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Hyco International, Inc. – IPO: ‘S-1’ on 5/12/06

On:  Friday, 5/12/06, at 3:56pm ET   ·   Accession #:  1193125-6-110769   ·   File #:  333-134066

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 5/12/06  Hyco International, Inc.          S-1                   15:4.8M                                   RR Donnelley/FA

Document/Exhibit                   Description                      Pages   Size 

 1: S-1         Registration Statement (General Form)               HTML   1.13M 
 2: EX-4.2      Stockholders' Agreement                             HTML     66K 
 3: EX-4.3      Registration Rights Agreement                       HTML     54K 
 4: EX-4.4      Hyco International, Inc. 1998 Stock Option Plan     HTML     46K 
 5: EX-10.1     Credit Agreement                                    HTML    370K 
 6: EX-10.2     Business Finance Agreement                          HTML    461K 
 7: EX-10.3     Business Finance Agreement                          HTML    398K 
 8: EX-10.4     Trust Indenture                                     HTML    381K 
 9: EX-10.5     Trust Indenture                                     HTML    403K 
10: EX-10.6     Tax-Exempt Credit Agreement                         HTML    235K 
11: EX-10.7     Taxable Credit Agreement                            HTML    236K 
12: EX-10.8     Lease Agreement                                     HTML    231K 
13: EX-10.9     Lease Between Ultra Metal Inc. and Huron Woods      HTML    150K 
                          Development Corp.                                      
14: EX-21.1     List of Subsidiaries of Hyco International, Inc.    HTML     12K 
15: EX-23.1     Consent of Deloitte & Touche LLP                    HTML      8K 

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As filed with the Securities and Exchange Commission on May 12, 2006

Registration No. 333-            

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

HYCO INTERNATIONAL, INC.

(Exact name of registrant as specified in charter)

100 Galleria Parkway, Suite 1000

Atlanta, Georgia 30339

(770) 980-1935

(Address, including zip code, and telephone number, including area code, of registrants’ principal executive offices)

Ronald C. Whitaker

100 Galleria Parkway, Suite 1000

Atlanta, Georgia 30339

(770) 980-1935

(Name, address, including zip code, and telephone number, including area code, of agent for service of process)

With copies to:

Approximate date of commencement of proposed sale to the public:    As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.    ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    ¨

CALCULATION OF REGISTRATION FEE

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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The information in this prospectus is not complete and may be changed. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold until the registration statement is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED MAY 12, 2006

                     Shares

HYCO INTERNATIONAL, INC.

Common Stock

This is Hyco International, Inc.’s initial public offering. We are selling              shares, and our stockholders are selling              shares. We will not receive any of the proceeds from the shares of common stock sold by the selling stockholders.

Prior to this offering, there has been no public market for our common stock. We estimate that the initial public offering price will be between $             and $             per share. We intend to apply to list our common stock for quotation on the Nasdaq National Market under the symbol “HYCO.”

See “ Risk Factors” beginning on page 9 to read about factors you should consider before buying shares of our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters may also purchase up to an additional              shares from the selling stockholders at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover over-allotments of shares.

The underwriters expect to deliver the shares of common stock offered by this prospectus to purchasers on                     , 2006.

Joint Book-Running Managers

The date of this prospectus is                     , 2006

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You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus or other date stated in this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date, and we have an obligation to provide updates to this prospectus only to the extent that the information contained in this prospectus becomes materially deficient or misleading after the date on the front cover.

As used in this prospectus, unless the context otherwise indicates, references to “Hyco,” “Hyco International,” “our company,” “we,” “our,” and “us” refer to Hyco International, Inc. and its consolidated subsidiaries, including, as a result of the reorganization transaction described below, Hyco Acquisition LLC and its consolidated subsidiaries. References to the “Centre Entities” refer, collectively, to Centre Capital Investors II, L.P., a Delaware limited partnership, and the related entities described in footnote 2 under “Principal and Selling Stockholders.” Hyco International, Inc. is a Delaware corporation, and Hyco Acquisition LLC is a Delaware limited liability company.

Unless otherwise indicated or the context otherwise requires, financial data in this prospectus reflects the combined consolidated business and operations of Hyco International, Inc. and Hyco Hidrover Oleodinámica Indústria e Comércio LTDA, which we refer to as Hyco Hidrover LTDA, and their respective wholly-owned subsidiaries. Except where otherwise indicated, “$” indicates U.S. dollars.

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FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. These statements relate to future events or our future financial performance. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors, including those discussed under “Risk Factors.” The following factors, among others, could cause our actual results and performance to differ materially from the results and performance projected in, or implied by, the forward-looking statements:

Although we believe that the expectations reflected in the forward-looking statements are reasonable based on our current knowledge of our business and operations, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this prospectus. We assume no obligation to provide revisions to any forward-looking statements should circumstances change.

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MARKET AND INDUSTRY DATA

This prospectus includes market share and industry data and forecasts that we derived from internal company records, publicly available information and industry publications and surveys. Industry publications and surveys generally state that the information contained therein has been obtained from sources believed to be reliable. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Similarly, internal company records and forecasts, which we believe to be reliable as of the date hereof based upon management’s knowledge of the industry, have not been verified by any independent sources. Except where otherwise noted, statements as to our position relative to our competitors or as to market position or market share refer to the most recently available data.

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SUMMARY

This summary highlights information about Hyco International, Inc. and this offering contained elsewhere in this prospectus. You should read this entire prospectus carefully, including “Risk Factors” and the combined consolidated financial statements and related notes, before making an investment decision.

Overview

We are a designer and manufacturer of custom-designed hydraulic cylinders used in mobile equipment. With six manufacturing facilities located on three continents, we believe that we are the world’s largest independent manufacturer of mobile hydraulic cylinders. Our manufacturing facilities are strategically located to facilitate a collaborative design and engineering process with our original equipment manufacturer, or OEM, customers, and to deliver our products on a timely basis. Our cylinders are shipped directly and indirectly to countries in North and South America, Europe and Asia, as we leverage our broad manufacturing footprint and each location’s specialized capabilities to serve the global needs of our customers. In 2005, we generated net sales and EBITDA of $189.1 million and $14.9 million, respectively.

Our mobile hydraulic cylinders primarily consist of single-stage, or rod, cylinders and multi-stage, or telescopic, cylinders, and can be found on a wide variety of machines used for construction, material handling, waste handling, agricultural and other applications. Mobile hydraulic cylinders are fundamental components of hydraulic systems, which convert the hydrostatic pressure in a fluid into mechanical power used for mobile equipment applications, such as steering, suspension, lifting, tilting, compaction, extension and stabilizing. Hydraulic cylinders are essential to the overall performance of mobile equipment, with cylinder failure generally rendering a machine inoperable.

Hyco was formed in 1998 by Centre Partners, a New York-based private equity firm, to acquire manufacturing facilities from Dana Corporation. Since then, we have completed three additional acquisitions of hydraulic cylinder manufacturers located in Canada (1999), Germany (1999) and Brazil (2001). In addition, in 2000 we moved to a greenfield manufacturing facility in Kitchener, Canada and expanded our facility in Alabama.

In 2003, a new senior management team led by our current President and Chief Executive Officer, Ron Whitaker, instituted a number of operational initiatives designed to increase sales and profitability. Our success in implementing these various strategic initiatives contributed to substantial sales growth and margin expansion.

Competitive Strengths

We believe that the following factors contribute to our success in the mobile hydraulic cylinder industry:

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Operating and Growth Strategies

Our senior management team has developed the following operating and growth strategies to generate additional sales and increase profitability:

Pre-Offering Transactions

We expect that during the second quarter of 2006, Hyco Hidrover LTDA, which operates our Brazilian business and which is 99.99% owned by the Centre Entities, our principal stockholders, will pay a dividend on its outstanding share capital in the amount of approximately $575,000. Also in the second quarter of 2006, we expect to pay accrued dividends on our Series A preferred stock, all of which is owned by the Centre Entities, in the amount of $         million and to effect a partial redemption of our Series A preferred stock in the amount of $     million.

Immediately prior to the completion of this offering, the Centre Entities will contribute all of the outstanding interests in Hidrover Acquisition LLC, through which the Centre Entities hold their 99.99% interest in Hyco Hidrover LTDA, to Hyco International, Inc. in exchange for                  shares of our common stock. In

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addition, the Centre Entities expect to effect a cashless exercise of all of their outstanding warrants to purchase shares of our common stock, resulting in the issuance of              shares of our common stock to the Centre Entities.

We refer to these transactions collectively as the pre-offering transactions.

Corporate Information

Hyco International, Inc. was incorporated in 1998 as a Delaware corporation. Our principal executive office is located at 100 Galleria Parkway, Suite 1000, Atlanta, Georgia 30339-5954 and our telephone number is (770) 980-1935.

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The Offering

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Unless we indicate otherwise, all information in this prospectus:

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Summary Historical Combined Consolidated Financial Data

The following table sets forth our summary historical combined consolidated financial data at the dates and for the periods indicated. The summary historical combined consolidated balance sheet data as of December 31, 2005, and the summary historical combined consolidated statement of operations data for the years ended December 31, 2003, 2004 and 2005, have been derived from our audited combined consolidated financial statements included elsewhere in this prospectus. The contribution of the interests in Hidrover Acquisition LLC to Hyco International, Inc. has been treated, for accounting purposes, as a combination of entities under common control because of the Centre Entities’ controlling interest in each of the companies. This historical combined consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical combined consolidated financial statements and related notes included elsewhere in this prospectus.

Basic and diluted net income (loss) per share and basic and diluted weighted average shares outstanding for the years ended December 31, 2003, 2004 and 2005, and the summary historical combined consolidated balance sheet data as of December 31, 2005, are presented:

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Additionally, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as capital expenditures, contractual commitments, interest payments, tax payments and debt service requirements. Also the amounts shown for EBITDA as presented herein differ from the amounts calculated under the definition of EBITDA used in certain of our debt instruments, which further adjust for certain profits and losses and extraordinary items and is used to determine compliance with financial covenants.

The following table reconciles the GAAP measure of net income (loss) to EBITDA:

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RISK FACTORS

You should carefully consider the risks described below, as well as other information included in this prospectus, before making any investment in our common stock.

Risks Relating to Our Business

The mobile hydraulic cylinder market is generally characterized by intense competition, which could cause us to suffer price reductions, customer losses, reduced operating margins and loss of market share.

The mobile hydraulic cylinder market is highly fragmented and intensely competitive. We compete with a large number of manufacturers, some of which are full-line producers that have the ability to provide to customers total hydraulic systems, including components functionally similar to those we manufacture, and many of which are local, independent suppliers of cylinders.

In addition, many of our OEM customers have in-house cylinder manufacturing capabilities, and we compete with them both for their internal business and, sometimes, for other customers. It is possible that a decline in demand for mobile hydraulic cylinders would cause one or more of such OEMs to reduce their purchases of our products and rely increasingly on in-house production. We believe that we compete with these businesses based upon design expertise, quality, reliability, price, value, speed of delivery and technological characteristics. There can be no assurance that we will continue to be able to compete effectively with these companies.

Market demand for our products may suffer due to cyclical declines or adverse regulations or policy shifts.

The level of market demand for our products depends mostly on the general economic condition and government regulatory climate of the markets into which our OEM customers sell products. A substantial portion of our net sales is derived from customers in cyclical industries that typically are adversely affected by downward economic cycles, which may result in lower demand for products in the affected business segment. Specifically, we derive substantially all of our net sales from OEMs that sell into the construction, material handling, waste handling and agricultural industries. Reductions in mobile equipment spending in any of these end markets could result in a decrease in demand for our products.

The market for hydraulic cylinders peaked in the late 1990s before experiencing a reduction in demand from 1999 through 2002 in all of our primary end-markets due to a reduction in capital spending and general economic softness. There can be no assurance that such a reduction in demand will not occur again. In addition, some of our customers operate in markets that are influenced by government incentives or subsidies that encourage investment in equipment that uses our products. If these incentives or subsidies were reduced or eliminated, the demand for our products in these markets could decline.

We depend on a small number of customers for a significant portion of our net sales.

We are and believe we will continue to be heavily dependent upon a small number of customers. Our three largest customers represented approximately 32% and 34% of net sales in 2005 and 2004, respectively. Our largest customer, Caterpillar Inc., generated approximately 19% of our net sales in 2005 and 2004. The loss of one or more of our largest customers, or a significant slowdown in the business of any of these customers, could have a material adverse effect on our financial condition and results of operations.

Large or rapid increases in the costs of raw materials or a lack of availability of our raw materials could adversely affect our operations.

The primary raw materials that we use include steel tubing, steel castings and forgings, steel bar and preformed sealing elements. We do not have long-term contracts with most of our suppliers of raw materials nor

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any derivative contracts to hedge our exposure to commodity risks. Consequently, we are susceptible to increases in prices of such raw materials if we cannot pass them through to our customers, in a timely manner or at all. Market prices for certain materials such as steel have been rising, which could have a negative effect on our operating results and ability to manufacture our cylinders in a timely manner. Factors such as supply and demand, freight costs and transportation availability, the level of imports and general economic conditions may affect the prices of raw materials that we need. If we have difficulty in obtaining the raw materials we need from our existing suppliers on terms that we consider reasonable or experience deteriorating relations with such suppliers and we cannot identify alternative supply sources of raw materials, our ability to deliver cylinders to our customers in a timely manner could be adversely affected and may harm our operations.

Most of our business is conducted outside of the United States, and we intend to continue to expand our operations internationally. As a result, we are subject to a number of risks associated with foreign business activities.

We derive a significant majority of our sales from outside of the United States. In 2005, we generated approximately 82% of our net sales from sales of products manufactured outside the United States, including 51% in Germany, 20% in Canada and 11% in Brazil. An integral part of our geographic expansion strategy is to enter new foreign markets, principally China, and to further penetrate those foreign markets in which we are already active. Our ability to penetrate certain international markets may be limited, and our international sales and operations and our expansion strategy are subject to numerous risks inherent in international business activities, including:

These and other factors could have a material adverse effect on our international operations or our business as a whole. As we continue to expand our business internationally, our success will increasingly depend on our ability to manage these risks effectively.

Our international operations pose currency risks.

Our operating results may be affected by volatility in currency exchange rates and our ability to manage effectively our currency transaction and translation risks. We conduct our business, earn revenue and incur costs in the local currency of the countries in which we operate. As a result, our international operations present special risks from currency exchange rate fluctuations. The financial condition and results of operations of each of our foreign operating subsidiaries are reported in the relevant local currency and then translated to U.S. dollars at the applicable currency exchange rate for inclusion in our combined consolidated financial statements. Changes in

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exchange rates between these foreign currencies and the U.S. dollar will affect the recorded levels of our foreign assets and liabilities, as well as our net sales, cost of goods sold and operating margins, and could result in exchange losses.

Our historical results of operations have been significantly affected by fluctuations in foreign currency exchange rates. In that regard, our net sales for 2005 increased by $22.2 million over 2004, and approximately $6.8 million of that increase was due to the favorable impact of foreign currency exchange rate changes on translated results, due primarily to the weakness of the U.S. dollar relative to the Euro, the Canadian dollar, the Brazilian real and certain other currencies.

In the future, we may not benefit from favorable exchange rate translation effects, and these effects may harm our operating results. In addition to currency translation risks, we incur currency transaction risks whenever one of our operating subsidiaries enters into either a purchase or a sale transaction using a different currency from the currency in which it receives revenues. In such cases we may suffer an exchange loss because we do not currently engage in currency swaps or other currency hedging strategies to address this risk.

Because some of our employees are unionized, we could experience a significant disruption of our operations or incur higher labor costs.

As of March 31, 2006, we had approximately 1,200 employees, approximately 950 of whom were unionized. The employees at our Ontario, Canada facility, our two German facilities and our Brazilian facility are unionized. The employees at our Alabama and Quebec, Canada facilities are not unionized. One of our collective bargaining agreements expires in June 2006, two expire in 2007 and one expires in 2008. We expect that, as is customary, the agreement that expires in June 2006 will be renewed for a one-year period. Although we believe that our working relationship with our employees is generally good, a strike, work stoppage or slowdown by our employees or a significant dispute with our employees could result in a significant disruption of our operations or higher ongoing labor costs.

We may not be able to consummate future acquisitions or successfully integrate future acquisitions into our business, which could result in unanticipated expenses and losses.

As part of our business strategy, we intend to pursue acquisitions. Our ability to execute this strategy successfully depends on, among other things, the availability of suitable acquisition candidates, the ability to obtain financing and our ability to quickly resolve challenges associated with integrating acquired businesses into our existing business. The expenses incurred in pursuing and consummating acquisitions, the time it takes to integrate an acquisition or our failure to integrate businesses successfully could result in unanticipated expenses and losses. Furthermore, we may not be able to realize any anticipated benefits from acquisitions.

The process of integrating acquired operations into our existing operations may result in unforeseen operating difficulties and may require significant financial resources that would otherwise be available for the ongoing development or expansion of existing operations. Some of the risks associated with acquisitions include:

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Any loss of key personnel and the inability to attract and retain qualified employees could have a material adverse impact on our operations.

We are dependent on the continued services of key executives including Ron Whitaker, our President and Chief Executive Officer, Craig Wolf, our Chief Financial Officer, Kurt Wittich, our Chief Operating Officer, and Kevin Chambers, our Vice President and Director of Global Marketing, as well as our plant general managers and engineering managers. The departure of key personnel without adequate replacement could severely disrupt our business operations. Additionally, we need skilled engineers and other employees with technical and manufacturing industry experience to operate our business successfully. From time to time there may be shortages of skilled labor that may make it more difficult and expensive for us to attract and retain qualified employees. If we are unable to attract and retain qualified individuals or our respective costs to do so increase significantly, our operations would be materially adversely affected.

Environmental and health and safety laws and regulations may result in additional costs.

We are subject to stringent federal, state, local and foreign laws, regulations and other requirements regarding public and worker health and safety and the environment. Any violations of these laws by us could cause us to incur unanticipated liabilities that could harm our operating results and cause our business to suffer. Pursuant to such laws, governmental authorities may require us to investigate or remediate, or contribute to the cost of investigating or remediating, sites owned or operated by us or third parties, now or in the past. Liability as an owner or operator, or as an arranger for the treatment or disposal of wastes, can be joint and several and can be imposed without regard to fault. There is a risk that our costs relating to these matters could be greater than what we currently expect or exceed our insurance coverage, or that additional remediation and compliance obligations could arise which require us to make material expenditures. In particular, the increased costs related to compliance with more stringent environmental laws, unanticipated remediation requirements or the discovery of previously unknown conditions could materially harm our financial condition and operating results. We are also required to comply with various environmental laws and maintain permits, some of which are subject to discretionary renewal from time to time, and we could suffer if we are unable to renew existing permits on favorable terms or to obtain any additional permits that we may require.

Our inability to protect our unpatented proprietary manufacturing expertise and other trade secrets could have a material adverse effect on our business, financial condition and results of operations.

We rely upon unpatented proprietary manufacturing expertise, continuing technological innovation and other trade secrets and know-how to develop and maintain our competitive position. We cannot assure you that such unpatented expertise and other information is adequately protected or that adequate remedies will be available in the event of an unauthorized use or disclosure of our trade secrets, manufacturing expertise or other proprietary information.

Litigation involving patent infringement claims by our competitors may result in significant legal costs or otherwise impede our ability to produce and distribute key products.

We could face patent infringement claims from our competitors or others alleging that our processes or products infringe on their proprietary technologies. If we are found to be infringing on the proprietary technology

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of others, we may be liable for substantial damages, including in some cases treble damages, and we may be required to change our processes, to redesign our products partially or completely, to pay to use the technology of others or to stop using certain technologies or producing the infringing product entirely. Even if we ultimately prevail in an infringement suit, the existence of the suit could prompt customers to switch to products that are not the subject of infringement suits.

We could be subject to damages based on product liability claims and other claims brought against us by our customers or end users, or lose customers as a result of the failure of our products to meet certain quality specifications.

Our products provide important performance attributes to our customers’ products. If one of our products fails to perform as expected due to design or manufacturing flaws, a customer or end user could seek replacement of the product or damages for costs incurred as a result of the performance failure. A successful claim or series of claims against us could have a material adverse effect on our financial condition and results of operations and could result in a loss of one or more customers.

We also face the risk of exposure to product liability claims if the use of any of our products results in personal injury or property damage. If any of our products prove to be defective, we may be required to recall or redesign such products. We maintain insurance against product liability claims, but there can be no assurance that such coverage will continue to be available on terms acceptable to us or that such coverage will be adequate for liabilities actually incurred. A successful claim brought against us in excess of available insurance coverage or any claim or product recall that results in significant adverse publicity against us may have an adverse effect on our financial condition, results of operations or future business prospects.

The insurance that we maintain may not fully cover all potential exposures.

We maintain property, business interruption, product liability and casualty insurance, but such insurance may not cover all risks associated with the hazards of our business and is subject to limitations, including deductibles and maximum liabilities covered. We may incur losses beyond the limits, or outside the coverage, of our insurance policies. In the future, we may not be able to obtain coverage at current levels, and our premiums may increase significantly on coverage that we maintain.

Technological changes in the fluid power industry could cause our products to become obsolete or noncompetitive.

The fluid power industry and its component parts are subject to technological change, evolving industry standards, changing customer requirements and improvements in and expansion of product offerings. If technologies or standards used in our cylinders become obsolete and we fail to adapt to the new technologies or standards, we could suffer customer losses and lose market share. Although we believe that we have the technological capabilities to remain competitive, there can be no assurance that developments by others will not render our cylinders or technologies obsolete or noncompetitive.

Failure to achieve and maintain effective internal control over financial reporting and disclosure controls in accordance with SEC rules could have a material adverse effect on our business and stock price.

Upon the effectiveness of the registration statement of which this prospectus forms a part, we will become subject to the rules of the Securities and Exchange Commission, or the SEC. Under current SEC rules, we will be required to document and test our internal control over financial reporting so that our management can certify, in annual reports beginning with the Form 10-K for 2007 to be filed with the SEC in the first quarter of 2008, as to the effectiveness of our internal control over financial reporting and our independent registered public accounting firm can render an opinion on management’s assessment and operating effectiveness of our internal controls. In addition, we will be required to implement and maintain effective disclosure controls and procedures. While we anticipate being able to fully implement these requirements and all other aspects of related SEC rules in a timely fashion, we cannot be certain as to the timing of completion of our evaluation, testing and remediation actions, if

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any, or the impact of the same on our operations. The assessment of our internal control over financial reporting and evaluation of our disclosure controls and procedures will require us to expend significant management and employee time and resources and incur significant additional expense.

During our assessments of the effectiveness of our controls and procedures, we may identify material weaknesses in such controls and procedures, as well as any other significant deficiencies, which could harm our business and operating results, and could result in adverse publicity, regulatory scrutiny and a loss of investor confidence in the accuracy and completeness of our financial reports and SEC filings. In turn, this could have a material adverse effect on our stock price, and, if such weaknesses are not properly addressed, could adversely affect our ability to satisfy SEC filing requirements and report our financial results on a timely and accurate basis. We cannot assure you that we would be able to remedy any such material weaknesses or that additional deficiencies or weaknesses in our controls and procedures would not be identified. In addition, we cannot assure you that our independent registered public accounting firm will agree with our assessment that any identified material weaknesses in our internal control over financial reporting have been addressed. Moreover, we will continue to operate at a relatively small staffing level. Although our control procedures have been designed with this staffing level in mind, they are highly dependent on each individual’s performance or controls in the required manner. The loss of accounting personnel, particularly our Chief Financial Officer, would adversely impact the effectiveness of our control environment and our internal controls, including our internal control over financial reporting.

In addition, compliance with reporting and other requirements applicable to public companies will create additional costs for us and will require the time and attention of management. We cannot predict or estimate the amount of the additional costs we may incur, the timing of such costs or the degree of impact that our management’s attention to these matters will have on our business.

This offering will cause us to undergo an “ownership change” for purposes of Section 382 of the Internal Revenue Code, which will likely limit our ability to use our net operating loss carryforwards and certain other tax attributes.

At December 31, 2005, we had U.S. federal net operating loss carryforwards of $27.2 million, U.S. state net operating loss carryforwards of $16.4 million and foreign net operating loss carryforwards of $4.3 million. Under Section 382 of the Internal Revenue Code, because this offering will cause us to undergo an “ownership change,” our ability to use our pre-change of control net operating loss carryforwards and other pre-change tax attributes against our post-change income will likely be limited. These limitations would have the effect of reducing our after-tax cash flow.

Incurrence of indebtedness could adversely affect our financial health and limit our ability to react to changes in our industry or to implement our strategic initiatives.

After giving effect to the offering and the application of a portion of the net proceeds to the repayment of debt as described under “Use of Proceeds,” as of December 31, 2005, we would have had total indebtedness of $             million. We may borrow additional funds in the future to finance acquisitions, capital expenditures or for other purposes. The terms of any such indebtedness could:

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Acts of God and war or terrorist activities may cause the economic conditions in the United States or abroad to deteriorate, which could harm our business.

Acts of God, such as hurricanes, earthquakes and pandemic diseases, war or terrorist attacks around the world may impact our operations or cause general economic conditions around the world to deteriorate. Any of these events could have a negative impact on our business, financial condition or results of operations.

Risks Relating to This Offering

The price of our common stock may be volatile and you could lose all or part of your investment.

Volatility in the market price of our common stock may prevent you from being able to sell your shares at or above the price you paid for your shares. The market price of our common stock could fluctuate significantly for various reasons, which include:

In addition, in recent years, the stock market has experienced extreme price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in our industry. The price of our common stock could fluctuate based upon factors that have little or nothing to do with our company, and these fluctuations could materially reduce our stock price.

In the past, following periods of market volatility in the price of a company’s securities, security holders have often instituted class action litigation. If the market value of our common stock experiences adverse fluctuations and we become involved in this type of litigation, regardless of the outcome, we could incur substantial legal costs and our management’s attention could be diverted from the operation of our business, causing our business to suffer.

There is no existing market for our common stock and we do not know if one will develop to provide you with adequate liquidity.

Prior to this offering, there has not been a public market for our common stock. An active market for our common stock may not develop following the completion of this offering, or if it does develop, may not be maintained. If an active trading market does not develop, you may have difficulty selling any of our common stock that you buy. The initial public offering price for the shares will be determined by negotiations between us,

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the selling stockholders and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell shares of our common stock at prices equal to or greater than the price paid by you in this offering.

Future sales of our common stock, including shares purchased in this offering, in the public market could lower our stock price.

Sales of substantial amounts of our common stock in the public market following this offering by our existing stockholders, upon the exercise of outstanding stock options or by persons who acquire shares in this offering may adversely affect the market price of our common stock. Such sales could also create public perception of difficulties or problems with our business. These sales might also make it more difficult for us to sell securities in the future at a time and price that we deem necessary or appropriate.

Upon the completion of this offering, we will have outstanding              shares of common stock, of which:

With limited exceptions, these lock-up agreements prohibit a stockholder from selling, contracting to sell or otherwise disposing of any common stock or securities that are convertible or exchangeable for common stock for 180 days from the date of this prospectus, although the lead underwriters, may, in their sole discretion and at any time without notice, release all or any portion of the securities subject to these lock-up agreements. The lead underwriters have advised us that they have no present intent or arrangement to release any shares subject to a lock-up, and will consider the release of any lock-up on a case-by-case basis. Upon a request to release any shares subject to a lock-up, the lead underwriters would consider the particular circumstances surrounding the request, including, but not limited to, the length of time before the lock-up expires, the number of shares requested to be released, reasons for the request, the possible impact on the market or our common stock and whether the holder of our shares requesting the release is an officer, director or other affiliate of ours. As a result of these lock-up agreements, notwithstanding earlier eligibility for sale under the provisions of Rule 144, none of these shares may be sold until at least 180 days after the date of this prospectus.

At our request, the underwriters have reserved up to              shares, or       % of our common stock offered by this prospectus, for sale under a directed share program to our officers, directors, employees, business associates and other individuals who have family or personal relationships with our employees. If any of our current directors or executive officers subject to lock-up agreements purchase these reserved shares, the shares will be restricted from sale under the lock-up agreements. If any of these shares are purchased by other persons, such shares will not be subject to lock-up agreements.

As restrictions on resale end, our stock price could drop significantly if the holders of these restricted shares sell them or are perceived by the market as intending to sell them. These sales might also make it more difficult for us to sell securities in the future at a time and at a price that we deem appropriate.

We will have broad discretion in applying a portion of the net proceeds of this offering and may not use those proceeds in ways that will enhance our market value.

Our management has broad discretion over the use of the portion of the proceeds that we receive from this offering. If we do not apply these funds effectively, we may lose significant business opportunities. Furthermore, our stock price could decline if the market does not view our use of the proceeds from the offering favorably.

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You will suffer immediate and substantial dilution.

The initial public offering price per share is substantially higher than the pro forma net tangible book value per share immediately after the offering. As a result, you will pay a price per share that substantially exceeds the book value of our assets after subtracting our liabilities. Assuming an offering price of $             per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, you will incur immediate and substantial dilution in the amount of $             per share. If the underwriters exercise their over-allotment option, or if outstanding options and warrants to purchase our common stock are exercised, you will experience additional dilution. Any future equity issuances will result in even further dilution to holders of our common stock.

Certain provisions of Delaware law and our certificate of incorporation and bylaws that will be in effect after this offering may deter takeover attempts, which may limit the opportunity of our stockholders to sell their shares at a favorable price, and may make it more difficult for our stockholders to remove our board of directors and management.

Certain provisions of Delaware law, the state in which we are incorporated, and our certificate of incorporation and bylaws that will be in effect after this offering could discourage potential acquisition proposals, delay or prevent a change of control and prevent changes in our board of directors or management, even if these events would be in the best interests of our stockholders. These provisions include the following:

Although no shares of preferred stock will be outstanding upon the completion of this offering and the application of the net proceeds as described under “Use of Proceeds,” and although we have no present plans to issue any preferred stock, our certificate of incorporation authorizes the board of directors to issue up to 100,000 shares of preferred stock. The preferred stock may be issued in one or more series, the terms of which will be determined at the time of issuance by our board of directors without further action by the stockholders. These terms may include voting rights, including the right to vote as a series on particular matters, preferences as to dividends and liquidation, conversion rights, redemption rights and sinking fund provisions. The issuance of any preferred stock could diminish the rights of holders of our common stock and, therefore, could reduce the value of our common stock. In addition, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell assets to, a third party. The ability of our board of directors to issue preferred stock could make it more difficult or costly to acquire or effect, or delay, discourage or prevent, a change in control of our company. See “Description of Capital Stock.”

Since we do not expect to pay any dividends for the foreseeable future, investors in this offering may be forced to sell their stock in order to obtain a return on their investment.

We do not anticipate that we will pay any dividends to holders of our common stock for the foreseeable future. Any payment of cash dividends will be at the discretion of our board of directors and will depend on our financial condition, capital requirements, legal requirements, earnings and other factors. Our ability to pay dividends is restricted by the terms of our credit facilities and might be restricted by the terms of any indebtedness that we incur in the future. See “Dividend Policy.”

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USE OF PROCEEDS

We estimate that we will receive net proceeds from our offering of common stock, after deducting underwriting discounts and other expenses, of approximately $             million, assuming the shares are offered at $             per share, which is the midpoint of the estimated offering price range set forth on the cover of this prospectus. We estimate that the offering expenses payable by us will be $             million. We will not receive any proceeds from the sale of the shares to be sold by the selling stockholders, including if the underwriters exercise their option to purchase additional shares to cover over-allotments.

We intend to use the net proceeds of our offering of common stock to:

Any remaining net proceeds will be used for general corporate purposes.

As of December 31, 2005, we had 17,662 shares of our Series A preferred stock outstanding, all of which were held by the Centre Entities. The holders of the shares of our Series A preferred stock are entitled to receive cumulative dividends accruing at the rate of 6% per annum payable quarterly in arrears, when and if declared by our board of directors. The Series A preferred stock ranks senior as to dividends and upon liquidation to our common stock and has a liquidation preference of $1,000 per share plus all undeclared and unpaid dividends.

We have three credit facilities, each of which provides for a revolving line of credit:

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We have not yet determined how we will allocate, among the three credit facilities, the approximately $             million of net proceeds that we intend to use to reduce indebtedness outstanding under the revolving portions of our credit facilities.

We have financed the purchase of certain machinery and equipment through capital lease finance agreements. These leases generally require monthly payments of principal and interest, and are scheduled to mature over the period from 2007 through 2010. On December 31, 2005, the outstanding balance under our capital leases, including current maturities, was $0.9 million and the interest rates on such leases ranged from 4.9% to 8.2% per annum.

DIVIDEND POLICY

We do not expect to declare or pay any cash or other dividends in the foreseeable future on our common stock, as we intend to reinvest cash flow generated by operations in our business. Our credit facilities restrict our ability to pay cash dividends on our common stock, and we may also enter into credit agreements or other borrowing arrangements in the future that restrict our ability to declare or pay cash dividends on our common stock. Any determination to pay cash dividends in the future will be at the discretion of our board of directors and will depend on various factors, including our financial condition, earnings, cash requirements, legal restrictions, restrictions under our credit facilities and other factors deemed relevant by our board of directors.

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2005:

You should read the following table in conjunction with the sections captioned “Use of Proceeds,” “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and with our combined consolidated financial statements and related notes included elsewhere in this prospectus.

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DILUTION

If you invest in our common stock, your ownership interest will be diluted to the extent of the difference between the offering price per share of our common stock and the net tangible book value per share of our common stock upon completion of this offering.

As of December 31, 2005, without taking into account the pre-offering transactions, the reverse stock split or this offering, our historical net tangible book value was approximately $             million, or approximately $             per share, based on 12,383,555 shares of common stock outstanding on December 31, 2005. Historical net tangible book value per share represents the amount of our total consolidated tangible assets minus our total consolidated liabilities, divided by the actual number of shares of our common stock outstanding on December 31, 2005.

Our pro forma net tangible book value as of December 31, 2005 was approximately $            , or $             per share of our common stock, based on              shares of common stock outstanding after giving effect to the pre-offering transactions, including the issuance of              shares of common stock in connection therewith, and the reverse stock split. Pro forma net tangible book value represents the amount of our total combined consolidated tangible assets minus our total combined consolidated liabilities, divided by the pro forma number of shares of common stock outstanding after the pre-offering transactions and the reverse stock split but before giving effect to this offering.

Dilution in pro forma net tangible book value per share represents the difference between the amount per share paid by investors in this offering and the adjusted pro forma net tangible book value per share of our common stock immediately after the pre-offering transactions, the reverse stock split and this offering.

After giving effect to our sale of              shares of our common stock offered by this prospectus at an assumed public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting the underwriters’ discounts and commissions and estimated offering expenses payable by us, our adjusted pro forma net tangible book value as of December 31, 2005 would have been approximately $             million, or approximately $             per share of our common stock. This represents an immediate increase in pro forma net tangible book value of $             per share to our existing stockholders and an immediate dilution in pro forma net tangible book value of $             per share to new investors purchasing shares of our common stock at the assumed public offering price. If the offering price is higher or lower, the dilution to new investors purchasing our common stock will be greater or less, respectively.

The following table illustrates this dilution on a per share basis:

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The following table summarizes as of December 31, 2005, as adjusted to give effect to the pre-offering transactions, the reverse stock split and this offering, the differences between our existing stockholders and new investors with respect to the number of shares of our common stock purchased from us, the total consideration paid to us and the average price per share paid:

The preceding discussion and tables exclude any shares of our common stock issuable under the new equity incentive plan that we expect our board of directors will adopt after the completion of this offering. We expect that the new equity incentive plan will make available for issuance to our management and employees equity based awards representing, in the aggregate, up to         % of the shares of common stock outstanding after this offering.

If the underwriters’ over-allotment option is exercised in full:

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SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth our selected consolidated financial data at the dates and for the periods indicated. The selected combined consolidated balance sheet data as of December 31, 2004 and 2005, and the selected combined consolidated statement of operations data for the years ended December 31, 2003, 2004 and 2005, have been derived from our audited combined consolidated financial statements included elsewhere in this prospectus. The selected combined consolidated balance sheet data as of December 31, 2003 have been derived from our unaudited balance sheet as of such date not included in this prospectus. Such balance sheet was prepared on the same basis as our audited financial statements and includes, in the opinion of management, all adjustments that management considers necessary for a fair presentation of the financial information set forth therein. These financial statements are considered “combined” because the contribution of the interests in Hidrover Acquisition LLC to Hyco International, Inc. has been treated, for accounting purposes, as a combination of entities under common control. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Reorganization Transaction.”

The selected consolidated balance sheet data as of December 31, 2001 and 2002, and the selected consolidated statement of operations data for the years ended December 31, 2001 and 2002, have been derived from our consolidated financial statements not included in this prospectus. The selected consolidated statement of operations data for 2001 includes the results of operations of Hyco Hidrover LTDA for the period from May 15, 2001 through December 31, 2001 following our acquisition of Hyco Hidrover LTDA on May 15, 2001.

The results presented below are not necessarily indicative of the results to be expected in any future period and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes included elsewhere in this prospectus.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

You should read the following discussion and analysis in conjunction with our combined consolidated financial statements and related notes contained elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those contained in or implied by these forward-looking statements as a result of a variety of factors, including those set forth under “Forward-Looking Statements” and “Risk Factors” and elsewhere in this prospectus.

Overview

We are a designer and manufacturer of custom-designed hydraulic cylinders used in mobile equipment. With six manufacturing facilities located on three continents, we believe that we are the world’s largest independent manufacturer of mobile hydraulic cylinders. Our manufacturing facilities are strategically located to facilitate a collaborative design and engineering process with our OEM customers, and to deliver our products on a timely basis. Our cylinders are shipped directly and indirectly to countries in North and South America, Europe and Asia, as we leverage our broad manufacturing footprint and each location’s specialized capabilities to serve the global needs of our customers.

Our diverse and broad manufacturing capabilities provide us with the ability to design and manufacture custom cylinders in accordance with our OEM customers’ engineering requirements, while maintaining close geographic proximity to their manufacturing facilities. In addition, our regional presence allows us to exploit trends or changes in local business conditions, economies, politics and other factors that influence our end markets and the resulting demand for mobile equipment.

We have three reporting segments: Europe, North America and South America. Our European segment consists of the operations of our two German facilities. Our North American segment consists of the operations of our one U.S. facility and two Canadian facilities. Our South American segment consists of the operations of our Brazilian facility. Below is a table of our net sales and income (loss) from continuing operations, by segment, for 2003, 2004 and 2005. Sales are classified based on where our products are manufactured, and may not be indicative of where the equipment bearing our products is ultimately sold. Net sales outside the United States are translated into U.S. dollars at a weighted average exchange rate for the year.