-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Cn7Uiov5d1wboxEwoi2xBlkI7APh1g+OGPYzRH4PmeGBQF4LZi/DJXcq1USxOdHG 5VP+ajylNLtC7jAk+S4QOw== 0000025445-95-000009.txt : 19951119 0000025445-95-000009.hdr.sgml : 19951119 ACCESSION NUMBER: 0000025445-95-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRANE CO /DE/ CENTRAL INDEX KEY: 0000025445 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 131952290 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01657 FILM NUMBER: 95592060 BUSINESS ADDRESS: STREET 1: 100 FIRST STAMFORD PLACE CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 2033637300 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 1995 Commission File Number 1-1657 CRANE CO. (Exact name of registrant as specified in its charter) Delaware 13-1952290 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 100 First Stamford Place, Stamford, Ct. 06902 (Address of principal executive office) (Zip Code) (203) 363-7300 (Registrant's telephone number, including area code) (Not Applicable) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares outstanding of the issuer's classes of common stock, as of October 31, 1995: Common stock, $1.00 Par Value - 30,162,789 shares Part I - Financial Information Item 1. Financial Statements Crane Co. and Subsidiaries Consolidated Statements of Income (In Thousands, Except Per Share Amounts) (Unaudited)
Periods Ended September 30, Three Months Nine Months 1995 1994 1995 1994 Net Sales $ 453,344 $ 451,108 $ 1,337,401 $ 1,211,542 Operating Costs and Expenses: Cost of sales 336,860 339,806 993,081 924,329 Selling, general and administrative 65,944 65,509 202,416 177,219 Depreciation & amortization 12,406 13,312 36,252 33,762 415,210 418,627 1,231,749 1,135,310 Operating Profit 38,134 32,481 105,652 76,232 Other Income (Deductions): Interest income 979 467 1,602 2,918 Interest expense (6,699) (7,623) (20,729) (16,972) Miscellaneous - net 2,701 626 3,067 1,355 (3,019) (6,530) (16,060) (12,699) Income Before Taxes 35,115 25,951 89,592 63,533 Provision for Income Taxes 13,086 9,949 34,171 24,456 Net Income $ 22,029 $ 16,002 $ 55,421 $ 39,077 Net Income Per Share $.71 $.53 $1.81 $1.30 Average Shares Outstanding 30,830 30,219 30,567 30,129 Dividends Per Share $.1875 $.1875 $.5625 $.5625 See Notes to Consolidated Financial Statements
-2- Part I - Financial Information Crane Co. and Subsidiaries Consolidated Balance Sheets (In Thousands, Except Per Share Amounts)
September 30, December 31, 1995 1994 1994 (Unaudited) Assets Current Assets: Cash and cash equivalents $ 423 $ 2,470 $ 2,072 Accounts receivable, net of allowance 284,966 245,778 234,695 Inventories at lower of cost, principally LIFO, or market; replacement cost would be higher by approximately $52,021, ($56,250 at September 30, 1994 and $52,739 at December 31, 1994) Finished goods 113,439 123,367 116,625 Finished parts and subassemblies 33,710 27,308 30,556 Work in process 37,358 41,588 39,286 Raw materials 54,558 52,051 50,598 239,065 244,314 237,065 Other current assets 6,682 13,648 6,407 Total Current Assets 531,136 506,210 480,239 Property, Plant and Equipment: Cost 507,259 524,297 513,348 Less accumulated depreciation 263,540 246,166 250,350 243,719 278,131 262,998 Other Assets 27,410 24,962 30,173 Intangibles, less accumulated amortization of $9,924 ($6,833 at September 30, 1994 and $7,716 at December 31, 1994) 60,142 66,179 63,434 Cost in excess of net assets acquired less accumulated amortization of $21,051 ($15,621 at September 30, 1994 and $16,730 at December 31, 1994) 169,297 171,818 171,201 $ 1,031,704 $ 1,047,300 $ 1,008,045 See Notes to Consolidated Financial Statements -3-
Part I - Financial Information
September 30, December 31, 1995 1994 1994 (Unaudited) Liabilities and Shareholders' Equity Current Liabilities: Current maturities of long-term debt $ 767 $ 1,453 $ 1,272 Loans payable 14,819 28,816 20,986 Accounts payable 109,612 100,231 95,211 Accrued liabilities 120,341 110,109 119,382 U.S. and foreign taxes on income 9,872 5,402 7,444 Total Current Liabilities 255,411 246,011 244,295 Long-Term Debt 305,756 386,302 331,289 Deferred Income Taxes 32,315 22,929 32,440 Other Liabilities 17,274 23,217 20,159 Accrued Postretirement Benefits 43,138 43,162 43,066 Accrued Pension Liability 8,730 6,991 8,804 Preferred Shares, Par Value $.01 Authorized - 5,000 Shares - - - Common Shareholders' Equity: Common shares 30,363 30,102 30,047 Capital surplus 20,037 14,081 12,766 Retained earnings 326,766 284,478 296,268 Currency translation adjustment (8,086) (9,973) (11,089) Total Common Shareholders' Equity 369,080 318,688 327,992 $ 1,031,704 $ 1,047,300 $ 1,008,045 See Notes to Consolidated Financial Statements -4-
Part I - Financial Information (Cont'd.) Crane Co. and Subsidiaries Consolidated Statements of Cash Flows (In Thousands) (Unaudited)
Nine Months Ended September 30, 1995 1994 Cash flows from operating activities: Net income $ 55,421 $ 39,077 Depreciation 26,848 26,075 Amortization 9,404 7,687 Deferred taxes (1,385) 204 Cash used for operating working capital (27,800) (12,845) Other 872 (4,185) Total from operating activities 63,360 56,013 Cash flows from investing activities: Capital expenditures (20,239) (21,915) Payments for acquisitions (1,879) (161,424) Proceeds from divestitures - 2,580 Proceeds from disposition of capital assets 8,100 3,540 Purchase of equity investment (5,501) - Total used for investing activities (19,519) (177,219) Cash flows from financing activities: Equity: Dividends paid (17,096) (16,884) Reacquisition of shares (3,129) (42) Stock options exercised 8,762 1,041 Net Equity (11,463) (15,885) Debt: Proceeds from issuance of long-term debt - 230,105 Repayments of long-term debt (13,051) (75,164) Net decrease in short-term debt (21,052) (28,059) Net Debt (34,103) 126,882 Total(used for)provided from financing activities (45,566) 110,997 Effect of exchange rate on cash and cash equivalents 76 87 Decrease in cash and cash equivalents (1,649) (10,122) Cash and cash equivalents at beginning of period 2,072 12,592 Cash and cash equivalents at end of period $ 423 $ 2,470 Detail of Cash (Used for) Provided From Operating Working Capital: Accounts receivable $ (37,497) $ (21,075) Inventories 1,232 8,777 Other current assets (209) (4,607) Accounts payable 6,164 9,815 Accrued liabilities 110 (2,528) U.S. and foreign taxes on income 2,400 (3,227) Total $ (27,800) $ (12,845) Supplemental disclosure of cash flow information: Interest paid $ 19,681 $ 17,039 Income taxes paid 30,526 24,269 See Notes to Consolidated Financial Statements -5-
Part I - Financial Information (Cont'd.) Notes to Consolidated Financial Statements 1. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim period presented. 2. Sales and operating profit by segment are as follows:
Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 (In thousands) Net Sales: Fluid Handling $ 88,438 $ 81,921 $ 250,695 $ 226,698 Aerospace 55,902 46,413 160,391 113,936 Engineered Materials 47,842 50,975 151,806 153,543 Crane Controls 31,739 27,642 99,006 59,039 Merchandising Systems 42,480 42,883 142,087 119,482 Wholesale Distribution 187,765 203,193 536,451 543,937 Other 2,903 2,478 9,221 9,763 Intersegment Elimination (3,725) (4,397) (12,256) (14,856) Total $ 453,344 $ 451,108 $ 1,337,401 $ 1,211,542 Operating Profit (Loss): Fluid Handling $ 6,560 $ 5,866 $ 13,793 $ 13,750 Aerospace 14,329 9,522 40,581 20,500 Engineered Materials 4,699 6,111 16,719 18,534 Crane Controls 2,417 1,697 8,475 3,759 Merchandising Systems 4,587 5,275 19,983 16,274 Wholesale Distribution 8,793 6,835 16,542 12,686 Other 280 (427) 322 (528) Corporate (3,507) (2,517) (10,817) (8,759) Intersegment Elimination (24) 119 54 16 Total $ 38,134 $ 32,481 $ 105,652 $ 76,232 3.Supplemental schedule on non-cash financing activities: Crane Co. purchased all of the capital stock of ELDEC Corporation in March 1994 for $77,300 and Mark Controls Corporation in April 1994 for $96,900. The fair value of assets and liabilities at the date of acquisition are presented as follows: Mark ELDEC Controls (in thousands) Fair value of assets acquired $138,951 $170,288 Cash paid for capital stock (77,300) (96,900) Assumption of liabilities $ 61,651 $ 73,388 -6-
Part I - Financial Information (Cont'd) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Three and Nine Months Ended September 30, 1995 and 1994 [CAPTION] Results From Operations: Third Quarter of 1995 Compared to Third Quarter of 1994: Net income for the quarter ended September 30, 1995 of $22 million or $.71 per share was the second consecutive record quarter, a 38% increase from the $16 million or $.53 per share reported for the same period last year. Sales in the quarter were $453.3 million, up 1% from last year, and operating profit increased 17% to $38.1 million. Fluid Handling sales and operating profit were up 8% and 12% in the quarter compared to the prior year due to increased demand for the pressure seal valve line of the Pacific Valve business and for valve products in the United Kingdom, where the third quarter domestic demand was exceptionally strong. The backlog in the worldwide valve business is 66% higher than last year. In the third quarter the Hebei Ningjin Valve Plant in China, the Company's first manufacturing joint venture in the Far East, started manufacturing quarter turn industrial iron valves for sale through Crane Co.'s global distribution network. Pumps business units sales were approximately the same as last year. Aerospace sales and operating profit were up substantially with improvement at all three of the segment's business units. ELDEC continued strong with quarterly profit 37% over last year on a 24% increase in shipments. Hydro-Aire and Lear Romec earnings were up due to somewhat higher OEM and aftermarket sales. Program wins and market strength in the business and commuter jet market is of increasing importance to segment results. Aerospace backlog is 16% higher than last year. Engineered Materials sales and operating profit were down 6% and 23% compared to the third quarter last year. The operating profit decrease was partially due to the impact of higher raw material costs at Kemlite and the inability to pass on these costs in the market. The weak Canadian housing market, with housing starts 34% below the same period last year, continued to adversely impact Crane Plumbing sales and operating profit. Cor-Tec's shipments continued strong and were significantly ahead of last year while profit doubled from 1994. Resistoflex's operating profit increased compared to last year due to improved manufacturing efficiency and continued strong demand for lined pipe and fittings. -7- Part I - Financial Information (Cont'd) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Three and Nine Months Ended September 30, 1995 and 1994 [CAPTION] Results From Operations: Third Quarter of 1995 Compared to Third Quarter of 1994: Crane Controls sales and operating profit were up 15% and 42% compared to the third quarter 1994. Barksdale had record shipments for the quarter due to the Unimess acquisition and additional distribution channels. Ferguson operating profit increased primarily due to higher shipments and margins on the Index and Cams product line. Merchandising Systems sales and operating profit were down due to the leveling off of the automated merchandising market and increased promotional activities to entice new equipment purchases. The Cafe System "7" product continues to gain acceptance. NRI operated at a profit for the second consecutive quarter due to higher production and sales levels and the benefits of the cost reduction program previously instituted. Wholesale Distribution sales were down due to lower shipments at Huttig, which reflected a slow down in single family construction across the United States. Despite lower sales, Huttig's operating profit increased as a result of management's continued focus on operating cost and inventory management which resulted in LIFO income of $1.5 million in the quarter. In addition, strong results at Crane Supply and continued improvement at Valve Systems resulted in a 29% operating profit increase in the segment over the third quarter 1994. Net interest expense in the quarter decreased $1.4 million compared to the prior year due to decreased debt. Net debt was $320.9 million at the end of the quarter. Miscellaneous income increased $2.1 million in the third quarter. The third quarter results included a gain of $9.4 million on the sale of Mid-Ocean Reinsurance investment in September partially offset by legal costs for a previously discontinued operation of $3.4 million and net losses recognized on excess real estate of $3.5 million. The effective tax rate decreased to 37.3% in the third quarter of 1995 compared to 38.3% in 1994 due principally to lower taxes related to non U.S. operating units. -8- Part I - Financial Information (Cont'd) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Three and Nine Months Ended September 30, 1995 and 1994 [CAPTION] Results From Operations: Nine Months Ended September 30, 1995 Compared to Nine Months Ended September 30 , 1994: Net income for the first nine months was up 42% to $55.4 million or $1.81 per share compared to $39.1 million or $1.30 per share last year. Operating income for the first nine months was up 39% to $105.7 million on a sales increase of 10% to $1.3 billion. Fluid Handling sales were up 11% compared to 1994 due to increased demand for valve products in the United Kingdom as well as the inclusion of Mark Controls Corporation acquired in April 1994. Operating profit remained level with the prior year due to a loss at Cochrane's water treatment business and lower results at both Pacific Valves and Flowseal which more than offset improvement at the other businesses within the segment. Aerospace sales and operating profit were up significantly for the first nine months due largely to the inclusion of ELDEC which was acquired in late March 1994, and improved operating results at both Hydro-Aire and Lear Romec. Engineered Materials sales were down slightly compared to September 1994, as strong sales at Cortec and Resistoflex were offset by lower sales at Crane Plumbing. Operating profit decreased 10% due to a loss at Crane Plumbing, the result of the weak Canadian housing market and lower earnings at Kemlite due to higher material costs. Crane Controls sales increased 68% compared to last year while operating profit more than doubled due mainly to the Mark Controls Corporation acquisition in April 1994. Results of this segment are somewhat distorted by non-cash goodwill charges of $3 million per year which reduce earnings but have no effect on cash flow returns. Merchandising Systems sales were up 19% from last year to $142.1 million. This increase was due to the continued strong acceptance of National Vendors' new product introductions and expanded distribution channels. National Vendors' profits were up 10% due to higher sales and production volume. NRI sales were up 27% from last year and the unit was profitable compared to a loss last year. Wholesale Distribution sales were down 1% due to Huttig's distribution business and reflects the slowdown in single family housing construction across the United States which offset the higher sales at Valve Systems and Crane Supply. Operating profit was up 30% due to strong results at Crane Supply and improved results at Valve Systems which more than offset lower Huttig earnings. -9- Part I - Financial Information (Cont'd) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Three and Nine Months Ended September 30, 1995 and 1994 [CAPTION] Results From Operations: Nine Months Ended September 30, 1995 Compared to Nine Months Ended September 30, 1994: Net interest expense increased $5.1 million compared to the prior year due to debt financed acquisitions in 1994. Miscellaneous income increased $1.7 million compared to the prior year. Results for the year included a $9.4 million gain on the sale of Mid-Ocean Reinsurance investment in September partially offset by legal costs for a previously discontinued operation of $3.4 million and net losses recognized on excess real estate of $3.4 million. The effective tax rate decreased to 38.1% from 38.5% in 1994. [CAPTION] Liquidity and Capital Resources: During the first nine months of 1995 the company generated $63.4 million of cash from operating activities, compared to $56 million in 1994. Net debt totaled 47 percent of capital at September 30, 1995 compared to 57 percent last year. The current ratio of 2.1 remained the same as 1994 with working capital totaling $275.7 million in 1995 compared to $260.2 million in 1994. The company had unused credit lines of $401 million at September 30, 1995. On October 30, 1995 the company acquired certain assets and assumed certain liabilities of Process Systems, Inc. based in Warren, Michigan for a net purchase price of $7 million. Process Systems is a manufacturer of vertical turbine pumps and accessories for industrial applications. Process Systems will operate as a subsidiary of Crane Pumps and Systems, based in Piqua, Ohio and Crane's existing vertical turbine pump product lines will be integrated with Process Systems. -10- Part II - Other Information Item 1. Legal Proceedings: Item 5. Other: In October 1995, the Company announced that L. Hill Clark was elected President and Chief Operating Officer of the company. Mr. Clark joined Crane Co. in 1990 as President of Lear Romec. His background in manufacturing and engineering will be of great assistance in Crane's continued efforts to reduce costs and increase efficiency and quality. -11- Item 6. Exhibits and Reports on Form 8-K 10. Material Contracts 11.Computation of earnings per share for the quarters and nine months ended September 30, 1995 and 1994. 27.Article 5 of Regulation S-X Financial Data Schedule for the third quarter. -12- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CRANE CO. REGISTRANT Date November 13, 1995 By D.S. SMITH D.S. SMITH Vice President-Finance and Chief Financial Officer Date November 13, 1995 By M.L. RAITHEL M.L. RAITHEL Controller -13- Crane Co. and Subsidiaries Exhibit A to Form 10-Q Computation of Net Income per Common Share Three and Nine Months Ended September 30, 1995 and 1994 (In Thousands, Except Per Share Amounts)
Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Primary Net Income Per Share: Net income available to shareholders $ 22,029 $ 16,002 $ 55,421 $ 39,077 Average primary shares 30,830 30,219 30,567 30,129 outstanding Net Income $ .71 $ .53 $ 1.81 $ 1.30 Fully Diluted - Income Per Share: Net income $ 22,029 $ 16,002 $ 55,421 $ 39,077 Add back interest, net of tax, assuming the conversion of debentures - - - 12 Net income available to shareholders, assuming the conversion of debentures $ 22,029 $ 16,002 $ 55,421 $ 39,089 Average primary shares 30,830 30,219 30,567 30,129 outstanding Add Adjustment for further dilutive effect of stock options (ending market price higher than average market price used in primary shares calculation) (4) - 11 - Shares reserved for conversion of debentures - - - 117 Average fully diluted shares outstanding 30,826 30,219 30,578 30,246 Net income $ .71 $ .53 $ 1.81 $ 1.29
-14- EX-27 2 ARTICLE 5 FDS FOR 3RD QUARTER 10-Q WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1,000 9-MOS DEC-31-1995 Sept-30-1995 423 0 284,966 0 239,065 531,136 507,259 263,540 1,031,704 255,411 0 30,363 0 0 338,717 1,031,704 1,337,401 1,337,401 1,022,962 1,231,749 (3,067) 1,007 19,127 89,592 34,171 55,421 0 0 0 55,421 1.81 1.81
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