SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)December 29, 1993
CRANE CO.
(Exact name of registrant as specified in its Charter)
AMENDMENT NO. 1
Delaware 1-1657 13-1952290
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification
No.)
100 First Stamford Place, Stamford, CT 06902
(Address of principal executive offices) (Zip Code)
(203)363-7300
Registrant's telephone number, including area code
(Not Applicable)
(Former name or former address, if changed since last report)
<PAGE>
<PAGE>
Item 7 of the report on Form 8-K filed by Crane Co. on
January 12, 1994 is hereby amended in its entirety to read
as follows:
Item 7. Financial Statements and Exhibits
Exhibit 1 Copy of the Stock Purchase
Agreement dated December 29, 1993
among the Registrant, Burks Pumps,
Inc. and the individuals listed in
Item 2. (previously submitted).
Exhibit 2 Audited 1992 Financial Statements for Burks Pumps,
Inc.
Exhibit 3 Consent of Price Waterhouse.
Exhibit 4 Unaudited Financial Statements for the nine months
ended September 30, 1992 and 1993 for Burks Pumps,
Inc.
Exhibit 5 Proforma financial information relative to Burks
Pumps, Inc.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Crane Co.
Registrant
January 25, 1994
By:P.R. Hundt
P. R. Hundt
Vice President
By:M. L. Raithel
M. L. Raithel
Controller-Chief
Accounting Officer
<PAGE>
<PAGE>
EXHIBIT 2
BURKS PUMPS, INC.
Report and Consolidated Financial
Statements
December 31, 1992
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of Burks Pumps, Inc. and
the Partners of Harbour Group
Investments, L.P.
In our opinion, the accompanying consolidated balance sheet and
the related consolidated statements of income, of changes in
stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of Burks Pumps, Inc.
and its subsidiaries as of December 31, 1992, and the results of
their operations and their cash flows for the year in conformity
with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the
opinion expressed above.
As explained in Note 13, on December 29, 1993, Crane Co. acquired
the outstanding common stock of Burks Pumps, Inc.
PRICE WATERHOUSE
St. Louis, Missouri
February 12, 1993, except as to Note 13,
which is as of December 29, 1993
<PAGE>
<PAGE>
BURKS PUMPS, INC.
<TABLE>
Consolidated Balance Sheet
<CAPTION>
December 31, 1992
Assets
<S> <C>
Current assets:
Cash $ 205
Accounts receivable, net 9,077,885
Inventories 12,267,305
Prepaid expenses and other 300,081
Deferred income taxes 686,130
----------
Total current assets 22,536,704
Property, plant and equipment, net 8,410,905
Intangible assets, net 11,522,235
Other assets, net 242,249
----------
$42,712,093
===========
Liabilities ans stockholders' equity
Current liabilities:
Current portion of long-term debt $ 341,472
Accounts payable 3,358,098
Accrued liabilities 4,433,421
-----------
Total current liabilities 8,132,991
-----------
Long-term debt 8,688,583
Subordinated long-term debt-related party 13,500,000
Other long-term liabilities and
deferred credit 1,123,985
Commitments and contingencies (Note 11) -
Redeemable common stock warrants (Note 10) 2,186,636
Stockholders' equity:
Common stock, $.01 par value;
1,000,000 shares authorized;
117,728 shares issued and outstanding 1,177
Additional paid-in capital 9,822,992
Retained earnings -
Cumulative translation adjustment (13,620)
Stockholders' notes receivable (730,651)
-----------
Total stockholders' equity 9,079,898
-----------
$42,712,093
===========
See accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
<PAGE>
BURKS PUMPS, INC.
<TABLE>
Consolidated Statement of Income
<CAPTION>
For the year ended
December 31, 1992
<S> <C>
Net sales $52,640,441
Cost of sales 35,490,853
-----------
Gross profit 17,149,588
Selling, general and administrative expenses 11,569,093
-----------
Operating income 5,580,495
-----------
Other expenses:
Interest expense 2,763,604
Other, net 315,000
-----------
3,078,604
Income from continuing operations before
provision for income taxes 2,501,891
Provision for income taxes 1,170,657
-----------
Income from continuing operations 1,331,234
Discontinued operations (Note 3):
Loss from discontinued Water Systems
Division operations, after applicable
income taxes of $170,045 (457,775)
Loss on sale of Water Systems Division (118,195)
------------
Net income $ 755,264
============
See accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
<PAGE>
BURKS PUMPS, INC.
<TABLE>
Consolidated Statement of Changes in Stockholders' Equity
For the Year Ended December 31, 1992
<CAPTION>
Additional Cumulative Stockholders'
Common paid-in Retained translation notes
stock capital earnings adjustment receivable Total <C> <C> <c
<S> <C> <C> <C> <C> <C> <C>
Balance December 31,
1991 $1,177 $10,730,574 $ 523,790 $ - $(730,651) $10,524,890
Net income 755,264 755,264
Accretion of common
stock warrants (907,582) (1,279,054) (2,186,636)
Foreign currency
translation
adjustment (13,620) (13,620)
------ ----------- ----------- ---------- --------- -----------
Balance December 31,
1992 $1,177 $ 9,822,992 $ - $ (13,620) $(730,651) $ 9,079,898
====== =========== =========== =========== ========= ===========
See accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
<PAGE>
BURKS PUMPS, INC.
<TABLE>
Consolidated Statement of Cash Flows
<CAPTION>
For the year ended
December 31, 1992
<S> <C>
Cash flows from operating activities:
Net income $ 755,264
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,682,583
Amortization 974,580
Change in cumulative
translation adjustment account (13,620)
Write-off of Water Systems
Division intangible assets 687,730
Changes in assets and liabilities,
excluding sale of the
Water Systems Division:
Decrease in accounts receivable, net 1,836,999
Decrease in inventories 1,812,700
Decrease in prepaid expenses and other 31,518
Increase in deferred taxes (350,455)
Decrease in accounts payable (1,749,975)
Decrease in accrued liabilities (332,356)
Decrease in other long-term liabilities (198,167)
-----------
Net cash provided by operating activities 5,136,801
-----------
Cash flows from investing activities:
Sale of Water Systems Division 6,787,778
Increase in accounts receivable from sale of
Water Systems Division (2,079,778)
Proceeds from Water Systems Division
non-competition agreement 350,000
Purchase of Barnes Pumps Canada, Inc. (594,247)
Capital expenditures, net (487,942)
-----------
Net cash provided by investing activities 3,975,811
-----------
Cash flows from financing activities:
Payments of long-term debt (5,298,364)
Net payments under revolving credit agreement (3,783,251)
-----------
Net cash used by financing activities (9,081,615)
Net increase in cash 30,997
Cash at beginning of period 174,306
-----------
Cash at end of period $ 205,303
===========
(continued)
See accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
<PAGE>
BURKS PUMPS, INC.
<TABLE>
Consolidated Statement of Cash Flows
(Continued)
<CAPTION>
For the year ended
December 31, 1992
<S> <C>
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $3,090,713
Income taxes 854,266
Supplemental schedule of noncash activities:
Equipment acquired through capital leases $ 310,369
See accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
<PAGE>
BURKS PUMPS, INC.
Notes to Consolidated Financial Statements
1. Organization
Burks Pumps, Inc. (the Company or Burks), a Delaware
corporation, is 93% owned by Harbour Group Investments, L.P.
(HGI, L.P.), a Missouri limited partnership. The remaining
7% of outstanding stock is held by members of Burks and HGI,
L.P. management. The Company is engaged in the manufacture
and sale of specialty industrial systems pumps, wastewater
pumping equipment, pumps for military applications and
engineered cleaning equipment, and centrifugal pumps.
As more fully described in Note 3, on September 30, 1992 the
Company sold its Water Systems Division. Concurrent with the
sale, the Company acquired the net assets of Barnes Pumps Canada,
Inc. (BPC).
As more fully described in Note 4, on November 22, 1991, the
Company acquired substantially all of the net assets of AMW
Industries, Inc. (AMW).
The Company operates manufacturing facilities in Decatur,
Illinois; Piqua, Ohio, and Bramalea, Canada, and formerly in
Conway, Arkansas.
2. Summary of significant accounting policies
The significant accounting policies followed by Burks are
described below and are in conformity with generally accepted
accounting principles:
Principles of consolidation
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, Barnes Pumps, Inc. and
Barnes Pumps Canada, Inc. Results of operations for AMW and
Barnes Pumps Canada, Inc. have been included since their
respective dates of acquisition. All significant intercompany
transactions and balances are eliminated. Results of
discontinued operations have been presented separately as
described in Note 3.
Revenue recognition
Revenue from the sale of the Company's products is recognized
upon shipment to the customer. Costs and related expenses to
manufacture the Company's products are recorded as costs of sales
when the related revenue is recognized.
Cash and cash equivalents
For purposes of the consolidated statement of cash flows, the
Company considers all highly liquid investments with
original maturity of three months or less to be cash
equivalents. A book cash overdraft on the Company's
disbursement account in the amount of $314,058 at December
31, 1992 is included in accounts payable.
BURKS PUMPS, INC.
Notes to Consolidated Financial Statements
Page 2
Concentrations of credit risk
The Company sells its products to a wide range of industries in
which its pumps are utilized. In addition, most of the Company's
business activity is with customers located within North America.
The Company performs ongoing credit evaluations of its customers
and generally does not require collateral. The Company maintains
reserves for potential credit losses and historically such losses
have been within management's expectations. At December 31,
1992, the Company had no significant concentrations of credit
risk.
Inventories
Inventories, which include the cost of materials, direct labor
and manufacturing overhead, are stated at the lower of cost,
determined using the last-in, first-out (LIFO) method for
substantially all inventories, or market.
If the FIFO method (which approximates replacement cost) had been
used in determining cost for all inventories, inventories would
have been approximately the same at December 31, 1992 due to a
LIFO reserve of $520,496 being less than the reserves for excess
and obsolete inventories used in determining replacement cost.
Obsolete or unsalable inventories are reflected at their
estimated realizable values.
Property, plant and equipment
Property, plant and equipment is recorded at cost and is
depreciated using the straight-line method over the estimated
useful lives of the assets which range from 3 to 31.5 years.
Properties held under capital leases are recorded at the present
value of the non-cancelable lease payments over the term of the
lease and are amortized over the shorter of the lease term or the
estimated useful lives of the assets.
Expenditures for repairs, maintenance and renewals are charged to
income as incurred. Expenditures which improve an asset or
extend its estimated useful life are capitalized. When
properties are retired or otherwise disposed of, the related cost
and accumulated depreciation are removed from the accounts and
any gain or loss is included in income.
Intangible assets
The excess of the purchase price over the fair value of net
assets acquired in a business combination (goodwill) is
capitalized and amortized on a straight-line basis over 40
years. Amortization charged to income for the year ended
December 31, 1992 was $315,036. Accumulated amortization at
December 31, 1992 was $1,397,089.
Costs incurred in obtaining intellectual property rights
(principally engineering drawings) have been deferred and are
being amortized on a straight-line basis over 40 years.
BURKS PUMPS, INC.
Notes to Consolidated Financial Statements
Page 3
Amortization charged to income for the year ended
December 31, 1992 was $42,956. Accumulated amortization at
December 31, 1992 was $118,143.
Costs incurred in connection with non-competition agreements have
been deferred and are being amortized on a straight-line basis
over the lives of the agreements. Amortization charged to income
for the year ended December 31, 1992 was $516,000. Accumulated
amortization at December 31, 1992 was $1,429,000.
Other assets
Costs incurred in obtaining financing have been deferred and are
being amortized over the life of the related obligation.
Amortization charged to income for the year ended December 31,
1992 was $80,000. Accumulated amortization at December 31, 1992
was $167,500.
Income taxes
The Company files a consolidated federal income tax return which
includes its wholly-owned subsidiaries. The provision for income
taxes is based on consolidated income and expenses of the Company
for financial reporting purposes. Deferred income taxes are
provided for timing differences between financial and income tax
reporting.
In February 1992, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," which establishes financial
accounting and reporting standards for income taxes that result
from an enterprise's activities during the current and preceding
years. It requires an asset and liability approach for financial
accounting and reporting for income taxes. This statement will
be adopted by the Company for its year ending December 31, 1993;
management has estimated the cumulative effect of adoption of the
new statement on the Company at January 1, 1993 to be a charge of
approximately $200,000.
Foreign currency translation
The accounts of Barnes Pumps Canada, Inc., are measured using the
Canadian dollar as the functional currency. Assets and
liabilities of the Canadian operations are translated into United
States dollars at period-end exchange rates. Operating results
are translated at the average exchange rates in effect during the
year. Net unrealized gains or losses on translation of foreign
currency financial statements are recorded in stockholders'
equity, as a cumulative translation adjustment, and will be
included in income only upon sale or liquidation of underlying
assets.
Earnings per share information
Given the historical organization and capital structure of the
Company, earnings per share information is not considered
meaningful or relevant and has not been presented in the
<PAGE>
BURKS PUMPS, INC.
Notes to Consolidated Financial Statements
Page 4
accompanying consolidated financial statements or the notes
thereto.
Other postemployment benefits
In December 1990, the FASB issued Statement of Financial
Accounting Standards No. 106, "Employer's Accounting for
Postretirement Benefits Other than Pensions (OPEB)," which
establishes financial and reporting standards for OPEB
liabilities. It requires companies to record on an accrual basis
the costs of OPEB liabilities, such as health care costs. This
statement will be effective for the Company for its year ending
December 31, 1995. Management has estimated that the new
statement will result in an additional obligation of
approximately $1 million. Management has not determined whether
the obligation will be recognized in the year in which the
statement is adopted or whether it will be amortized on a
straight-line basis over the average remaining service period of
active plan participants, not to exceed twenty years.
In November 1992, the FASB issued Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits," which establishes accounting standards
for employers who provide benefits to former or inactive
employees after employment but before retirement. This statement
will be effective for the Company for its year ending December
31, 1995. Management does not anticipate that adoption of the
new statement will have a significant effect on the Company's
financial position or results of operations.
3. Sale of Water Systems Division
On September 30, 1992 the Company sold its Water Systems Division
for a preliminary sale price of $6,787,778, which approximated
the historical carrying value of the assets sold. The loss on
sale of discontinued operations
represents income tax expense of $118,195, related primarily
to differences between the book and tax bases of the
inventory sold. In connection with the sale, the Company
received $350,000 related to a non-competition agreement
which was accounted for as a deferred credit to be amortized
to income over the three year life of the agreement.
The 1992 consolidated statement of income disaggregates sales and
expenses of discontinued operations from captions applicable to
continuing operations. The net loss from discontinued operations
during the nine-month period ended September 30, 1992 includes
the write-off of the net book value of certain intangible assets
related to the Water Systems Division which no longer have value
to the Company.
<PAGE>
<PAGE>
BURKS PUMPS, INC.
Notes to Consolidated Financial Statements
Page 5
The following is summarized financial information of the
Water Systems Division for the nine-month period ended
September 30, 1992:
<TABLE>
<CAPTION>
1992
<S> <C>
Net sales $16,045,000
Gross profit 2,761,000
Operating income 700,000
Interest expense 300,000
Other expenses - write-off of ceratin intangible assets 687,730
Provision for income taxes 170,045
Net loss (457,775)
</TABLE>
Concurrent with the sale of the Water Systems Division, the
Company acquired certain net assets, principally inventory, of
Barnes Pumps Canada, Inc., a firm engaged in the manufacture and
sale of wastewater pumps in Canada, for a purchase price of
$594,247. The acquisition was accounted for as a purchase and
the purchase price approximated the fair value of the assets
acquired. The pro forma effects of this acquisition on the
Company's results of operations and financial position for 1992
are not material.
4. Acquisition of AMW Industries, Inc.
On November 22, 1991, the Company acquired the net assets of
AMW for a purchase price of $8,797,957. The acquisition was
accounted for as a purchase and was financed through the
Company's existing debt agreements, as amended. The purchase
price was preliminarily assigned to the net assets acquired
based on their estimated fair value at the date of
acquisition. The purchase price allocation was finalized in
1992. Such finalization reflects the industrial pump line
relocation and consolidation expenses ofapproximately
$2,000,000. In connection with finalizing the AMW purchase
price allocation, the fixed assets retained by Burks were
written up to their estimated fair value as of the date of
acquisition, with the remaining excess purchase price of
$1,215,000 reflected as goodwill. In addition, included in
the purchase price and in connection with the acquisition,
the Company paid $225,000 related to a non-competition
agreement.
<PAGE>
<PAGE>
BURKS PUMPS, INC.
Notes to Consolidated Financial Statments
Page 6
5. Financing
<TABLE>
Long-term debt consists of the following:
<CAPTION>
December 31, 1992
Unsubordinated debt:
<S> <C>
Notes payable to bank under a Revolving Credit
and Term Loan Agreement dated April 2, 1990, as
amended, collateralized by property, plant and
equipment, accounts receivable and inventories:
Term note - repaid during 1992; interest was paid
monthly at the bank's base rate (defined as the
greater of (i) the prime rate, or (ii) the
Federal Funds Rate plus 1/2%) plus 2% $ -
Revolving credit note - principal due in full
on December 31, 1996; interest payable monthly
at the bank's base rate plus 1-1/2% (7-1/2% at
December 31, 1992) 8,067,700
Capital lease obligations 962,355
Subordinated debt:
Note payable to insurance company - principal
due in semiannual installments of $1,700,000
commencing December 1, 1994 with a final
instalment of $1,800,000 on December 1,
1997; interest due semiannually at 13.35%,
subordinated to notes payable to bank 12,000,000
Note payable to Harbour Group Investments, L.P. -
principal due on or before December 31, 1996,
interest due quarterly at 12%, subordinated
to notes payable to bank and insurance company 1,500,000
----------
22,530,055
Less - Current portion of long-term debt, including
$341,472 of capital lease obligations at
December 31, 1992 (341,472)
----------
$22,188,583
===========
</TABLE>
<PAGE>
<PAGE>
BURKS PUMPS, INC.
Notes to Consolidated Financial Statements
Page 7
Maturities of long-term debt, including capital leases, for the
five years subsequent to December 31, 1992 are as follows:
1993 $ 341,472
1994 2,004,391
1995 3,574,217
1996 13,061,096
1997 3,548,879
-----------
$22,530,055
===========
On April 2, 1990, the Company entered into a Revolving Credit and
Term Loan Agreement (the Agreement) with a bank. On November 21,
1991, the Company amended the Agreement to provide for the
acquisition of AMW. The amendment increased the remaining term
loan from $2.575 million at November 21, 1991, to $5 million and
increased quarterly principal payments from $300,000 to $500,000.
Borrowings available under the revolving credit facility increased
from $14 million to $14.5 million. In addition, the amendment
adjusted the covenants included in the original Agreement. During
1992, the $5 million term loan was repaid with proceeds from the
sale of the Water Systems Division.
The Agreement, as amended, contains restrictive covenants relating
to working capital, debt to tangible net worth, interest expense,
capital expenditures, cash dividends, incurrence of additional
indebtedness and sale of assets and prohibits any guaranty,
endorsement or contingent liability with respect to the obligation
or liability of any other person. The Company was in compliance
with these restrictive covenants at December 31, 1992, or waivers
have been obtained for all covenants for which the Company was not
in compliance. The Agreement requires neither a commitment fee nor
compensating account balance. Borrowings under the Agreement are
secured by property, plant and equipment, inventories and
receivables.
On August 1, 1990 the Company entered into a Note Agreement (Note
Agreement) with an insurance company which replaced the previous
note agreement. The Note Agreement with the insurance company for
the senior subordinated notes contains covenants which are less
restrictive than the Agreement. On November 21, 1991, the Note
Agreement was amended to provide for the acquisition of AMW. The
amendment adjusted the repayment terms and covenants included in
the original Note Agreement. The Company was in compliance with
these covenants at December 31, 1992, or waivers have been obtained
for all covenants for which the Company was not in compliance. As
more fully described in Note 10, the insurance company was granted
warrants under the Note Agreement to purchase 13,303 shares of the
Company's outstanding common stock.
BURKS PUMPS, INC.
Notes to Consolidated Financial Statements
Page 8
The Company has renegotiated certain of the covenants in its
financing agreements in order to reflect the sale of the Water
Systems Division.
6. Lease obligations
The Company leases its Anaheim, California facility under a non-
cancelable lease which provides for payment by the Company of
property taxes and insurance. The lease has a five-year renewal
option at the end of the lease term (1995). The Company does not
presently utilize the facility for manufacturing operations, and is
subleasing the facility. Payments to be received under such
subleases approximate lease payments made by the Company.
The Company leases certain of its machinery and equipment under
non-cancelable lease agreements. These agreements extend for a
seven-year term. The Company also leases its computer system and
related software under a non-cancelable lease with a five-year
term. The leases are reflected in the financial statements as
capitalized leases in accordance with the requirements of Statement
of Financial Accounting Standards No. 13, "Accounting for Leases."
<TABLE>
<CAPTION>
Minimum lease payments under long-term capital leases at December 31, 1992 are
as follows:
<S> <C> <C>
1993 $ 445,181
1994 358,217
1995 194,122
1996 71,262
1997 23,404
----------
Total minimum lease payments 1,092,186
Less amount representing interest (129,831)
----------
Present value of net minimum lease
payments, including current portion
of $341,472 $ 962,355
==========
Minimum rental payments under existing non-cancelable operating leases at
December 31, 1992 are as follows:
1993 $ 33,528
1994 11,445
----------
Total minimum payments $ 44,973
==========
Rental expense on operating leases for the year ended December 31, 1992 was
approximately $258,939.
</TABLE>
<PAGE>
<PAGE>
BURKS PUMPS, INC.
Notes to Consolidated Financial Statements
Page 9
<TABLE>
7. Income taxes
The provision for income taxes is summarized as follows:
<CAPTION>
1992
<S> <C>
Current:
Federal $1,076,437
Foreign 52,612
State 232,869
----------
1,361,918
==========
Deferred:
Federal 107,569
State (10,590)
---------
96,979
=========
$1,458,897
</TABLE>
Included in current assets at December 31, 1992 are deferred
income taxes of $686,130, which primarily reflect the timing
differences relating to the allowance for doubtful accounts,
inventory reserves and additional inventory costs capitalized for
tax purposes.
The provision for income taxes for the year ended December 31,
1992 differs from the amount of income tax determined by applying
the applicable U.S. statutory federal income tax rate to pretax
income as a result of the following differences:
<TABLE>
<CAPTION>
<S> <C>
Statutory U.S. rate 34%
Increase in rate resulting from:
State/local taxes, net 7%
Taxable gain on sale of Water Systems Division 6%
Non-deductible goodwill amortization and write-off 14%
Fixed asset bases differences due to purchase accounting 5%
---
Effective tax rate 66%
===
</TABLE>
<PAGE>
<PAGE>
BURKS PUMPS, INC.
Notes to Consolidated Financial Statements
Page 10
8. Related parties
Harbour Group Ltd., an affiliate of HGI, L.P. charges the Company
for direct management and administrative services provided to the
Company based on actual, direct costs of such services. These
charges totaled $283,010 for the year ended December 31, 1992.
Certain members of management have purchased shares of the
Company's stock at prices determined by the Board of Directors.
The purchase price has been financed by promissory notes payable to
the Company, $730,651 outstanding at December 31, 1992, with the
shares pledged as security.
The insurance company with whom Burks has a note payable and
outstanding common stock warrants is a limited partner of Harbour
Group Investments, L.P.
9. Retirement plans
The Company offers its employees one retirement savings plan under
Section 401(k) of the Internal Revenue Code. Each employee may
elect to enter into a written salary deferral agreement under which
a portion their salary, ranging from 0-15%, subject to aggregate
limits required under the Internal Revenue Code, may be contributed
to the plan. The Company may match a part of the employee's
contribution up to a maximum Company contribution of 5% of the
employee's salary, and all plan administrative expenses are borne
by the Company. During the year ended December 31, 1992 plan
expenses, including administrative costs and employer
contributions, were $296,223.
The Company has a defined benefit pension plan for union employees
at the Decatur location. Benefits under the union employee plan
are based on years of service. The Company's policy is to fund the
minimum amount necessary to avoid a funding deficiency.
<PAGE>
<PAGE>
BURKS PUMPS, INC.
Notes to Consolidated Financial Statements
Page 11
<TABLE>
Net periodic pension benefit related to the Company's defined benefit plans
for 1992 is comprised of the following:
<CAPTION>
1992
<S> <C>
Service cost $ 9,476
Interest cost on projected benefit obligation 25,701
Actual return on plan assets (43,737)
Net amortization and deferral (7,952)
--------
Net periodic pension benefit $(16,512)
========
The funded status of the Company's defined benefit plan covering
employees at December 31, 1992 is as follows:
1992
Accumulated benefit obligation:
Vested benefits $ 333,883
Nonvested benefits 8,395
---------
$ 342,278
Plan assets at fair value $ 586,173
Projected benefit obligation (342,278)
---------
Overfunded projected benefit obligation 243,895
Unrecognized initial net asset (133,705)
Unrecognized net gain (56,016)
---------
Prepaid pension cost $ 54,174
=========
</TABLE>
The expected long-term rate of return on plan assets was 8% at
December 31, 1992. The expected discount rate used in determining
the actuarial present value of the accumulated benefit obligations
was 8% for the plan at December 31, 1992. Plan assets are invested
in a diversified portfolio that primarily consists of equity and
debt securities. The method of valuation used to calculate the
costs of the plan for pension benefits is the unit credit actuarial
cost method. Death and disability benefits are valued under the
one-year term actuarial cost method.
10. Redeemable common stock warrants
Under terms of the Note Agreement with the insurance company, the
insurance company was granted warrants to purchase 13,303 shares of
the Company's outstanding common stock for an aggregate purchase
price of $.10 per share.
BURKS PUMPS, INC.
Notes to Consolidated Financial Statements
Page 12
The warrants expire December 1, 1997 and none have been
exercised as of December 31, 1992. The warrants allow the
insurance company to require the Company to purchase the
warrants at any time between September 30, 1992 (the date of the
sale of the Water Systems Division) and December 1, 1997 at a
specified formula price. At the date of issuance, the warrants
were determined to be equity warrants; however, no amount was
assigned thereto as their value was estimated to be nominal.
The estimated put value of the warrants has increased from a
nominal amount at December 31, 1991 to $2,186,636 at
December 31, 1992. The warrants have been accreted to their
estimated put value through charges to retained earnings and
additional paid-in capital of $1,279,054 and $907,582,
respectively.
11.
Commitments and contingencies
The Company is a party to certain lawsuits. Management and legal
counsel do not expect the outcome of any litigation to have a
material adverse affect on the Company's financial position or
results of operations. See Note 13 for further discussion.
<TABLE>
12. Supplemental balance sheet information
<CAPTION>
December 31, 1992
<S> <C>
Accounts receivable:
Trade receivables $6,815,212
Less: Allowance for doubtful accounts (583,119)
Water Systems Division sale receivable 2,079,778
Other receivables 766,014
----------
$9,077,885
==========
Inventories:
Raw materials $ 2,422,316
Work in process 2,204,718
Finished goods 7,640,271
-----------
$12,267,305
===========
</TABLE>
<PAGE>
<PAGE>
BURKS PUMPS, INC.
Notes to Consolidated Financial Statements
Page 13
<TABLE>
<CAPTION>
1992
<S> <C>
Property, plant and equipment:
Machinery and equipment $ 8,119,634
Buildings and improvements 3,320,743
Land 167,850
Property held under capital lease 2,145,025
-----------
13,753,252
Less: Accumulated depreciation (including
$1,250,580 related to property held
under capital leases) (5,631,495)
-----------
8,121,757
Construction-in-progress 31,434
Property held for sale, net 257,714
-----------
$ 8,410,905
===========
Intangible assets:
Goodwill, net $ 9,740,804
Intellectual property rights, net 1,600,431
Non-competition agreements, net 181,000
-----------
$11,522,235
===========
Other assets:
Deferred financing costs, net $ 232,500
Other 9,749
-----------
$ 242,249
===========
Accrued liabilities:
Accrued payroll and commissions $ 593,967
Warranty reserve 772,927
Accrued professional services 402,325
Accrued vacation 334,339
Accrued interest 231,654
Accrued property taxes 233,275
Accrued advertising 107,846
Accrued workers compensation 73,566
Relocation and consolidation reserve 1,110,542
Accrued income taxes 215,039
Other 357,941
-----------
$ 4,433,421
===========
Other long-term liabilities and deferred credit:
Post-employment group insurance $ 348,835
Product liability reserve 454,319
Non-competition agreement, net 320,831
-----------
$ 1,123,985
===========
</TABLE>
BURKS PUMPS, INC.
Notes to Consolidated Financial Statements
Page 14
13. Subsequent event
On December 29, 1993, Crane Co. acquired the outstanding common
stock of Burks Pumps, Inc. for approximately $70 million.
Coincident with the sale of the Company, approximately $6 million
of the proceeds were placed in escrow to cover potential expenses
related to environmental and other contingencies. The Company is
presently in the process of testing and evaluating any potential
environmental matters at its production facilities. Due to the
preliminary stage of the Company's testing and evaluation process,
the December 31, 1992 Company financial statements do not reflect
any liabilities associated with environmental matters.
<PAGE>
<PAGE>
EXHIBIT 3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Form 8-K of Crane Co. dated
December 29, 1993 of our report dated February 12, 1993, except as to
Note 13 which is as of December 29, 1993, relative to Burks Pumps, Inc.'s
financial statements for the year ended December 31, 1992.
PRICE WATERHOUSE
St. Louis, Missouri
January 20, 1994
<PAGE>
<PAGE>
<TABLE>
EXHIBIT 4
CRANE CO.
BURKS PUMPS, INC.
Statement of Income
(in thousands)
<CAPTION>
9 Months Ended
9/30/93 9/30/92
(Unaudited)
<S> <C> <C>
Net Sales $41,998 $39,249
Operating Costs and Expenses:
Cost of Sales 28,850 26,451
Selling, General and Administrative 8,918 8,038
------- -------
37,768 34,489
Operating Profit 4,230 4,760
Other Expenses:
Interest Expense - Net (1,723) (2,101)
Miscellaneous - Net (161) (158)
------- -------
(1,884) (2,259)
Income from Continuing Operations 2,346 2,501
Provision for Income Taxes 970 1,009
------- -------
Income from Continuing Operations 1,376 1,492
Discontinued Operations:
Loss from Discontinued Operations,
After Applicable Income Taxes of $114 - (172)
------- -------
Net Income $ 1,376 $ 1,320
======= =======
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CRANE CO.
BURKS PUMPS, INC.
Balance Sheet
(in thousands)
<CAPTION>
9/30/93 9/30/92
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and Cash Equivalents $ 59 $ -
Accounts Receivable - Net 6,357 9,780
Inventories, at lower of cost, principally
LIFO, or market:
Net Inventory 12,857 13,282
Prepaid Expenses 112 109
Other Current Assets 722 394
------- -------
Total Current Assets 20,107 23,565
Intangible Assets 11,147 11,296
Property, Plant and Equipment:
Cost 15,436 15,437
Less Accumulated Depreciation 7,080 6,123
------- -------
8,356 9,314
Other Assets 168 255
Cost in Excess of Net Assets Acquired - -
------- -------
Total Assets $39,778 $44,430
======= =======
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CRANE CO.
BURKS PUMPS, INC.
Balance Sheet
(in thousands)
<CAPTION>
9/30/93 9/30/92
(Unaudited)
<S> <C> <C>
Liabilities and Shareholders' Equity
Current Liabilities:
Current Maturities of Long-Term Debt $ 1,874 $ 2,324
Accounts Payable 2,918 4,760
Accrued Liabilities 3,790 3,483
------- -------
Total Current Liabilities 8,582 10,567
Long-Term Debt 5,694 7,697
Long-Term Debt - Related Parties 12,000 13,500
Redeemable Common Stock Warrants 2,323 2,187
Other Long-Term Liabilities 951 822
Shareholders' Equity:
Common Shares 1 1
Capital Surplus 10,803 10,386
Shareholders Note Receivable (576) (730)
------- -------
Total Common Shareholders' Equity 10,228 9,657
------- -------
$39,778 $44,430
======= =======
</TABLE>
<PAGE>
<PAGE>
<TABLE>
EXHIBIT 5
CRANE CO. - PROFORMA
Statement of Income
(in thousands, except per share amounts)
<CAPTION>
12/31/92 12/31/92
Crane Co. Burks Pro-Forma Pro-Forma
& Subs Pumps Adjustments 12/31/92
<C> <C> <C> <C>
Net Sales $1,306,977 $52,640 $ - $1,359,617
Operating Costs and Expenses
Cost of Sales 1,027,408 35,491 1,880 1,064,779
Selling, General and Administrative 194,881 11,568 - 206,449
Special Charge 39,444 - - 39,444
---------- ------- ------- ---------
1,261,733 47,059 1,880 1,310,672
Operating Profit (Loss) 45,244 5,581 (1,880) 48,945
Other Income (Deductions):
Interest Expense - Net (9,485) (2,764) (389) (12,638)
Miscellaneous Income(Expense) - Net 2,930 (315) - 2,615
---------- ------- ------- ----------
(6,555) (3,079) (389) (10,023)
---------- ------- ------- ----------
Income (Loss) Before Taxes 38,689 2,502 (2,269) 38,922
Provision For Income Taxes (Benefit) 14,403 1,171 (463) 15,111
---------- ------- ------- ---------
Income (Loss) from Continuing Operations 24,286 1,331 (1,806) 23,811
Discontinued Operations:
Earnings (Loss) from Discontinued
Operations, After Applicable Income
Taxes of $170 - (458) - (458)
Loss on Sale of Water Systems Division - (118) - (118)
---------- ------- ------- ----------
Net Income $ 24,286 $ 755 $(1,806) $ 23,235
========== ======= ======= ==========
Net Income Per Share $.79 $.75
==== ====
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CRANE CO. - PROFORMA
Statement of Income
(in thousands, except per share amounts)
<CAPTION>
9/30/93 9/30/93
Crane Co. Burks Pro-Forma Pro-Forma
& Subs Pumps Adjustments 9/30/93
(Unaudited)
<S> <C> <C> <C> <C>
Net Sales $987,930 $41,998 $ - $1,029,928
Operating Costs and Expenses
Cost of Sales 781,548 28,850 1,610 812,008
Selling, General and Administrative 139,918 8,918 - 148,836
-------- ------- ------ ----------
921,466 37,768 1,610 960,844
Operating Profit (Loss) 66,464 4,230 (1,610) 69,084
Other Income (Deductions):
Interest Expense - Net (4,790) (1,723) 82 (6,431)
Miscellaneous Income(Expense) - Net 938 (161) - 777
-------- ------- ------ ----------
(3,852) (1,884) 82 (5,654)
-------- ------- ------ ----------
Income (Loss) Before Taxes 62,612 2,346 (1,528) 64,430
Provision For Income Taxes (Benefit) 23,358 970 (279) 24,049
-------- ------- ------- -----------
Income (Loss) from Continuing Operations $39,254 $ 1,376 $(1,249) $ 39,381
======== ======= ======= ===========
Net Income (Loss) Per Share $1.30 $1.30
===== =====
Average Shares Outstanding 30,233 30,233
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CRANE CO. - PROFORMA
Balance Sheet
(in thousands, except per share amounts)
<CAPTION>
9/30/93 9/30/93
Crane Co. Burks Pro-Forma Pro-Forma
& Subs Pumps Adjustments 9/30/93 9/30/93
(Unaudited)
<S> <C> <C> <C> <C>
Assets
Current Assets:
Cash and Cash Equivalents $ 44,365 $ 59 $ - $ 44,424
Accounts Receivable 179,810 6,357 - 186,167
Inventories, at lower of cost,
principally LIFO, or market:
Net Inventory 170,252 12,857 800 183,909
Other Current Assets 9,635 834 - 10,469
-------- ------- ------- ---------
Total Current Assets 404,062 20,107 800 424,969
Intangible Assets, Net - 11,147 (9,455) 1,692
Property, Plant and Equipment:
Gross P.P.& E. 387,318 15,436 7,080) 395,674
Accumulated Depreciation 219,083 7,080 (7,080) 219,083
-------- ------- -------- --------
Net Property, Plant & Equipment 168,235 8,356 - 176,591
Other Assets 28,280 168 - 28,448
Cost in Excess of Net
Assets Acquired 60,899 - 52,652 113,551
-------- ------- -------- --------
Total Assets $661,476 $39,778 $ 43,997 $745,251
======== ======= ======== ========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CRANE CO. - PROFORMA
Balance Sheet
(in thousands,except per share amounts)
<CAPTION>
9/30/93 9/30/93
Crane Co. Burks Pro-Forma Pro-Forma
& Subs Pumps Adjustments 9/30/93
(Unaudited)
<S> <C> <C> <C> <C>
Liabilities and Shareholders' Equity
Current Liabilities:
Current Maturities of
Long-Term Debt $ 6,039 $ 1,874 $ (1,500) $ 6,413
Loans Payable 41,740 - 69,824 111,564
Accounts Payable 71,131 2,918 - 74,049
Accrued Liabilities 72,918 3,790 - 76,708
Taxes on Income 52 - - 52
-------- ------- -------- --------
Total Current Liabilities 191,880 8,582 68,324 268,786
Long-Term Debt 105,492 5,694 (5,694) 105,492
Long-Term Debt - Related Parties - 12,000 (12,000) -
Reserves and Other Liabilities 19,701 951 3,240 23,892
Accrued Postretirment Benefits 40,214 - 2,218 42,432
edeemable Common Stock
Warrants - 2,323 - 2,323
ccrued Pension Liability 7,701 - - 7,701
Deferred Income Tax 6,097 - (1,863) 4,234
Shareholders' Equity:
Common Shares 30,031 1 (1) 30,031
Capital Surplus 13,992 10,803 (10,803) 13,992
Retained Earnings 258,993 - - 258,993
Currency Translation Adjustment (12,625) - - (12,625)
Shareholders Note Receivable - (576) 576 -
--------- ------- -------- --------
Total Common Shareholders' Equity 290,391 10,228 (10,228) 290,391
--------- ------- -------- --------
$ 661,476 $39,778 $ 43,997 $745,251
========= ======= ======== ========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
12/31/92 9/30/93
Pro-Forma Adjustments Amount Amount
<S> <C> <C>
1) Amortization of the excess of purchase price over
net assets acquired of $52,652 million over
40 years - charged to cost of sales $ 1,316 $ 987
To reverse amortization of preacquisition goodwill (236) (177)
------- ------
1,080 810
2) Increase (Decrease) in net interest cost as a result
of acquisition based on Crane's investment and
borrowing rates for the respective periods 389 (82)
3) Record step-up basis of inventory (flow through
cost of goods sold) 800 800
4) Record postretirment benefits upon acquisition 2,218
5) Record restructuring/reorganization cost 3,240
6) Pay down Burks debt upon acquisition
Current maturities of long-term debt (1,500)
Long-term debt (5,694)
Long-term debt - related parties (12,000)
7) Record deferred tax on acquisition (1,863)
8) Purchase price 69,824
9) Excess of the purchase price over net assets
upon acquisition ($52,652 less $9,455) 43,197
10) Reclass excess purchase price over net assets
from intangible asset on Burks Pumps books 9,455
11) Reclass accumulated depreciation 7,080
</TABLE>
