##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
 For the Transition period from to
 Commission file number 0-20328
 AMTROL Inc.
 (Exact Name of Registrant as Specified in Its Charter)
 Rhode Island
    
    05-0246955(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)
 1400 Division Road, West Warwick, RI
    
    02893(Address of Principal Executive Offices)
    
    (Zip Code)
 (401) 884-6300  None  None
 o þ
 þ o
 o þ
 þ
  o o þ
 o þ
   None




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##### 



TABLE OF CONTENTS
 PART I
    
    PageItem 1    BusinessBackground
    
    
    3Operations
    
    
    4Products and Markets
    
    
    5Distribution and Marketing
    
    
    7Manufacturing, Raw Materials and Suppliers
    
    
    8Seasonality and Backlog
    
    
    8Patents, Trademarks and Licenses
    
    
    8Competition
    
    
    9Employees
    
    
    9Environmental Matters
    
    
    9Item 1A
 Risk Factors
    
    
    9Item 1B
 Unresolved Staff Comments
    
    
    10Item 2    Properties
    
    
    11Item 3    Legal Proceedings
    
    
    11Item 4    Submission of Matters to a Vote of Security Holders
    
    
    11PART IIItem 5    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    12Item 6    Selected Financial Data
    
    
    13Item 7    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    14Item 7A
 Quantitative and Qualitative Disclosures of Market Risk
    
    
    27Item 8    Financial Statements and Supplementary Data
    
    
    28Item 9    Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
    
    
    28Item 9A
 Controls and Procedures
    
    
    28Item 9B
 Other Information
    
    
    29PART IIIItem 10
 Directors and Executive Officers of the Registrant
    
    
    29Item 11 - Executive Compensation
    
    
    30Item 12
 Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
    
    
    33Item 13
 Certain Relationships and Related Transactions
    
    
    34Item 14
 Principal Accountant Fees and Services
    
    
    34PART IVItem 15
 Exhibits and Financial Statement Schedules
    
    
    35Report of Independent Registered Public Accounting Firm
    
    
    36Schedule II  Valuation and Qualifying Accounts and Reserves
    
    
    57Signatures
    
    
    58Exhibit Index
    
    
    59EX-10.13.4 THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT DATED MARCH 29, 2006EX-10.19 GUILLEMETTE AGREEMENT DATED 1-18-2006EX-10.20 DEPAULA AGREEMENT DATED 1-18-2006EX-10.21 LAUS AGREEMENT DATED 1-18-2006EX-10.22 AGREEMENT DATED 2-2-2006 AMONG AMTROL INC. AND LARRY T. GUILLEMETTEEX-10.23 AGREEMENT DATED 2-2-2006 AMONG AMTROL HOLDINGS INC. AND LARRY T. GUILLEMETTEEX-10.24 AGREEMENT DATED 2-2-2006 AMONG AMTROL INC AND JOSEPH L. DEPAULAEX-10.25 AGREEMENT DATED 2-2-2006 AMONG AMTROL HOLDINGS INC. AND JOSEPH L. DEPAULAEX-14 CODE OF ETHICSEX-21 SUBSIDIARIES OF AMTROL INC.EX-31.1 SECTION 302 CERTIFICATION OF CEOEX-31.2 SECTION 302 CERTIFICATION OF CFOEX-32.1 SECTION 906 CERTIFICATION OF CEOEX-32.2 SECTION 906 CERTIFICATION OF CFO
  2




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PART I
 
 ITEM 1. BUSINESS
 
 Background
     3




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Operations
  ® ® ® ® ®
      4




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Products
And Markets
 Water
Systems Solutions Products
  Well Water Systems . ® ®
 ®
 Water
Treatment Products
  Hydronic
Technologies Products
  EXTROLs ® . ®
 5




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##### Table of Contents



Therm-X-Trols ® . ® ® ®
 Indirect-Fired Water Heaters .
 Engineered
Products
    6




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##### Table of Contents



Pressure-Rated
Cylinders
    
 Distribution
and Marketing
     7




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##### Table of Contents



Manufacturing,
Raw Materials and Suppliers
       
 Seasonality
and Backlog
  
 Patents,
Trademarks And Licenses
   8




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##### Table of Contents



® ® ® ® ®
 
 Competition
  
 Employees
  
 Environmental
Matters
   
 ITEM 1A. RISK FACTORS
 A significant portion of the Companys outstanding debt obligations will mature in December 2006.
  9




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The Companys inability to pass along increases in pricing of raw materials to its customers could
have a negative impact on the Companys business.
  The Companys business strategies could be significantly disrupted if the Company lost members of
its management team.
  The Companys operating results could be adversely affected by changes in foreign currency exchange
rates.
  The Companys operating results could be adversely affected by weather conditions adverse to sales
growth.
  Continued growth of the Companys operating results are linked to customer acceptance of its
planned new products.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  10




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ITEM 2. PROPERTIES
  Location
    
    Square Footage
    
    Principal Use(approximate)West Warwick, RI
    
    270,000
    
    Corporate Headquarters, Manufacturing, and Education CenterGuimaraes, Portugal (b)
    
    295,600
    
    ManufacturingNorth Kingstown, RI (a)
    
    143,800
    
    Distribution CenterPaducah, KY
    
    46,300
    
    ManufacturingMansfield, OH (a)
    
    45,000
    
    Manufacturing and Distribution CenterBaltimore, MD
    
    37,000
    
    ManufacturingSwarzedz, Poland (a)
    
    29,000
    
    ManufacturingKitchener, Ontario(a)
    
    18,400
    
    Sales Office and DistributionTotal
    
    885,100
 
    
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  11




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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
 Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder
Matters
 12




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##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA
  Year Ended December 31,2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005(in thousands)Statement of Operations Data:Net sales
    
    $
    175,096
    
    
    $
    179,416
    
    
    $
    185,046
    
    
    $
    198,394
    
    
    $
    218,548Cost of goods sold
    
    
    133,374
    
    
    
    136,556
    
    
    
    144,761
    
    
    
    152,136
    
    
    
    172,271Gross profit
    
    
    41,722
    
    
    
    42,860
    
    
    
    40,285
    
    
    
    46,258
    
    
    
    46,277Selling, general and
administrative expenses
    
    
    25,867
    
    
    
    27,290
    
    
    
    26,702
    
    
    
    28,305
    
    
    
    27,230Amortization of goodwill
    
    
    4,391
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income from operations
    
    
    11,464
    
    
    
    15,570
    
    
    
    13,583
    
    
    
    17,953
    
    
    
    19,047Interest expense, net
    
    
    (18,964
    )
    
    
    (19,867
    )
    
    
    (19,499
    )
    
    
    (21,512
    )
    
    
    (22,007
    )Gain (loss) on extinguishment of debt, net
    
    
    (584
    )
    
    
    
    
    
    
    6,760
    
    
    
    
    
    
    
    Other income (expense), net
    
    
    372
    
    
    
    (385
    )
    
    
    (100
    )
    
    
    (55
    )
    
    
    235Gain (loss) from continuing operations before provision
(benefit) for income taxes
    
    
    (7,712
    )
    
    
    (4,682
    )
    
    
    744
    
    
    
    (3,614
    )
    
    
    (2,725
    )Provision (benefit) for income taxes
    
    
    (1,166
    )
    
    
    774
    
    
    
    1,166
    
    
    
    9,737
    
    
    
    (535
    )Loss from continuing operations
    
    
    (6,546
    )
    
    
    (5,456
    )
    
    
    (422
    )
    
    
    (13,351
    )
    
    
    (2,190
    )Loss from discontinued operations
    
    
    (2,869
    )
    
    
    (5,381
    )
    
    
    (1,310
    )
    
    
    (8,863
    )
    
    
    Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    (34,492
    )
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (9,415
    )
    
    $
    (45,329
    )
    
    $
    (1,732
    )
    
    $
    (22,214
    )
    
    $
    (2,190
    )Other Data:Depreciation and amortization
    
    $
    12,788
    
    
    $
    8,803
    
    
    $
    9,744
    
    
    $
    8,808
    
    
    $
    7,437Capital expenditures
    
    
    3,800
    
    
    
    3,165
    
    
    
    3,249
    
    
    
    6,626
    
    
    
    6,961Balance Sheet Data (at period end):Working capital (deficit)
    
    $
    8,602
    
    
    $
    7,877
    
    
    $
    27,884
    
    
    $
    22,820
    
    
    $
    (149,411
    )Total assets
    
    
    264,455
    
    
    
    226,873
    
    
    
    237,023
    
    
    
    228,240
    
    
    
    222,451Long-term debt, less current maturities
    
    
    157,511
    
    
    
    158,391
    
    
    
    167,022
    
    
    
    171,300
    
    
    
    Shareholders equity (deficit)
    
    
    58,219
    
    
    
    15,849
    
    
    
    17,211
    
    
    
    (220
    )
    
    
    (4,942
    )
 13




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Business
Overview
       14




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Forward
Looking Statements
    Results
of Operations
 Fiscal 2005 Compared to Fiscal 2004
  15




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In millions of dollars
 2004
    
    
    2005% of Net
    
    
    
    
    
    
    % of Net
    
    
    %Actual
    
    
    Sales
    
    
    Actual
    
    
    Sales
    
    
    ChangeNet sales
    
    $
    198.4
    
    
    
    100.0
    %
    
    $
    218.5
    
    
    
    100.0
    %
    
    
    10.1
    %Cost of goods sold
    
    
    152.1
    
    
    
    76.7
    %
    
    
    172.2
    
    
    
    78.9
    %
    
    
    13.2
    %Gross profit
    
    
    46.3
    
    
    
    23.3
    %
    
    
    46.3
    
    
    
    21.1
    %
    
    
    0.0
    %Selling, general and administrative expenses
    
    
    28.3
    
    
    
    14.3
    %
    
    
    27.2
    
    
    
    12.4
    %
    
    
    -3.8
    %Income from operations
    
    
    18.0
    
    
    
    9.0
    %
    
    
    19.1
    
    
    
    8.7
    %
    
    
    5.9
    %Other income (expense), netInterest expense, net
    
    
    (21.5
    )
    
    
    -10.8
    %
    
    
    (22.0
    )
    
    
    -10.1
    %
    
    
    2.2
    %Other, net
    
    
    (0.1
    )
    
    
    0.0
    %
    
    
    0.2
    
    
    
    0.2
    %
    
    
    340.0
    %Loss before income taxes
    
    
    (3.6
    )
    
    
    -1.8
    %
    
    
    (2.7
    )
    
    
    -1.2
    %
    
    
    -25.8
    %Income tax expense (benefit)
    
    
    9.7
    
    
    
    4.9
    %
    
    
    (0.5
    )
    
    
    -0.2
    %
    
    
    -105.2
    %Loss from continuing operations
    
    
    (13.3
    )
    
    
    -6.7
    %
    
    
    (2.2
    )
    
    
    -1.0
    %
    
    
    83.7
    %Loss from discontinued operations, net
    
    
    (8.9
    )
    
    
    -4.5
    %
    
    
    
    
    
    
    0.0
    %
    
    
    100.0
    %Net loss
    
    $
    (22.2
    )
    
    
    -11.2
    %
    
    $
    (2.2
    )
    
    
    -1.0
    %
    
    
    90.2
    %
 Fiscal Year Ended December 31, 2005 Compared to Fiscal Year Ended December 31, 2004.
 Net Sales .
 Gross Profit .
 Selling, General and Administrative Expenses .
 Interest Expense.
 Other Income (Expense), Net .
 Income Taxes.
 16




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Net Loss .
 Segment Operations
 North America
  In millions
 2004
    
    
    2005% of Net
    
    
    
    
    
    
    % of Net
    
    
    %Actual
    
    
    Sales
    
    
    Actual
    
    
    Sales
    
    
    ChangeNet sales
    
    $
    127.8
    
    
    
    100.0
    %
    
    $
    132.3
    
    
    
    100.0
    %
    
    
    3.5
    %Cost of goods sold
    
    
    90.5
    
    
    
    70.8
    %
    
    
    97.8
    
    
    
    73.9
    %
    
    
    8.1
    %Gross profit
    
    
    37.3
    
    
    
    29.2
    %
    
    
    34.5
    
    
    
    26.1
    %
    
    
    -7.5
    %Selling, general and
administrative
expenses
    
    
    22.1
    
    
    
    17.3
    %
    
    
    20.1
    
    
    
    15.2
    %
    
    
    -9.0
    %Income from operations
    
    $
    15.2
    
    
    
    11.9
    %
    
    $
    14.4
    
    
    
    10.9
    %
    
    
    -5.3
    %Units shipped
    
    
    5.15
    
    
    
    
    
    
    
    5.25
  Europe
  17




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In millions
 2004
    
    
    2005% of Net
    
    
    
    
    
    
    % of Net
    
    
    %Actual
    
    
    Sales
    
    
    Actual
    
    
    Sales
    
    
    ChangeNet sales
    
    $
    70.6
    
    
    
    100.0
    %
    
    $
    86.2
    
    
    
    100.0
    %
    
    
    22.1
    %Cost of goods sold
    
    
    61.6
    
    
    
    87.3
    %
    
    
    74.4
    
    
    
    86.3
    %
    
    
    20.8
    %Gross profit
    
    
    9.0
    
    
    
    12.7
    %
    
    
    11.8
    
    
    
    13.7
    %
    
    
    31.1
    %Selling, general and administrative
expenses
    
    
    6.2
    
    
    
    8.7
    %
    
    
    7.1
    
    
    
    8.2
    %
    
    
    14.5
    %Income from operations
    
    $
    2.8
    
    
    
    4.0
    %
    
    $
    4.7
    
    
    
    5.5
    %
    
    
    67.9
    %Units shipped
    
    
    4.00
    
    
    
    
    
    
    
    3.52
  Fiscal 2004 Compared to Fiscal 2003
  In milions of dollars
 2003
    
    
    2004% of Net
    
    
    
    
    
    
    % of Net
    
    
    %Actual
    
    
    Sales
    
    
    Actual
    
    
    Sales
    
    
    ChangeNet sales
    
    $
    185.0
    
    
    
    100.0
    %
    
    $
    198.4
    
    
    
    100.0
    %
    
    
    7.2
    %Cost of goods sold
    
    
    144.7
    
    
    
    78.2
    %
    
    
    152.1
    
    
    
    76.7
    %
    
    
    5.1
    %Gross profit
    
    
    40.3
    
    
    
    21.8
    %
    
    
    46.3
    
    
    
    23.3
    %
    
    
    14.9
    %Selling, general and administrative
expenses
    
    
    26.7
    
    
    
    14.4
    %
    
    
    28.3
    
    
    
    14.3
    %
    
    
    6.0
    %Income from operations
    
    
    13.6
    
    
    
    7.4
    %
    
    
    18.0
    
    
    
    9.0
    %
    
    
    32.4
    %Other income (expense), netInterest expense, net
    
    
    (19.5
    )
    
    
    -10.5
    %
    
    
    (21.5
    )
    
    
    -10.8
    %
    
    
    10.3
    %Gain on extinguishment of debt, net
    
    
    6.7
    
    
    
    3.6
    %
    
    
    
    
    
    
    0.0
    %
    
    
    -100.0
    %Other, net
    
    
    (0.1
    )
    
    
    -0.1
    %
    
    
    (0.1
    )
    
    
    0.0
    %
    
    
    0.0
    %Income (loss) before income taxes
    
    
    0.7
    
    
    
    0.4
    %
    
    
    (3.6
    )
    
    
    -1.8
    %
    
    
    -614.3
    %Income tax expense
    
    
    1.1
    
    
    
    0.6
    %
    
    
    9.7
    
    
    
    4.9
    %
    
    
    781.8
    %Loss from continuing operations
    
    
    (0.4
    )
    
    
    -0.2
    %
    
    
    (13.3
    )
    
    
    -6.7
    %
    
    
    -3225.0
    %Loss from discontinued operations, net
    
    
    (1.3
    )
    
    
    -0.7
    %
    
    
    (8.9
    )
    
    
    -4.5
    %
    
    
    -584.6
    %Net loss
    
    $
    (1.7
    )
    
    
    -0.9
    %
    
    $
    (22.2
    )
    
    
    -11.2
    %
    
    
    -1205.9
    %
 Fiscal Year Ended December 31, 2004 Compared to Fiscal Year Ended December 31, 2003.
 18




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Net Sales .
 Gross Profit .
 Selling, General and Administrative Expenses .
 Interest Expense.
 Gain on Extinguishment of Debt, Net .
 Other Income (Expense), Net .
 Income Taxes.
 Net Loss .
 Segment Operations
 North America
  19




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##### Table of Contents



In millions
    
    2003
    
    
    2004% of Net
    
    
    
    
    
    
    % of Net
    
    
    %Actual
    
    
    Sales
    
    
    Actual
    
    
    Sales
    
    
    ChangeNet sales
    
    $
    117.1
    
    
    
    100.0
    %
    
    $
    127.8
    
    
    
    100.0
    %
    
    
    9.1
    %Cost of goods sold
    
    
    84.4
    
    
    
    72.1
    %
    
    
    90.5
    
    
    
    70.8
    %
    
    
    7.2
    %Gross profit
    
    
    32.7
    
    
    
    27.9
    %
    
    
    37.3
    
    
    
    29.2
    %
    
    
    14.1
    %Selling, general and
administrative
expenses
    
    
    20.3
    
    
    
    17.3
    %
    
    
    22.1
    
    
    
    17.3
    %
    
    
    8.9
    %Income from operations
    
    $
    12.4
    
    
    
    10.6
    %
    
    $
    15.2
    
    
    
    11.9
    %
    
    
    22.6
    %Units shipped
    
    
    5.11
    
    
    
    
    
    
    
    5.15
  Europe
  In millions
    
    2003
    
    
    2004% of Net
    
    
    
    
    
    
    % of Net
    
    
    %Actual
    
    
    Sales
    
    
    Actual
    
    
    Sales
    
    
    ChangeNet sales
    
    $
    67.9
    
    
    
    100.0
    %
    
    $
    70.6
    
    
    
    100.0
    %
    
    
    4.0
    %Cost of goods sold
    
    
    60.3
    
    
    
    88.8
    %
    
    
    61.6
    
    
    
    87.3
    %
    
    
    2.2
    %Gross profit
    
    
    7.6
    
    
    
    11.2
    %
    
    
    9.0
    
    
    
    12.7
    %
    
    
    18.4
    %Selling, general and
administrative
expenses
    
    
    6.4
    
    
    
    9.4
    %
    
    
    6.2
    
    
    
    8.7
    %
    
    
    -3.1
    %Income from operations
    
    $
    1.2
    
    
    
    1.8
    %
    
    $
    2.8
    
    
    
    4.0
    %
    
    
    133.3
    %Units shipped
    
    
    4.38
    
    
    
    
    
    
    
    4.00
  20




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Liquidity
and Capital Resources
      21




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##### Table of Contents



22




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Payments due by period as of December 31, 2005Less than 1
    
    
    
    
    
    
    4 - 5
    
    
    Over 5Total
    
    
    Year
    
    
    1 - 3 Years
    
    
    Years
    
    
    YearsShort-term debt
    
    $
    184,943
    
    
    $
    184,943
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest Expense
    
    
    22,432
    
    
    
    22,432
    
    
    
    
    
    
    
    
    
    
    
    Operating leases
    
    
    2,411
    
    
    
    1,088
    
    
    
    1,309
    
    
    
    14
    
    
    
    Deferred pension
    
    
    1,433
    
    
    
    229
    
    
    
    687
    
    
    
    458
    
    
    
    59Raw materials, etc.
    
    
    16
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    $
    211,235
    
    
    $
    208,708
    
    
    $
    1,996
    
    
    $
    472
    
    
    $
    59
     23




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##### Table of Contents



Share-Based Payment Accounting for Stock-Based
Compensation. Accounting for Stock Issued to
Employees Statement of Cash Flows.
 Inventory Costs  an amendment of ARB No. 43. Inventory Pricing,
 Critical
Accounting Policies
  Goodwill and Other Long-Lived Assets
 Goodwill and Other Intangible Assets
 24




---



##### Table of Contents



Accounting for the Impairment or Disposal of Long-Lived Assets
 Revenue Recognition
   25




---



##### Table of Contents



Inventory Valuation
  Income Taxes
 Accounting for Income Taxes
 26




---



##### Table of Contents



Contingencies
    
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
 Foreign Currency Risk
  Interest Rate Market Risk
  27




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##### Table of Contents



Year End2005 Exposure
    
    
    Hypothetical
    
    
    Effect onVariable
    
    to Interest
    
    
    Change in
    
    
    AmtrolRate Debt
    
    Rate Risk
    
    
    Rate Index
    
    
    InterestRevolver
    
    $
    5,754
    
    
    100 bps
    
    $
    58Term A Loan
    
    
    3,841
    
    
    100 bps
    
    
    38Term B Loan
    
    
    19,298
    
    
    100 bps
    
    
    192$
    28,893
    
    
    100 bps
    
    $
    288
  Commodity Risk
  
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
  28




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##### Table of Contents



ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  Name
    
    Age
    
    PositionLarry T. Guillemette
    
    
    50
    
    
    Chairman of the Board, President, Chief
Executive Officer and DirectorJoseph L. DePaula
    
    
    51
    
    
    Executive Vice President, Chief Financial
Officer, Treasurer and SecretaryWilliam Chohfi
    
    
    57
    
    
    President  Alfa European OperationsChristopher A. Laus
    
    
    47
    
    
    Senior Vice President  OperationsJohn P. Cashman
    
    
    65
    
    
    DirectorJames A. Stern
    
    
    55
    
    
    Director
    29




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Compliance
with Section 16(a) of the Securities Exchange Act of 1934.
  
 ITEM 11. EXECUTIVE COMPENSATION
  30




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##### Table of Contents



Summary Compensation Table
 Long TermAnnual
    
    CompensationCompensation (a)
    
    AwardsSecuritiesName and Principal
    
    
    
    
    
    
    
    
    
    
    
    
    
    Underlying
    
    All OtherPosition
    
    Year
    
    Salary (b)
    
    Bonus
    
    Options/SARs
    
    Compensation (c)Larry T. Guillemette
    
    
    2005
    
    
    $
    207,981
    
    
    $
    135,000
    
    
    
    
    
    
    $
    12,336Chairman, President and
    
    
    2004
    
    
    
    194,375
    
    
    
    
    
    
    
    
    
    
    
    11,484Chief
Executive Officer (d)
    
    
    2003
    
    
    
    201,945
    
    
    
    
    
    
    
    
    
    
    
    11,779Albert D. Indelicato
    
    
    2005
    
    
    
    430,000
    
    
    
    400,000
    
    
    
    
    
    
    
    195,995Former Chairman, President
    
    
    2004
    
    
    
    400,000
    
    
    
    
    
    
    
    
    
    
    
    14,900and Chief Executive Officer (e)
    
    
    2003
    
    
    
    414,231
    
    
    
    
    
    
    
    
    
    
    
    71,403William Chohfi
    
    
    2005
    
    
    
    298,150
    
    
    
    62,181
    
    
    
    
    
    
    
    49,021President  Alfa European
    
    
    2004
    
    
    
    296,700
    
    
    
    
    
    
    
    
    
    
    
    43,490Operations
    
    
    2003
    
    
    
    264,653
    
    
    
    109,130
    
    
    
    
    
    
    
    35,101Joseph L. DePaula
    
    
    2005
    
    
    
    194,934
    
    
    
    100,000
    
    
    
    
    
    
    
    19,160Executive Vice President,
    
    
    2004
    
    
    
    182,654
    
    
    
    
    
    
    
    
    
    
    
    18,963Chief
Financial Officer and Treasurer (d)
    
    
    2003
    
    
    
    187,365
    
    
    
    
    
    
    
    
    
    
    
    19,237Christopher A. Laus
    
    
    2005
    
    
    
    179,764
    
    
    
    120,000
    
    
    
    
    
    
    
    11,391Senior Vice President 
    
    
    2004
    
    
    
    168,004
    
    
    
    
    
    
    
    
    
    
    
    9,131Operations
    
    
    2003
    
    
    
    172,466
    
    
    
    
    
    
    
    
    
    
    
    11,494
 
 (a)
    
    Any perquisites or other personal benefits received from the Company by any of the named
executives were substantially less than the reporting thresholds established by the Securities
and Exchange Commission (the lesser of $50,000 or 10% of the individuals cash compensation).(b)
    
    Includes portion of salary deferred under the Companys 401(k) Plan.(c)
    
    Amounts paid in 2005 include the Companys contributions under the Companys 401(k) Plan in
the amount of $11,221, $11,085, $10,243, and $9,850 for Mssrs. Indelicato, Guillemette, Laus,
and DePaula, respectively, premiums paid by the Company with respect to term life and
long-term disability insurance purchased for such executive officers in the amount of $1,467,
$1,251, $1,148 and $1,210 for Mssrs. Indelicato, Guillemette, Laus and DePaula, respectively
and an automobile allowance received by Messrs. Indelicato, Chohfi, and DePaula, respectively,
in the amount of $2,813, $14,193, and $8,100, respectively. Messrs. Indelicato and Chohfi
received other compensation in the amount of $180,494 and $34,828, respectively in connection
with their 31




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##### Table of Contents



employment agreements. Mr. Indelicatos other compensation primarily related to
reimbursement of state income taxes.(d)
    
    Appointed by Board of Directors to these positions effective January 18, 2006. Until that
date and for all periods covered by this table, Mr. Guillemette served as the Companys
Executive Vice President, Chief Financial Officer and Treasurer and Mr. DePaula served as the
Companys Vice President  Finance, Corporate Controller and (since 2005) Secretary.(e)
    
    Resigned effective January 18, 2006. Option
Plans
  Aggregated
Option/SAR Exercises in Last Fiscal Year and Year-End Option/SAR
Values
 Number ofSecuritiesUnderlyingUnexercisedNumber of
    
    
    
    
    
    Option/SARs atSecurities
    
    
    
    
    
    Calendar Year
    
    Value ofUnderlying
    
    
    
    
    
    End 2005
    
    UnexercisedOptions/SARs
    
    
    
    
    
    Exercisable/
    
    In-the-MoneyName
    
    Exercised
    
    Value Realized($)
    
    Unexercisable
    
    Options/SAR($)Larry T. Guillemette
    
    
    0
    
    
    
    0
    
    
    
    5,500/0
    
    
    
    0/0Albert D. Indelicato
    
    
    0
    
    
    
    0
    
    
    
    15,250/0
    
    
    
    0/0William Chohfi
    
    
    0
    
    
    
    0
    
    
    
    2,500/0
    
    
    
    0/0Joseph L. DePaula
    
    
    0
    
    
    
    0
    
    
    
    0/0
    
    
    
    0/0Christopher A. Laus
    
    
    0
    
    
    
    0
    
    
    
    2,500/0
    
    
    
    0/0
 Supplemental
Retirement Plans
  Employment
Agreements and Other Transactions
  32




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##### Table of Contents



Directors
Compensation
   Compensation
and Benefits Committee
  Compensation Committee Interlocks and Insider Participation
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  33




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##### Table of Contents



Common Stock
    
    Preferred StockNumberof
    
    Percentage
    
    Number
    
    PercentageName and Address of Beneficial Owner
    
    Shares
    
    of Total
    
    of Shares
    
    of TotalCypress Merchant Banking Partners L.P.(a) (c)
c/o The Cypress Group L.L.C.
65 East 55th Street, 28th Floor
New York, NY 10022
    
    
    847,127
    
    
    
    86.6
    
    
    
    95,076
    
    
    
    93.0Cypress Offshore Partners L.P. (a) (c)
c/o The Cypress Group L.L.C.
65 East 55th Street, 28th Floor
New York, NY 10022
    
    
    43,873
    
    
    
    4.5
    
    
    
    4,924
    
    
    
    4.8John P. Cashman (b)
    
    
    40,517
    
    
    
    4.1
    
    
    
    2,235
    
    
    
    2.2Larry T. Guillemette (b)
    
    
    6,166
    
    
    
    0.6
    
    
    
    
    
    
    
    Christopher A. Laus
    
    
    3,200
    
    
    
    0.3
    
    
    
    
    
    
    
    William Chohfi
    
    
    5,616
    
    
    
    0.6Joseph L. DePaula
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    James A. Stern (a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    All directors and executive officers as a group
(consisting of 6 persons)
    
    
    55,499
    
    
    
    5.6
    
    
    
    2,235
    
    
    
    2.2
 
 (a)
    
    Cypress Merchant Banking Partners L.P. and Cypress Offshore Partners L.P.
are affiliates of The Cypress Group L.L.C. Mr. Stern is an executive of The
Cypress Group L.L.C. and may be deemed to share beneficial ownership of the
shares shown as beneficially owned by such Cypress entities. Each of such
individuals disclaims beneficial ownership of such shares. See Item 10,
Directors and Executive Officers of the Company.(b)
    
    Includes 23,281, 5,500 and 2,500 shares of Common Stock
issuable upon exercise of options granted to Messrs. Cashman, Guillemette and
Chohfi, respectively.(c)
    
    Includes 57,046 and 2,954 shares of common stock issuable
upon exercise of warrants granted to Cypress Merchant
Banking Partners, L.P. and Cypress Offshore Partners, L.P. 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 Audit Fees:
  Audit Related Fees:
 34




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##### Table of Contents



Tax Fees:
  All Other Fees:
  
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a) (1) Financial Statements
  PageReport of Independent Registered Public Accounting Firm
    
    36Consolidated Balance Sheets as of December 31, 2004 and 2005
    
    37Consolidated
Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2003, 2004 and 2005
    
    38Consolidated
Statements of Shareholders Equity (Deficit) for the years ended December 31, 2003, 2004 and 2005
    
    39Consolidated
Statements of Cash Flows for the years ended December 31, 2003, 2004 and 2005
    
    40Notes to Consolidated Financial Statements
    
    41(a) (2) Financial Statement ScheduleSchedule II - Valuation and Qualifying Accounts and Reserves for theyears ended December 31, 2003, 2004 and 2005
    
    57
  (a) (3) Exhibits
  35




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36




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##### Table of Contents



AMTROL INC. AND SUBSIDIARIES
 
 Consolidated Balance Sheets  (In thousands, except share data)  Assets
 December 312004
    
    
    2005Current Assets:Cash and cash equivalents
    
    $
    12,378
    
    
    $
    7,470Accounts receivable, less allowance for doubtful
accounts, credits and returns of
$1,049 and $973 in 2004 and 2005, respectively
    
    
    29,946
    
    
    
    37,375Inventories
    
    
    30,637
    
    
    
    24,895Tax refund receivable
    
    
    2,010
    
    
    
    1,477Deferred income taxes  short-term
    
    
    103
    
    
    
    132Prepaid expenses and other
    
    
    904
    
    
    
    566Total current assets
    
    
    75,978
    
    
    
    71,915Property, Plant and
Equipment, at costLand
    
    
    4,162
    
    
    
    3,197Buildings and improvements
    
    
    12,681
    
    
    
    11,389Machinery and equipment
    
    
    67,608
    
    
    
    72,433Furniture and fixtures
    
    
    1,491
    
    
    
    1,494Information systems software and other
    
    
    9,051
    
    
    
    8,05094,993
    
    
    
    96,563Less: accumulated depreciation and amortization
    
    
    64,193
    
    
    
    67,17830,800
    
    
    
    29,385Other Assets:Goodwill
    
    
    119,205
    
    
    
    119,205Deferred financing costs
    
    
    1,920
    
    
    
    960Deferred income taxes  long-term
    
    
    23
    
    
    
    680Other
    
    
    314
    
    
    
    306121,462
    
    
    
    121,151$
    228,240
    
    
    $
    222,451Liabilities and Shareholders Equity (Deficit)Current Liabilities:Current maturities of long-term debt
    
    $
    2,957
    
    
    $
    179,332Notes payable to banks
    
    
    10,774
    
    
    
    5,611Accounts payable
    
    
    23,006
    
    
    
    21,117Accrued volume rebates
    
    
    4,615
    
    
    
    4,650Accrued expenses
    
    
    10,158
    
    
    
    9,749Accrued interest
    
    
    256
    
    
    
    226Accrued income taxes
    
    
    1,415
    
    
    
    641Total current liabilities
    
    
    53,181
    
    
    
    221,326Other Noncurrent Liabilities
    
    
    3,979
    
    
    
    6,067Long-Term Debt, less current maturities
    
    
    171,300
    
    
    
    Commitments and Contingencies
    
    
    
    
    
    
    Shareholders Equity (Deficit)Capital stock $.01 par value  authorized 1,000 shares,
100 shares issued
    
    
    
    
    
    
    Additional paid-in capital
    
    
    99,273
    
    
    
    99,273Accumulated deficit
    
    
    (105,339
    )
    
    
    (107,529
    )Accumulated other comprehensive income
    
    
    5,846
    
    
    
    3,314Total shareholders equity (deficit)
    
    
    (220
    )
    
    
    (4,942
    )$
    228,240
    
    
    $
    222,451
 The accompanying notes are an integral part of these consolidated financial statements.
 37




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##### Table of Contents



AMTROL INC. AND SUBSIDIARIES
 
 Consolidated Statements of Operations  (In thousands)
 Year Ended December 312003
    
    
    2004
    
    
    2005Net sales
    
    $
    185,046
    
    
    $
    198,394
    
    
    $
    218,548Cost of goods sold
    
    
    144,761
    
    
    
    152,136
    
    
    
    172,271Gross profit
    
    
    40,285
    
    
    
    46,258
    
    
    
    46,277Operating expenses:Selling
    
    
    11,075
    
    
    
    11,267
    
    
    
    11,174General and administrative
    
    
    15,627
    
    
    
    17,038
    
    
    
    16,056Income from operations
    
    
    13,583
    
    
    
    17,953
    
    
    
    19,047Other income (expense):Interest expense
    
    
    (19,564
    )
    
    
    (21,664
    )
    
    
    (22,287
    )Interest income
    
    
    65
    
    
    
    152
    
    
    
    280Gain on extinguishment of debt, net
    
    
    6,760
    
    
    
    
    
    
    
    Other income (expense), net
    
    
    (100
    )
    
    
    (55
    )
    
    
    235Income (loss) before provision for income taxes
    
    
    744
    
    
    
    (3,614
    )
    
    
    (2,725
    )Provision (benefit) for income taxes
    
    
    1,166
    
    
    
    9,737
    
    
    
    (535
    )Loss from continuing operations
    
    
    (422
    )
    
    
    (13,351
    )
    
    
    (2,190
    )Discontinued operations:Loss from sale of subsidiary, net
    
    
    
    
    
    
    (8,093
    )
    
    
    Loss from discontinued operations, net
    
    
    (1,310
    )
    
    
    (770
    )
    
    
    Net loss
    
    $
    (1,732
    )
    
    $
    (22,214
    )
    
    $
    (2,190
    )
 Consolidated Statements of Comprehensive Income (Loss)  (In thousands)
 Year Ended December 312003
    
    
    2004
    
    
    2005Net loss
    
    $
    (1,732
    )
    
    $
    (22,214
    )
    
    $
    (2,190
    )Foreign currency translation adjustments
    
    
    2,800
    
    
    
    4,726
    
    
    
    (2,532
    )Derivative instrument valuation
    
    
    294
    
    
    
    57
    
    
    
    Comprehensive income (loss)
    
    $
    1,362
    
    
    $
    (17,431
    )
    
    $
    (4,722
    )
 The accompanying notes are an integral part of these consolidated financial statements .
 38




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##### Table of Contents



AMTROL INC. AND SUBSIDIARIES
 
 Consolidated Statements of Shareholders Equity (Deficit)  (In thousands)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCapital
    
    
    Paid-in
    
    
    Accumulated
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Deficit
    
    
    Income (Loss)Balance, December 31, 2002
    
    $
    
    
    
    $
    99,273
    
    
    $
    (81,393
    )
    
    $
    (2,031
    )Net loss
    
    
    
    
    
    
    
    
    
    
    (1,732
    )
    
    
    Derivative instrument valuation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    294Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,800Balance, December 31, 2003
    
    
    
    
    
    
    99,273
    
    
    
    (83,125
    )
    
    
    1,063Net loss
    
    
    
    
    
    
    
    
    
    
    (22,214
    )
    
    
    Derivative instrument valuation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57Currency translation adjustment from
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,483
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,209Balance, December 31, 2004
    
    
    
    
    
    
    99,273
    
    
    
    (105,339
    )
    
    
    5,846Net loss
    
    
    
    
    
    
    
    
    
    
    (2,190
    )
    
    
    Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,532
    )Balance, December 31, 2005
    
    $
    
    
    
    $
    99,273
    
    
    $
    (107,529
    )
    
    $
    3,314
 The accompanying notes are an integral part of these consolidated financial statements.
 39




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##### Table of Contents



AMTROL INC. AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows
 (In thousands)
 Year Ended December 312003
    
    
    2004
    
    
    2005Cash Flows Provided by Operating Activities:Loss from continuing operations
    
    $
    (422
    )
    
    $
    (13,351
    )
    
    $
    (2,190
    )Loss from discontinued operations
    
    
    (1,310
    )
    
    
    (8,863
    )
    
    
    Adjustments to reconcile net loss to net cash
provided by operating activities -Depreciation
    
    
    8,292
    
    
    
    7,480
    
    
    
    6,477Amortization
    
    
    1,452
    
    
    
    1,328
    
    
    
    960Deferred income tax provision
    
    
    
    
    
    
    8,686
    
    
    
    (667
    )Provision for losses on accounts receivable
    
    
    77
    
    
    
    73
    
    
    
    6Gain on extinguishment of debt, net
    
    
    (6,760
    )
    
    
    
    
    
    
    Deferred interest
    
    
    4,517
    
    
    
    6,667
    
    
    
    7,479Changes in operating assets and liabilities:Accounts receivable, net
    
    
    1,853
    
    
    
    (1,584
    )
    
    
    (9,910
    )Tax refund receivable
    
    
    746
    
    
    
    (12
    )
    
    
    283Inventory
    
    
    (769
    )
    
    
    (5,386
    )
    
    
    4,119Prepaid expenses and other current assets
    
    
    365
    
    
    
    252
    
    
    
    243Other assets
    
    
    2,414
    
    
    
    612
    
    
    
    1,114Accounts payable
    
    
    (5,120
    )
    
    
    (685
    )
    
    
    100Accrued expenses and other current liabilities
    
    
    (1,782
    )
    
    
    4,529
    
    
    
    (718
    )Other noncurrent liabilities
    
    
    658
    
    
    
    475
    
    
    
    2,307Net assets of discontinued operations
    
    
    (967
    )
    
    
    7,148
    
    
    
    Net cash provided by operating activities
    
    
    3,244
    
    
    
    7,369
    
    
    
    9,603Cash Flows Used in Investing Activities:Proceeds from sale of discontinued business
    
    
    
    
    
    
    363
    
    
    
    Capital expenditures
    
    
    (3,249
    )
    
    
    (6,626
    )
    
    
    (6,961
    )Capital expenditures  discontinued operations
    
    
    (167
    )
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (3,416
    )
    
    
    (6,263
    )
    
    
    (6,961
    )Cash Flows Provided by (Used in) Financing Activities:Repayment of long-term debt
    
    
    (124,276
    )
    
    
    (138,879
    )
    
    
    (106,962
    )Issuance of long-term debt
    
    
    119,933
    
    
    
    135,803
    
    
    
    103,849Repayment of short-term debt
    
    
    (15,461
    )
    
    
    (21,026
    )
    
    
    (30,670
    )Issuance of short-term debt
    
    
    16,350
    
    
    
    21,663
    
    
    
    26,716Issuance of new senior debt and warrants
    
    
    15,000
    
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    11,546
    
    
    
    (2,439
    )
    
    
    (7,067
    )Net increase (decrease) in cash and cash equivalents
    
    
    11,374
    
    
    
    (1,333
    )
    
    
    (4,425
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    216
    
    
    
    422
    
    
    
    (483
    )Cash and cash equivalents, beginning of period
    
    
    1,699
    
    
    
    13,289
    
    
    
    12,378Cash and cash equivalents, end of period
    
    $
    13,289
    
    
    $
    12,378
    
    
    $
    7,470
 The accompanying notes are an integral part of these consolidated financial statements.
 40




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) Basis of Presentation
      2) Summary of Significant Accounting Policies
 Principles of Consolidation
  41




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##### Table of Contents



(2)
Summary of Significant Accounting Policies (Continued)
 Use of Estimates
  Fiscal Year
  Reclassifications
  Revenue Recognition and Related Costs
  Accounting for Points and Certain Other Time-Based or Volume-Based
Sales Incentive Offers, and Offers for Free Products or Services to Be Delivered in the Future
 Cash and Cash Equivalents
  Allowance for Doubtful Accounts
  42




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##### Table of Contents



(2) Summary of Significant Accounting Policies (Continued)
 Concentration of Credit Risk
   Depreciable Property and Equipment
  Building and improvements
    
    10-40 yearsMachinery and equipment
    
    3-12 yearsFurniture and fixtures
    
    5-20 yearsOther
    
    3-10 years
   Inventories
  43




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##### Table of Contents



(2) Summary of Significant Accounting Policies (Continued)
 Warranty
      2004
    
    
    2005Balance, beginning of year
    
    $
    3,065
    
    
    $
    3,662Warranties issued during year
    
    
    1,924
    
    
    
    2,182Claims during year
    
    
    (1,987
    )
    
    
    (2,392
    )Change in estimate
    
    
    660
    
    
    
    277Balance, end of year
    
    $
    3,662
    
    
    $
    3,729
 Goodwill and Long-Lived Assets
 Goodwill and Other Intangible Assets
  44




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##### Table of Contents



(2) Summary of Significant Accounting Policies (Continued)
    Accounting for the Impairment or Disposal of Long-Lived Assets
 Fair Value of Financial Instruments
 Disclosures About Fair Value of Financial
Instruments
 Research and Development Expenses
  45




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##### Table of Contents



(2) Summary of Significant Accounting Policies (Continued)
 Deferred Financing Costs
  Foreign Currency Translation
     2004
    
    
    2005Currency translation adjustment
    
    $
    5,846
    
    
    $
    3,314Total accumulated other comprehensive income
    
    $
    5,846
    
    
    $
    3,314
 Stock Options
 Accounting for
Stock Based Compensation Accounting for Stock Issued to Employees,
 Accounting for Derivative Instruments and Hedging Activities
  Recent Accounting Pronouncements
 46




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##### Table of Contents



Share-Based Payment . Statement of Cash Flows.
 Inventory Costs  an amendment of ARB No. 43. Inventory Pricing,
 (3) Inventories
  2004
    
    
    2005Raw materials and work in process
    
    $
    18,935
    
    
    $
    15,511Finished goods
    
    
    11,702
    
    
    
    9,384$
    30,637
    
    
    $
    24,895
 (4) Debt and Notes Payable to Banks
  2004
    
    2005Revolving credit facility
    
    $
    5,201
    
    
    $
    5,754Term A loan
    
    
    5,548
    
    
    
    3,841Term B loan
    
    
    19,799
    
    
    
    19,298Term C loan
    
    
    45,860
    
    
    
    52,590Senior subordinated notes, due 2006, 10.625%
    
    
    97,849
    
    
    
    97,849174,257
    
    
    
    179,332Less: Current maturities of long-term debt
    
    
    2,957
    
    
    
    179,332Long-term
debt
    
    $
    171,300
    
    
    $
    
 Revolving Credit and Term Loans
 47




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##### Table of Contents



Debtors Accounting for a Modification or Exchange of Debt Instruments,
  48




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##### Table of Contents



Senior Subordinated Notes
    Short-Term Debt
   (5) Income Taxes
  49




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##### Table of Contents



Year Ended December 31,2003
    
    
    2004
    
    
    2005US
    
    $
    114
    
    
    $
    (5,689
    )
    
    $
    (6,965
    )Foreign
    
    
    630
    
    
    
    2,075
    
    
    
    4,240$
    744
    
    
    $
    (3,614
    )
    
    $
    (2,725
    )
  Year Ended December 31,2003
    
    
    2004
    
    
    2005Current:Federal
    
    
    
    
    
    $
    40
    
    
    $
    
    
    
    $
    State
    
    
    
    
    
    
    75
    
    
    
    150
    
    
    
    85Foreign
    
    
    
    
    
    
    1,051
    
    
    
    901
    
    
    
    471,166
    
    
    
    1,051
    
    
    
    132Deferred:Federal
    
    
    
    
    
    
    
    
    
    
    8,812
    
    
    
    Foreign
    
    
    
    
    
    
    
    
    
    
    (126
    )
    
    
    (667
    )
    
    
    
    8,686
    
    
    
    (667
    )Provision (benefit)
    
    
    
    
    
    $
    1,166
    
    
    $
    9,737
    
    
    $
    (535
    )
  December 31,2003
    
    
    2004
    
    
    2005Provision (benefit) for income taxes at the
Federal statutory rate
    
    $
    252
    
    
    $
    (1,228
    )
    
    $
    (926
    )State taxes, net of federal tax
    
    
    50
    
    
    
    90
    
    
    
    56Foreign taxes rate differential
    
    
    397
    
    
    
    (391
    )
    
    
    (180
    )Increase (decrease) in U.S. valuation allowance
    
    
    (11
    )
    
    
    8,060
    
    
    
    2,370Other taxes
    
    
    602
    
    
    
    327
    
    
    
    198Change in tax contingency reserves
    
    
    
    
    
    
    2,637
    
    
    
    (2,272
    )Other, net
    
    
    (124
    )
    
    
    242
    
    
    
    219Recorded provision (benefit)
    
    $
    1,166
    
    
    $
    9,737
    
    
    $
    (535
    )
 50




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##### Table of Contents



December 31,2004
    
    
    2005Deferred Income Taxes short-termAllowance for doubtful accounts
    
    $
    153
    
    
    $
    152Inventory
    
    
    878
    
    
    
    1,033Accrued liabilities and other
    
    
    1,676
    
    
    
    880Valuation allowance
    
    
    (2,604
    )
    
    
    (1,933
    )$
    103
    
    
    $
    132
 2004
    
    
    2005Deferred Income Taxes long-termNet operating loss carryforward
    
    $
    12,390
    
    
    $
    15,761Capital loss carryforward
    
    
    
    
    
    
    2,609Property, plant and equipment
    
    
    (1,998
    )
    
    
    (2,104
    )Warranty reserves
    
    
    772
    
    
    
    1,278Deferred compensation
    
    
    434
    
    
    
    371Other
    
    
    355
    
    
    
    286Valuation allowance
    
    
    (11,930
    )
    
    
    (17,521
    )$
    23
    
    
    $
    680
     51




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##### Table of Contents



(6) Pension and Profit Sharing Plans
    (7) Lease Commitments
  2006
    
    $
    1,0882007
    
    
    8602008
    
    
    3282009
    
    
    1212010
    
    
    14$
    2,411
  (8) Intangible Assets
  52




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##### Table of Contents



(in thousands)
 Gross Carrying
    
    
    Accumulated
    
    
    Net IntangibleAmount
    
    
    Amortization
    
    
    AssetsDecember 31, 2005Patents
    
    $
    733
    
    
    $
    (666
    )
    
    $
    67Trademarks
    
    
    104
    
    
    
    (82
    )
    
    
    22$
    837
    
    
    $
    (748
    )
    
    $
    89December 31, 2004Patents
    
    $
    697
    
    
    $
    (609
    )
    
    $
    88Trademarks
    
    
    97
    
    
    
    (65
    )
    
    
    32$
    794
    
    
    $
    (674
    )
    
    $
    120
  Year Ended
    
    Annual AmortizatonDecember 31,
    
    Expense2006
    
    $472007
    
    212008
    
    122009
    
    9
 (9) Commitments and Contingencies
    53




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##### Table of Contents



(10) Stock Plans
    (11) Business Segment Information
     54




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##### Table of Contents



Year Ended December 31,2003
    
    
    2004
    
    
    2005Loss from continuing operations
    
    $
    (422
    )
    
    $
    (13,351
    )
    
    $
    (2,190
    )Interest expense
    
    
    19,564
    
    
    
    21,664
    
    
    
    22,287Depreciation
    
    
    8,292
    
    
    
    7,480
    
    
    
    6,477Income taxes
    
    
    1,166
    
    
    
    9,737
    
    
    
    (535
    )Gain on extinguishment of debt
    
    
    (6,760
    )
    
    
    
    
    
    
    EBITDA
    
    $
    21,840
    
    
    $
    25,530
    
    
    $
    26,039
 55




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##### Table of Contents



2003
    
    
    2004
    
    
    2005Net Sales to external customersNorth America
USUSWater technologies
    
    $
    86,483
    
    
    $
    97,865
    
    
    $
    99,087Cylinders
    
    
    23,927
    
    
    
    22,662
    
    
    
    25,422Other
    
    
    
    
    
    
    
    
    
    
    Water technologies
    
    
    6,700
    
    
    
    7,307
    
    
    
    7,779EuropePortugalCylinders
    
    
    65,988
    
    
    
    69,267
    
    
    
    84,893OtherCylinders
    
    
    1,948
    
    
    
    1,293
    
    
    
    1,367Consolidated
    
    $
    185,046
    
    
    $
    198,394
    
    
    $
    218,548Income from operationsNorth America
    
    $
    12,371
    
    
    $
    15,185
    
    
    $
    14,435Europe
    
    
    1,212
    
    
    
    2,768
    
    
    
    4,612Consolidated
    
    $
    13,583
    
    
    $
    17,953
    
    
    $
    19,047EBITDANorth America
    
    $
    17,434
    
    
    $
    20,060
    
    
    $
    18,453Europe
    
    
    4,406
    
    
    
    5,470
    
    
    
    7,586Consolidated
    
    $
    21,840
    
    
    $
    25,530
    
    
    $
    26,039Long-Lived assetsNorth AmericaUS
    
    $
    115,819
    
    
    $
    114,859
    
    
    $
    113,430Other
    
    
    10
    
    
    
    9
    
    
    
    11EuropePortugal
    
    
    31,999
    
    
    
    33,127
    
    
    
    33,569Other
    
    
    1,888
    
    
    
    2,010
    
    
    
    1,580Consolidated
    
    $
    149,716
    
    
    $
    150,005
    
    
    $
    148,590
 (12) Discontinued Operations
  56




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##### Table of Contents



Net assets of Holdings at 2/27/04
    
    $
    5,973Net proceeds
    
    
    (363
    )Net loss prior to write-off of currency translation adjustment
    
    
    5,610Loss resulting from write-off of currency translation adjustment
    
    
    2,483Net loss recorded on sale of Holdings
    
    $
    8,093
  Year Ended December 31,2003
    
    
    2004
    
    
    2005Net sales
    
    $
    11,111
    
    
    $
    1,871
    
    
    $
    Pre-tax loss
    
    
    (1,310
    )
    
    
    (770
    )
    
    
    
 
 Item 15(a)(2) SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
 (in thousands)
 Balance atBeginning of
    
    
    
    
    
    
    
    
    
    
    Adjustments/
    
    
    Balance at EndConsolidated
    
    Period
    
    
    Provision
    
    
    Recoveries
    
    
    Write-Offs
    
    

of PeriodYear ended
December 31, 2003
Allowance for doubtful accounts
    
    $
    1,075
    
    
    $
    77
    
    
    $
    44
    
    
    $
    
    
    
    $
    1,196Year ended December 31, 2004
Allowance for doubtful accounts
    
    
    1,196
    
    
    
    73
    
    
    
    
    
    
    
    (220
    )
    
    
    1,049Year ended December 31, 2005
Allowance for doubtful accounts
    
    
    1,049
    
    
    
    6
    
    
    
    
    
    
    
    (82
    )
    
    
    973
 57




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##### Table of Contents



SIGNATURES
  AMTROL Inc.By:
    
    /s/ Joseph L. DePaula

     Joseph L. DePaulaChief Financial OfficerDate:
    
    March 31, 2006
  Signature
    
    Title
    
    Date/s/ Larry T. Guillemette
    
    Chairman of the Board, President,
    
    March 31, 2006Larry T. Guillemette
    
    Chief
Executive Officer and Director(Principal Executive Officer)/s/ Joseph L. DePaula

      Joseph L. DePaula
    
    Exec. Vice President, Chief Financial Officer,
Treasurer and Secretary (Principal Financial and Accounting Officer)
    
    March 31, 2006/s/ John P. Cashman

      John P. Cashman
    
    Director
    
    March 31, 2006/s/ James A. Stern

      James A. Stern
    
    Director
    
    March 31, 2006
 58




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##### Table of Contents



EXHIBIT INDEX
 Exhibit #
    
    Document Description3.1
    
    

Restated Articles of Incorporation of AMTROL Inc. (incorporated by reference from the Companys Registration Statement on Form S-4, Registration No. 333-18075, declared
effective by the Securities and Exchange Commission on January 2, 1997).3.2
    
    
    Bylaws of AMTROL Inc. (incorporated by reference from the Companys Registration Statement on
Form S-4, Registration No. 333-18075, declared effective by the Securities and Exchange
Commission on January 2, 1997).4.1
    
    
    Indenture, dated as of November 1, 1996 between AMTROL Acquisition, Inc. and The Bank of New
York (incorporated by reference from the Companys Registration Statement on Form S-4,
Registration No. 333-18075, declared effective by the Securities and Exchange Commission on
January 2, 1997).4.2
    
    
    Form of 10-5/8% Senior Subordinated Notes due 2006 (included in Exhibit 4.1) (incorporated by
reference from the Companys Registration Statement on Form S-4, Registration No. 333-18075,
declared effective by the Securities and Exchange Commission on January 2, 1997).4.3
    
    
    First Supplemental Indenture, dated as of November 13, 1996, between AMTROL Inc. and The Bank
of New York (incorporated by reference from the Companys Registration Statement on Form S-4,
Registration No. 333-18075, declared effective by the Securities and Exchange Commission on
January 2, 1997).10.1
    
    
    Credit Agreement, dated as of November 13, 1996, among AMTROL Acquisition, Inc. and AMTROL
Holdings, Inc., various lending institutions party thereto, Morgan Stanley Senior Funding,
Inc. as documentation agent, and Bankers Trust Company, as administrative agent (incorporated
by reference from the Companys Registration Statement on Form S-4, Registration No.
333-18075, declared effective by the Securities and Exchange Commission on January 2, 1997).10.1.1
    
    
    First Amendment to Credit Agreement, dated as of June 24, 1997 (incorporated by reference to
the Companys Quarterly Report on Form 10-Q for the quarter ended July 5, 1997).10.1.2
    
    
    Second Amendment to Credit Agreement, dated as of December 12, 1997 (incorporated by
reference to Exhibit 7(c) in the Companys Current Report on Form 8-K dated December 22,
1997).10.1.3
    
    
    Third Amendment to the Credit Agreement dated as of June 24, 1998 (incorporated by reference
to the Companys Quarterly report on Form 10-Q for the quarter ended July 4, 1998).10.1.4
    
    
    Fourth Amendment to the Credit Agreement dated as of July 13, 1998 (incorporated by
reference to the Companys Quarterly report on Form 10-Q for the third quarter ended October
3, 1998).10.1.5
    
    
    Fifth Amendment to the Credit Agreement dated as of March 30, 2001 (incorporated by
reference to the Companys Annual Report of Form 10-K for the fiscal year ended December 31,
2000).10.2
    
    
    AMTROL Inc. Pension Plan and Trust (incorporated by reference from the Companys Registration
Statement on Form S-1, Registration No. 33-48413, declared effective by the Commission on
March 18, 1993).*10.3
    
    
    Amendments to AMTROL Inc. Pension Plan and Trust (incorporated by reference from the
Companys Registration Statement on Form S-1, Registration No. 33-48413, declared effective by
the Securities and Exchange Commission on March 18, 1993).*10.4
    
    
    AMTROL Inc. Executive Cash Bonus Plan (incorporated by reference from the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 1994).*
 59




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##### Table of Contents



10.5
    
    
    AMTROL Inc. Supplemental Retirement Plan II (incorporated by reference from the Companys
Registration Statement on Form S-1, Registration No. 33-48413, declared effective by the
Commission on March 18, 1993).*10.6
    
    
    First Amendment to AMTROL Inc. Supplemental Retirement Plan II (incorporated by reference
from the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 1995).*10.10
    
    
    Employment Agreement dated June 24, 1998 by and between AMTROL Inc. and Albert D. Indelicato
(incorporated by reference from the Companys Annual Report on Form 10-K for the fiscal year
ended December 31, 1998).*10.11
    
    
    AMTROL Holdings Inc. 1997 Incentive Stock Plan dated December 16, 1997. (incorporated by
reference to the Companys Annual Report on Form 10-K for the year ended December 31, 1997).*10.12
    
    
    Loan and Security Agreement dated December 26, 2001 among Amtrol Holdings, Inc., Amtrol Inc.
and WaterSoft Inc. and Foothill Capital Corporation as the Arranger and Administrative Agent
(incorporated by reference from the Companys Annual Report on Form 10-K for the fiscal year
ended December 31, 2001).10.12.1
    
    
    First Amendment and Waiver To Loan and Security Agreement dated November 18, 2003 among
Amtrol Holdings, Inc., Amtrol Inc., WaterSoft Inc., Amtrol Canada LTD (incorporated by
reference from the Companys Form 8-K dated November 25, 2003).10.13
    
    
    Loan and Security Agreement dated December 26, 2001 among Amtrol Holdings, Inc., Amtrol
Inc. and WaterSoft Inc. and Cypress Merchant Banking Partners, L.P. and Cypress Offshore
Partners, L.P. (incorporated by reference from the Companys Annual Report on Form 10-K for
the fiscal year ended December 31, 2001).10.13.1
    
    
    First Amendment to Loan and Security Agreement dated November 18, 2003 among Amtrol
Holdings, Inc., Amtrol Inc., WaterSoft Inc., Amtrol Canada LTD, and Cypress Merchant Banking
Partners, L.P. and Cypress Offshore Partners, L.P. (incorporated by reference from the
Companys Form 8-K dated November 25, 2003).10.13.2
    
    
    Second Amendment to Loan and Security Agreement dated November 18, 2003 among Amtrol
Holdings, Inc., Amtrol Inc., WaterSoft Inc., Amtrol Canada LTD, and Cypress Merchant Banking
Partners, L.P. and Cypress Offshore Partners, L.P. (incorporated by reference from the
Companys Form 8-K dated November 25, 2003).10.13.3
    
    
    Second Amendment to Loan and Security Agreement dated December 22, 2004 among Amtrol
Holdings, Inc., Amtrol Inc., WaterSoft Inc., Amtrol Canada LTD, and Wells Fargo Foothill, Inc.
(incorporated by reference from the Companys Annual Report on Form 10-K for the fiscal year
ended December 31, 2004).10.13.4
    
    
    Third Amendment to Loan and Security Agreement dated March 29, 2006 among Amtrol Holdings,
Inc., Amtrol Inc., WaterSoft Inc., Amtrol Canada LTD, and Wells Fargo Foothill, Inc.10.14
    
    
    Subsidiary Guaranty Agreement dated December 26, 2001 among Amtrol International
Investments, Inc. and Cypress Merchant Banking Partners, L.P. and Cypress Offshore Partners,
L.P. (incorporated by reference from the Companys Annual Report on Form 10-K for the fiscal
year ended December 31, 2001).10.15
    
    
    Contribution Agreement dated December 26, 2001 among Amtrol Holdings, Inc., Amtrol Inc.
and WaterSoft Inc. and Cypress Merchant Banking Partners, L.P. and Cypress Offshore Partners,
L.P. (incorporated by reference from the Companys Annual Report on Form 10-K for the fiscal
year ended December 31, 2001).10.16
    
    
    Subsidiary Guaranty Agreement dated December 26, 2001 among Amtrol International
Investments, Inc. and Foothill Capital Corporation (incorporated by reference from the
Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2001).10.17
    
    
    Contribution Agreement dated December 26, 2001 among Amtrol Holdings, Inc., Amtrol Inc. and
WaterSoft Inc. and Foothill Capital Corporation (incorporated by reference from the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 2001).
 60




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##### Table of Contents



10.18
    
    
    Change of Control Agreement dated October 29, 2004 among Amtrol Holdings Inc. and Albert D.
Indelicato.* (incorporated by reference from the Companys Annual Report on Form 10-K for the
fiscal year ended December 31, 2004).10.19
    
    
    Retention and Change of Control Agreement dated January 18, 2006 among Amtrol Holdings Inc.,
Amtrol Inc. and Larry T. Guillemette.*10.20
    
    
    Retention and Change of Control Agreement dated January 18, 2006 among Amtrol Holdings Inc.
and Amtrol Inc. and Joseph DePaula.*10.21
    
    
    Retention and Change of Control Agreement dated January 18, 2006 among Amtrol Holdings Inc.,
Amtrol Inc. and Christopher A. Laus.*10.22
    
    
    Form of Indemnification Agreement dated February 2, 2006 among Amtrol Inc and Larry T.
Guillemette.*10.23
    
    
    Form of Indemnification Agreement dated February 2, 2006 among Amtrol Holdings Inc and Larry
T. Guillemette.*10.24
    
    
    Form of Indemnification Agreement dated February 2, 2006 among Amtrol Inc and Joseph L.
DePaula.*10.25
    
    
    Form of Indemnification Agreement dated February 2, 2006 among Amtrol Holdings Inc and
Joseph L. DePaula.*10.26
    
    
    Form of Indemnification
Agreement entered into between Amtrol
Inc and each member of the Board of
Directors and certain executives
(incorporated by reference from the
Companys Annual Report on Form 10-K
for the fiscal year ended December 31,
2004).10.27
    
    
    Form of Indemnification
Agreement entered into between Amtrol
Holdings Inc and each member of the
Board of Directors and certain
executives (incorporated by reference
from the Companys Annual Report on
Form 10-K for the fiscal year ended
December 31, 2004).14
    
    
    Code of Ethics18
    
    
    Preferability letter regarding change in accounting policy from LIFO to FIFO (incorporated by
reference from the Companys Annual Report on Form 10-K for the fiscal year ended December 31,
1998).21
    
    
    Subsidiaries of AMTROL Inc.31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934.31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14 (a) under the Securities
Exchange Act of 1934.32.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C., Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C., Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 * Management contract or
compensatory plan arrangement. 61