<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED June 30, 1999 COMMISSION FILE NUMBER 0-14229
CROWN ANDERSEN INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-1653577
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
306 Dividend Drive, Peachtree City, Georgia 30269
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 486-2000
---------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to filing such
requirements for the past 90 days. Yes X No ___
---
================================================================================
Class Outstanding at June 30, 1999
----------------------------- ----------------------------
Common Stock, $0.10 Par Value 1,832,939 shares
Page 1 of 14
<PAGE>
CROWN ANDERSEN INC.
-------------------
INDEX
-----
PAGE NO.
--------
Part I. FINANCIAL INFORMATION:
Consolidated Balance Sheets--
June 30, 1999 and September 30, 1998 3
Consolidated Statements of Income--
Three Months and Six Months Ended June 30, 1999
and 1998 4
Consolidated Statements of Cash Flows--
Six Months Ended June 30, 1999 and 1998 5
Notes to Consolidated Financial Information 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES 14
2
<PAGE>
CROWN ANDERSEN INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
----------- -------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents $ 717,927 $ 1,171,097
Receivables:
Trade, less allowance of $165,477 and $99,324 for
possible losses 3,896,107 2,432,605
Other 150,681 63,285
Income taxes 309,104 1,354,594
Costs and estimated earnings in excess of billings on
uncompleted contracts 6,238,604 4,686,555
Inventories 2,154,932 2,341,955
Prepaid expenses 147,094 82,819
Current maturities of long-term note receivable 490,000 490,000
Deferred income taxes 184,730 148,730
----------- -----------
TOTAL CURRENT ASSETS 14,289,179 12,771,640
RESTRICTED CASH 1,036,000 1,036,000
EQUIPMENT HELD FOR RESALE 490,000 490,000
PROPERTY AND EQUIPMENT, less accumulated depreciation 2,820,181 1,573,913
DEFERRED INCOME TAXES 601,513 601,513
PROPERTY HELD FOR RESALE 1,500,000 1,500,000
OTHER ASSETS 962,030 111,051
----------- -----------
$21,698,903 $18,084,117
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 774,171 $ 670,000
Accounts payable 4,681,093 2,025,031
Accruals:
Compensation 349,100 254,704
Warranty 179,000 333,000
Miscellaneous 555,571 603,872
Billings on uncompleted contracts in excess of cost
and estimated earnings - 6,113
Current maturities of long-term debt 809,496 775,000
Deferred income taxes 507,283 531,164
----------- -----------
TOTAL CURRENT LIABILITIES 7,855,714 5,198,884
LONG-TERM DEBT, less current maturities 45,283 -
DEFERRED INCOME TAXES 282,790 21,790
----------- -----------
TOTAL LIABILITIES 8,183,787 5,220,674
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock, $.10 par; shares authorized 20,000,000;
issued 1,873,635; outstanding 1,832,939 and
1,515,571 187,364 156,164
Additional paid-in capital 3,826,301 2,905,801
Treasury stock; 40,696, at cost (270,235) (295,733)
Retained earnings 9,783,411 9,904,257
Foreign currency translation adjustment (11,725) 192,954
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 13,515,116 12,863,443
----------- -----------
$21,698,903 $18,084,117
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
CROWN ANDERSEN INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------- ---------------------------
1999 1998 1999 1998
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Contracts $3,815,328 $ 1,798,802 $11,865,787 $10,108,862
Sales 397,743 513,800 1,464,130 1,442,302
Other 35,782 - 62,920 16,835
---------- ----------- ----------- -----------
4,248,853 2,312,602 13,392,837 11,567,999
---------- ----------- ----------- -----------
COSTS AND EXPENSES:
Cost of contracts and sales 3,709,069 2,328,297 11,153,396 9,881,115
Selling, general and
administrative 829,323 603,205 2,438,395 2,198,140
Interest and other 8,351 (12,706) 592 (120,126)
Loss on litigation settlement - 900,000 - 900,000
---------- ----------- ----------- -----------
4,546,743 3,818,796 13,592,383 12,859,129
---------- ----------- ----------- -----------
Income (loss) from operations
before taxes on income (297,890) (1,506,194) (199,546) (1,291,130)
TAXES (TAX BENEFIT) ON INCOME (113,400) (510,500) (78,700) (443,200)
---------- ----------- ----------- -----------
NET INCOME (LOSS) $ (184,490) $ (995,694) $ (120,846) $ (847,930)
========== =========== =========== ===========
AVERAGE NUMBER OF SHARES - BASIC 1,832,939 1,515,571 1,749,369 1,514,447
AVERAGE NUMBER OF SHARES - DILUTED 1,970,531 1,515,571 1,837,785 1,514,447
EARNINGS (LOSS) PER SHARE
BASIC $ (0.10) $ (0.66) $ (0.07) $ (0.56)
DILUTED $ (0.10) $ (0.66) $ (0.07) $ (0.56)
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
CROWN ANDERSEN INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended June 30,
----------------------------
1999 1998
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (120,846) $ (847,930)
Adjustments to reconcile net income to net cash
Depreciation and amortization 229,559 165,774
Provision for valuation of soil processor unit - 135,000
Deferred income taxes - (500)
Cash provided by (used for)
Trade and other receivables (907,229) (611,648)
Refundable income taxes 33,839 (38,270)
Costs and estimated earnings in excess of
billings on uncompleted contracts (1,552,048) 1,009,199
Inventories 613,529 162,258
Prepaid expenses (31,269) 13,417
Accounts payable 2,400,336 (2,128,108)
Accrued expenses 757,655 (1,261,492)
Billings on uncompleted contracts in excess of
costs and estimated earnings (6,113) (112,677)
Other (1,480) (16,018)
----------- -----------
Cash provided by (used for) operating activities 1,415,933 (3,530,995)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Collection of note receivable - 150,000
Investment in Griffin Environmental Company Inc. (2,296,010) -
Capital expenditures (93,719) (56,352)
Assets received in litigation settlement - (1,500,000)
----------- -----------
Cash used for investing activities (2,389,729) (1,406,352)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction in long-term debt (284,504) (469,733)
Increase (decrease) in notes payable (161,333) 970,442
Sale of common stock 977,198 24,027
------------ -----------
Cash provided by financing activities 531,361 524,736
------------ -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (10,735) (711)
------------ -----------
CASH AND CASH EQUIVALENTS:
Net decrease during the period (453,170) (4,413,322)
Balance at beginning of period 1,171,097 4,894,371
------------ -----------
BALANCE AT END OF PERIOD $ 717,927 $ 481,049
============ ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
CROWN ANDERSEN INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL INFORMATION
-------------------------------------------
1. Condensed footnotes:
-------------------
As contemplated by the Securities and Exchange Commission instructions to
Form 10-Q, the following footnotes have been condensed and therefore do not
contain all disclosures required in connection with annual financial statements.
Reference should be made to the notes to Crown Andersen Inc.'s annual financial
statements set forth in its Form 10-K for the year ended September 30, 1998.
2. Earnings per share:
------------------
Earnings per share is computed based on the weighted average of common
shares, common stock options and warrants (using the treasury stock method) in
accordance with FAS 128 "Earnings Per Share."
3. Stock options and warrants:
--------------------------
As of June 30, 1999, options to purchase 309,900 shares at an average price
of $4.44 were outstanding under the Company's stock option plan. This includes
options to purchase 177,900 shares at $4.50 per share granted to key employees
on April 2, 1999.
The Company also has outstanding warrants to purchase 300,000 shares of
common stock under the Directors Stock Warrant Plan at $4.45 per share,
including warrants to purchase 190,000 shares at $4.50 per share purchased by
directors on April 9, 1999. Of the total 300,000 warrants outstanding, only
16,000 are vested.
4. Revenue recognition:
-------------------
Revenues from contracts are reported on the percentage-of-completion
method. Under this method, the percentage of contract revenue to be recognized
currently is based on the ratio of costs incurred to date to total estimated
contract costs, after giving effect to the most recent estimate of costs to
complete. Revenues other than contracts are recorded when the product is
shipped or the service is rendered to the customers.
5. Inventories:
-----------
Inventories were $2,154,932 and $2,341,955 as of June 30, 1999 and
September 30, 1998. Included in inventories is approximately $1,120,000 related
to incineration equipment purchased from a former competitor.
6
<PAGE>
6. Restricted cash:
---------------
As of June 30, 1999, $1,036,000 of the Company's short-term investments
were held by banks as collateral for an outstanding letter of credit. The
letter of credit expires in December 1999.
7. Equipment held for resale:
-------------------------
On September 30, 1992, the Company sold a soil processor unit under a
financing-type lease arrangement. As a result of the customer's default, the
Company, during 1994, terminated the lease and repossessed the equipment. On
September 30, 1994, the Company reclassified this asset as equipment held for
resale and reduced its carrying value from approximately $2.1 million to $1.8
million. The Company employs an outside appraiser and reviews the carrying
value of this unit on a periodic basis. Through June 30, 1999, the carrying
value of this unit has been reduced to $490,000.
8. Commitments and contingencies:
------------------------------
There are no significant changes to the information discussed in the
Company's annual report on Form 10K for the year ended September 30, 1998 (Note
12 to the Consolidated Financial Statements), except as noted below:
On June 17, 1999, the Company filed a claim for arbitration in Singapore
seeking to settle a contractual dispute with a customer in connection with the
sale of equipment in Indonesia. The equipment has been delivered, installed
and, in management's opinion, has operated in accord with the contract. The
customer is claiming the equipment has not met certain performance
specifications, but has provided no evidence to support this position. The
Company's claim is for $2.3 million. As of June 30, 1999, the Company has
recorded $1.9 million in accounts receivable and cost and estimated earnings in
excess of billings on uncompleted contracts. Management believes that it will
prevail and recover the amount claimed in this dispute. Accordingly, no
specific reserve has been established for this matter. The inability of
management to satisfactorily resolve this matter with the customer and collect
the outstanding receivable could have a material unfavorable effect on the
Company's financial statements.
9. Litigation Settlement
---------------------
During fiscal 1998, the Company settled the litigation over principal and
interest for certain Kansas property formerly occupied by Struthers Thermo-Flood
Corporation, a former Crown Andersen subsidiary. Under terms of the settlement,
the Company paid $1,630,000 in cash and issued a one year, non-interest bearing
promissory note and the amount of $670,000. The note has been paid in full. In
exchange, the Company received the rights (without further obligation) to
transfer title of this property to a purchaser or to the Company. The Company
is in the process of negotiations with potential purchasers. The estimated
value of these assets is presently $1,500,000. This transaction was recorded as
of June 30, 1998 and the Company recognized a net loss of approximately
$900,000. The Company's June 30, 1999 balance sheet includes these assets as
"property held for sale." The buildings on this property total 128,600 sq. ft.
and the land totals 27.41
7
<PAGE>
acres. Buildings and land in this area are selling at prices which management
believes supports its valuation of these assets.
10. Acquisition of business:
-----------------------
On December 16, 1998 the Company purchased all the outstanding shares of
stock of Griffin Environmental Company Inc. ("Griffin"). Griffin is a
manufacturer of fabric filter and cartridge dust collector pollution control
equipment. Griffin sells its pollution control equipment to a wide variety of
industries, including concrete, steel, other metals, clays, paper, glass, and
other industries.
The Company purchased Griffin for $2.6 million. This was comprised of cash
of $2.3 million and a one-year promissory note of $271,000 secured by a second
mortgage on the real estate. The note bears annual interest at 4.33%, payable
monthly, and the principal is due on December 16, 1999.
The acquisition included the purchase of assets comprised primarily of
inventories, accounts receivable, and property, plant, and equipment.
Liabilities assumed in the acquisition consist primarily of trade accounts
payable, customer deposits, long term debt, and other accrued liabilities. The
transaction was accounted for under the purchase method of accounting whereby
all assets and liabilities were valued at their current fair market value at
December 16, 1998.
* * *
The financial information included in this report has not been certified
and should not be relied upon to the same extent as certified financial
statements. The financial information included in this report reflects all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the results for the interim period. Nevertheless, the results
shown are for interim periods and are not necessarily indicative of results to
be expected for the year.
8
<PAGE>
CROWN ANDERSEN INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
Introduction:
- ------------
Crown Andersen Inc. (Crown Andersen or the Company) is a publicly-traded
holding company for Andersen 2000 Inc. (Andersen), Griffin Environmental Company
Inc. (Griffin), and, through Andersen, owns all of the outstanding stock of
Montair Andersen bv (Montair). The Company is engaged exclusively in the
pollution control, product recovery and waste processing equipment businesses.
Liquidity and Capital Resources:
- -------------------------------
Cash and cash equivalents at June 30, 1999 decreased $451,370 from the
September 30, 1998 balance of $1,171,097. The decrease resulted from the
expenditure of cash to acquire Griffin Environmental Company Inc. Cost and
estimated earnings in excess of billings on uncompleted contracts increased
$1,552,048. Receivables also increased $907,229. However, these increases
were offset by income tax refunds, an increase in payables, and a decrease in
inventories. Cash provided by operating activities amounted to $1,415,933.
Cash used for investing activities totaled $2,389,729. This amount
includes $2,296,010 for the acquisition of Griffin and capital expenditures of
$93,719, mostly at Griffin.
Andersen realized a positive cash flow from operations as a result of an
increase in payables and income tax refunds. At Montair, profitable operations
contributed to a positive cash flow from operations.
As disclosed in Note 7 to the Consolidated Financial Statements, during
1994 the Company repossessed certain equipment sold under a lease arrangement.
The Company has reduced the carrying value of this asset to $490,000 as of June
30, 1999 and it is reflected as equipment held for resale in the accompanying
consolidated balance sheet. The Company is attempting to market this equipment
for sale and has active negotiations underway for its sale.
As of June 30, 1999, the Company had borrowed $500,000 against its $5.0
million U.S. line of credit, the $0.4 million credit facility available to
Montair, and the $0.5 million credit facility available to Griffin. The amount
of $4.9 million remained available for borrowing under these credit facilities
as $0.5 million in letters of credit are outstanding against the U.S. line of
credit. The U.S. line of credit is up for renewal on September 30, 1999. The
Company expects to utilize its existing credit facility to fund anticipated cash
needs resulting from normal operations.
Under the current loan agreement, the Company is required to obtain the
bank's consent to pay cash dividends, purchase treasury stock, or to sell assets
which constitute collateral. The Company obtained permission to purchase up to
$400,000 of treasury stock. A total of $270,235 of net treasury stock purchases
is reflected in the Company's balance sheet as of June 30, 1999.
9
<PAGE>
As of June 30, 1999, the Company's equity in its Montair operation had
decreased in value by $204,679 from September 30, 1998 as a result of a decrease
in the foreign currency translation adjustment, reflecting a 13% increase in the
U.S. dollar against the Dutch guilder.
The year 2000 issue relates to computer programs and systems that recognize
dates using two digit year data rather than four digit year data. As a result,
such programs and systems may fail or provide incorrect information for dates
after December 31, 1999. If the year 2000 issue were to cause disruption to the
Company's internal information technology systems or to the information
technology systems of entities with whom the Company has commercial
relationships, material adverse effects to the Company's operations could
result.
The Company's internal computer programs and systems consist of programs
and systems relating to virtually all segments of the Company's business,
including customer database management, marketing, order processing, production
budgeting, financial reporting, customer service, investor relations, proposal
generation, cash management and other key information systems. These systems
include a mainframe computer, personal computers, phones, ancillary sources,
internally developed software, and third-party software programs.
The Company is presently completing its review of these programs and
systems. The Company does not expect that any required changes to such programs
and systems will cause the Company to incur material costs or present challenges
that cannot be addressed prior to the end of calendar 1999. The Company expects
to complete its reviews of these programs and systems within the next three
months.
The computer programs and operating systems used by entities with whom the
Company has commercial relationships also pose potential problems relating to
the year 2000 issue, which may affect the Company's operations in a variety of
ways. These risks are more difficult to assess than those posed by internal
programs and systems and the Company initiated a process to assess these risks.
The assessment will be complete in three months.
The Company expects to complete its plan for assessing these programs and
systems and to complete the review by the end of fiscal 1999. Once such
assessment and identification has been completed, the Company intends to resolve
any material risks and uncertainties that are identified by: 1) communicating
further with the relevant vendors and service providers, 2) working internally
to identify alternative sourcing, and 3) formulating contingency plans to deal
with such material risks and uncertainties. The Company expects the resolution
of any such material risks and uncertainties to be an ongoing process until all
year 2000 problems are satisfactorily resolved.
Results of Operations:
- ---------------------
Revenues.
- ---------
Revenues for the first nine months of fiscal 1999 were $13,392,837
compared with $11,567,999 for the first nine months of fiscal 1998. For the
third quarter of fiscal 1999, revenues were $4,248,853 compared with $2,312,602
for the comparable figure in 1998 and $5,013,054 for the second quarter of
fiscal 1999. Foreign sales (including export sales by Andersen and sales by
10
<PAGE>
Montair) were $3.5 million and $8.1 million for the first nine months of 1999
and 1998, respectively, and accounted for 26.3% and 69.6% of revenues. All
changes in revenues are related to the quantity of products sold, not to pricing
changes.
Nine months revenues in 1999 increased $1,824,838 (15.8%) from fiscal 1998.
Revenues at newly acquired Griffin Environmental Company Inc. accounted for all
of the increase. Sales at Montair declined $143,053 while sales at Andersen
declined $17,127.
The Company continues to rely on the international market for some of its
revenues. Demand for the Company's products in the domestic market has remained
low over the last five years because of uncertainty in changes in United States
regulations. However, the Company experienced an increase in domestic business
in late 1998 and expects this to continue to increase in 1999. There are orders
for $10 million in domestic projects which the Company expects to receive in the
next three months. In addition, the Montair subsidiary received an order for
$3.1 million - its largest ever. Depending on timing, these orders may
substantially contribute to revenues in the next two fiscal quarters.
Third quarter 1999 revenues increased $1,936,251 (84%) from the comparable
period in 1998. The increase increase reflects higher revenues at Andersen of
$1,230,771 and revenues at Griffin ($946,225) which offset a decrease in
revenues at Montair of $240,745.
Third quarter 1999 revenues declined $764,201 compared with the second
quarter of 1999. The decline was entirely attributable to Andersen.
Cost of Sales.
- --------------
For the first nine months of fiscal 1999, cost of sales totaled $11,153,396
as compared with $9,881,115 for the first nine months of fiscal 1998. Third
quarter 1999 cost of sales were $3,709,069 as compared with $2,328,297 for the
third quarter of 1998 and $4,070,733 for the second quarter of 1999.
Cost of sales for the first nine months of 1999 increased $1,272,281 (14%)
from the similar period in 1998 as a result of higher sales. Fiscal 1999 cost
of sales reflects seven months operations of Griffin (the recently acquired
subsidiary).
Third quarter 1999 cost of sales increased $1,380,772 (59.3%) from the
comparable period of 1998 as a result of higher sales. The fiscal 1999 quarter
includes $946,225 in revenues generated by Griffin.
Third quarter 1999 cost of sales decreased $361,664 (9%) from the
preceding fiscal quarter as a result of lower revenues.
Selling, General and Administrative Costs.
- ------------------------------------------
Selling, general and administrative costs for the first nine months of
fiscal 1999 were $2,438,395 compared with $2,198,140 for the first nine months
of 1998. For the third quarter of
11
<PAGE>
1999, selling, general and administrative costs were $829,323, as compared with
$603,205 in the comparable period of 1998 and $888,264 for the second quarter of
1999. As a percentage of revenues, selling, general and administrative costs
were 18.2%, 19.0%, 19.5%, 26.1% and 17.8% of revenues for the first nine months
of 1999 and 1998, the third quarters of 1999 and 1998, and the second quarter of
1999, respectively. The current period increases of $240,255 (11%) and $226,108
(37%) from the comparable nine months and third quarter periods of 1998 are
primarily attributable to the expenses incurred by Griffin (the newly acquired
subsidiary), offset by a reduction in the valuation provision on equipment held
for resale.
Third quarter 1999 expenses decreased by $58,941 (7%) from the preceding
fiscal quarter, primarily as a result of expense reductions at Andersen.
Interest and Other (Income) Expenses.
- -------------------------------------
Interest and other (income) expenses for the first nine months of fiscal
1999 totaled $592, compared with a credit of $120,126 for the comparable period
in 1998. For the third quarter of 1999, interest and other expenses were
$8,351, compared to a credit of $12,706 for the third quarter of 1998, and a
credit of $11,321 for the second quarter of 1999. The increase in costs of
$120,718 and $21,059 in the current nine months and third quarter period reflect
a substantial reduction in interest income as cash available for investment was
used to pay down debt and to settle litigation. The increase in costs of
$19,672 from the preceding fiscal quarter reflects higher costs at Griffin and a
reduction in rental income.
Loss on Litigation Settlement.
- ------------------------------
The Company recorded a loss on litigation settlement of $900,000 in the
third quarter of 1998 (See Note 9 to the Form 10Q.)
Taxes on Income.
- ----------------
The effective tax rate for all periods are:
First 9 months of 1999 - 34.9% - benefit
First 9 months of 1998 - 34.3% - benefit
Third quarter of 1999 - 38.0% - benefit
Third quarter of 1998 - 34.0% - benefit
Second quarter of 1999 - 34.0% - expense
Net Loss.
- ---------
For the first nine months of 1999, the Company suffered a net loss of
$120,846 or $0.07 per share, compared to a net loss of $847,930 or $0.56 per
share for the first nine months of 1998. For the third quarter of 1999, the net
loss was $184,490 or $0.10 per share, compared with a loss of $995,694 or $0.66
per share for the third quarter of 1998 and net income of $43,178 or $0.02 per
share for the second quarter of 1999.
12
<PAGE>
The net loss in the current nine month period declined $727,084 from the
loss reported in 1998. In 1998, the Company reported a loss as a result of
litigation settlement in the amount of $900,000 ($0.60 per share pre-tax).
Montair reported net income of $73,283 in 1999 compared to $37,002 in 1998.
The third quarter net loss of $184,490 was entirely attributable to
operations at Andersen, primarily as a result of low revenues and continuing
high warranty costs.
Net income declined $227,568 from the preceding fiscal quarter as a result
of lower revenues and lower operating margins.
While the Company expects to replenish its backlog with several large
orders in the next two months, these orders may not be processed in time to
avoid reporting a loss for the fourth quarter of 1999.
Shares Outstanding.
- -------------------
The average shares and equivalent shares outstanding for all periods were:
<TABLE>
<CAPTION>
BASIC DILUTED
----- -------
<S> <C> <C>
First 9 months of 1999 1,749,369 1,837,785
First 9 months of 1998 1,514,447 1,514,447
Third quarter of 1999 1,832,939 1,970,531
Third quarter of 1998 1,515,571 1,515,571
Second Quarter of 1999 1,825,403 1,882,011
</TABLE>
Forward-Looking Statements.
- --------------------------
Certain forward-looking statements are made in this Management's Discussion
and Analysis. The Company's results may differ materially from those in the
forward-looking statements. Forward-looking statements are based on management's
current views and assumptions, and involve risks and uncertainties that
significantly affect expected results. For example, operating results may be
affected by external factors. Such factors include, but are not limited to,
changes in the regulatory environment, general conditions in the environmental
industry, the Company's competitive position, and economic conditions in
international markets.
13
<PAGE>
CROWN ANDERSEN INC AND SUBSIDIARIES
PART II
OTHER INFORMATION
===========================
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibit 27. Financial Data Schedule
(b) No reports on Form 8K were filed during the quarter ended June
30, 1999.
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.
Dated: August 9, 1999 By: /s/ Jack D. Brady
------------------------------
Jack D. Brady
Chairman of the Board
(Duly Authorized Officer)
Dated: August 9, 1999 By: /s/ Milton Emmanuelli
-----------------------------
Milton Emmanuelli
Secretary and Treasurer
(Principal Financial Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 717,927
<SECURITIES> 0
<RECEIVABLES> 4,061,584
<ALLOWANCES> 165,477
<INVENTORY> 2,154,932
<CURRENT-ASSETS> 14,289,179
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0
0
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