SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of Report: October 31, 1997
Amendment: December 31, 1997
Cramer, Inc.
Kansas 2-69336 48-0638707
(State of (Commission File Number) (IRS Employer
Incorporation) I.D. No.)
625 Adams Street, Kansas City, Kansas 66105
(Address of principal executive offices)
Registrant's telephone number, including area code:
(913) 621-6700
ITEM 2. ACQUISITION OF ASSETS-AMENDMENT TO FORM 8K FILED
OCTOBER 31, 1997
The form 8K filed with the Commission on October 31, 1997 with
respect to the Company's acquisition of Floating Arms, Inc.
indicated that certain information concerning the Financial
Statements of the Business Acquired and the required Pro Forma
Financial Information would be filed by amendment in accordance
with the provisions of Item 7 (a)(4) and 7(b)(2) of Form 8K.
This information is hereby submitted.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
1. Audited Balance Sheet and Notes as of December 31, 1996
(previously filed)
2. Unaudited Balance Sheet as of September 30, 1997
3. Unaudited Statements of Income for the years ended
December 31, 1995 and 1996 and the three and nine month
periods ended September 30, 1996 and 1997
4. Unaudited statements of Cash Flows for the years ended
December 31, 1995 and 1996
5. Unaudited statements of Stockholders Equity for the
years ended December 31, 1995 and 1996
Item 310 of Regulation SB requires that certain of the financial
information listed above be audited. As advised by letter to the
Commission dated November 25, 1997, audited financial statements
of the business acquired could not be obtained without
unreasonable effort or expense. The accompanying unaudited
financial information excludes footnote disclosures typically
made in accordance with Generally Accepted Accounting Principles
because it was the only information available from the Seller.
An audit of these statements had not been previously performed.
It is the Company's opinion that the effort and expense necessary
to prepare audited financial statements meeting the requirements
of Generally Accepted Accounting Principles and Item 310 of
Regulation SB would entail unreasonable effort and expense
compared to the size of the acquisition. The Company believes
that audited financial statements would not be material to
understanding the transaction and its possible effect on Cramer.
The future results of the Company's activities concerning the
split keyboard business acquired will be included with the
regular financial statements provided in accordance with the
appropriate SEC regulations.
The Company believes that the interim financial statements for
Floating Arms, Inc., presented herein, include all adjustments
necessary in order to make such financial statements not
misleading.
FLOATING ARMS INC.
BALANCE SHEET AS OF SEPTEMBER 30, 1997
Amounts in Thousands
Unaudited
Assets
Cash $ 0
Accounts receivable 3
Inventory 32
35
Property, at cost 132
Accumulated depreciation (26)
Net 106
$ 142
Liabilities and Equity
Accounts payable $ 75
Accrued expenses 37
Current long-term debt 24
136
Long-term debt - banks 73
Common stock 968
Retained deficit (1,035)
Net equity (67)
$ 142
FLOATING ARMS, INC.
STATEMENTS OF INCOME
Amounts in Thousands
Unaudited
Year Ending Nine Months Ending Three Months Ending
1995 1996 9/30/96 9/30/97 9/30/96 9/30/97
Sales $ 72 $ 102 $ 89 $ 56 $ 89 $ 11
Cost of
sales 74 121 103 41 103 8
Gross
Profit
(loss) (2) (20) (14) 15 (14) 3
Selling,
administrative
and R&D costs 250 248 189 166 190 32
Income (loss)
from
operations (252) (268) (204) (151) (205) (29)
Other income
(expense)
Interest
expense, net 0 (8) (2) (2) (2) 0
Income before
income taxes (252) (276) (206) (153) (207) (29)
Income taxes 0 0 0 0 0 0
Net income
(loss) $(252) $ (276) $(206) $ (153) $ (207) $ (29)
FLOATING ARMS, INC.
STATEMENTS OF CASH FLOW
In Thousands
Unaudited
Year Ending Nine Months Ending
12/31/95 12/31/96 9/30/96 9/30/97
Cash flows from
operating
activities:
Net income (loss) $ (252) $ (276) $ (206) $ (153)
Adjustments to
reconcile net
income to net
cash provided by
(used in) operating
activities:
Depreciation 12 4 2 8
Changes in operating
assets and liabilities:
Accounts receivable (11) 7 8 6
Inventory (5) (3) 4 17
Other noncurrent
assets 0 0 0 0
Prepaids (1) 4 4 0
Accounts payable 25 24 16 20
Accrued expenses (2) 47 27 (10)
Net cash provided
by (used in)
operating
activities (234) (193) (145) (112)
Cash flows from
investing activities:
Capital expenditures 30 50 0 42
Cash flows from
financing activities:
Stock issuance 240 183 71 110
Net change in notes
payable to banks (6) 48 68 49
Net increase
(decrease) in cash (30) (13) (6) 6
Cash at the beginning
of the period 37 7 7 (6)
Cash at the
end of the period $ 7 $ (6) $ 1 $ 0
Supplemental disclosures:
Cash paid during the period:
Interest $ 0 $ 8 $ 2 $ 2
Income tax $ 0 $ 0 $ 0 $ 0
FLOATING ARMS, INC.
STATEMENTS OF STOCKHOLDERS EQUITY
For the Years Ending December 31, 1995 and 1996
Amounts in Thousands
Unaudited
Total
Common Accumulated Stockholders'
Stock Deficit Equity
Balance
December 31, 1994 $ 435 $ (355) $ 80
Issuance of
common stock 240 0 240
Net income (loss) 0 (252) (252)
Balance
December 31, 1995 675 (606) 68
Issuance of
common stock 183 0 183
Net income (loss) 0 (276) (276)
Balance at
December 31, 1996 $ 857 $ (882) $ (25)
(B) PROFORMA FINANCIAL INFORMATION
The following proforma financial statements are derived using the
separate financial statements of the Company and Floating Arms,
Inc. As discussed in (a) above, the financial statements of
Floating Arms, Inc. may not be in compliance with Generally
Accepted Accounting Principles or SEC regulations and do not
include all required disclosures. As such, the accompanying
proforma presentations also may not be in compliance with GAAP
and SEC regulations.
1. Proforma Balance Sheet as of September 30, 1997
The unaudited Proforma Balance Sheet assumes that the
acquisition of the assets of Floating Arms, Inc. and
the payment for such assets by cash, the assumption of
certain debts, and the issuance of 210,750 shares of
common stock occurred on September 30, 1997.
2. Proforma Statements of Income for the Year Ended
December 31, 1996 and for the Nine Month Period Ended
September 30, 1997
The respective proforma Statements of Income assume
that the acquisition of the assets of Floating Arms,
Inc. and the payment for such assets by cash and the
assumption of certain debts occurred on the first day
of the period presented.
The above proforma financial information do not purport to
present the financial position or results of operations of the
Company had the transactions assumed herein occurred on the date
indicated, nor are they necessarily indicative of the results of
operations which may be expected to occur in the future.
The proforma financial statements are based on a preliminary
purchase price allocation which is calculated based on available
information and certain assumptions the Company considers
reasonable. The final purchase price allocation will be based
upon a final determination of the fair market value of the net
assets acquired at the acquisition date as determined by
valuations and other studies which are not yet complete. The
final purchase price allocation may differ significantly from the
preliminary allocation.
CRAMER, INC.
UNAUDITED PROFORMA BALANCE SHEET
Amounts in Thousands
September 30, 1997
Floating Proforma Proforma
Cramer Arms Adjustment Total
Assets
Cash $ 121 $ 0 $ (14)(a) $ 107
Accounts receivable 1,065 4 1,069
Inventory 1,419 32 1,451
Prepaid expenses and
other 236 0 23(b) 259
2,841 36 9 2,886
Property, at cost 5,443 132 5,575
Accumulated
depreciation (4,820) (26) 26(c) (4,820)
Net 623 106 26 755
Other noncurrent 286 0 372(d) 658
$3,750 $ 142 $ 407 $4,299
Liabilities and Equity
Note payable - banks $1,210 $ 0 $ 300 (a) $1,510
Accounts payable 572 75 (75)(a) 572
Accrued expenses 627 37 (37)(a) 627
Current long-term debt 0 24 (24)(a) 0
2,409 136 164 2,709
Long-term debt - banks 0 73 (73)(a) 0
Other long-term
liabilities 649 0 0 649
Total long-term debt 649 73 (73) 649
Common stock 3,508 968 316 (e) 4,792
Retained deficit (2,774) (1,035) (3,809)
734 (67) 316 983
Pension liability
adjustment (42) 0 (42)
Net equity 692 (67) 316 941
$3,750 $ 142 $ 407 $4,299
NOTE: Footnotes a, b, c, d, and e are on the following page.
Footnotes to the Cramer, Inc. Unaudited Proforma Balance Sheet:
(a) Proforma adjustment to cash represents amounts paid at
closing. The Proforma adjustment to Notes Payable - banks
represents the net additional amount borrowed by the Company
to settle all liabilities that existed at the closing date,
October 31, 1997.
(b) Proforma adjustment to prepaid expense represents amounts
that had been paid to vendors by the Company prior to the
acquisition date to guarantee future delivery of inventory.
(c) Proforma adjustment to Accumulated Depreciation represents
the elimination of depreciation previously recorded by
Floating Arms, Inc. In management's opinion, the original
cost of the assets approximates their current fair market
value.
(d) Proforma adjustments to Other Noncurrent Assets represents
the values assigned to certain intangible assets acquired as
part of the transaction. In management's opinion, these
intangibles and their respective values consist of:
Customer Lists $ 100
Patent 50
Excess of purchase price over
fair value of assets acquired (goodwill) 222
Total $ 372
(e) Proforma adjustment of equity represents the issuance of
210,750 shares of the Company's common stock. For purposes
of this transaction, these shares were agreed by both
parties to have a value of $1.50 each.
CRAMER, INC.
UNAUDITED PROFORMA STATEMENTS OF INCOME
Amounts in Thousands
Year Ended December 31, 1996
Floating Proforma Proforma
Cramer Arms Adjustment Total
Sales $11,872 $ 102 $ $11,974
Cost of sales 8,562 121 8,683
Gross profit 3,310 (20) 3,290
Selling,
administrative
and R&D costs 2,854 248 52 (a) 3,154
Income (loss)
from operations 456 (268) (52) 136
Other income (expense):
Interest expense, net (105) (8) (8)(b) (121)
Other, net (26) 0 (26)
Income before income
taxes 325 (276) (60) (11)
Income taxes 0 0 0
Net income $ 325 $ (276) $ (60) $ (11)
Nine Months Ended September 30, 1997
Floating Proforma Proforma
Cramer Arms Adjustment Total
Sales $9,195 $ 56 $ $9,251
Cost of sales 6,771 41 6,812
Gross profit 2,424 15 2,439
Selling, administrative
and R&D costs 2,201 166 35 (a) 2,402
Income (loss)
from operations 223 (151) (35) 38
Other income (expense):
Interest expense, net (64) (2) (10)(b) (76)
Other, net (19) 0 (19)
Income before income
taxes 140 (153) (45) (58)
Income taxes 0 0 0
Net income $ 140 $ (153) $ (45) $ (58)
NOTE: Footnotes a and b are on the following page.
(a) Proforma adjustment to Selling, Administrative and R&D Costs
represents the net of elimination of depreciation previously
recorded by Floating Arms, Inc. and the additional
depreciation that would be recorded by the Company on the
Property, Plant and Equipment and the Intangible assets
acquired as a result of the transaction. The estimated
useful lives of the significant asset categories are as
follows:
Production tooling 5 years
Patent 10 years
Customer lists 10 years
Excess of purchase price over fair
value of assets acquired 10 years
(b) Proforma adjustment to interest expense represents the net
of eliminating the interest paid by Floating Arms, Inc. on
its various bank debts and the additional interest that
would have been paid by the Company if it financed both the
initial borrowings and the liabilities assumed through
additional borrowings under its share of the Consolidated
Rotherwood Line of Credit (see Management Discussion and
Analysis in the 1996 Form 10-KSB).
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 hereto duly authorized.
Cramer, Inc.
Date: 12/31/97 /s/ Gary A. Rubin
Gary A. Rubin
Vice President, Finance