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                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the Fiscal Year Ended December 31, 1999.

                           Commission File No. 2-69336

                                  CRAMER, INC.

KANSAS                                           I.R.S. EMPLOYER IDENTIFICATION
                                                 NUMBER 48-0638707
625 ADAMS STREET, KANSAS CITY, KS 66105
TELEPHONE: (913) 621-6700


Securities registered under Section 12(g) of the Exchange Act:  Common Stock

Check whether the issuer: (1) has filed all reports required to be filed by
Sections 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No __

Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or other information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

The issuer's revenues for the 1999 fiscal year were $12,693,000.

As of December 31, 1999 the aggregate market value of the common shares of
Cramer, Inc. held by non-affiliates was approximately $318,000. (Calculated
assuming the market value of Cramer, Inc. common stock is approximately equal to
the net book value per share at December 31, 1999 of such stock.)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 4,051,400 shares of common stock.

Documents Incorporated by Reference: The Company's Proxy Statement for the 2000
Annual Meeting of Shareholders is incorporated by reference into Part III of
this Report.

Transitional Small Business Disclosure Format (check one): Yes__ No  X
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                                      INDEX

<TABLE>
<CAPTION>
                                                                                           PAGE NO.


PART I

<S>               <C>                                                                      <C>
     Item 1.      Description of Business                                                          3
     Item 2.      Description of Property                                                          8
     Item 3.      Legal Proceedings                                                                9
     Item 4.      Submission of Matters to a Vote of Security Holders                              9

PART II

     Item 5.      Market for Common Equity and Related Stockholder Matters                        10
     Item 6.      Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                             10
     Item 7.      Financial Statements                                                            15
     Item 8.      Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure                                             28

PART III

     Item 9.      Directors, Executive Officers, Promoters and Control
                  Persons; Compliance with Section 16(a) of the Exchange Act                     29
     Item 10.     Executive Compensation                                                         29
     Item 11.     Security Ownership of Certain Beneficial Owners and
                  Management                                                                     29
     Item 12.     Certain Relationships and Related Transactions                                 29
     Item 13.     Exhibits and Reports on Form 8-K                                               29
</TABLE>

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                                     PART I


ITEM 1. DESCRIPTION OF BUSINESS

Cramer, Inc. is a Kansas corporation engaged in the manufacture and sale of
seating and utility products designed for office or industrial settings, and
chair accessories such as ergonomic articulating keyboards for intensive data
entry environments. The Company was established in 1886 as a manufacturer of
safes and office products. Descendants of the Cramer family owned the Company
until 1961 when it was sold to OLIX Industries, a public company located in
Austin, Texas. In January 1981, OLIX made a public distribution of its Cramer
common stock.


Business of Issuer

The Company's office seating products compete in the $12 billion domestic market
for office furniture, which includes seating, desks, files, and panel systems.
Major companies serving this market are Steelcase, Herman Miller, Knoll,
Haworth, Kimball, and HON Industries. These six companies supply products in all
major categories of this market. Together they account for an estimated 60% of
sales in this market. The remaining 40% of the market are served by smaller
companies (typically sales of less than $75 million) that primarily compete only
in selected portions of the market. These market segments are delineated either
by product type, such as seating or casegoods, or by customer category, for
example high style, wood-finish, or budget-price.

Cramer's seating products are non-wood, characterized by painted metal finish
and upholstered seats and backs. The product line includes standard height
chairs and a wide range of raised height models and stools. All offer ergonomic
design with varying degrees of adjustability to accommodate individual users.
Cramer manufactures and sells chairs for a variety of demanding commercial
applications, including intensive (24-hour) use, production facilities,
laboratories, hospitals, schools as well as conference, secretarial and
management seating for the general office. The Company also manufactures
Cleanroom and Electro-Static Discharge seating which meets the needs of certain
specialized manufacturing and research environments. The Company's seating
products are recognized for quality construction and lasting durability.

The Company's utility products include step stools and aluminum ladders
featuring the use of retractable casters. The design of these products and the
retractable caster concept are well recognized and accepted in the marketplace.
These products have been continuously manufactured by the Company for sale in
the United States since the 1950s.

The Company's chair accessory products include a patented split keyboard that is
designed to be mounted on the arms of the user's chair. The product can be used
on most task chairs sold in the United States. A version of the split keyboard
can be mounted on a desk or keyboard tray. An accompanying product is an
articulating mouse pad that also can be mounted on the arms of a chair.

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Marketing and Competition

The domestic office furniture market is highly competitive. Cramer competes by
focusing on the non-wood task seating market niche with products that have high
quality and a reputation for long-term reliability. The Company also
differentiates itself by a commitment to customer service and on-time delivery.
The Company's 110+ year history and the proven reliability of its products
support a strong reputation and product awareness in the marketplace. Cramer
frequently competes in its narrow market area against similar-sized niche
manufacturers. In addition, the Company has been able to effectively compete
against the major companies in the industry when Cramer's unique product
features, reputation for quality, and attention to customer service offer the
customer a better price-value relationship than the large competitors.

The majority of the Company's seating products are sold to independent office
furniture dealers who resell the products to end-users. Cramer has approximately
1,500 of these accounts, although only a portion of these accounts are active in
any given year. For the past several years, sales to independent office
furniture dealers have accounted for 70% to 75% of the Company's revenue. These
sales efforts are focused through 23 independent sales representative
organizations located in major markets throughout the United States. These sale
organizations typically employ from 1 to 6 people, and represent 3 to 6
complimentary product lines such as desks, panel systems, and lighting. Average
tenure for the Company's sales representatives is more than four years. These
representatives initiate and develop business directly with end users, designers
and architects for specification projects and coordinate and manage the
Company's business relationships with the independent office furniture dealers
in their territories.

The Company's utility products are sold primarily to approximately 100 wholesale
and catalog distributors. These distributors include major office supply and
industrial suppliers, and specialty distributors serving end-users' health-care,
scientific, and safety needs. Utility products, principally the Kik-Step(R)
stool, are also distributed to the home market primarily through specialty
catalog distributors serving domestic kitchen and workroom needs. While other
manufacturers produce competing products, as a result of the Company's favorable
price/value relationship, the variety of applicable products Cramer has to offer
the specific wholesale or catalog distributor, and its attention to customer
service, these competitors have, thus far, not been successful in reducing the
Company's market share of these products. However, there is no guarantee that
competitors will not be successful in reducing our market share in the future.
While seven wholesale and catalog distributors accounted for 53% of the
Company's 1999 utility product sales, no single customer accounted for more than
10% of the Company's total sales in 1998 or 1999.

The company's chair accessory products are sold directly to end users through a
site on the World Wide Web. Inquiries and customer order fulfillment is handled
by an in-house sales manager. Since these products can be used on many types of
seating products, Management believes that establishment of these products and
this new sales channel will increase the Company exposure to users who have not
traditionally purchased the Company's products, ultimately increasing all of the
Company's sales.

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An emerging market channel is sales directly to commercial consumers or users of
the Company's seating and utility products. These sales efforts are primarily
being handled through an in-house telemarketing sales force supplemented by
direct mail campaigns to likely product users.

Cramer regularly participates in national office, industrial, and ergonomic
products trade shows and conferences. Sales representatives display product
samples and provide demonstration chairs for dealers and end-users.

Sales in the contract furnishing industry, where Cramer's office seating
products compete, follow a seasonal pattern of slightly lower volume in the
winter and summer and higher volume in the spring and fall. Utility product
sales are generally equal through each quarter of the year.

Cramer's products are sold throughout the United States. International sales are
not significant.

Products

Office Seating - The Company's flagship seating product is the Triton(R) chair.
The Company believes this chair is unique in the industry because it combines a
15-year, 3 shift-a-day warranty and steel structural components with full
ergonomic adjustability.

The Triton's(R) design significantly upgrades the user's ability to meet
emerging ergonomic adjustability requirements yet have a chair that exceeds
industry durability specifications. The Triton(R) is designed to meet or exceed
all current standards of adjustability for prevention of repetitive stress
trauma including the San Francisco VDT work-station standards; meet or exceed
all flame-retarding specifications, including Boston Fire Marshal, California TB
117, and California TB 133; and meet or exceed industry testing for strength and
component failure (ANSI/BIFMA specifications). Additionally, a version of the
Triton(R) has been independently certified to pass the more rigorous U.S.
Federal General Services Administration Intensive Use Seating specifications.

Typical purchasers of the Triton(R) are health-care facilities, professional
offices, production lines, airline reservation centers, police and emergency
dispatch stations and similar 24-hour use applications. The Triton product line
includes both a regular size version and a larger version called the Triton Max.
This version was specifically designed to accommodate larger-sized users.

Other significant office seating products include the Fusion(R), Fusion Express,
Aeros(R), Affix and Avail. The Fusion(R) and Fusion Express chairs both provide
full ergonomic task seating at moderate prices. These chairs' designs and
functions follow the strict standards found in all of the Company's active
ergonomic seating lines. The products are designed to function within office,
light assembly and laboratory settings. Both chair lines are designed to
complement the Triton(R) line with its unique steel seat pan. The Aeros(R) and
Affix products are lower priced task seating products with less ergonomic
adjustments. The Avail is a stacking guest chair intended to complement the
Company's other task chairs.

Utility - The Company's utility products include the Kik-Step(R), a round,
all-steel, 2-step stool that rolls on retractable casters and is frequently used
in libraries, file rooms, and warehouses. This product was designed by Cramer in
1957 and continues to be an important part of the Company's product line. In
addition to the Kik-Step(R), Cramer manufactures StopStep, SmartStep and PAL

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ladders, a series of steel and lightweight aluminum ladders featuring the same
retractable caster concept as the Kik-Step(R).

Industrial Seating - The Company's industrial seating line includes the Rhino
seating product line and a series of aluminum framed seating designed for a more
rugged setting than a typical office chair. The Rhino seating line is
distinguished by its seat and back, which are made from "tough-skinned" urethane
foam. This technology offers industrial-strength reliability for factory
seating, including the ability to wash the chair without damaging the
upholstery. The product-line includes a large "task" chair and a smaller
"operational" chair. The third product in the Rhino seating line is a small
sit-stand designed to relieve weight from an individual's feet in industrial
situations that do not allow a fully seated position.

The aluminum frame seating products have been in production for over 25 years
and are well recognized in the market for value and lasting performance. These
product lines offer a wide range of seating material from wood or plastic to
upholstered products. The products are available in both desk height and a range
of stools suitable for counter height tasks.

Chair Accessories - The Company's articulating split keyboard features the
ability to be mounted on the arms of most task chairs sold in the United States.
The keyboard is split into two separate parts to improve the ergonomic aspects
of the product. Each of the two sections of the keyboard can be articulated in
an infinite range to fit the size and shape of individual users. The Company
believes that proper use of the product reduces the likelihood of repetitive
motion injuries arising from extensive use of electronic keyboards or data entry
devices. The Company also believes that users may experience productivity
increases due to lessened fatigue during the course of a regular workday.

New products - The Company believes that systematic development and introduction
of unique new products that fit within the Company's product niches is important
for the Company's growth and profitability. In 1999 the Company introduced the
SmartStep ladder. This product is unique in that it provides a warning mechanism
to alert users that they have reached the bottom step of the ladder and can
safely dismount. The ladder warnings can be tactile, audible or both. The
Company also introduced the Rhino Plus in 1999. The Rhino Plus is a unique
product that combines the tough industrial strength urethane skin of the
original Rhino product with a separate fully padded foam cushion. As a result,
the product is significantly more comfortable than all other urethane chairs
currently on the market. The product was developed jointly with the Company's
vendor partner Meramec, a manufacturer of urethane products.

Production, Trademarks and Government Regulation

The Company's products are fabricated from raw materials such as steel sheet and
tubing, aluminum tubing, plastic forms, foam, and fabric purchased from sources
locally and throughout the United States. Specialized components, including
printed circuit boards, and subassemblies are likewise purchased from vendors
throughout the United States and, in a few instances, internationally.

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Cramer understands the importance of developing partnerships with its vendors,
and has undertaken a program to work closely with suppliers to improve quality,
delivery, and price, while offering technical assistance and production planning
forecasts. Although this approach includes focusing greater purchases with fewer
vendors, the Company believes it retains the ability to change to alternative
suppliers in most cases.

Certain components of the Company's products are sourced from a single vendor.
Any disruption in such supply arrangements could result in temporary shipment
delays or increased costs. However, the Company believes it has the ability to
substitute suppliers for any component within a three month period of time.

Production machinery and equipment used to manufacture the majority of the
Company's products is owned and maintained by the Company and primarily located
in the Company's factory in Kansas City, Kansas. Certain tooling for the
fabrication of specialized components is owned by the Company, but located at
vendors who manufacture the components. The production equipment ranges from
older-model metalworking machinery to a modern powder coat painting system. The
Company systematically maintains its equipment at high levels of operation.
Cramer has sufficient production capacity for substantially increased sales
requirements. Due to the unique requirements of the keyboard product, an outside
contractor that specializes in the assembly of electronic components
manufactures these items. The Company is continuously looking for ways to reduce
the cost of this outside service.

The Company uses the concept of "lean" manufacturing and produces most products
to specific customer orders. For the Company, "lean" manufacturing means the use
of simple visual signals directly on the plant floor that allow plant employees
and supervisors to control the manufacture of products for each individual
customer order. While the majority of sales are configured using standard
components and options, Cramer is able to customize product specifications for
particular needs. At the end of 1999, the Company's delivery schedule is 5 days
for orders of less than 30 seating, ladder or keyboard products. A 5-day
lead-time is also offered for orders of less than 100 Kik-Steps(R). This
schedule is significantly shorter than that offered by most of the Company's
competition and is a competitive advantage in certain situations. Larger orders
are given a 3 week lead time, which is typical for the business areas in which
the Company competes.

At December 31, 1999, the Company's backlog of unfilled orders was $1,000,000,
the majority of which are scheduled to be shipped in the first quarter of 2000.

The name Cramer and the Company's Kik-Step(R), Aeros(R), Triton(R), and
Fusion(R) product names are registered trademarks. The Company's other office
and utility seating products are marketed under the Cirrus, Avail, Affix,
Nimbus, Fusion Express and Rhino trademarks. The Company also considers the
overall design and appearance of the Kik-Step(R) to be a trademark of the
product.

The Company's articulating keyboard is protected by a U.S. patent covering key
switching devices mounted on the arms of a chair.

The Company has filed for patent protection for the warning mechanisms
incorporated in the SmartStep ladder and the separate urethane skins used in
Rhino Plus seating products.

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No government approval is required for Cramer's products. The Company designs
its products to meet voluntary industry standards for strength and reliability
(ANSI/BIFMA). The Company maintains ANSI/BIFMA test equipment at its factory and
has implemented a program of systematically testing its products for
reliability. Certain products are designed to meet the more rigorous
requirements of the General Services Administration. This provides the Company
with competitive advantages in certain situations.

The Company's production processes use no known hazardous or polluting
substances. The Company is subject to various federal, state, and local laws and
regulations governing the protection of its employees and the environment. The
Company believes that it is in substantial compliance with such laws, and that
continued compliance will not have a material adverse effect on its business.

Employees

As of December 31, 1999, the Company employed 91 full time people; 33 office,
supervisory, managerial, and executive personnel, and 58 factory workers. Cramer
management considers the ability to attract, train, and retain skilled
professional employees and production workers to be an important aspect of the
Company's competitive advantage. Management believes that it enjoys a good,
interdependent relationship with its employees, and has instituted personnel
policies intended to maintain this relationship. The Company is an equal
opportunity employer and an active non-discrimination policy is integral to this
concept.

The factory workers are covered by a collective bargaining agreement with the
United Steelworkers of America that expires on September 30, 2002. The Company
believes that strong labor relations are important to its ability to achieve
product quality, on-time delivery, and continuous improvement in the workplace.
No work stoppages have occurred over the past ten years. The State of Kansas is
a right-to work state, so not all factory workers belong to the Union. At
year-end, 27 of the 58 factory workers were not dues paying members. The Company
considers its labor relations to be good.

Research and Development

New products are developed internally by a technical staff who has an average of
more than 5 years experience with seating and industrial products. New designs
are developed on state-of-the-art CAD equipment to shorten development time,
improve documentation, and facilitate sourcing of high quality components from
outside vendors. The Company's internal costs for engineering, research and
development were $252,000 and $277,000 in 1999 and 1998, respectively.

Cramer employees are committed to continuous improvement of products and
processes. The Company believes that this philosophy is working to develop
products with higher reliability, lower cost, and improved product features.

ITEM 2.  DESCRIPTION OF PROPERTY

The Company's corporate headquarters and manufacturing facility are located on a
5-acre tract at 625 Adams Street, Kansas City, KS in a building owned and
occupied by the Company since 1957.

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This facility comprises 165,000 square feet, including 20,000 office, 2,000
showroom, and 143,000 manufacturing space.

The Company considers the facility appropriate for its type of manufacturing,
with sufficient expansion potential for foreseeable growth. The facility is in
good condition. No expansions, renovations, or significant changes are necessary
or planned. The location is in proximity to a large labor pool and has good
access to transportation, including rail service.

The Company believes that its facilities are adequately insured.

The Company's sales office in Minneapolis consists of a small office leased by
the Company in a suburban office park.


ITEM 3. LEGAL PROCEEDINGS

The Company is a defendant in several lawsuits relating to product liability
claims arising from accidents allegedly occurring in connection with the use of
its products. The claims are covered by insurance and are being defended by the
Company's independent counsel or by counsel assigned by the Company's insurance
carriers, but are subject to deductibles ranging from $0 to $100,000. A number
of the claimants allege substantial damages. While management believes the
Company has substantial defenses with respect to the claims, the ultimate
outcome of such litigation cannot be predicted with certainty. The Company has
reasonably estimated and accrued in its financial statements its portion of the
deductible as a product liability contingency. Such claims are an ordinary
aspect of the Company's business.



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

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                                     PART II



ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Cramer stock is not listed on NASDAQ or any exchange and there is no public
trading market for the Company's stock.

As of January 31, 2000, there were 756 shareholders of record.

Since being publicly held, the Company has never paid cash dividends and does
not anticipate paying any cash dividends in the foreseeable future. The
Company's ability to pay cash dividends on its common stock will depend upon its
capital surplus and cash requirements.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS


A.       FORWARD LOOKING STATEMENTS

         Except for the historical information contained herein, this report on
         Form 10-KSB contains forward-looking statements that involve risks and
         uncertainties. The Company's actual results could differ materially. In
         connection with the "safe harbor" provisions of the Private Securities
         Litigation Reform Act of 1995, Cramer, Inc. reminds readers that there
         are many important factors that could cause the Company's actual
         results to differ materially from those projected in forward-looking
         statements made by, or on behalf of, the Company. When used in this
         Form 10-KSB and in other filings by the Company with the Securities and
         Exchange Commission, in the Company's press releases and in oral
         statements made with the approval of an authorized executive officer,
         words or phrases such as "will likely result", "expects", "are expected
         to", "will continue", "is anticipated", "estimate", "project" or
         similar expressions are intended to identify forward-looking
         statements. The Company wishes to caution readers not to place undue
         reliance on such forward-looking statements.

         There are a number of reasons why investors should not place undue
         reliance on forward-looking statements. Among the risks and
         uncertainties that could cause the Company's actual results for future
         periods to differ materially from any forward-looking statements made
         are the following:

         -        Fluctuations or reductions in product demand and market
                  acceptance

         -        The level of product development by the Company

         -        Capacity and supply constraints or difficulties

         -        The results of financing efforts

         -        The effect of new laws and regulations

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         -        Unexpected additional expenses or operating losses

         -        Competition

         -        The Company's reliance on certain vendors for key components.

         The foregoing list of risks and uncertainties is not meant to be
         complete.


B.       IMPACT OF THE YEAR 2000

         As of the filing date of this report, the impact of the Year 2000 has
         not had a material adverse impact on the Company's business or results
         of operations. The total cost of the Company's Year 2000 efforts was
         approximately $15,000. These amounts included the purchase of software
         and hardware and the cost of employees and consultants working on Year
         2000 projects. All costs were funded from cash flows from operations.

C.       SUMMARY OF OPERATIONS

         At $12,693,000, net sales for 1999 were $81,000 less than in 1998. The
         reduction in sales of approximately 1/2% was slightly better than the
         experience of the furniture industry as a whole. The Business and
         Institutional Furniture Manufacturers Association (BIFMA) reported that
         total industry sales were approximately 1% less in 1999 as compared to
         1998. The Company's significantly improved its manufacturing and
         scheduling efficiency in 1999. This allowed orders in 1999 to be
         scheduled with an average lead-time of less than 3 weeks instead of the
         4-week lead-time used throughout all of 1998. By the end of 1999,
         Management's emphasis on reducing lead-time and in implementing lean
         manufacturing was allowing the Company to use a 5-day lead-time on the
         majority of its new orders. Management believes the Company's shorter
         lead-time provides better customer service and is a competitive
         advantage in many situations.

         The Company's backlog at the end of 1999 was $1,000,000. This was
         $22,000 more than at December 31, 1998. Substantially all of the
         Company's backlog is scheduled to ship within the first three months of
         2000.

         As a percentage of net sales, gross margins in 1999 were 28.2% as
         compared to 28.6% in 1998. The majority of the difference in gross
         margin percentages is due to normal fluctuations in business conditions
         and product mix. However, the Company expensed approximately $10,000,
         net of a retraining grant from the State of Kansas of $25,000, in 1999
         in implementing its "lean" manufacturing approach and in reducing lead
         times. The Company anticipates that an additional $60,000 will be
         expensed in 2000 to complete this process.

         Selling expenses in 1999 increased by $178,000 as compared to 1998.
         Personnel costs increased by $208,000 in order to hire individuals to
         more actively manage the Company's key catalog customers and to allow
         more timely contact and follow-up with the increasing number of
         customer leads being generated by the Company's web page.

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         These individuals will also manage specific market areas, and/or market
         channels, which will provide better support for the Company's
         commissioned sales representatives. In addition, the Company's cost for
         catalog placement fees in 1999 increased by $57,000 as compared to
         1998. This increase in costs is due to participation in a greater
         number of catalogs, and increases in the rates being charged by certain
         of the Company's larger volume customers. Finally, in the third quarter
         of 1999 the Company incurred approximately $65,000 in consulting fees
         to correct certain technical deficiencies in the keyboard product line.
         Management considers these fees to be part of the costs for introducing
         the keyboard product.

         Partially offsetting the above increases is a $105,000 reduction in the
         cost of sales literature due to less emphasis being placed on this
         sales support mechanism.

         General and administrative costs in 1999 decreased $32,000 as compared
         to the total for 1998. The decrease is primarily the result of (a) a
         $42,000 decrease in the fees paid by the Company to its parent
         Rotherwood, (b) a decrease of approximately $55,000 in salaries as a
         result of lower headcount and delays in replacing personnel who left
         the Company. These decreases were partially offset by a $36,000
         increase in legal fees related to the defense of several product
         liability claims. These claims are being defended by the Company under
         the Self Insured Retention clauses in its liability policies with
         insurance companies. See Note 9 of the Company's Financial Statements
         for further discussion.

         Interest expense in 1999 increased by $43,000 as compared to 1998. The
         increase is consistent with the increase in average borrowings
         discussed below.

         Other non-operating expenses increased by $55,000 in 1999 as compared
         to 1998. The increase is primarily due to a $25,000 charge-off of
         accounts receivable due to the bankruptcy of a dealer with whom the
         Company maintained a relationship in order to serve an important
         customer in the industrial market. Future sales to this customer will
         be handled through a new and financially stronger dealer. Furthermore,
         in 1998 the Company received approximately $30,000 in refunds of prior
         year workers' compensation insurance premiums. No such refunds were
         received in 1999.

         Primarily as a result of the increases in operating expenses, the
         Company experienced a loss before income taxes of $292,000 in 1999.
         This is a difference of $317,000 when compared to the net income before
         income taxes of $25,000 during 1998.

         A substantial portion of the Company's operating loss and loss before
         income taxes in 1999 can be attributed to continuing introduction of
         the chair accessory product line and the establishment of direct to end
         user sales channels. Amounts invested in these activities in 1999
         aggregated approximately $550,000, net of sales revenues. As a result
         of its experience in 1999, the Company is refining its sales approach
         for these products for 2000. These refinements include integrating the
         marketing of the keyboard products and other chair accessories more
         closely with the Company's core products, with sales

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         coming primarily through a telemarketing group that is being
         established to market all of the Company's products directly to end
         users. Extensive direct mail campaigns and the use of advertisements in
         selected regional or national publications will support the
         telemarketing group. Management hopes that these actions will prove out
         the viability of this direct sales approach establishing it as a
         profitable supplement to the Company's traditional dealer and
         wholesaler sales channels.

         FINANCIAL CONDITION AND LIQUIDITY

         At $1,263,000, the Company's December 31, 1999 accounts receivable
         balance increased by $149,000 as compared to the balance at December
         31, 1998. The increase is primarily due to higher sales in the month of
         December 1999 as compared to December 1998.

         The Company's December 31, 1999 inventories decreased by $128,000 from
         the 1998 year-end balance. The decrease is the result of management
         efforts to better control the Company's investment in inventory and
         reductions in stocks as a result of applying lean manufacturing
         techniques.

         Capital expenditures in 1999 included $228,000 for investments in
         factory tooling and office equipment for the Company's main Kansas City
         location. This amount was $25,000 more than depreciation, which
         aggregated $203,000 during the period.

         Principally as a result of the Company's 1999 operating loss and the
         increase in accounts receivable in 1999, the Company's short-term notes
         payable increased by $541,000 during 1999.

         The Company's accounts payable increased by $37,000 during 1999. This
         increase is the result of normal fluctuations in operating conditions.

         The Company made payments of approximately $154,000 into the trust for
         the Company's Pension Plan during 1999. However, the pension plan
         liability decreased by $193,000 due to non-cash adjustments reflecting
         the ongoing interest accruals and the amortization of the unrecognized
         prior service cost and transition obligation. This amortization also
         resulted in the decrease in the pension plan asset from $160,000 at
         December 31, 1998 to $108,000 at December 31, 1999 and a $70,000
         decrease in the Minimum Pension Liability Adjustment to Accumulated
         Other Comprehensive Income.

         The Company continues to participate in a consolidated Rotherwood
         credit facility with Mercantile Bank (the Bank). At December 31, 1999,
         the credit facility provided Rotherwood, and its participating
         subsidiaries (including Cramer), with access to a $2,500,000 credit
         line with interest charged on outstanding borrowings at one-fourth of a
         percent less than the Bank's prime interest rate. Management believes
         that this is a lower interest rate than the rate that Cramer would pay
         if it tried to finance its working capital needs by itself. The Company
         may borrow up to the maximum amount of the credit

                                       13
<PAGE>   14
         line less any amounts already borrowed by the other participating
         Rotherwood companies.

         The combined credit facility is secured by the inventory, accounts
         receivable, and equipment of the participating Rotherwood subsidiaries.
         In addition, Rotherwood's founder has pledged publicly traded equity
         securities with a market value in excess of $2 million as additional
         collateral for the loan.

         Each participating Rotherwood subsidiary has guaranteed repayment of
         the total amount borrowed under the credit facility. Management
         believes that the reduction in interest rates and the access to a
         larger credit facility more than offset the risk of potential losses
         under the guarantee provisions of the credit facility in the event that
         another participating Rotherwood subsidiary would default under their
         portion of the credit line.

         There is a risk that Cramer will not have access to sufficient funds
         for its operations if another participating Rotherwood subsidiary
         borrowed more of the funds under the credit line than anticipated.
         However, the consolidated credit line is currently being re-negotiated
         and extended to $3,000,000. Management anticipates no difficulty in
         obtaining the new loan and that there will be no significant changes in
         the interest rate or other terms. The anticipated $3,000,000 credit
         line is in excess of the total aggregate prospective borrowing needs of
         all of the participating Rotherwood subsidiaries over the next 12
         months. Furthermore, Cramer management participates in regular
         assessments of the borrowing needs of all Rotherwood subsidiaries and
         believes it would be aware of anticipated credit shortages in time to
         arrange new or additional sources of capital.

         Management intends to improve the Company's profitability and cash flow
         in the year 2000 by implementing several actions. First, the Company
         will increase average sales prices and gross margins by focusing sales
         in the traditional dealer and catalog channels toward sales
         opportunities where the strengths of the Company's niche products
         (i.e., durability, heavy duty construction) better match the end users
         needs. Further, management anticipates that overall sales levels will
         be higher in 2000 than in 1999, with the majority of the increase
         coming in the new market channels being developed. Management also
         anticipates that that sales made by through the Internet and
         telemarketing channels will generally be at a higher gross margin than
         sales made through the Company's existing channels. There is a risk
         that future profits will not develop as anticipated due to the
         Company's reliance on the successful development of new, alternative
         sales channels. However, the Company believes that the current
         consolidated credit line, coupled with the anticipated cash flow from
         operations, will be sufficient to meet current operating requirements
         over the next 12 months.

                                       14
<PAGE>   15
ITEM 7. FINANCIAL STATEMENTS

The following financial statements of Cramer, Inc., are included herewith:

<TABLE>
<CAPTION>
                                                               Page No.
<S>                                                            <C>
Independent Auditors Report                                          F-1

Balance Sheet - December 31, 1999                                    F-2

Statements of Operations for the Years Ended
December 31, 1998 and 1999                                           F-3

Statements of Stockholders' Equity for the Years
Ended December 31, 1998 and 1999                                     F-4

Statements of Cash Flows for the Years Ended
December 31, 1998 and 1999                                           F-5

Notes to Financial Statements                                        F-6
</TABLE>

                                       15
<PAGE>   16
                                                                             F-1
Independent Auditors' Report


To the Board of Directors and Stockholders of
Cramer, Inc.
Kansas City, Kansas

We have audited the accompanying balance sheet of Cramer, Inc. as of December
31, 1999 and the related statements of operations, stockholders' equity and cash
flows for each of the two years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Cramer, Inc. at December 31, 1999, and the
results of its operations and its cash flows for each of the two years in the
period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States of America.


/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
Kansas City, Missouri
February 25, 2000

                                       16
<PAGE>   17
                                  CRAMER, INC.                               F-2
                                  BALANCE SHEET
                    (Amounts in Thousands, Except Share Data)
<TABLE>
<CAPTION>
ASSETS                                                         December 31, 1999
     Current Assets:
<S>                                                            <C>
         Cash                                                      $    49
         Accounts receivable, net of allowance of $21                1,263
         Inventories                                                 1,355
         Prepaid expenses                                              309
                                                                   -------
                  Total Current Assets                               2,976

     Property, Plant and Equipment, net                                775

     Other Assets:
         Intangible pension asset                                      108
         Goodwill                                                      171
         Other noncurrent assets                                       160
                                                                   -------

                  Total Assets                                     $ 4,190
                                                                   =======

LIABILITIES AND STOCKHOLDERS' EQUITY
     Current Liabilities:
         Note payable                                              $ 2,088
         Accounts payable                                              466
         Accrued liabilities                                           477
                                                                   -------

                  Total Current Liabilities                          3,031

     Noncurrent Liabilities:
         Pension benefits payable                                      301
         Other                                                         210
                                                                   -------
                  Total Noncurrent Liabilities                         511

COMMITMENTS AND CONTINGENCIES (Note 9)

     Stockholders' Equity:
         Common stock, no par value; authorized, 6,000,000
              shares; issued and outstanding 4,051,400 shares        3,824
         Accumulated deficit                                        (2,979)
                                                                   -------
                                                                       845
         Accumulated Other Comprehensive Income                       (197)
                                                                   -------
                  Total Stockholders' Equity                           648
                                                                   -------
         Total Liabilities and Stockholders' Equity                $ 4,190
                                                                   =======
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       17
<PAGE>   18
                                                                             F-3

                                  CRAMER, INC.
                            STATEMENTS OF OPERATIONS
                  (Amounts in Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
                                                         Year Ended December 31,
                                                           1999           1998
<S>                                                      <C>            <C>
Net Sales                                                $ 12,693       $ 12,774
Cost of Sales                                               9,119          9,127
                                                         --------       --------

                  Gross Profit                              3,574          3,647

Operating Expenses:
     Selling                                                2,485          2,307
     General and administration                             1,190          1,222
                                                         --------       --------

                  Total Operating Expenses                  3,675          3,529
                                                         --------       --------

                  Income (Loss) from Operations              (101)           118

Other Expense:
     Interest expense                                        (122)           (79)
     Other                                                    (69)           (14)
                                                         --------       --------

                  Income (Loss) Before Income Taxes          (292)            25

Income Taxes                                                    0              0
                                                         --------       --------

Net Income (Loss)                                        $   (292)      $     25
                                                         ========       ========

Net Income (Loss) Per Common
       Share - Basic and Diluted                         $  (0.07)      $   0.01
                                                         ========       ========

Weighted Average Number of Common and
     Common Equivalent Shares Outstanding

         Basic                                              4,051          4,051
                                                         ========       ========
         Diluted                                            4,051          4,086
                                                         ========       ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       18
<PAGE>   19
                                  CRAMER, INC.                               F-4
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                             (Amounts in Thousands)

<TABLE>
<CAPTION>
                                                                                        Accumulated
                                                                                            Other           Total
                                              Number of     Common      Accumulated     Comprehensive      Stockholders'
                                               Shares       Stock         Deficit           Income          Equity
<S>                                           <C>           <C>         <C>             <C>                <C>
Balance at January 1, 1998                      4,051       $ 3,824       $(2,712)         $  (213)         $   899

Comprehensive Income

      Net Income                                                               25                                25

      Adjustment to Additional Minimum
          Pension Liability                                                                    (54)             (54)
                                                                                                            -------

      Total Comprehensive Income                                                                                (29)

                                                -----         -----        ------             ----          -------
Balance at December 31, 1998                    4,051         3,824        (2,687)            (267)             870


Comprehensive Income

       Net Loss                                                              (292)                             (292)

        Adjustment to Additional Minimum
         Pension Liability                                                                      70               70
                                                                                                            -------

     Total Comprehensive Income (Loss)                                                                         (222)

                                                -----       -------       -------          -------          -------
Balance at December 31, 1999                    4,051       $ 3,824       $(2,979)         $  (197)         $   648
                                                =====       =======       =======          =======          =======
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       19
<PAGE>   20
                                                                             F-5
                                  CRAMER, INC.
                            STATEMENTS OF CASH FLOWS
                             (Amounts in Thousands)

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                                                   1999          1998
<S>                                                                               <C>           <C>
Cash flows from operating activities:
     Net income (loss)                                                            $  (292)      $    25
     Adjustments to reconcile net income (loss) to net
         cash provided by (used in) operating activities:
         Depreciation and amortization                                                251           225
         Changes in operating assets and liabilities:
              Accounts receivable                                                    (149)         (124)
              Inventories                                                             128          (241)
              Prepaid expenses                                                        (79)           72
              Intangible pension asset                                                 52            52
              Accounts payable and accrued liabilities                                (87)          (18)
              Noncurrent pension benefits payable                                    (123)         (140)
              Other noncurrent liabilities                                            (28)            4
                                                                                  -------       -------

              Net cash used in operating activities                                  (327)         (145)

Cash flows from investing activities:
     Capital expenditures, net of proceeds from sales of
     property, plant and equipment                                                   (228)         (204)
                                                                                  -------       -------

              Net cash used in investing activities                                  (228)         (204)

Cash flows from financing activities:
     Principal payments on notes payable                                           (5,237)       (4,701)
     Proceeds from issuance of notes payable                                        5,778         5,061
                                                                                  -------       -------

                  Net cash provided by financing activities                           541           360

Net increase (decrease) in cash                                                       (14)           11
Cash at beginning of year                                                              63            52
                                                                                  -------       -------

Cash at end of year                                                               $    49       $    63
                                                                                  =======       =======

Supplemental disclosures of cash flow information: Cash paid during the year
     for:
         Interest                                                                 $   125       $    79
                                                                                  =======       =======
         Income tax                                                               $     0       $     0
                                                                                  =======       =======
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       20
<PAGE>   21
                                  CRAMER, INC.                               F-6
                          NOTES TO FINANCIAL STATEMENTS
                     Years ended December 31, 1999 and 1998

1.   SUMMARY OF ACCOUNTING POLICIES

     ORGANIZATION

     Cramer, Inc. ("Cramer" or "the Company") is a manufacturer of a variety of
     products for office and industrial use. The Company believes that all of
     its operations are in one segment. The Company sells its products
     throughout the United States. International sales are limited. The
     Company's principal customers are office furniture dealers (seating
     products) and wholesale catalog distributors (utility and seating
     products). Cramer is a 51% owned subsidiary of Rotherwood Corporation
     ("Rotherwood"), a Minneapolis, Minnesota based holding company.



     INVENTORIES

     Inventories are valued at the lower of cost (determined by the first-in,
     first-out method) or market. The closing inventory is comprised of raw
     material of $824,000, work in progress of $451,000, finished goods of
     $110,000 and reserves for obsolescence and shrinkage of $30,000.



     PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment are carried at cost. Depreciation is provided
     for in amounts sufficient to charge the cost of depreciable assets to
     operations over their estimated service lives, principally on a
     straight-line basis.

<TABLE>
<CAPTION>
                                                                Estimated
                                                                  Useful
                                                    Cost           Life
                                               (In Thousands)   (In Years)
<S>                                            <C>              <C>
         Land                                         $   29           --
         Buildings                                       769      20 - 40
         Machinery and Equipment                       3,917       3 - 10
         Furniture and Office Equipment                1,331       5 - 10
                                                      ------
                                                       6,046
         Less Accumulated Depreciation                 5,271
                                                      ------
         Net Property, Plant and Equipment            $  775
                                                      ======
</TABLE>

                                       21
<PAGE>   22
INCOME TAXES

     Income taxes have been provided using the liability method in accordance
     with Statement of Financial Accounting Standards ("SFAS") No. 109,
     Accounting for Income Taxes.

     USE OF ESTIMATES

     The preparation of the financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the amounts reported in the financial statements
     and accompanying notes. Actual results could differ from those estimates.

     WARRANTIES

     Depending on the model, the Company warranties its products for periods up
     to 15 years. The Company's reserve for anticipated warranty costs of
     $100,000 is included in accrued liabilities. The warranty reserve is
     estimated based on durability testing, engineering studies, and actual
     costs incurred in prior years.

     EARNINGS PER SHARE

     Basic and Diluted Earnings Per Share is calculated in accordance with the
     provisions of SFAS No. 128, Earnings Per Share. Basic earnings per share is
     computed by dividing income available to common shareholders by the
     weighted average number of common shares outstanding for the reporting
     period. Diluted earnings per share reflects the potential dilution that
     could occur if securities or other contracts to issue common stock were
     exercised or converted into common stock. Stock options that were
     outstanding during 1998 and 1999 represent the only dilutive effect on
     weighted average shares (see Note 4).


     NEW ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standard No. 133, Accounting for Derivative
     Instruments and Hedging Activities. SFAS No. 133, as amended by SFAS No.
     137, establishes accounting and reporting standards for derivative
     instruments and hedging activities. It requires that an entity recognize
     all derivatives as either assets or liabilities in the statement of
     financial position and measure those instruments at fair value. This
     statement is effective for the Company for periods beginning in the first
     quarter of fiscal year 2001. The Company believes that the adoption of the
     provisions of SFAS No. 133 will not have a material effect on its financial
     statements, based on current activities.

                                       22
<PAGE>   23
2.   BENEFIT PLANS


     Defined Benefit Plan

     The Company has a defined benefit pension plan covering all of its
     bargaining unit employees working as of September 30, 1988. Effective
     September 30, 1988, the plan was amended to freeze future benefit accruals.
     As a result of freezing the benefits, no further benefits accrue to plan
     participants. The amount of pension a participant will receive was frozen
     at $9.00 multiplied by the number of years of service from the later of the
     date of hire or January 1, 1942, through September 30, 1988. Effective
     September 30, 1988, new employees have not accrued benefits under the
     defined benefit plan. The Company's funding of the plan is equal to, or
     exceeds, the minimum contribution required by ERISA and totaled $153,800
     and $184,500 in 1999 and 1998, respectively.

     Net pension costs included the following components (in thousands):

<TABLE>
<CAPTION>
                                                   Year Ended December 31,
                                                      1999       1998
<S>                                                   <C>        <C>
Service cost - benefits earned during the period      $  0       $  0
Interest cost on projected benefit obligation           58         64
Expected return on plan assets                         (38)       (33)
Net amortization and deferral                           63         63
                                                      ----       ----
         Total pension costs                          $ 83       $ 94
                                                      ====       ====
</TABLE>

Net regular periodic pension cost was calculated using the following
assumptions:

<TABLE>
<CAPTION>
                                       Year Ended December 31,
                                          1999       1998
<S>                                       <C>        <C>
Weighted Average Discount Rate            7.50%      6.50%
Expected Long-Term Rate of Return         8.00%      8.00%
</TABLE>

     The plan's funded status as of December 31, 1999 is summarized below (in
thousands):

<TABLE>
<S>                                                                                      <C>
              Actuarial present value of projected benefit obligation                    $     805
              Plan assets at fair value                                                        503
                                                                                         ---------
              Projected benefit obligation in excess of plan assets                           (302)
              Remaining unrecognized net transition obligation                                 100
              Unrecognized prior service cost                                                    8
              Unrecognized net loss                                                            197
              Adjustment required to recognize minimum liability                              (304)
                                                                                         ---------
              Net pension liability recognized                                           $    (301)
                                                                                         ==========
</TABLE>

                                       23
<PAGE>   24
     An intangible asset of $108,000 equal to the unrecognized prior service
     cost and transition obligation has been included in the balance sheet. The
     remaining additional minimum liability of $197,000 related to the
     unrecognized net loss has been recorded as a decrease in stockholders'
     equity at December 31, 1999.

     The fair value of plan assets changed from December, 31, 1998 to
     December 31, 1999 as follows (in thousands):

<TABLE>
<S>                                                                              <C>
Fair value of plan assets at December 31, 1998                                   $ 434
Contributions                                                                      154
Benefit payments                                                                  (136)
Investment return net of investment expenses                                        51
                                                                                 -----

Fair value of plan assets at December 31, 1999                                   $ 503
                                                                                 =====

The projected benefit obligation changed from December 31, 1998 to December
31, 1999 as follows (in thousands):

Projected benefit obligation at December 31, 1998                                $(927)
Pension costs                                                                      (83)
Contributions                                                                      154
Change in additional minimum liability                                              70
Actuarial gains and losses                                                         (19)
                                                                                 -----

Projected benefit obligation at December 31, 1999                                $(805)
                                                                                 =====
</TABLE>

     The change in the additional minimum pension liability has been included as
     a component of other comprehensive income.

     Plan assets are held by trust funds devoted to servicing pension benefits
     and are invested in a diversified portfolio of fixed income and equity
     securities.


     DEFINED CONTRIBUTION PLAN

     The Company sponsors a 401(k) plan covering substantially all employees.
     Participants may contribute from 1% to 15% of compensation, subject to
     annual limitations. Company contributions are at the discretion of the
     Board of Directors. In 1999 the Company instituted a matching contribution
     equal to 25% of a participant's contribution that is less or equal to 6% of
     gross salary. Total company contributions in 1999 were $19,700. There were
     no Company contributions in 1998.

                                       24
<PAGE>   25
3.   SHORT-TERM BORROWINGS

Rotherwood and certain of its subsidiaries, which includes the Company,
participate in a combined credit facility with Mercantile Bank. At December 31,
1999, the credit facility provides Rotherwood and its participating subsidiaries
with access to a credit line of $2,500,000 with interest charged at a rate of
one-fourth of a percent less than the Bank's prime rate (8.25% at December 31,
1999). The Company's share of these borrowings at December 31, 1999 was
$2,088,000, which includes bank overdrafts of $246,000 that will be drawn on the
line.

The combined credit facility, which matures in August 2000, is secured by the
general intangibles, inventory, accounts receivable and equipment of all of the
participating Rotherwood subsidiaries.

The Company, and each of the other Rotherwood subsidiaries, has guaranteed
repayment of the total debt to Mercantile Bank. Rotherwood's founder has pledged
publicly traded equity securities with a market value in excess of $2 million as
additional collateral for the loan. Because of the minimal amounts historically
borrowed by the other participating Rotherwood Subsidiaries, the Company's
management believes that there is minimal risk associated with the guarantee
provisions of the credit facility.


4.   STOCKHOLDERS' EQUITY

The Company has a stock option plan (the "Plan") which provides for the grant of
incentive awards to directors, officers and other key employees. Under the Plan,
stock options are granted at the fair market value of the Company's common stock
at the date of the grant. In accordance with Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees, no compensation expense is
recognized for grants under the Plan. There were no stock option grants under
this plan in 1998 or 1999.

At December 31, 1999, the Plan had a total of 840,000 shares authorized for
issuance. There were zero shares granted, outstanding, or vested under the Plan
at December 31, 1999.

In 1997, the Board of Directors issued non-qualified stock options for a total
of 50,000 shares of the Company's common stock to two of the Company's Directors
(The "New Plan"). The options had an exercise price of $1.50 per share and
ten-year terms. During 1999 all options under the New Plan were canceled due to
the resignation of the two Directors holding the options.

There were no shares exercised during 1998 or 1999 under these plans.

                                       25
<PAGE>   26
5.       INTANGIBLE ASSETS

Intangible assets consist of the following at December 31, 1999 (in thousands):

<TABLE>
<CAPTION>
                                               Accumulated                   Amortization Period
                                    Cost       Amortization          Net          in Years
<S>                                 <C>        <C>                  <C>      <C>
Goodwill                            $205            $ 34            $171              10
                                    ====            ====            ====
Other noncurrent assets

         Customer lists             $150            $ 32            $118              10
         Patent                       50              10              40              10
         Non compete agreement        28              26               2               3
                                    ----            ----            ----
                                    $228            $ 68            $160
                                    ====            ====            ====
</TABLE>

6.   INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities as of December 31, 1999 are as
follows (in thousands):

<TABLE>
<CAPTION>
Deferred tax assets:
<S>                                         <C>
    Net operating loss carryforwards        $ 3,693
    Tax credit carryforwards                    317
    Pension costs                                96
    Product liability accrual                    82
    Accrued compensation and vacations           25
    Warranty accrual                             39
    Inventories                                  20
    Other - net                                  16
                                            -------

 Total deferred tax assets                    4,288
Deferred tax liabilities                          0
                                            -------
Net deferred tax asset                        4,288
Valuation allowance                          (4,288)
                                            -------
                                            $     0
                                            =======
</TABLE>

                                       26
<PAGE>   27
A reconciliation of the income tax provision to the amounts computed at the
federal statutory rate is as follows (in thousands):

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                                       1999        1998
<S>                                                    <C>         <C>
Tax benefit provision (benefit) at statutory rate      $ (99)      $   8
State income taxes, net of federal taxes                 (13)          1
Changes in valuation reserve related to
    utilization or generation of net operating
    loss carryforward                                    117          (4)
Other                                                     (4)         (5)
                                                       -----       -----
                                                       $   0       $   0
                                                       =====       =====
</TABLE>


At December 31, 1999, the Company has available the following net operating loss
and credit carryforwards to reduce future income taxes. These amounts are
subject to applicable limitations (in thousands).

<TABLE>
<CAPTION>
                             Amount       Expiration
                            Available       Dates
<S>                         <C>           <C>
Net operating losses          $9,469      2001 - 2017
Targeted jobs tax credit      $  261      2000 - 2001
Investment tax credit         $   56      2000 - 2000
</TABLE>

7.   FINANCIAL INSTRUMENTS

The Company grants credit to customers who meet the Company's pre-established
credit requirements. Credit losses are provided for in the Company's financial
statements based on factors surrounding the credit risk of specific customers,
historical trends and other information and have consistently been within
management's expectations.

The Company's concentrations of credit risk with respect to trade receivables
arising from the sale to office furniture dealers are minor due to the large
number of entities comprising the Company's customer base. However, as of
December 31, 1999, the Company had approximately $236,000 of receivables from
seven companies, all of whom are wholesale catalogers of office or industrial
products and who are the principal purchasers of the Company's utility products.

At December 31, 1999, the carrying value of the Company's cash, accounts
receivable, and accounts payable approximate fair value. Based on borrowing
rates currently available to the Company for bank loans with similar terms and
collateral, the fair value of the Company's short-term notes payable
approximates its carrying value.

                                       27
<PAGE>   28
9.       COMMITMENTS AND CONTINGENCIES

The Company is a defendant in several lawsuits relating to product liability
claims arising from accidents allegedly occurring in connection with the use of
its products. The claims are covered by insurance and are being defended by the
Company's counsel or by counsel assigned by the Company's insurance carriers,
but are subject to deductibles ranging from $0 to $100,000. A number of the
claimants allege substantial damages. The ultimate outcome of such litigation
cannot be predicted at this time. However, management believes the Company has
substantial defenses with respect to the claims and that the ultimate outcome of
these claims will not have a material adverse effect on the Company's financial
position. The Company has accrued, and included with other noncurrent
liabilities, the estimated amount of losses not covered by insurance which may
be incurred from presently known and anticipated product liability claims.


10.  RELATED PARTY TRANSACTIONS

Rotherwood, the Company's majority owner, provides management services to the
Company. Certain employees of the Company provide management service to other
subsidiaries of Rotherwood. In 1999 and 1998, the net cost to the Company for
these services was approximately $48,000 and $90,000, respectively.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None

                                       28
<PAGE>   29
                                    PART III



ITEM 9.       DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
              COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT - This
              information will be included in the Company's 2000 Proxy Statement
              pursuant to Section 14A of the Securities Exchange Act and is
              incorporated by reference herein.

ITEM 10.      EXECUTIVE COMPENSATION - This information will be included in
              the Company's 2000 Proxy Statement pursuant to Section 14A of the
              Securities Exchange Act and is incorporated by reference herein.

ITEM 11.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
              - This information will be included in the Company's 2000 Proxy
              Statement pursuant to Section 14A of the Securities Exchange Act
              and is incorporated by reference herein.

ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - This
              information will be included in the Company's 2000 Proxy Statement
              pursuant to Section 14A of the Securities Exchange Act and is
              incorporated by reference herein.


ITEM 13.      EXHIBITS AND REPORTS ON FORM 8-K

Number

2.1    Floating Arms Asset Purchase Agreement dated October 31, 1997 (previously
       filed)

10.1   1989 Incentive Stock Option Plan (previously filed)

10.2   1996 Loan Documents - Mark Twain Bank (previously filed)

23     Consent of Deloitte & Touche LLP

There were no current reports filed on Form 8-K by the Company during 1999.

                                       29
<PAGE>   30
                                   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, as duly authorized.

                                    CRAMER, INC.



3/30/00                         /s/ James R. Zicarelli
                                ___________________________________________
                                    James R. Zicarelli
                                    Director and CEO
                                    (Principal Executive Officer)

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 date indicated.



3/30/00                         /s/ James R. Zicarelli
                                ___________________________________________
                                    James R. Zicarelli
                                    Director



3/30/00                         /s/ David E. Crandall
                                ___________________________________________
                                    David E. Crandall
                                    Director



3/30/00                         /s/ James E. Workman
                                ___________________________________________
                                    James E. Workman

                                    Director


3/30/00                         /s/ Robert J. Kovach
                                ___________________________________________
                                    Robert J. Kovach
                                    Director President & Chief Operating Officer

                                       30
<PAGE>   31
3/30/00                         /s/ Gary A. Rubin
                                ___________________________________________
                                    Gary A. Rubin
                                    Vice President, Finance
                                    (Principal Financial and Accounting Officer)


                                       31
<PAGE>   32
                                  EXHIBIT INDEX

Number

2.1    Floating Arms Asset Purchase Agreement dated October 31, 1997 (previously
       filed)

10.1   1989 Incentive Stock Option Plan (previously filed)

10.2   1996 Loan Documents - Mark Twain Bank (previously filed)

23     Consent of Deloitte & Touche LLP

                                       32