-----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, IdhNevb6SZms2tJu1iIUOBKYScyxS921O/Xan1WxVy3sZPrNoZ2zPpgjac4H+ykm U5YvUybk+fxJWBklMFuGBA== 0000025445-97-000001.txt : 19970514 0000025445-97-000001.hdr.sgml : 19970514 ACCESSION NUMBER: 0000025445-97-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970505 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRANE CO /DE/ CENTRAL INDEX KEY: 0000025445 STANDARD INDUSTRIAL CLASSIFICATION: 5031 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: 97595478 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 March 31, 1997 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 April 30, 1997: Common stock, $1.00 Par Value - 45,792,910 shares Part I - Financial Information Item 1. Financial Statements Crane Co. and Subsidiaries Consolidated Statements of Income (In Thousands, Except Per Share Amounts) (Unaudited)
Three Months Ended March 31, 1997 1996 Net Sales $ 467,333 $ 436,463 Operating Costs and Expenses: Cost of sales 338,160 319,982 Selling, general and administrative 74,814 70,358 Depreciation & amortization 13,364 12,150 426,338 402,490 Operating Profit 40,995 33,973 Other Income (Expense): Interest income 692 533 Interest expense (5,957) (5,862) Miscellaneous - net 16 836 (5,249) (4,493) Income Before Taxes 35,746 29,480 Provision for Income Taxes 13,101 11,272 Net Income $ 22,645 $ 18,208 Net Income Per Share $ .49 $ .40 Average Shares Outstanding 46,337 45,780 Dividends Per Share $ .125 $ .125 See Notes to Consolidated Financial Statements
-2- Part I - Financial Information Crane Co. and Subsidiaries Consolidated Balance Sheets (In Thousands, Except Per Share Amounts)
March 31, December 31, 1997 1996 1996 (Unaudited) Assets Current Assets: Cash and cash equivalents $ 3,578 $ 4,748 $ 11,579 Accounts receivable 250,001 275,892 253,729 Inventories Finished goods 121,503 119,859 124,490 Finished parts and subassemblies 37,265 38,423 35,507 Work in process 46,374 34,863 43,894 Raw materials 65,489 54,780 63,383 270,631 247,925 267,274 Other current assets 8,666 7,333 7,432 Total Current Assets 558,767 510,007 540,014 Property, Plant and Equipment: Cost 562,406 513,772 547,566 Less accumulated depreciation 299,907 273,652 289,219 262,499 240,120 258,347 Other Assets 29,100 27,073 29,879 Intangibles, 54,447 58,481 55,862 Cost in excess of net assets acquired 216,915 169,041 204,753 $ 1,121,728 $1,004,722 $ 1,088,8 55 See Notes to Consolidated Financial Statements -3-
Part I - Financial Information
March 31, December 31, 1997 1996 1996 (Unaudited) Liabilities and Shareholders' Equity Current Liabilities: Current maturities of long-term debt $ 1,067 $ 772 $$ 1,251 Loans payable 28,800 17,799 23,937 Accounts payable 117,123 103,042 105,082 Accrued liabilities 109,634 106,680 116,488 U.S. and foreign taxes on income 18,999 19,788 7,095 Total Current Liabilities 275,623 248,081 253,853 Long-Term Debt 266,875 265,238 267,795 Deferred Income Taxes 29,515 28,456 29,774 Other Liabilities 27,207 22,081 25,126 Accrued Postretirement Benefits 42,959 43,090 43,155 Accrued Pension Liability 6,210 8,377 6,483 Preferred Shares, Par Value $.01 Authorized - 5,000 Shares - - - Common Shareholders' Equity: Common shares 45,565 45,306 45,660 Capital surplus 26,577 13,482 29,756 Retained earnings 412,742 341,287 394,621 Currency translation adjustment (11,545) (10,676) (7,368) Total Common Shareholders' Equity 473,339 389,399 462,669 $ 1,121,728 $ 1,004,722 $ 1,088,855 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)
Three Months Ended March 31, 1997 1996 Cash flows from operating activities: Net income $ 22,645 $ 18,208 Depreciation 9,085 8,636 Amortization 4,279 3,514 Deferred taxes (776) (288) Cash used for operating working capital (5,516) (9,197) Other 1,662 (90) Total from operating activities 31,379 20,783 Cash flows from investing activities: Capital expenditures (10,192) (6,864) Payments for acquisitions (19,820) - Proceeds from divestitures - 1,555 Proceeds from disposition of capital assets 159 990 Total used for investing activities (29,853) (4,319) Cash flows from financing activities: Equity: Dividends paid (5,699) (5,662) Reacquisition of shares (4,007) (1,521) Stock options exercised 803 3,281 Net Equity (8,903) (3,902) Debt: Proceeds from issuance of long-term debt - - Repayments of long-term debt (1,016) (17,688) Net increase in short-term debt 707 4,432 Net Debt (309) (13,256) Total(used for)provided from financing activities (9,212) (17,158) Effect of exchange rate on cash and cash equivalents (315) (34) Decrease in cash and cash equivalents (8,001) (728) Cash and cash equivalents at beginning of period 11,579 5,476 Cash and cash equivalents at end of period $ 3,578 $ 4,748 Detail of Cash (Used for) Provided From Operating Working Capital: Accounts receivable $ (18,179) $ (10,313) Inventories (2,533) (3,553) Other current assets (246) (596) Accounts payable 12,087 6,690 Accrued liabilities (8,731) (8,503) U.S. and foreign taxes on income 12,086 7,078 Total $ (5,516) $ (9,197) Supplemental disclosure of cash flow information: Interest paid $ 4,966 $ 5,187 Income taxes paid 955 4,038 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. These interim consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements in the company's Annual Report on Form 10-K for the year ended December 31, 1996. 2. Sales and operating profit by segment are as follows:
Three Months Ended March 31, 1997 1996 (In thousands) Net Sales: Fluid Handling $ 88,115 $ 92,230 Aerospace 81,894 58,321 Engineered Materials 56,372 50,738 Crane Controls 31,753 33,783 Merchandising Systems 42,466 44,072 Wholesale Distribution 166,901 159,420 Other 2,954 2,580 Intersegment Elimination (3,122) (4,681) Total $ 467,333 $ 436,463 Operating Profit (Loss): Fluid Handling $ 6,089 $ 5,038 Aerospace 19,798 15,283 Engineered Materials 7,114 5,240 Crane Controls 1,929 3,477 Merchandising Systems 7,741 5,866 Wholesale Distribution 3,383 3,560 Other 316 51 Corporate (5,383) (4,572) Intersegment Elimination 8 30 Total $ 40,995 $ 33,973 -6-
Part I - Financial Information (Cont'd.) Notes to Consolidated Financial Statements 3. Restatements Share and per share data for the period ending March 31, 1996 has been restated to reflect the three-for-two stock split effected on December 12, 1996. 4. Inventories Inventories are stated at the lower of cost or market, principally on the last-in, first-out (LIFO) method of inventory valuation. Replacement cost would be higher by $51,280,000 at March 31, 1997, $51,934,000 at March 31, 1996, and $49,260,000 at December 31, 1996. 5. Earning Per Share The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 128, Earnings Per Share, (SFAS128). The company plans to adopt SFAS128 for both interim and annual periods after December 15, 1997, as required by the statement. Pro forma amounts as if the statement had been adopted for the first quarter of 1997 are as follows: Three Months Ended March 31, 1997 1996 Basic Earnings Per Share $ .50 $ .40 Fully Diluted Earnings Per Share $ .49 $ .40 -7- Part I - Financial Information (Cont'd) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Three Months Ended March 31, 1997 and 1996 [CAPTION] Results From Operations: First Quarter of 1997 Compared to First Quarter of 1996: Net income for the quarter ended March 31, 1997 set a first quarter record of $22.6 million or $.49 per share, a 24 percent increase from the $18.2 million or $.40 per share reported for the same period last year. Sales in the quarter were $467.3 million, up 7 percent from last year, and operating profit increased 21 percent to $41 million. Fluid Handling sales declined 4.5 percent as lower margin project business was down in the first quarter of 1997 compared to the prior year level. Operating profit increased 21 percent as profit margins improved to 6.9 percent of sales as compared to 5.5 percent in the prior year. The improvement in profit was attributable to both the valves and pumps operations. North American valves margins were up significantly, with the bronze valve and quarter turn valve businesses greatly improved. The pumps business benefited from higher sales, and lower costs associated with manufacturing efficiencies and improved product sourcing. In early April, the company acquired the Nuclear Valve Business of ITI MOVATS, a leading supplier of valve diagnostic equipment and valve services to the commercial nuclear power industry. MOVATS will be integrated with the company's Nuclear Valve Division which together will provide a complete package of nuclear valves, diagnostics and valve services to the nuclear power industry. Aerospace sales increased 40 percent in the quarter with Interpoint and Grenson, acquired in October 1996, contributing nearly two- thirds of the increase. Excluding the acquisitions, sales improved 14 percent with all businesses reporting higher sales because of continued high aircraft production levels. Operating profit improved 30 percent because of the increased sales level and the acquisitions. Profit margins declined to 24.2 percent of sales from 26.2 percent last year due, in large part, to the inclusion of Interpoint. Margins at Hydro-Aire and Lear Romec exceeded the prior year while margins at ELDEC declined because of higher research and development costs for new aerospace programs. Engineered Materials sales and operating profit improved 11 percent and 36 percent, respectively, compared to the first quarter last year. All operations experienced higher shipments with significant contributions from Kemlite and Resistoflex. Kemlite sales improved nearly 11 percent on strong demand in the recreational vehicle market. Resistoflex continued to benefit from project wins in North America and Asia. For the group as a whole, profit margins improved to 12.6 percent of sales as compared to 10.3 percent. -8- Part I - Financial Information (Cont'd) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Three Months Ended March 31, 1997 and 1996 In mid March, the company purchased the transportation product business of Sequentia, Incorporated. This business produces fiberglass reinforced plastic panels for the truck body, trailer and container OEM markets, and it will be integrated into Kemlite. Crane Controls sales declined 6 percent while operating profit declined 45 percent from the 1996 first quarter. All businesses reported lower profit margins. In particular, margins at Ferguson and Ferguson Europe were substantially lower as a result of weak sales. Merchandising Systems sales declined 4 percent but operating profit jumped 32 percent. National Vendors continued to benefit from the plant expansion and modernization program completed last year and operating margins improved, despite an 8 percent decline in sales mainly due to weak national account activity. NRI margins more than doubled because of greater sales volume and significant improvements in operating efficiencies. Margins for the group in total were 18.2 percent of sales compared with 13.3 percent last year. In mid March, the company acquired Polyvend, Inc., a manufacturer of snack and food vending machines. Polyvend's product line will be integrated with National Vendors' manufacturing plant in St. Louis. The acquisition greatly expands National Vendors' distribution network. Wholesale Distribution sales increased 5 percent. Huttig's distribution business was responsible for most of the sales gain, benefiting from strong housing activity in the West, Northeast and Florida. Operating profit declined 5 percent as higher raw material costs put pressure on margins at Huttig's manufacturing business. In addition, reduced building activity in Ontario negatively impacted results at Crane Supply. Net interest expense in the quarter was in line with the prior year. The effective tax rate decreased to 36.7 percent in the first quarter of 1997 compared to 38.2 percent in 1996. Liquidity and Capital Resources: During the three months of 1997 the company generated $31.4 million of cash from operating activities, compared to $20.8 million in 1996. In addition, the company paid $19.8 million in cash for Polyvend and Sequentia, and repurchased 143,500 shares of Crane Co. stock in the open market at a cost of $4 million. Net debt totaled 38.2 percent of capital at March 31, 1997. The current ratio was 2.0 with working capital totaling $283.1 million at March 31, 1997 compared to $262.0 million at March 31, 1996. The company had unused credit lines of $444 million at March 31, 1997. -9- Part II - Other Information Item 1. Legal Proceedings There have been no material developments in any of the legal proceedings described in the company's Annual Report on Form 10- K for the year ended December 31, 1996. Item 4. Submission of Matters to a vote of Security Holders A) The Annual Meeting of shareholders was held on April 21, 1997. B)The following three Directors were reelected to serve for three years until the Annual Meeting of 2000. Mr. R.S. Evans Vote for - 39,587,622 Vote withheld - 551,782 Mr. Dorsey R. Gardner Vote for - 39,598,144 Vote withheld - 541,260 Mr. Dwight C. Minton Vote for - 39,604,255 Vote withheld - 535,149 C)The shareholders approved the selection of Deloitte & Touche LLP. as independent auditors for the company for 1997. Vote for - 39,927,183 Vote against - 94,573 Abstained - 117,648 Item 6. Exhibits and Reports on Form 8-K 11.Computation of earnings per share for the quarters March 31, 1997 and 1996. 27.Article 5 of Regulation S-X Financial Data Schedule for the first quarter. -10- 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 May 5, 1997 By /s/ D.S. Smith D.S. SMITH Vice President-Finance and Chief Financial Officer Date May 5, 1997 By /s/ M.L. Raithel M.L. RAITHEL Controller -11- Crane Co. and Subsidiaries Exhibit 11 to Form 10-Q Computation of Net Income per Common Share Three Months Ended March 31, 1997 and 1996 (In Thousands, Except Per Share Amounts)
Three Months Ended March 31, 1997 1996 Primary Net Income Per Share: Net income available to shareholders $ 22,645 $ 18,208 Average primary shares outstanding 46,337 45,780 Net Income $ .49 $ .40 Fully Diluted - Income Per Share: Net income $ 22,645 $ 18,208 Add back interest, net of tax, assuming the conversion of debentures - - Net income available to shareholders, assuming the conversion of debentures $ 22,645 $ 18,208 Average primary shares outstanding 46,337 45,780 Add Adjustment for further dilutive effect of stock options (ending market price higher than average market price used in primary shares calculation) - - Shares reserved for conversion of debentures - - Average fully diluted shares outstanding 46,337 45,780 Net income $ .49 $ .40
-12- EX-27 2 ARTICLE 5 FDS FOR 1ST QUARTER 10-Q
5 1,000 3-MOS DEC-31-1997 Mar-31-1997 3,578 0 275,892 0 270,631 558,767 562,406 299,907 1,121,728 275,623 266,875 45,565 0 0 427,774 1,121,728 467,333 467,333 348,727 426,338 16 0 5,265 35,746 13,101 22,645 0 0 0 22,645 .49 .49
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