<PAGE>
SECURITIES AND EXCHANGE COMMISION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
DATE OF REPORT: DECEMBER 16, 1998
CROWN ANDERSEN INC.
Exact name of Registrant as Specified in CHARTER
DELAWARE 0-14229 58-1653577
(State of incorporation) (Commission File No.) (IRS Employer ID No.)
306 DIVIDEND DRIVE, PEACHTREE CITY, GEORGIA 30269
(Address of principal executive offices including (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 486-2000
NOT APPLICABLE
(Former name or former address, if changes since last report)
<PAGE>
Contents
Item 2: Acquisition or Disposition of Assets................................. 3
Item 7: Financial Statements, Pro Forma Financial Information and Exhibits... 3
Signatures................................................................... 4
<PAGE>
Item 2. Acquisition or Disposition of Assets
On December 16, 1998, Crown Andersen Inc. ("Crown") consummated the
purchase of all of the outstanding capital stock, consisting of sixty (60)
shares, of Griffin Environmental Company, Inc. ("Griffin") from Frank V. Smith,
Jr. ("Seller"). Griffin is a designer and manufacturer of pollution control
products, including bag houses, cartridge filters and similar equipment used in
industrial and environmental applications. The total consideration for the
purchase of Griffin was $2,437,781, consisting of $2,164,610 in cash paid to
Seller at closing, and a one (1) year Promissory Note from Crown in the initial
principal amount of $273,171 plus annual interest at the rate of 4.38%. The
amount of consideration for the purchase of Griffin stock was determined through
an analysis of cash flow models performed by Crown and Crown's outside
consultants, based upon Griffin's cash flow over the previous two (2) fiscal
years. The source of the consideration for the purchase was a combination of
(i) funds received through private placement; (ii) working capital from Crown's
short-term line of credit; and (iii) the aforementioned Promissory Note. The
assets of Griffin include inventory, accounts receivable, current contract
commitments, and a 60,000 square foot manufacturing facility situated on ten
(10) acres of property located in Syracuse, New York. Crown intends to operate
Griffin as a wholly-owned subsidiary, and to continue to utilize Griffin's
assets as previously used in the ordinary course of Griffin's business.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired
Audited Financial Statements of Griffin Environmental Company, Inc. as
of March 31, 1998 and 1997 are attached hereto.
(b) Pro Forma Financial Information
Crown Andersen Inc. Pro Forma Combined Financial Statements (Unaudited)
are attached hereto.
3
<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.
CROWN ANDERSEN INC.
(Registrant)
Date: January 26, 1999 by: /s/ Jack D. Brady
-------------------------------------
Jack D. Brady
President and Chief Executive Officer
4
<PAGE>
CROWN ANDERSEN INC.
Index to Financial Statements
Form 8-K/A
<TABLE>
<S> <C>
(a) Financial Statements of Business Acquired
Financial Statements of Griffin Environmental Company, Inc.
Report of Independent Certified Public Accountants F-2
Balance sheets F-3
Statements of income and retained earnings F-4
Statements of cash flows F-5
Notes to financial statements F-6 to F-12
(b) Pro Forma Financial Information
Crown Andersen Inc. Pro forma Combined Financial Statements
(Unaudited)
Unaudited pro forma combined balance sheet F-13
Unaudited pro forma combined statements of operations F-14
Notes to pro forma combined financial statements F-15 to F-17
</TABLE>
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors and Stockholder
of Griffin Environmental Company, Inc.:
We have audited the accompanying balance sheets of Griffin Environmental
Company, Inc. (formerly Bexhill, Inc. and Subsidiary) as of March 31, 1998 and
1997, and the related statements of income and retained earnings, and cash flows
for the years then ended. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Griffin Environmental Company,
Inc. (formerly Bexhill, Inc. and Subsidiary) as of March 31, 1998 and 1997, and
the results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
BDO SEIDMAN, LLP
Atlanta, Georgia
November 18, 1998, except for
Note 9, which is as of
December 16, 1998
F-2
<PAGE>
GRIFFIN ENVIRONMENTAL COMPANY, INC.
(formerly Bexhill, Inc. and Subsidiary)
Balance Sheets
<TABLE>
<CAPTION>
March 31, March 31, September 30,
1998 1997 1998
----------- ----------- -------------
<S> <C> <C> <C>
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 111,728 $ 52,491 $ 30,818
Accounts receivable, net of allowance for
doubtful accounts of $25,000, $25,000
and $15,000 (notes 3 and 4) 925,527 599,601 685,497
Inventories (notes 2, 3 and 4) 886,220 511,248 606,582
Prepaid expenses and other assets 18,191 27,124 55,250
Note receivable - current portion - 4,250 -
Deferred taxes (note 5) 44,000 57,500 36,000
----------- ----------- -----------
Total current assets 1,985,666 1,252,214 1,414,147
----------- ----------- -----------
Property, plant and equipment (notes 3 and 4):
Land 360,224 360,224 360,224
Building and improvements 1,310,731 1,310,731 1,310,731
Machinery and equipment 819,557 816,246 837,252
Furniture, fixtures and office equipment 311,903 305,500 318,311
Automotive equipment 67,342 67,342 67,342
----------- ----------- -----------
2,869,757 2,860,043 2,893,860
Less accumulated depreciation (1,732,893) (1,659,345) (1,769,282)
----------- ----------- -----------
Net property, plant and equipment 1,136,864 1,200,698 1,124,578
----------- ----------- -----------
Other assets:
Debt acquisition costs, net of accumulated
amortization of $5,655, $3,770 and $6,598 3,770 5,655 2,827
Note receivable - long-term - 11,688 -
----------- ----------- -----------
Total other assets 3,770 17,343 2,827
----------- ----------- -----------
$ 3,126,300 $ 2,470,255 $ 2,541,552
=========== =========== ===========
Liabilities and Stockholder's Equity
Current liabilities:
Note payable - bank (note 3) $ - $ 20,000 $ 120,000
Current installments of long-term debt (Note 4) 105,022 107,677 104,747
Trade accounts payable 644,178 515,158 400,509
Accrued compensation 115,581 105,842 65,064
Accrued commissions and other expenses 69,605 96,970 92,038
Accrued income taxes 61,933 116,845 14,154
Customer deposits 441,657 1,750 -
----------- ----------- -----------
Total current liabilities 1,437,976 964,242 796,512
----------- ----------- -----------
Long-term debt, excluding current installments (Note 4) 163,278 268,300 118,956
Deferred income taxes (Note 5) 272,000 287,500 261,000
----------- ----------- -----------
Total liabilities 1,873,254 1,520,042 1,176,468
----------- ----------- -----------
Stockholder's equity:
Common stock no par value. 200 shares
authorized, 60 shares issued and
outstanding 30,000 30,000 30,000
Retained earnings 1,223,046 920,213 1,335,084
----------- ----------- -----------
Total stockholder's equity 1,253,046 950,213 1,365,084
----------- ----------- -----------
$ 3,126,300 $ 2,470,255 $ 2,541,552
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
GRIFFIN ENVIRONMENTAL COMPANY, INC.
(formerly Bexhill, Inc. and Subsidiary)
Statements of Income and Retained Earnings
<TABLE>
<CAPTION>
For the Year For the six months
ended March 31, ended September 30,
-------------------------------- -------------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
(unaudited)
<S> <C> <C> <C> <C>
Net sales $5,903,764 $6,475,707 $2,407,120 $2,373,684
Cost of goods sold 4,296,019 4,944,369 1,759,307 1,772,754
---------- ---------- ---------- ----------
Gross margin 1,607,745 1,531,338 647,813 600,930
Operating expenses 1,036,994 1,010,650 451,230 522,568
---------- ---------- ---------- ----------
Operating income 570,751 520,688 196,583 78,362
---------- ---------- ---------- ----------
Other income (expense):
Interest income 4,310 2,582 1,557 1,135
Interest expense (48,896) (65,713) (11,381) (30,820)
Other income - 295 - -
---------- ---------- ---------- ----------
Other expense, net (44,586) (62,836) (9,824) (29,685)
---------- ---------- ---------- ----------
Income before income taxes 526,165 457,852 186,759 48,677
---------- ---------- ---------- ----------
Income tax expense (note 5) 223,332 136,912 74,721 18,000
---------- ---------- ---------- ----------
Net income 302,833 320,940 112,038 30,677
Retained earnings at beginning
of period 920,213 599,273 1,223,046 920,213
---------- ---------- ---------- ----------
Retained earnings at end of period $1,223,046 $ 920,213 $1,335,084 $ 950,890
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
GRIFFIN ENVIRONMENTAL COMPANY, INC.
(formerly Bexhill, Inc. and Subsidiary)
Statements of Cash Flows
<TABLE>
<CAPTION>
For the Year For the six months
ended March 31, ended September 30,
------------------------------ ------------------------------
1998 1997 1998 1997
--------- --------- --------- ---------
(unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 302,833 $ 320,940 $ 112,038 $ 30,677
Adjustments to reconcile net
income to net cash provided
by (used in) operating activities:
Depreciation and amortization 75,433 67,696 37,330 35,797
Provision for doubtful accounts - - (10,000) 6,000
Provision for deferred income taxes (2,000) (32,500) (3,000) (1,000)
Change in operating assets and
liabilities:
Accounts receivable (325,926) 311,127 250,030 (249,178)
Inventories (374,972) 13,159 279,638 36,246
Prepaid expenses and other assets 8,933 (10,638) (37,059) (27,344)
Accounts payable 129,020 (215,261) (243,669) (133,173)
Accrued expenses and
customer deposits 367,368 121,116 (517,519) 191,082
--------- --------- --------- ---------
Net cash provided by (used in)
operating activities 180,689 575,639 (132,211) (110,893)
--------- --------- --------- ---------
Cash flows from investing activities:
Purchase of property and equipment (9,714) (73,483) (24,101) (6,430)
Payments received on note
receivable 15,938 4,250 - 1,771
--------- --------- --------- ---------
Net cash provided by (used in)
investing activities 6,224 (69,233) (24,101) (4,659)
--------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from notes payable to bank 160,000 - 120,000 160,000
Principal payments on note payable
to bank and long-term debt (287,676) (517,310) (44,598) (55,302)
--------- --------- --------- ---------
Net cash provided by (used in)
financing activities (127,676) (517,310) 75,402 104,698
--------- --------- --------- ---------
Increase (decrease) in cash 59,237 (10,904) (80,910) (10,854)
Cash and cash equivalents at beginning
of period 52,491 63,395 111,728 52,491
--------- --------- --------- ---------
Cash and cash equivalents at end of
period $ 111,728 $ 52,491 $ 30,818 $ 41,637
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
GRIFFIN ENVIRONMENTAL COMPANY, INC.
(formerly Bexhill, Inc. and Subsidiary)
Notes to Financial Statements
(Amounts and disclosures as of September 30, 1998 and for the six months
ended September 30, 1998 and 1997 are unaudited)
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) Nature of Operations
--------------------
Griffin Environmental Company, Inc. (Company) is engaged in the design and
manufacture of pollution control equipment. Customers are primarily located in
the Central and Eastern United States. Credit sales are made under standard
industry terms. Sales to one customer represented 55% and 34% for the years
ended March 31, 1998 and 1997, respectively, and 25% (unaudited) and 40%
(unaudited) for the periods ended September 30, 1998 and 1997.
(b) Basis of Presentation
---------------------
The Company formerly operated under the name Bexhill, Inc. and Subsidiaries.
Bexhill, Inc. was a holding company which had two wholly owned subsidiaries,
Griffin Environmental, Inc. and Allodyne, Inc. Allodyne, Inc., an inactive
company, was dissolved on March 31, 1997. Bexhill, Inc. was subsequently merged
into Griffin Environmental Company, Inc. effective June 1, 1998. The financial
statements presented here for periods prior to the merger are consolidated
financial statements. All significant intercompany accounts and transactions
have been eliminated in consolidation.
The information at September 30, 1998 and for the six months ended September 30,
1998 and 1997 is unaudited but in the opinion of management, reflects all
adjustments (which are comprised of only normal recurring accruals) necessary
for a fair presentation of the financial position and results of operations at
the dates and for the periods then ended. Results for interim periods are not
necessarily indicative of results expected for an entire year.
(c) Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Examples include the allowance for doubtful accounts, fixed asset lives and
warranty reserves. Actual results could differ from those estimates.
(d) Cash and Cash Equivalents
-------------------------
Cash and cash equivalents includes all highly liquid investments with a maturity
of three months or less.
F-6
<PAGE>
GRIFFIN ENVIRONMENTAL COMPANY, INC.
(formerly Bexhill, Inc. and Subsidiary)
Notes to Financial Statements
(Amounts and disclosures as of September 30, 1998 and for the six months
ended September 30, 1998 and 1997 are unaudited)
(1) Summary of Significant Accounting Policies, Continued
-----------------------------------------------------
(e) Inventories
-----------
Inventories are stated at the lower of cost (first-in, first-out method) or
market.
(f) Property, Plant and Equipment
-----------------------------
Property, plant and equipment are stated at cost. Depreciation and amortization
is calculated on the straight-line method over estimated useful lives of four to
thirty-five years. Depreciation and amortization expense amounted to $75,433 and
$67,696 for the years ended March 31, 1998 and 1997, respectively, and $37,330
(unaudited) and $35,797 (unaudited) for the periods ended September 30, 1998 and
1997, respectively.
(g) Debt Acquisition Costs
----------------------
Debt acquisition costs represent legal fees and related expenses incurred in
connection with the Company obtaining long-term financing for its plant facility
and equipment. Such costs are being amortized over the term of the debt.
(h) Income Taxes
------------
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
(i) Fair Value of Financial Instruments
-----------------------------------
The Company's principal financial instruments, as contemplated under SFAS No.
107, are represented by its receivables and its long-term debt. A majority of
the Company's receivables are short-term in nature, accordingly, carrying value
is deemed to approximate fair value. The Company's long-term debt bears interest
at rates which change periodically with market interest rates, accordingly,
carrying value is deemed to approximate fair value.
(j) Revenue Recognition
-------------------
Sales of products are recorded when the product is shipped.
F-7
<PAGE>
GRIFFIN ENVIRONMENTAL COMPANY, INC.
(formerly Bexhill, Inc. and Subsidiary)
Notes to Financial Statements
(Amounts and disclosures as of September 30, 1998 and for the six months
ended September 30, 1998 and 1997 are unaudited)
(2) Inventories
-----------
Inventories are summarized as follows:
<TABLE>
<CAPTION>
March 31, March 31, September 30,
1998 1997 1998
--------- --------- -------------
(unaudited)
<S> <C> <C> <C>
Raw materials $340,243 $405,602 $352,260
Work in process 545,977 105,646 254,322
-------- -------- --------
$886,220 $511,248 $606,582
======== ======== ========
</TABLE>
(3) Note Payable - Bank
-------------------
Griffin Environmental Company, Inc. has a $500,000 line of credit agreement with
a bank with interest payable at prime plus 1%. The line is secured by accounts
receivable, inventory, equipment and a limited individual guarantee by the sole
stockholder and another officer. The bank's prime rate was 8.5% at March 31,
1998 and 9.5% (unaudited) at September 30, 1998.
(4) Long-Term Debt
--------------
A summary of long-term debt at March 31 and September 30 is as follows:
<TABLE>
<CAPTION>
March 31, March 31, September 30,
1998 1997 1998
-------------- -------------- -----------------
(unaudited)
<S> <C> <C> <C>
Note payable to bank, due October 2000,
payable in monthly installments of $8,333
plus interest at 1% over prime, secured by
a mortgage on the Company's facility, as
well as the items securing the bank line of
credit $258,333 $358,333 $216,667
Note payable to bank, payable in monthly
installments of $616 including interest at
6.8%, secured by a vehicle - 3,017 -
Note payable, due March 2000, payable in
monthly installments of $467 including
interest at 7.5%, secured by a vehicle 9,967 14,627 7,036
-------------- -------------- -----------------
268,300 375,977 223,703
Less current installments 105,022 107,677 104,747
-------------- -------------- -----------------
$163,278 $268,300 $118,956
============== ============== =================
</TABLE>
F-8
<PAGE>
GRIFFIN ENVIRONMENTAL COMPANY, INC.
(formerly Bexhill, Inc. and Subsidiary)
Notes to Financial Statements
(Amounts and disclosures as of September 30, 1998 and for the six months
ended September 30, 1998 and 1997 are unaudited)
Aggregate debt maturities are as follows:
<TABLE>
<CAPTION>
March 31, September 30,
1998 1997 1998
---------- ------------- -------------
(unaudited)
<S> <C> <C> <C>
1998 $ - $107,677 $ -
1999 105,022 105,022 104,747
2000 104,944 104,945 102,290
2001 58,333 58,333 16,666
</TABLE>
As of March 31, 1998, the Company has outstanding a $68,000 standby letter of
credit in favor of a third party. The letter of credit was increased to $75,000
in July 1998 and expires on December 31, 1998.
(5) Income Taxes
------------
Income tax expense (benefit) consists of:
<TABLE>
<CAPTION>
For the year For the six months
ended March 31, ended September 30,
--------------------- -----------------------------
1998 1997 1998 1997
-------- -------- ---------- -----------
(unaudited)
<S> <C> <C> <C> <C>
Current:
Federal $194,329 $165,463 $ 67,842 $ 16,500
State 31,003 3,949 9,879 2,500
-------- -------- -------- -----------
225,332 169,412 77,721 19,000
-------- -------- -------- -----------
Deferred federal and state (2,000) (32,500) (3,000) (1,000)
-------- -------- -------- -----------
$223,332 $136,912 $ 74,721 $ 18,000
======== ======== ======== ===========
</TABLE>
F-9
<PAGE>
GRIFFIN ENVIRONMENTAL COMPANY, INC.
(formerly Bexhill, Inc. and Subsidiary)
Notes to Financial Statements
(Amounts and disclosures as of September 30, 1998 and for the six months
ended September 30, 1998 and 1997 are unaudited)
The following table reconciles income tax expense calculated at the federal
statutory rate of 34% to the income tax expense reflected above:
<TABLE>
<CAPTION>
Year ended Six-month periods
March 31, September 30,
----------------------------- -----------------------------
1998 1997 1998 1997
-------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C>
Federal income taxes at $178,896 $155,679 $ 64,518 $ 16,550
statutory rate of 34%
State tax, net of federal benefit 38,204 (15,136) 6,520 1,650
Other items 6,232 (3,622) 3,683 (200)
-------- -------- -------- --------
Income tax expense $223,332 $136,912 $ 74,721 $ 18,000
======== ======== ======== ========
</TABLE>
The components of the Company's deferred tax assets and liabilities are as
follows:
<TABLE>
<CAPTION>
March 31, March 31, September 30,
1998 1997 1998
-------- -------- --------------
(unaudited)
<S> <C> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts $ 9,500 $ 9,500 $ 6,000
Accrued liabilities 34,500 30,300 30,000
New York State net operating loss - 17,700 -
-------- -------- --------------
44,000 57,500 36,000
Deferred tax liability:
Depreciation 272,000 287,500 261,000
-------- -------- --------------
Net deferred tax liability 228,000 230,000 225,000
Classification of net deferred tax liability:
Current asset 44,000 57,500 36,000
Noncurrent liability 272,000 287,500 261,000
-------- -------- --------------
$228,000 $230,000 $ 225,000
======== ======== ==============
</TABLE>
F-10
<PAGE>
GRIFFIN ENVIRONMENTAL COMPANY, INC.
(formerly Bexhill, Inc. and Subsidiary)
Notes to Financial Statements
(Amounts and disclosures as of September 30, 1998 and for the six months
ended September 30, 1998 and 1997 are unaudited)
(6) Employee Benefit Plan
---------------------
The Company has a defined contribution retirement plan which includes a salary
reduction provision. Under the Plan, employees are eligible to participate in
the voluntary salary reduction provision after one-half year of service and may
contribute up to 12% of annual compensation. The Company contributes an amount
equal to 50% of the first 6% of employee contributions. Pension expense totalled
$28,900 and $28,800 for the years ended March 31, 1998 and 1997, respectively,
and $13,200 (unaudited) and $12,900 (unaudited) for the six-month periods ended
September 30, 1998 and 1997, respectively.
(7) Concentration of Credit Risk
----------------------------
The Company maintains cash balances in various financial institutions which may,
at times, exceed federally insured limits. Receivables from one customer
represents 58% and 29% for the years ended March 31, 1998 and 1997,
respectively.
(8) Supplemental Disclosures - Cash Flows
-------------------------------------
<TABLE>
<CAPTION>
For the year ended For the six months ended
March 31, September 30,
1998 1997 1998 1997
-------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C>
Cash paid for:
Interest $ 48,896 $ 65,713 $ 11,381 $ 30,820
Income taxes 278,421 71,191 123,500 110,000
Noncash financing and
investing activities for the
years ended March 31 and
six- month periods ended
September 30 are as
follows:
$ 48,896 $ 65,713 $ 11,381 $ 30,820
Vehicle purchase financing $ - $ 15,000 $ - $ -
</TABLE>
F-11
<PAGE>
GRIFFIN ENVIRONMENTAL COMPANY, INC.
(formerly Bexhill, Inc. and Subsidiary)
Notes to Financial Statements
(Amounts and disclosures as of September 30, 1998 and for the six months
ended September 30, 1998 and 1997 are unaudited)
(9) Subsequent Event
----------------
On December 16, 1998, Crown Andersen Inc. ("Crown") consummated the purchase of
all of the outstanding capital stock of the Company. This acquisition will be
accounted for by Crown under the purchase method of accounting. Accordingly, the
cost basis of the assets and liabilities Company will change to reflect their
fair value as of the acquisition date.
F-12
<PAGE>
CROWN ANDERSEN INC.
Pro Forma Combined Balance Sheet
As of September 30, 1998
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Crown Griffin Subtotal Adjustments Ref Pro Forma
--------- ------- --------- ------------ --- -----------
ASSETS:
<S> <C> <C> <C> <C> <C> <C>
Current:
Cash and cash equivalents $ 1,171 $ 31 $ 1,202 $ (900) (A) $ 1,202
900 (B)
Receivables:
Trade, net 2,433 685 3,118 - 3,118
Other 63 - 63 - 63
Income taxes 1,355 - 1,355 - 1,355
Costs and estimated earnings in
excess of billings on
uncompleted contracts 4,686 - 4,686 - 4,686
Inventories 2,342 607 2,949 - 2,949
Prepaid expenses 83 55 138 - 138
Current maturities of long-term note receivable 490 - 490 - 490
Deferred income taxes 149 36 185 - 185
------- ------ ------- ------- -------
Total current assets 12,772 1,414 14,186 - 14,186
Restricted cash 1,036 - 1,036 - 1,036
Equipment held for resale 490 - 490 - 490
Property and equipment, less accumulated
depreciation 1,574 1,125 2,699 308 (A) 3,007
Deferred income taxes 601 - 601 - 601
Property held for sale 1,500 - 1,500 - 1,500
Other assets 111 3 114 765 (A) 879
------- ------ ------- ------- -------
Total assets $18,084 $2,542 $20,626 $ 1,073 $21,699
======= ====== ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Notes payable $ 670 $ 120 $ 790 $ 1,538 (A) $ 2,328
Accounts payable 2,025 401 2,426 - 2,426
Accruals:
Compensation 255 65 320 - 320
Warranty 333 - 333 - 333
Miscellaneous 604 106 710 - 710
Billings on uncompleted contracts in excess
of cost and estimated earnings 6 - 6 - 6
Current maturities of long-term debt 775 105 880 - 880
Deferred income taxes 531 - 531 - 531
------- ------ ------- ------- -------
Total currents liabilities 5,199 797 5,996 1,538 7,534
Long-term debt, less current maturities - 119 119 - 119
Deferred income taxes 22 261 283 - 283
------- ------ ------- ------- -------
Total liabilities 5,221 1,177 6,398 1,538 7,936
------- ------ ------- ------- -------
Stockholders' equity:
Common stock, $.10 par 156 - 156 30 (B) 186
Additional paid-in capital 2,906 - 2,906 870 (B) 3,776
Treasury stock, at cost (296) - (296) - (296)
Retained earnings 9,904 - 9,904 - 9,904
Foreign currency translation adjustment 193 - 193 - 193
Net assets of Griffin - 1,365 1,365 (1,365) (A) -
------- ------ ------- ------- -------
Total stockholders' equity 12,863 1,365 14,228 (465) 13,763
------- ------ ------- ------- -------
Total liabilities and stockholders' equity $18,084 $2,542 $20,626 $ 1,073 $21,699
======= ====== ======= ======= =======
</TABLE>
See notes to pro forma combined financial statements.
F-13
<PAGE>
CROWN ANDERSEN INC.
Pro Forma Combined Statement of Operations
For the Year Ended September 30, 1998
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Crown Griffin Subtotal Adjustments Ref Pro Forma
------ -------- --------- ------------ ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Contracts $12,335 $ - $12,335 $ - $12,335
Sales 1,974 5,937 7,911 - 7,911
Other 17 - 17 - 17
------- ------ ------- ----- -------
14,326 5,937 20,263 - 20,263
------- ------ ------- ----- -------
Costs and expenses:
Cost of contracts and sales 12,462 4,283 16,745 - 16,745
Selling, general and administrative 2,845 995 3,840 57 (C) 4,017
120 (D)
Interest and other income (148) (5) (153) - (153)
Loss on litigation settlement 900 - 900 - 900
------- ------ ------- ----- -------
16,059 5,273 21,332 177 21,509
------- ------ ------- ----- -------
Income (loss) from operations before taxes on
income (1,733) 664 (1,069) (177) (1,246)
Taxes (tax benefit) on income/loss (607) 280 (327) (54) (E) (381)
------- ------ ------- ----- -------
Net income (loss) $(1,126) $ 384 $ (742) $(123) $ (865)
======= ====== ======= ===== =======
Average shares and equivalent shares 1,514 1,814
outstanding ======= =======
Basic and diluted loss per share $(0.74) $(0.48)
======= =======
</TABLE>
See notes to pro forma combined financial statements
F-14
<PAGE>
CROWN ANDERSEN INC.
Notes to Pro Forma Combined Financial Statements
(Unaudited)
1. Basis of Presentation
Crown Andersen Inc. ("Crown" and, together with its subsidiaries, the
"Company") is involved in the design manufacture, sale, and installation of
industrial pollution control systems, medical, chemical and hazardous waste
disposal systems, heat recovery systems, industrial air handling systems, and
spray dryer systems. In December 1998, the Company entered into an agreement to
acquire substantially all of the common stock of Griffin Environmental, Inc.
(the "Griffin Acquisition") in a transaction to be accounted for as a purchase.
The unaudited pro forma combined financial statements present the
balance sheet and income statement data from the consolidated financial
statements of Crown Andersen Inc. ("Crown" or the "Company") and give effect to
the acquisition by Crown (entered into in December 1998) of the outstanding
stock of Griffin Environmental, Inc. ("Griffin").
The unaudited pro forma combined statements of operations have been
prepared for the year ended September 30, 1998. These statements give effect to
the Griffin Acquisition as if such transaction had occurred on October 1, 1997.
The pro forma combined statements of operations for the year ended September 30,
1998 combines the Company's income statement for that period with Griffin's
historical results of operations for the year ended September 30, 1998. The
unaudited pro forma combined balance sheet gives effect to the Griffin
Acquisition, and certain other related transactions as if such events had
occurred on September 30, 1998.
The unaudited pro forma combined financial statements are based on the
historical financial statements of the Company and Griffin and the estimates and
assumptions set forth below and in the notes to the unaudited pro forma combined
financial statements.
The pro forma adjustments are based on preliminary estimates,
available information and certain assumptions that management deems appropriate.
The unaudited pro forma combined financial data presented herein do not purport
to represent the results that the Company would have obtained had the
transactions which are the subject of pro forma adjustments occurred at the
beginning of the applicable periods presented, as assumed, or to project the
future results of the Company.
F-15
<PAGE>
CROWN ANDERSEN INC.
Notes to Pro Forma Combined Financial Statements
(Unaudited)
2. Unaudited Pro Forma Combined Balance Sheet Adjustments
(A) Records the acquisition of all of the outstanding shares of
Griffin Environmental, Inc. for $2,438,000. In connection therewith, the
Company paid cash of $900,000 issued a note payable to the seller in the amount
of $273,000 and obtained an additional advance of $1,265,000 on its line of
credit. This acquisition was accounted for as a purchase. The purchase price
was allocated as follows:
<TABLE>
<CAPTION>
Amount
Description (in thousands)
- ----------- ----------------
<S> <C>
Cash $ 31
Accounts receivable 685
Inventories 607
Prepaid expenses and other assets 94
Property and equipment 1,433
Notes payable (120)
Accounts payable and accrued expenses (572)
Long-term debt (224)
Deferred taxes (261)
------
Net assets 1,673
Goodwill 765
------
Total consideration $2,438
======
</TABLE>
The foregoing allocations are based on estimated fair values and are
subject to adjustment. Fair values were determined based on preliminary
findings of an independent appraisal of the purchase transaction.
The $273,000 note payable to the seller bears interest at 4.38 percent
and is due within one year of closing.
(B) Records the net proceeds from the December 1998 sale of 300,000
shares of Common Stock.
F-16
<PAGE>
CROWN ANDERSEN INC.
Notes to Pro Forma Combined Financial Statements
(Unaudited)
3. Unaudited Pro Forma Statement of Operations Adjustments
(C) Records adjustment to depreciation and amortization expense as
follows:
<TABLE>
<CAPTION>
Year Ended
Increase (decrease) due to: September 30, 1998
--------------------------- (In Thousands)
-----------------------------
<S> <C>
Amortization of new basis in goodwill over life of 15 $51
years on a straight line basis
Adjustment to depreciation and amortization for increase in basis 6
---
$57
===
</TABLE>
(D) Records adjustment of interest expense related to debt incurred
to effect the purchase of the Griffin Acquisition.
(E) Adjusts the provision for income taxes based on other pro forma
adjustments.
F-17
