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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _________ to __________
Commission File
Number 0-14229
CROWN ANDERSEN INC.
(Exact name of Registrant as specified in its charter)
Delaware 58-1653577
(State of Incorporation) (I.R.S. Employer
Identification No.)
306 Dividend Drive, Peachtree City, Georgia 30269
(Address of principal executive offices)
(770) 486 2000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.10 Per Share
--------------------------------------
(Title of Class)
-------------------------
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, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.[x]
At December 19, 1996 there were 1,524,635 shares of the Registrant's common
stock outstanding. The aggregate market value of the Registrant's outstanding
common stock held by non-affiliates of the Registrant as of December 19, 1996
was $9,147,810.
Documents incorporated by reference:
-----------------------------------
Portions of the Registrant's 1996 Annual Report are incorporated by reference in
Part I and Part II hereof. Portions of the Registrant's Proxy Statement for the
1997 Annual Meeting of Stockholders to be held on March 5, 1997 are incorporated
by reference in Part III hereof.
CROWN ANDERSEN INC.
Annual Report on Form 10-K
For the Fiscal Year Ended September 30, 1996
TABLE OF CONTENTS
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PART I
------
Item No. Page No.
- -------- -------
1 Business 3
2 Properties 10
3 Legal Proceedings 10
4 Submission of Matters to a Vote of 10
Security Holders
4(A) Executive Officers of the Registrant 10
PART II
-------
5 Market for the Registrant's Common
Equity and Related Stockholder Matters 11
6 Selected Financial Data 11
7 Management's Discussion and Analysis of
Financial Condition and Results of 12
Operation
8 Financial Statements and Supplementary 12
Data
9 Changes in and Disagreements with
Accountants on Accounting and Financial 12
Disclosure
PART III
--------
10 Directors and Executive Officers of the 12
Registrant
11 Executive Compensation 12
12 Security Ownership of Certain Beneficial 12
Owners and Management
13 Certain Relationships and Related 13
Transactions
PART IV
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14 Exhibits, Financial Statement Schedules 13
and Reports on Form 8-K
Signatures 15
Index to Financial Statement Schedules 16
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PART I
------
ITEM 1. BUSINESS
- ----------------
General
-------
Crown Andersen Inc. (the "Company" or the "Registrant") has, through its
subsidiaries, designed, manufactured, sold and installed a wide range of
industrial air pollution control and air handling systems, medical, chemical and
industrial waste treatment equipment and systems, molded plastic high integrity
tanks and containers, and related products. The Company is a Delaware
corporation formed in October 1985 to acquire and own all of the stock of
Andersen 2000 Inc. (hereinafter referred to as "Andersen") and Crown Rotational
Molded Products, Inc. (hereinafter referred to as "Crown"). The Company served
as a holding company for these two subsidiaries starting in January 1986. At
that time, it issued shares of its Common Stock to the shareholders of Andersen
and Crown in exchange for their shares of Andersen and Crown Common Stock,
respectively. Late in fiscal year 1994, the Company sold the assets of Crown
Rotational Molded Products, Inc. and Roanoke Industries, Inc. (collectively
"plastics") and is thus no longer involved in plastics molding or high integrity
tanks and containers.
Andersen is engaged in the design, manufacture, sale, and installation of
specialized industrial pollution control equipment and systems, medical,
chemical and industrial waste treatment equipment and systems, heat exchanger
and boiler systems, and industrial fans and blowers. Additionally, Andersen's
wholly-owned subsidiary, Montair Andersen bv in Sevenum, Holland ("Montair
Andersen") manufactures and installs industrial equipment similar to the
Andersen equipment for the European, African, Middle Eastern and Far Eastern
markets. Crown was engaged in the design, manufacture, sale and installation of
high integrity, rotationally molded plastic tanks and refuse containers.
The Company increased its revenues and income from continuing operations in
the period from 1988 through 1992 by introducing new products and providing
specialized, higher margin products and services for specific customer
applications. As an example, the Company expanded its operations to include the
design, manufacture, sale and installation of complex medical, chemical,
municipal and hazardous waste collection, incineration and disposal systems
which require sophisticated engineering services and specialized equipment. As
a result of such strategies, the Company's revenues increased from $15.5 million
in fiscal 1988 to $25.2 million in fiscal 1992, and its income from continuing
operations more than doubled from $816,000 in fiscal 1988 to $1.7 million in
fiscal 1992. However, in fiscal year 1993 revenues and net income declined to
$20.5 million and $0.5 million as a result of decreases in the revenues
generated by the air pollution control products and incinerator businesses, and
an enormous downturn in business at its Dutch operation. Revenues from these
same operations increased to $22.8 million in fiscal 1994 and net income from
the same operations decreased to $0.3 million. The Dutch operation returned to
profitability, but the air pollution control and incinerator businesses did not
recover to 1992 levels in either revenues or net income. The Company made a
major policy decision during fiscal 1994 and brought this to the shareholders
for approval before implementing it. That decision was to exit the plastics
business through a profitable sale of the plastics subsidiaries and to focus on
the environmental businesses in the future. The shareholders approved this
change and the two plastics operations were sold, resulting in a net gain on the
disposal of $1.2 million in fiscal 1994. This resulted in a total net income of
$1.50 million for that year. The financial results were then restated, moving
the plastics business revenues and net income contributions to "discontinued
operations". See "Selected Financial Data," Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements of the Company contained in the Company's 1996 Annual
Report and incorporated by reference in Items 6, 7, and 8, respectively, of this
report. In fiscal 1996, revenues increased 2% to $22.0 million and net income
decreased to $0.5 million as compared to net income of $1.4 million on revenues
of $21.6 million in fiscal 1995. In fiscal 1995, revenues from continuing
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operations increased 54% to $21.6 million and net income increased to $1.4
million as compared to a loss of $0.3 million in fiscal 1994. Additional
information pertaining to the revenues, operating profit or loss, and
identifiable assets for each of the Company's geographic areas for the past
three fiscal years is incorporated herein by reference to Note 11 of the Notes
to Consolidated Financial Statements contained in the Company's 1996 Annual
Report. The 1996 Annual Report is filed as Exhibit 13 to this report.
As used herein, unless otherwise indicated, the term "Company" refers to
Crown Andersen Inc. and its subsidiaries, the term "Andersen" refers to Andersen
2000 Inc. and Montair Andersen bv, and the term "Crown" refers to Crown
Rotational Molded Products, Inc. and Roanoke Industries, Inc.
Business and Products
---------------------
Andersen began operations in 1971 as a manufacturer of particle sizing
instrumentation used primarily in the air pollution control field. In fiscal
1975, Andersen acquired a limited industrial air pollution control equipment
line. During fiscal 1978, Andersen sold the particle sizing instrumentation
segment of its business and expanded its industrial pollution control equipment
segment. In fiscal 1982, Andersen embarked on a program designed to expand its
industrial manufacturing capabilities into related product areas. As a result
of that program, Andersen began to manufacture and sell heavy duty industrial
fans and condensing heat exchange equipment in fiscal 1983. In fiscal 1984,
Andersen began to design, manufacture, and sell chemical and industrial waste
incineration systems as well as spray dryers and began to offer contract
chemical and mechanical engineering services. At the beginning of fiscal 1985,
Andersen acquired 81% of the outstanding stock of Montair van Stratum bv,
Sevenum, The Netherlands, and renamed the company Montair Andersen bv. Andersen
acquired the remaining 19% of Montair Andersen in fiscal 1991. Montair Andersen
manufactures the same pollution control and chemical and industrial waste
incineration products as Andersen but also manufactures small animal isolators
and glove boxes for radioactive or chemically active materials handling. In
fiscal 1990, Andersen began offering turnkey medical waste incineration plants
to its customers and expanded that business in 1991 and 1992. In fiscal 1994,
Andersen expanded its incineration product line to include a new line of solid
waste incinerators. Materials handling products were also added for waste
processing.
Andersen's pollution control systems include high efficiency filtration
systems, wet scrubbers for particulate and gaseous emission collection, sulfur
dioxide removal systems for oil and coal-fired steam boilers and steam
generators, odor control systems, gas coolers and condensers, mechanical
collectors for product recovery, industrial water and waste water treatment
systems, spray dryer systems to produce dry powders from waste liquids which are
produced in gas treating systems, heavy duty industrial fans and blowers used
primarily in high pressure and alloy steel applications in industrial plants,
and heat recovery systems which allow heat recovery from gas streams which
previously could not utilize heat recovery equipment because of their dirty or
corrosive nature. These heat recovery systems are used primarily by the
chemical industries and food processing industries.
Andersen's chemical and industrial waste treatment systems include thermal
oxidation systems (incinerators), waste liquid fired boilers, and chemical
treatment systems for which the company furnishes both engineering designs and
equipment as well as turnkey installation services. All of Andersen's medical
waste processing systems are based on thermal oxidation.
Montair Andersen designs, manufactures and sells industrial pollution
control systems, heat exchangers, incineration systems, and small animal
isolators and glove boxes for radioactive and chemically active materials
handling. The small animal isolators are used for animals such as chickens and
guinea pigs by medical research facilities, pharmaceutical research facilities
and animal husbandry facilities. The radioactive and chemically active
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materials handling glove boxes are used by nuclear fuels processing facilities,
nuclear research facilities, and medical isotope manufacturing operations.
These products are sold to both industrial plants and research facilities.
Montair Andersen also builds specialized industrial machinery for the
electronics, aerospace and chemical process industries and in 1992 began the
manufacture of incinerators as well. The Montair Andersen product line now
includes all of the same incineration systems as Andersen.
Sales and Distribution
----------------------
In general, Andersen's products are marketed to various industrial
manufacturing concerns in the United States by independent sales representatives
in exclusive territories. Sales of Andersen products are made in all regions of
the country, with no one region serving as a dominant market for Andersen
products. International sales result from the efforts of Andersen and Montair
Andersen employees, independent sales representatives in many countries, and by
licensee companies in those countries where the technology has been licensed.
Montair Andersen historically handled sales of its products directly
through employees. This was changed in late 1993 and Montair now uses sales
agents in most countries which it serves.
Facilities And Manufacturing
----------------------------
The corporate offices of the Company are located in a building owned by
Andersen in Peachtree City, Georgia. The corporate offices occupy approximately
2,000 square feet of the building, and the Company makes no payments to Andersen
for the use of this space. The manufacturing facilities operated by each of the
subsidiary companies are described below.
Andersen's manufacturing operations in North America are conducted in
Peachtree City, Georgia. This facility, which is owned by Andersen, has 29,000
square feet of inside manufacturing and office space and 30,000 square feet of
outdoor assembly area. This facility is equipped for heavy steel fabrication
and is located on a three acre tract of property in an industrial park.
Andersen purchased an adjacent property in Peachtree City in 1992 with a 5,000
square feet office building on one acre of property. In 1996, Andersen
purchased another adjacent property with a 3,600 square feet storage building on
1.5 acres of land.
With the acquisition of the remaining 19% of Montair Andersen during 1991,
Andersen now owns the manufacturing facility in the Netherlands, which is larger
and more modern than the one which it operates in Peachtree City, Georgia. This
plant contains approximately 40,000 square feet of space and is located on 4.8
acres of industrial property in Sevenum, The Netherlands. This facility was
certified under the new world standard ISO-9001. Certification was attained in
fiscal year 1994.
Manufacturing equipment in the Peachtree City location and in the Sevenum,
Holland location is owned by Andersen and Montair Andersen, respectively. With
the exception of extremely heavy plate fabrication (over 1/2" thick), these two
facilities are capable of manufacturing all of the products offered by Andersen
and Montair Andersen. Where use of a subcontract manufacturing facility is
financially more attractive than manufacturing in company owned facilities, a
number of subcontractors are used. Andersen has adopted the practice of
purchasing from more than one of these suppliers on a routine basis in an effort
to insure adequate continuing sources of supply for subcontracted items in the
future. The Company has trained a number of employees in inspection procedures
and in quality control to ensure that these products are properly manufactured
before shipment by the subcontractors.
Most of the products sold by Andersen must be custom engineered for a
specific application. For this reason, Andersen normally does not maintain
-5-
finished product in inventory. However, during fiscal 1996, Andersen purchased
certain inventory from a former competitor. Included in this purchase were
certain finished goods that are available for sale as a completed unit.
Andersen inventories some raw materials which can be purchased more economically
in large quantities, particularly some of the high alloy stainless steels.
Andersen believes that its facilities are adequate for its current and
anticipated foreseeable manufacturing needs.
Foreign Operations And Export Sales
-----------------------------------
Montair Andersen manufactures and ships products to all European countries
and to some countries in the Middle East, Africa and Asia. Montair Andersen
also exports small animal isolators and some of its glove boxes to the United
States and Canada for sale by Andersen.
Andersen uses subcontract manufacturers in some foreign countries when
sales are made into those countries. In particular, it is common for Andersen
to use Canadian subcontract manufacturers for sales in Canada. Most of
Andersen's foreign sales in 1995, however, were manufactured in Andersen's plant
in the United States.
Foreign sales in fiscal 1996, 1995, and 1994 accounted for approximately
81%, 88% and 56%, respectively, of the Company's total revenues from continuing
operations. Foreign sales from continuing operations for fiscal 1996, 1995 and
1994 totaled approximately $17.8 million, $19.0 million and $7.9 million,
respectively.
Licensing
---------
Andersen has licensed the manufacture of its products in Japan and India.
During fiscal 1976, Andersen licensed a Japanese firm to manufacture and sell
HEAF(R) and CHEAF(R) gas filtration products in the Far East. Andersen was paid
an initial fee of $70,000 and then established a royalty arrangement for future
sales. The royalty arrangement included a minimum royalty payment on an annual
basis. In late fiscal 1977, Andersen negotiated a transfer of its license to a
second Japanese firm. The second Japanese firm was active in sales of the
HEAF(R) and CHEAF(R) equipment and installed more than 300 systems in Japan
under license from Andersen. This agreement expired in late 1991, and the
Japanese licensee agreed with Andersen to maintain a formal sales cooperation
arrangement in Japan and Korea whereby the Japanese licensee is still allowed
use of the HEAF(R) and CHEAF(R) technologies in Japan and Korea in exchange for
providing sales leads to Andersen for all other Far Eastern countries.
In fiscal 1986, Andersen negotiated a license agreement with Paramount
Pollution Control Pvt Ltd in Baroda, India. Andersen licensed manufacture of
all of its product lines, including those manufactured by Montair Andersen, to
the Indian firm. This agreement called for an initial payment of $85,000 to
Andersen for initial technical exchange and training, followed by royalties
calculated as a percentage of product sales in India in the future. This
agreement expired in early fiscal 1992, but a five-year extension was negotiated
and submitted to the Indian government for approval. The Indian government
approved the extension but imposed terms the Company would not accept.
Revisions to the agreement were negotiated at the end of 1992, and were finally
approved in early fiscal 1993 and the agreement has been extended for five more
years.
Competition
-----------
In the air pollution control field, Andersen competes with three or four
companies of similar size which have similar product lines. In 20 years of
direct competition with these firms, Company management has determined that
these competitors do not have the engineering capabilities that Andersen does,
and most of these companies do not routinely offer auxiliary systems and
installation services with their quotations. Andersen considers the ability to
furnish auxiliary systems and installation as an advantage over its competition.
There are some competitors in the field which are substantially larger than
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Andersen and which may have greater financial resources. However, these larger
companies tend to concentrate on large air pollution control projects associated
with utility plant construction or with large municipal projects. As a result,
they are not routine competitors with Andersen since Andersen does not compete
in these fields.
In medical, chemical and industrial waste incineration, Andersen competes
with a limited number of companies which have greater financial resources.
These waste incineration systems, however, are purchased primarily on the basis
of advanced design features rather than strictly on price. As a result,
Andersen believes that it can be successful in capturing an increasing market
share in the coming years due to its technological capabilities.
With the possible exceptions of sulfur dioxide removal scrubbing systems
for small industrial boilers, scrubbing equipment for medical, chemical and
industrial waste incinerators, and rotary kiln incinerators for chemical and
hazardous waste, Andersen does not consider itself the dominant supplier in
those industries in which it competes. In industrial boiler sulfur dioxide
removal systems and in scrubbing systems for waste incinerators, Andersen
believes, based on industry publications, published market surveys and trade
association records, that it currently holds a 30% or greater market share in
the United States. Internationally Andersen believes it has captured a 15-20%
market share in rotary kiln incinerators for chemical and hazardous wastes.
In the field of condensing heat exchangers, Andersen frequently competes
with two or three other manufacturers offering somewhat different products for
the same purpose. In most of these cases, price is the determining factor.
Demand for this product line has not been high in recent years due to relatively
low energy costs in industrialized countries.
Principal Customers
-------------------
During 1996 two customers accounted for approximately 35% (18% and 17%) of
the Company's consolidated revenue from continuing operations during fiscal
1996. It is the opinion of management that the loss of such customers would not
have a material adverse effect on the operations of the Company. Such business
is not normally repetitive and, therefore, is not dependent upon any single
customer or individual group of customers.
Backlog
-------
The Company's consolidated backlog of firm orders as of the dates set forth
below were as follows:
September 30, 1996 - $12,299,320
September 30, 1995 - $10,952,000
September 30, 1994 - $20,088,000
September 30, 1993 - $22,288,300
Prior to 1991, the entire backlog of firm orders as of the end of any
fiscal year was manufactured, shipped and recognized during the following fiscal
year. In late fiscal 1991, the pollution control systems segment of the
business began receiving orders requiring in excess of two years to complete.
Andersen and Montair Andersen products are normally built to order and thus
are not inventoried. The large reduction in backlog from 1994 to 1995 is the
result of completion of a $12 million order by Andersen for the government in
1995 and timing in receipt of some large orders pending at year end 1995.
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Raw Materials
-------------
Since the beginning of fiscal 1990, Andersen has encountered no shortages
of alloys used to fabricate its products. Andersen inventories high alloy
steels when substantial discounts can be negotiated by purchasing large
quantities and to avoid delays in fabrication and shipment caused by materials
availability problems. Beyond this, however, Andersen generally purchases raw
materials after orders are received for those products which will require those
raw materials.
Patents And Trademarks
----------------------
Andersen owns domestic and foreign patents on its HEAF(R) and CHEAF(R) gas
filtration systems, its sulfur dioxide removal scrubbing systems, a chemical
waste regeneration process for the sulfur dioxide removal system, an
incineration process, and improvements to these product lines which have
occurred in recent years. Andersen was granted patent protection on its
combination spray dryer-scrubber system for air pollution control on
incinerators in 1991. The oldest of the patents expired in 1991 and the newest
expires in 17 years. Andersen holds trademarks on the HEAF(R) and CHEAF(R)
systems, the SUBDEW(R) condensing heat exchanger, and the ANDERSEN(R) name. The
trademarks generally expire 20 years from the date of registration but may be
renewed for one or more additional 20 year periods when they first expire.
While Andersen considers its patents to be valuable assets which sometimes
provide a competitive advantage in the marketplace, Andersen does not believe
that the loss of patent protection on any of its products as a result of the
challenge to the validity of such patents would have a material impact on
Andersen's revenues and earnings. In countries such as Germany and Japan, the
patents on Andersen's products are considered to be substantially more important
than they are on the same products in the United States. For this reason,
Andersen works closely with its licensees to insure that any new patent
applications anticipate potential challenges to their validity in the future.
The validity of Andersen's patents on any of its products has never been
challenged, either in the United States or in foreign countries. Although
Andersen is not aware of any basis upon which such patents might be challenged,
there is no assurance that proceedings challenging these patents will not be
instituted in the future.
The Company examines every product which is developed to determine its
patentability. If the equipment or process is determined to be patentable by
the Company, a patent application is filed, not only in the United States but in
those foreign countries where the product is considered saleable. The patents
are particularly valuable when licensing of manufacturers in foreign countries
is considered.
Product Warranties
------------------
In connection with most contracts for manufacture and sale of Andersen
equipment, the Company warrants the equipment manufactured to be free from
defects in material and workmanship under normal use and service for a period of
eighteen months after shipment, or one year after completion of erection, or one
year after initial operation, whichever occurs first. Andersen's obligation is
generally limited to the repair or replacement of the defective parts. All
equipment not manufactured by Andersen carries only such warranty, if any, as
given by the manufacturer. In addition, Andersen sometimes provides performance
guarantees for equipment and systems which it furnishes. Each proposed
application is carefully evaluated for its potential risk before such guarantees
are offered to the customer. Warranty and performance guarantee related
expenses are recognized as they are incurred. As of September 30, 1996,
Andersen has established an $855,000 reserve for future warranty repairs.
Research And Development
------------------------
Andersen maintains a small development laboratory in its plant. Some of
the research and development activities done by Andersen are conducted in
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Andersen's customers' plants utilizing test equipment and systems designed and
supplied by Andersen. The results of such tests enable Andersen to provide the
customer with a guaranteed performance system if the development work is
successful. The customer is typically charged for rental of Andersen's
equipment during such activities, and the customer is allowed to use, in its own
plant, any developments which result from such testing. Andersen, however,
reserves all rights to patents or other proprietary benefits which might result
from such tests.
Andersen maintains an equipment test facility in Peachtree City, Georgia
and also owns mobile demonstration equipment which is used in testing new
developments in the air pollution control field, mainly at customer plant
locations.
Research and development expenses are expensed in the year incurred. There
were no research and development expenses during fiscal years 1996, 1995 and
1994.
Environmental Controls
----------------------
To a large extent, the demand for the Company's products is dependent upon
the enforcement of federal, state, and international regulations regarding air
pollution, water pollution, and general industrial pollution. There has been a
significant increase in enforcement actions related to hazardous waste disposal
during the past three years outside the United States. This enforcement action
has resulted in a greater demand outside the United States for incineration
systems offered by Andersen. This increased enforcement activity should benefit
both Andersen and Montair in fiscal 1996. On the other hand, any relaxation of
environmental laws and regulations by the federal, state, or international
governments or any delay in the implementation of such laws or regulations could
have an adverse effect on the Company's operations.
In November of 1993 the Company's now defunct Thermo-Flood subsidiary was
named a Potentially Responsible Party ("PRP") under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") by the United
States Environmental Protection Agency ("EPA"). This is discussed under Item 3.
Legal Proceedings in this document.
Employees
---------
The Company and its subsidiaries employed a total of 96 individuals as of
September 30, 1996, including 10 officers, 73 technical and manufacturing
people, and 13 others engaged in financial, sales, and secretarial activities.
Approximately 61% of these people are employed at the Peachtree City, Georgia
facility by either Andersen or by the Company, and 39% are employed at Montair
Andersen's Sevenum, The Netherlands plant.
Seasonal Nature of Business
---------------------------
Andersen's business has never been seasonal.
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ITEM 2. PROPERTIES
- -------------------
Andersen owns six acres of land in Peachtree City, Georgia, with a 15 year
old, 29,000 square feet office and manufacturing facility, a separate 5,000
square feet office building, and a separate 3,600 square feet storage building
located on the land. Andersen owns all of the office furniture and equipment,
all of the manufacturing equipment, and all of the testing equipment at this
facility. Andersen also owns an 80 acre vacant land site in a remote area of
Kern County, California. Andersen processed permit requests through various
state and county agencies in California in fiscal 1982 to enable use of this
property for solid waste disposal from Andersen's scrubber liquid waste
regeneration process. Because of the subsequent slowdown in the oil fields,
Andersen decided to abandon the permit application. Andersen is now interested
in selling the California property.
Montair Andersen owns its facility in Sevenum, The Netherlands, which
includes 40,000 square feet of office and manufacturing space located on 4.8
acres of land. Montair owns all of its manufacturing and office equipment in
Sevenum.
Thermo-Flood's properties in Winfield, Kansas consisted of six buildings on
13 acres of land, all of which were owned under capital leases by Thermo-Flood.
These facilities contained approximately 137,400 square feet of manufacturing
space and 20,000 square feet of office area. The Company abandoned the Thermo-
Flood property in 1992. See Item 3. Legal Proceedings below.
Management believes that the facilities discussed above are adequate for
the current needs of all of the Company's operations for the foreseeable future.
For additional information regarding the Company's property and equipment,
see Note 7 to the Notes to Consolidated Financial Statements contained in the
Company's 1996 Annual Report.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
A discussion of the Company's pending and threatened litigation and
unasserted claims or assessments is set forth under the caption "Commitments and
Contingencies" (Note 12 to the Consolidated Financial Statements) in the
Company's 1996 Annual Report. Such discussion is incorporated herein by
reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
No matters were submitted to a vote of the Company's shareholders, through
the solicitation of proxies or otherwise, during the fourth quarter of fiscal
1996.
ITEM 4(A). EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------
Set forth below in accordance with General Instruction G(3) to Form 10-K
and Instruction 3 to Item 401(b) of Regulation S-K is information as of December
16, 1996 regarding the executive officers (including executive officers who are
also directors) of the Company.
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Occupation During
Name Age The Past Five Years
- ---- --- ----------------------------------------------
Jack D. Brady 53 Chairman of the Board and Chief Executive
Officer of the Company since 1985; Chairman
of the Board of Ander-sen since 1984;
President and Treasurer of Andersen since
1978; Executive Vice President of Andersen
from 1975 until 1978; Director of Andersen
since 1975; Director of Montair Andersen
since 1984.
Milton Emmanuelli 62 Chief Financial Officer of the Company since
September 21, 1992; elected
Secretary/Treasurer of the Company on
December 16, 1992, and Con-troller/Treasurer
on December 13, 1994.
Thomas Van Remmen 39 Director elect of the Company; Pres-ident of
Andersen since December 2, 1996; General
Manager of Cleaver-Brooks incineration and
watertube boiler div-ision of Aqua-Chem Inc.
from 1986 to 1996.
Randall H. Morgan 48 Secretary of the Company since 1994;
Secretary/Treasurer from 1985 to 1992; Vice
President and Secretary of Ander-sen since
1979.
The Company has no paid officers. All officers of the Company are also
officers of one or more subsidiaries and are paid by such subsidiaries. See
"Item 11. Executive Compensation."
The executive officers of the Company and its subsidiaries are elected
annually by the respective Boards of Directors and serve at the discretion of
such Boards.
PART II
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ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
- --------------------------------------------------------------
Information relating to the market for, holders of and dividends paid on
the Company's common stock is set forth under the caption "Common Stock
Information" in the Company's 1996 Annual Report. Such information is
incorporated herein by reference. The 1996 Annual Report is filed as Exhibit 13
to this report.
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
Selected consolidated financial data for the Company for each year of the
five year period ended September 30, 1996 are set forth under the caption
"Selected Financial Data" in the 1996 Annual Report referred to in Item 5 above.
Such financial data are incorporated herein by reference.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
- ------------------------------------------------------------------------
A discussion of the Company's financial condition and results of operations
is set forth under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the 1996 Annual Report
referred to in Item 5 above. Such discussion is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
The consolidated balance sheets of the Company as of September 30, 1996 and
1995 and the Company's consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended September 30,
1996, together with the related notes thereto and the report of independent
certified public accountants thereon dated December 11, 1996, are set forth in
the 1996 Annual Report referred to in Item 5 above. Such consolidated financial
statements, notes and reports are incorporated herein by reference. The Company
is not required to furnish the supplementary financial information specified by
Item 302 of Regulation S-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
- --------------------------------------------------------------------
No independent certified public accountant of the Company has, during the
two fiscal years ended September 30, 1996 or subsequent thereto, resigned,
indicated any intent to resign or been dismissed as the independent certified
public accountants of the Company. There have been no disagreements between the
Company and its independent certified public accountants.
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
Information relating to the directors of the Company is set forth under the
caption "Election of Directors-Nominees" in the Company's Proxy Statement for
its 1997 Annual Meeting of Stockholders to be held on March 5, 1997. Such
information is incorporated herein by reference. Information relating to the
executive officers of the Company is, pursuant to Instruction 3 of Item 401(b)
of Regulation S-K and General Instruction G(3) of Form 10-K, set forth as Part
I, Item 4(A) of this report under the caption "Executive Officers of the
Registrant."
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
Information relating to management compensation is set forth under the
captions "Election of Directors - Director Compensation" and "Election of
Directors - Executive Compensation" in the Proxy Statement referred to in Item
10 above. Such information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
Information relating to ownership of the Company's $0.10 par value common
stock as of January 1, 1997 by (i) any person or group known to the Company to
be the beneficial owner of more than 5% of the Company's outstanding common
stock, (ii) each nominee for election as a director of the Company at the
Company's 1997 Annual Meeting of Stockholders, and (iii) all directors and
officers of the Company as a group is set forth under the captions "Voting -
Principal Stockholders" and "Election of Directors - Nominees" in the Proxy
Statement referred to in Item 10 above. Such information is incorporated herein
by reference.
-12-
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
Information regarding certain transactions between the Company, its
affiliates and certain other persons is set forth under the caption "Election of
Directors - Certain Relationships and Related Transactions" in the Company's
Proxy Statement referred to in Item 10 above. Such information is incorporated
herein by reference.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------
(a) Documents Filed as Part of This Report:
(1) Financial Statements.
The following consolidated financial statements are incorporated in
Part II, Item 8 of this report from the Company's 1996 Annual Report
referred to in Item 5 above:
Consolidated Balance Sheets as of September 30, 1996 and 1995;
Consolidated Statements of Income for the three fiscal years ended
September 30, 1996;
Consolidated Statements of Stockholders' Equity for the three fiscal years
ended September 30, 1996;
Consolidated Statements of Cash Flows for the three fiscal years ended
September 30, 1996;
Summary of Accounting Policies;
Notes to Consolidated Financial Statements;
Report of Independent Certified Public Accountants.
(2) Financial Statement Schedules.
The following financial statement schedules are set forth on pages 17 and
18 of this report. All other schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange Commission have
been omitted because such schedules are not required under the related
instructions or are inapplicable or because the information required is included
in the consolidated financial statements or notes thereto. See the Index to
Financial Statement Schedules on page 20 hereof.
Report of Independent Certified Public Accountants on Financial Statement
Schedules.
Schedule II - Valuation and Qualifying Accounts and Reserves
(3) Exhibits.
The exhibits listed on the following pages are filed as part of or are
incorporated by reference in this report. Where such filing is made by
incorporation by reference to a previously filed registration statement or
report, such registration statement or report is identified in parentheses.
-13-
Exhibit No. Description
- ----------- ---------------------------------------------------
3(a) Certificate of Incorporation of the Company (Exhibit 3(a) to
the Company's Registration Statement on Form S-4, No. 33-684
(the "Form S-4 Registration Statement")
3(b) Certificate of Amendment of the Certificate of Incorporation
of the Company filed with the Secretary of State of Delaware
on March 18, 1987 (Exhibit 3(b) to the Company's Annual
Report on Form 10-K for the fiscal year ended September 30,
1987)
3(c) Bylaws of the Company (Exhibit 3(b) to the Form S-4
Registration Statement)
4 Common Stock Certificate (Exhibit 4(a) to the Form S-4
Registration Statement)
10(a) Agreement and Plan of Reorganization dated as of September
30, 1985 among the Company, Andersen and Crown (Exhibit 2 to
the Form S-4 Registration Statement)
10(b) 1985 Incentive Stock Option Plan and related form of Option
Agreement (Exhibit 10(a) to the Form S-4 Registration
Statement)
10(c) First 1987 Amendment to the 1985 Incentive Stock Option Plan
(Exhibit 10(c) to the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1987)
10(d) Executive Option Plan (Exhibit 10(d) to the Company's Annual
Report on Form 10-K for the fiscal year ended September 30,
1987)
10(e) Key Employee Stock Option Plan (Exhibit 10(e) to the
Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1987)
10(f) 1985 Directors Stock Warrant Plan and related form of Stock
Purchase Warrant (Exhibit 10(b) to the Form S-4 Registration
Statement)
10(g) Cash Incentive Program For Key Employees (Exhibit 10(g) to
the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1987)
10(h) Employment Agreement dated October 1, 1992 between Jack D.
Brady and the Company
10(i) Employment Agreement dated October 1, 1992 between Crown and
Jack C. Hendricks
10(j) Lease between the City of Winfield, Kansas and the City of
Arkansas City, Kansas, as landlord, and Thermo-Flood, as
tenant, dated as of October 1, 1980 and related documents
regarding industrial revenue bonds issued for Thermo-Flood's
properties in Winfield, Kansas (Exhibit 10(p) to the
Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1988)
10(k) Revolving Credit Agreement dated as of July 25, 1989 among
the Company, Andersen, Crown, Thermo-Flood and The Citizens
and Southern National Bank, together with the related Pledge
Agreement, Security Agreement, Special Revolving Credit Note
and Working Capital Revolving Credit Note (Exhibit 10(s) to
the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1989)
10(l) Purchase Agreement dated April 30, 1991 between the Company
and Josef A.C. van Stratum for the acquisition by the Company
of the remaining 19% of Montair Andersen stock (Exhibit 2 to
the Company's Report on Form 8-K dated April 30, 1991)
10(m) Agreement for the Purchase of Stock dated as of September 13,
1991 among George T. Condy, Lawrence E. Wiegman, Kenneth
Kirby and Crown for the acquisition of the stock of Roanoke
by Crown (Exhibit 2 to the Company's Report on Form 8-K dated
September 13, 1991)
10(n) Revolving Credit Agreement Amendment dated as of March 31,
1992 among the Company, Andersen, Crown and Thermo-Flood and
NationsBank of Georgia, N.A. (formerly known as The Citizens
and Southern National Bank)- (See Exhibit 10p)
10(o) Second Amendment to Revolving Credit Agreement among the
Company, Andersen, Crown, Thermo-Flood and NationsBank of
Georgia, N.A. (Formerly known as The Citizens and Southern
National Bank) - (See Exhibit 10p)
10(p) Loan agreement dated as of March 31, 1993 among the Company,
Andersen and Crown and NationsBank of Georgia N.A. (Exhibit
10(u) to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1993)
10(q) Agreement for Sale of Roanoke Industries, Inc. assets, dated
July 19, 1994
10(r) Agreement for Sale of Crown Rotational Molded Products, Inc.
assets, dated July 19, 1994 (Exhibit A to the Company's
Notice of Special Meeting and Proxy Statement 1994)
10(s) Asset Purchase Agreement dated December 21, 1995 between the
Cleaver-Brooks Division of Aqua-Chem and Andersen 2000 Inc.
filed with Form 10Q for quarter ended December 31, 1995
10(t) Commercial Loan Agreement, General Security Agreement,
Commercial Promissory Note, and Revolving Note dated June 28,
1996 between South Trust Bank of Georgia, N.A. and Crown
Andersen Inc. and Andersen 2000 Inc. filed with Form 10Q for
the quarter ended June 30, 1996.
13* 1996 Annual Report - Filed herewith
21 Subsidiaries - Filed herewith
*Portions of the Company's 1996 Annual Report, as indicated in this Annual
Report on Form 10-K, are incorporated herein by reference. Other than as so
noted herein, the 1996 Annual Report is furnished to the Commission solely for
its information and is not deemed to be "filed" with the Commission or subject
to the liabilities of Section 18 of the Securities Exchange Act of 1934.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the fiscal quarter ended
September 30, 1996.
(c) Exhibits:
See Item 14 (a)(3) above.
(d) Financial Statement Schedules:
See Item 14 (a)(2) above.
-14-
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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: December 20, 1996 By: /s/ Jack D. Brady
---------------------
Jack D. Brady
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
/s/ Jack D. Brady Chairman of the Board, December 20, 1996
- --------------------------- President,
Jack D. Brady Principal Executive
Officer and Principal
Financial Officer
/s/ Jack C. Hendricks Director December 20, 1996
- ---------------------------
Jack C. Hendricks
/s/ Milton Emmanuelli Controller/Treasurer December 20, 1996
- --------------------------- and Principal Accounting
Milton Emmanuelli Officer
/s/ Richard A. Beauchamp Director December 20, 1996
- ---------------------------
Richard A. Beauchamp
/s/ J. Don Brock Director December 20, 1996
- ---------------------------
J. Don Brock
/s/ Robert Dressler Director December 20, 1996
- ---------------------------
Robert Dressler
/s/ M. Timothy Yonker Director December 20, 1996
- ---------------------------
M. Timothy Yonker
-15-
CROWN ANDERSEN INC.
Page
----
Report of Independent Certified Public Accountants on
Financial Statement Schedules 17
Schedule Schedule No.
-------- ------------
Valuation and Qualifying Accounts and Reserves II 18
All other schedules have been omitted because they are either not required, not
applicable, or the information has otherwise been supplied.
-16-
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors and Stockholders
of Crown Andersen Inc.
Peachtree City, Georgia
The audits referred to in our report dated December 11, 1996, relating to the
consolidated financial statements of Crown Andersen Inc. and Subsidiaries, which
is contained in Item 8 of this Form 10-K, included the audit of the financial
statement schedule listed in the accompanying index. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule based on our
audits.
In our opinion, such financial statement schedule presents fairly, in all
material respects, the information set forth therein.
BDO SEIDMAN, LLP
Atlanta, Georgia
December 11, 1996
-17-
SCHEDULE II
-----------
CROWN ANDERSEN INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
=====================================================
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
--------- -------- -------- --------- --------
Balance at Additions
beginning of charged to costs Balance at
Description period and expenses Deductions end of period
----------- ------------- ---------------- ---------- -------------
September 30, 1996
- ------------------
Allowance for doubtful accounts $166,192 $ 16,878 $ 62,690 $120,380
======== ======== ======== ========
September 30, 1995
- ------------------
Allowance for doubtful accounts $143,607 $ 87,130 $ 64,545 $166,192
======== ======== ======== ========
September 30, 1994
- ------------------
Allowance for doubtful accounts $112,254 $182,872 $151,519 $143,607
======== ======== ======== ========
-18-
CROWN ANDERSEN INC.
INDEX TO EXHIBITS
-------------------
Exhibit No. Description Page
- ----------- --------------------------------------------------------- ----
3(a) Certificate of Incorporation of the Company (Exhibit 3(a)
to the Company's Registration Statement on Form S-4,
No. 33-684 (the "Form S-4 Registration Statement")
3(b) Certificate of Amendment of the Certificate of
Incorporation of the Company filed with the Secretary of
State of Delaware on March 18, 1987 (Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1987)
3(c) Bylaws of the Company (Exhibit 3(b) to the Form S-4
Registration Statement)
4 Common Stock Certificate (Exhibit 4(a) to the Form S-4
Registration Statement)
10(a) Agreement and Plan of Reorganization dated as of September
30, 1985 among the Company, Andersen and Crown (Exhibit 2
to the Form S-4 Registration Statement)
10(b) 1985 Incentive Stock Option Plan and related form of Option
Agreement (Exhibit 10(a) to the Form S-4 Registration
Statement)
10(c) First 1987 Amendment to the 1985 Incentive Stock Option
Plan (Exhibit 10(c) to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1987)
10(d) Executive Option Plan (Exhibit 10(d) to the Company's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1987)
10(e) Key Employee Stock Option Plan (Exhibit 10(e) to the
Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1987)
10(f) 1985 Directors Stock Warrant Plan and related form of Stock
Purchase Warrant (Exhibit 10(b) to the Form S-4 Registration
Statement)
10(g) Cash Incentive Program For Key Employees (Exhibit 10(g) to
the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1987)
10(h) Employment Agreement dated October 1, 1992 between Jack D.
Brady and the Company
10(i) Employment Agreement dated October 1, 1992 between Crown
and Jack C. Hendricks
10(j) Lease between the City of Winfield, Kansas and the City of
Arkansas City, Kansas, as landlord, and Thermo-Flood, as
tenant, dated as of October 1, 1980 and related documents
regarding industrial revenue bonds issued for Thermo-Flood's
properties in Winfield, Kansas (Exhibit 10(p) to the
Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1988)
10(k) Revolving Credit Agreement dated as of July 25, 1989 among
the Company, Andersen, Crown, Thermo-Flood and The Citizens
and Southern National Bank, together with the related Pledge
Agreement, Security Agreement, Special Revolving Credit Note
and Working Capital Revolving Credit Note (Exhibit 10(s) to
the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1989)
10(l) Purchase Agreement dated April 30, 1991 between the Company
and Josef A.C. van Stratum for the acquisition by
the Company of the remaining 19% of Montair Andersen
stock (Exhibit 2 to the Company's Report on Form 8-K dated
April 30, 1991)
10(m) Agreement for the Purchase of Stock dated as of September 13,
1991 among George T. Condy, Lawrence E. Wiegman, Kenneth
Kirby and Crown for the acquisition of the stock of Roanoke
by Crown (Exhibit 2 to the Company's Report
on Form 8-K dated September 13, 1991)
10(n) Revolving Credit Agreement Amendment dated as of March 31,
1992 among the Company, Andersen, Crown and Thermo-Flood and
NationsBank of Georgia, N.A. (formerly known as The Citizens
and Southern National Bank)-(See Exhibit 10p)
10(o) Second Amendment to Revolving Credit Agreement among the
Company, Andersen, Crown, Thermo-Flood and NationsBank of
Georgia, N.A. (Formerly known as The Citizens and Southern
National Bank) - (See Exhibit 10p)
10(p) Loan agreement dated as of March 31, 1993 among the Company,
Andersen and Crown and NationsBank of Georgia N.A.
(Exhibit 10(u) to the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1993)
10(q) Agreement for Sale of Roanoke Industries, Inc. assets, dated
July 19, 1994
10(r) Agreement for Sale of Crown Rotational Molded Products, Inc.
assets, dated July 19, 1994 (Exhibit A to the Company's
Notice of Special Meeting and Proxy Statement 1994)
10(s) Asset Purchase Agreement dated December 21, 1995 between the
Cleaver-Brooks Division of Aqua-Chem Inc. and Andersen 2000
Inc. filed with Form 10Q for quarter ended December 31, 1995
10(t) Commercial Loan Agreement, General Security Agreement,
Commercial Promissory Note, and Revolving Note dated June 28,
1996 between South Trust Bank of Georgia, N.A. and Crown
Andersen Inc. and Andersen 2000 Inc. filed with Form 10Q for
the quarter ended June 30, 1996
13* 1996 Annual Report - Filed herewith 20
21 Subsidiaries - Filed herewith 41
*Portions of the Company's 1996 Annual Report, as indicated in this Annual
Report on Form 10-K, are incorporated herein by reference. Other than as so
noted herein, the 1996 Annual Report is furnished to the Commission solely for
its information and is not deemed to be "filed" with the Commission or subject
to the liabilities of Section 18 of the Securities Exchange Act of 1934.
Any exhibit will be furnished upon written request to the Company. There is
a charge of $.50 per page to cover expenses for copying and mailing. Requests
should be addressed to Milton Emmanuelli, Crown Andersen Inc., 306 Dividend
Drive, Peachtree City, Georgia 30269.
-19-