31
|
||||||||||||
2008
(a)
|
||||||||||||||||
Revenues
|
$ | 20,467 | $ | 18,791 | $ | 23,703 | $ | 18,113 | ||||||||
Cost
of sales
|
10,669 | 9,833 | 13,019 | 10,824 | ||||||||||||
Net
income
|
1,633 | 447 | 2,102 | (580 | ) | |||||||||||
Net
income (loss) per Common Share:
|
||||||||||||||||
Basic
|
$ | 0.07 | $ | 0.02 | $ | 0.09 | $ | (0.02 | ) | |||||||
Diluted
|
$ | 0.07 | $ | 0.02 | $ | 0.09 | $ | (0.02 | ) | |||||||
2007
(b)
|
||||||||||||||||
Revenues
|
$ | 16,262 | $ | 16,210 | $ | 15,246 | $ | 32,579 | ||||||||
Cost
of sales
|
8,957 | 9,083 | 8,018 | 16,413 | ||||||||||||
Net
income
|
792 | 282 | 927 | 5,242 | ||||||||||||
Net income
per Common Share:
|
||||||||||||||||
Basic
|
$ | 0.04 | $ | 0.01 | $ | 0.04 | $ | 0.23 | ||||||||
Diluted
|
$ | 0.03 | $ | 0.01 | $ | 0.04 | $ | 0.21 |
Plan Category
|
Number of Securities to be
issued upon exercise of outstanding options, warrants and rights |
Weighted-average
exercise price of outstanding options, warrants and rights |
Number of securities
remaining available for future issuance under equity compensation plans excluding securities listed in column (a) |
|||||||||
(a)
|
(b)
|
(c)
|
||||||||||
Equity
compensation plans approved by security holders (1)
|
2,905,325 | $ | 16.31 | 471,712 |
|
(1)
|
Includes
Common Shares of Fuel Tech authorized for awards under Fuel Tech’s
Incentive Plan, as amended through June 3,
2004.
|
(a)
|
(1)
Financial Statements
|
Management’s
Report on Internal Control Over Financial Reporting
|
|
Report
of Independent Registered Public Accounting Firm on Internal Control Over
Financial Reporting
|
|
Report
of Independent Registered Public Accounting Firm
|
|
Report
of Independent Registered Public Accounting Firm
|
|
Consolidated
Balance Sheets as of December 31, 2008 and 2007
|
|
Consolidated
Statements of Income for Years Ended December 31, 2008, 2007 and
2006
|
|
Consolidated
Statements of Stockholders’ Equity for the Years Ended December 31, 2008,
2007 and 2006
|
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and
2006
|
|
Notes
to Consolidated Financial
Statements
|
(2)
Financial Statement Schedules
|
(3) Exhibits
|
||||||||||||
|
Incorporated by reference
|
|||||||||||
Exhibit
|
|
Description
|
Filed
herewith
|
Form
|
Period
ending
|
Exhibit
|
Filing date
|
|||||
3.1
|
|
Certificate
of Incorporation of Fuel Tech, Inc.
|
8-K
|
3.2
|
10/05/06
|
|||||||
3.2
|
|
Certificate
of Conversion of Fuel Tech, Inc.
|
8-K
|
3.1
|
10/05/06
|
|||||||
3.3
|
|
By-Laws
of Fuel Tech, Inc.
|
8-K
|
3.3
|
10/05/06
|
|||||||
4.1
|
|
Instrument
Constituting US $19,200 Nil Coupon Non-Redeemable Convertible Unsecured
Loan Notes of Fuel-Tech N.V., dated December 21, 1989
|
20-F
|
4.1
|
08/26/93
|
|||||||
4.2
|
|
First
Supplemental Instrument Constituting US $3,000 Nil Coupon Non-Redeemable
Convertible Unsecured Loan Notes of Fuel-Tech N.V., dated July 10,
1990
|
20-F
|
4.2
|
08/26/93
|
|||||||
4.3
|
|
Instrument
Constituting US $6,000 Nil Coupon Non-Redeemable Convertible Unsecured
Loan Notes of Fuel-Tech N.V., dated March 12, 1993
|
6-K
|
03/31/93
|
4.3
|
04/01/93
|
||||||
4.4*
|
|
Fuel
Tech, Inc. Incentive Plan as amended through June 3, 2004
|
S-8
|
4.5
|
10/02/06
|
|||||||
4.5*
|
|
Fuel
Tech, Inc. Form of Non-Executive Director Stock Option
Agreement
|
10-K
|
12/31/06
|
4.6
|
03/06/07
|
||||||
4.6*
|
|
Fuel
Tech, Inc. Form of Non-Qualified Stock Option Agreement
|
10-K
|
12/31/06
|
4.7
|
03/06/07
|
||||||
4.7*
|
|
Fuel
Tech, Inc. Form of Incentive Stock Option Agreement
|
10-K
|
12/31/06
|
4.8
|
03/06/07
|
||||||
4.8
|
Business
Loan Agreement, dated as of July 31, 2006, between Wachovia Bank N.A. and
Fuel Tech, Inc.
|
8-K
|
99.1
|
08/10/06
|
Incorporated by reference
|
||||||||||||
Exhibit
|
|
Description
|
|
Filed
herewith
|
|
Form
|
|
Period
ending
|
Exhibit
|
Filing date
|
||
10.1
|
|
Securities
Purchase Agreement dated as of March 23, 1998, between Fuel-Tech N.V., and
the several Investors signatory thereto, including
exhibits.
|
|
|
6-K
|
|
03/31/98
|
|
10.1
|
|
04/01/98
|
|
10.2
|
|
License
Agreement dated November 18, 1998 between The Gas Technology Institute and
Fuel Tech, Inc. relating to the FLGR Process (Certain confidential
information removed and filed separately).
|
|
|
10-K
|
|
12/31/99
|
|
3.28
|
|
03/30/00
|
|
10.3
|
|
Amendment
No. 1, dated February 28, 2000, to License Agreement dated November 18,
1998 between The Gas Technology Institute and Fuel Tech, Inc. relating to
the FLGR Process (Certain confidential information removed and filed
separately).
|
|
|
10-K
|
|
12/31/99
|
|
3.29
|
|
03/30/00
|
|
10.4
|
|
Employment
Agreement as of February 28, 2006 between John (Johnny) F. Norris Jr. and
Fuel Tech, Inc.
|
|
|
10-K
|
|
12/31/05
|
|
3.18
|
|
03/10/06
|
|
10.5
|
|
Amendment
to Employment Agreement as of February 28, 2007 between John
(Johnny) F. Norris Jr. and Fuel Tech, Inc.
|
|
|
10-K
|
|
12/31/07
|
|
10.5
|
|
03/05/08
|
|
10.6
|
|
Form
of Indemnity Agreement between Fuel Tech, Inc. and its Directors and
Officers.
|
|
|
8-K
|
|
|
99.1
|
|
02/07/07
|
||
10.7
|
|
Restated
Supply Agreement, dated March 4, 2009, between Fuel Tech, Inc. and Martin
Marietta Magnesia Specialties, LLC (Certain confidential information
removed and filed separately).
|
|
X
|
||||||||
10.8
|
|
Asset
Purchase Agreement, dated December 5, 2008, among Fuel Tech, Inc.,
Advanced Combustion Technology, Inc., Peter D. Marx, Robert W. Pickering
and Charles E. Trippel.
|
|
X
|
||||||||
23.1
|
|
Consent
of Independent Registered Public Accounting Firm
|
|
X
|
||||||||
31.1
|
|
Certifications
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
X
|
|||||||||
31.2
|
Certifications
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
X
|
||||||||||
31.3
|
Certification
of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
|
X
|
||||||||||
31.4
|
Certification
of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
|
X
|
*
|
Indicates
a management contract or compensatory plan or
arrangement.
|
FUEL
TECH, INC.
|
|||
Date: March
5, 2009
|
By:
|
/s/ John F. Norris Jr.
|
|
John F. Norris Jr.
|
|||
Chief Executive Officer
|
|||
(Principal Executive Officer)
|
|||
Date: March
5, 2009
|
By:
|
/s/ John P. Graham
|
|
John P. Graham
|
|||
Chief Financial Officer
|
|||
(Principal Financial
Officer)
|
Signature
|
Title
|
|
/s/ Ralph E. Bailey
|
Executive
Chairman and Director
|
|
Ralph E. Bailey
|
||
/s/ Douglas G. Bailey
|
Deputy
Chairman and Director
|
|
Douglas G. Bailey
|
||
/s/ Miguel Espinosa
|
Director
|
|
Miguel Espinosa
|
||
/s/ Charles W. Grinnell
|
Director
|
|
Charles W. Grinnell
|
||
/s/ Thomas L. Jones
|
Director
|
|
Thomas L. Jones
|
||
/s/ John D. Morrow
|
Director
|
|
John D. Morrow
|
||
/s/ John F. Norris Jr.
|
Director,
President and Chief Executive Officer
|
|
John F. Norris Jr.
|
(Principal
Executive Officer)
|
|
/s/ Thomas S. Shaw, Jr.
|
Director
|
|
Thomas S. Shaw, Jr.
|
||
/s/ Delbert L. Williamson
|
Director
|
|
Delbert L. Williamson
|
||
/s/ Ellen T. Albrecht
|
Vice
President and Controller
|
|
Ellen T. Albrecht
|
(Controller)
|
|
/s/ John P. Graham
|
Sr.
Vice President, Chief Financial Officer and Treasurer
|
|
John P. Graham
|
(Principal
Financial Officer)
|