-----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, QOiURfy0vXnaqwUwW5rY5qj5CEtSobKEXyRDSCkcUk2TroKrD+xoUKwUoq6FQQnK FzIREfHOedxl0bsjwOXzVw== 0000025445-98-000006.txt : 19980514 0000025445-98-000006.hdr.sgml : 19980514 ACCESSION NUMBER: 0000025445-98-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRANE CO /DE/ CENTRAL INDEX KEY: 0000025445 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-LUMBER, PLYWOOD, MILLWORK & WOOD PANELS [5031] IRS NUMBER: 131952290 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-01657 FILM NUMBER: 98617879 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, 1998 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, 1998: Common stock, $1.00 Par Value - 45,729,288 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, 1998 1997 Net Sales $ 526,817 $ 467,333 Operating Costs and Expenses: Cost of sales 379,989 338,160 Selling, general and administrative 80,172 74,814 Depreciation & amortization 14,281 13,364 474,442 426,338 Operating Profit 52,375 40,995 Other Income (Expense): Interest income 542 692 Interest expense (5,940) (5,957) Miscellaneous - net (77) 16 (5,475) (5,249) Income Before Taxes 46,900 35,746 Provision for Income Taxes 17,001 13,101 Net Income $ 29,899 $ 22,645 Net Income Per Share: Basic $.66 $.50 Diluted $.65 $.49 Average Basic Shares Outstanding 45,591 45,578 Average Diluted Shares Outstanding 46,205 46,038 Dividends Per Share $.125 $.125 See Notes to Consolidated Financial Statements
-2- Part I - Financial Information Item 1. Financial Statements Crane Co. and Subsidiaries Consolidated Statements of Comprehensive Income (In Thousands) (Unaudited)
Three Months Ended March 31, 1998 1997 Net Income $ 29,899 $ 22,645 Other comprehensive income, net of tax- Foreign currency translation adjustments 108 (4,177) Comprehensive Income $ 30,007 $ 18,468 See Notes to Consolidated Financial Statements -3-
Part I - Financial Information Crane Co. and Subsidiaries Consolidated Balance Sheets (In Thousands, Except Per Share Amounts)
March 31, December 31, 1998 1997 1997 (Unaudited) Assets Current Assets: Cash and cash equivalents $ 48,908 $ 3,578 $ 6,982 Accounts receivable 250,294 286,807 272,262 Inventories Finished goods 118,683 121,503 113,496 Finished parts and subassemblies 49,241 37,265 46,351 Work in process 47,732 46,374 51,345 Raw materials 80,206 65,489 79,892 295,862 270,631 291,084 Other current assets 40,215 34,264 37,425 Total Current Assets 671,792 558,767 607,753 Property, Plant and Equipment: Cost 592,296 562,406 582,704 Less accumulated depreciation 317,471 299,907 308,947 274,825 262,499 273,757 Other Assets 54,799 54,061 55,114 Intangibles 50,661 54,447 51,907 Cost in excess of net assets acquired 218,299 216,915 220,563 $ 1,270,376 $1,146,689 $ 1,209,0 94 See Notes to Consolidated Financial Statements -4-
Part I - Financial Information
March 31, December 31, 1998 1997 1997 (Unaudited) Liabilities and Shareholders' Equity Current Liabilities: Current maturities of long-term debt $ 981 $ 1,067 $ 992 Loans payable 24,573 28,800 30,240 Accounts payable 134,728 117,123 122,616 Accrued liabilities 118,749 109,634 128,794 U.S. and foreign taxes on income 29,497 18,999 13,170 Total Current Liabilities 308,528 275,623 295,812 Long-Term Debt 281,783 266,875 260,716 Deferred Income Taxes 46,041 54,476 46,007 Other Liabilities 26,783 27,207 25,618 Accrued Postretirement Benefits 41,152 42,959 41,838 Accrued Pension Liability 6,415 6,210 6,559 Preferred Shares, Par Value $.01 Authorized - 5,000 Shares - - - Common Shareholders' Equity: Common shares 45,645 45,565 45,542 Capital surplus 21,368 26,577 19,951 Retained earnings 509,103 412,742 483,601 Accumulated other comprehensive (16,442) (11,545) (16,550) Income Total Common Shareholders' Equity 559,674 473,339 532,544 $ 1,270,376 $ 1,146,689 $ 1,209,094 See Notes to Consolidated Financial Statements -5-
Part I - Financial Information (Cont'd.) Crane Co. and Subsidiaries Consolidated Statements of Cash Flows (In Thousands) (Unaudited)
Three Months Ended March 31, 1998 1997 Operating activities: Net income $ 29,899 $ 22,645 Depreciation 9,505 9,085 Amortization 4,776 4,279 Deferred taxes (306) (776) Cash used for operating working capital (4,189) (5,516) Other 2,009 1,662 Total from operating activities 41,694 31,379 Investing activities: Capital expenditures (10,970) (10,192) Payments for acquisitions - (19,820) Proceeds from disposition of capital assets 116 159 Total used for investing activities (10,854) (29,853) Cash flows from financing activities: Equity: Dividends paid (5,703) (5,699) Reacquisition of shares (418) (4,007) Stock options exercised 1,938 803 Net Equity (4,183) (8,903) Debt: Proceeds from issuance of long-term debt 20,935 - Repayments of long-term debt (14) (1,016) Net increase in short-term debt (5,460) 707 Net Debt 15,461 (309) Total provided from (used for) financing activities 11,278 (9,212) Effect of exchange rate on cash and cash equivalents (192) (315) Increase (decrease) in cash and cash equivalents 41,926 (8,001) Cash and cash equivalents at beginning of period 6,982 11,579 Cash and cash equivalents at end of period $ 48,908 $ 3,578 Detail of Cash (Used for) Provided From Operating Working Capital: Accounts receivable $ (15,246) $ (18,179) Inventories (5,097) (2,533) Other current assets (2,602) (246) Accounts payable 12,311 12,087 Accrued liabilities (9,891) (8,731) U.S. and foreign taxes on income 16,336 12,086 Total $ (4,189) $ (5,516) Supplemental disclosure of cash flow information: Interest paid $ 5,124 $ 4,966 Income taxes paid 883 955 See Notes to Consolidated Financial Statements -6-
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, 1997. 2. Sales and operating profit by segment are as follows:
Three Months Ended March 31, 1998 1997 (In thousands) Net Sales: Fluid Handling $ 118,041 $ 88,115 Aerospace 94,505 81,894 Engineered Materials 61,249 56,372 Crane Controls 35,002 31,753 Merchandising Systems 46,184 42,466 Wholesale Distribution 172,448 166,901 Other 3,206 2,954 Intersegment Elimination (3,818) (3,122) Total $ 526,817 $ 467,333 Operating Profit (Loss): Fluid Handling $ 8,952 $ 6,089 Aerospace 25,272 19,798 Engineered Materials 7,551 7,114 Crane Controls 2,982 1,929 Merchandising Systems 8,736 7,741 Wholesale Distribution 4,428 3,383 Other (383) 316 Corporate (5,200) (5,383) Intersegment Elimination 37 8 Total $ 52,375 $ 40,995 -7-
Part I - Financial Information (Cont'd.) Notes to Consolidated Financial Statements 3. Restatements Certain prior year amounts have been reclassified to conform with the 1998 presentation. 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 $47.7 million at March 31, 1998, $51.3 million at March 31, 1997, and $46.6 million at December 31, 1997. 5. Disclosure of Accumulated Other Comprehensive Income Balances The company adopted Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" on January 1, 1998. Comprehensive Income is the change in equity of a business enterprise during a period from transactions and other events and circumstances, from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and dispositions to owners. Activity for the period is as follows:
Foreign Accumulated Currency Other Items Comprehensive Income January 1, 1988 $(16,550) $(16,550) Current-period change 108 108 March 31, 1998 $(16,442) $(16,442)
-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, 1998 and 1997 [CAPTION] This 10Q may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements present management's expectations, beliefs, plans and objectives, future financial performance, and assumptions or judgments concerning such matters. Any discussions contained in this 10Q, except to the extent that they contain historical facts, are forward-looking and accordingly involve estimates, assumptions, judgments and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking statements. Such factors are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 filed with the Securities and Exchange Commission Results From Operations: First Quarter of 1998 Compared to First Quarter of 1997: Net income for the quarter ended March 31, 1998 set a first quarter record of $29.9 million, or $.65 per diluted share outstanding, a 32% increase from $22.6 million or $.49 per diluted share reported for the same period last year. Operating profit for the first quarter increased 28% to $52.4 million on a sales increase of 13% to $526.8 million. Operating margins for the quarter improved a full percentage point to 9.9% of sales from 8.8% in 1997. Cash flow (net income plus depreciation and amortization) per diluted share increased 22% for the quarter to $.96 per share. Fluid Handling sales increased 34% in the quarter to $118.0 million, up $29.9 million from the prior year. The acquisitions of MOVATS and Stockham Valves in 1997 contributed $23.7 million to the increase. In addition, cast steel and quarter turn valve shipments increased 27% and 26%, respectively. Operating profit increased 47% to $9.0 million. Acquisitions contributed $2.3 million of the $2.9 million increase in operating profit. Operating profit margins improved to 7.6% of sales compared to 6.9% in 1997. Margins improved for engineered valves and pumps but were down slightly for commercial valves due to costs associated with integrating the Stockham iron and bronze production into Crane facilities. Aerospace sales increased 15% or $12.6 million in the quarter with all businesses continuing to benefit from the strength of the airline industry. Operating profit increased 28% with Hydro-Aire and ELDEC benefiting from higher aircraft production levels and airline utilization rates. Operating margins improved to 26.7% compared to 24.2% in the first quarter of 1997. Order backlog continued to increase and totaled $311 million at March 31, 1998, an increase of $14 million from year-end 1997 and up $37 million from the prior year. -9- 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, 1998 and 1997 Engineered Materials sales and operating profit were up 9% and 6%, respectively. Results in this segment were mixed. Kemlite and Cor Tec shipments were both up over 20% with a corresponding improvement in operating profit from the prior year level as both businesses continued to benefit from their strong market position and strong demand from the truck trailer manufacturers, and from Kemlite's leadership position in the strong recreational vehicle market. This was somewhat offset by lower project business at Resistoflex in the United States and Southeast Asia where shipments were down 21% from the 1997 level, and the January ice storm in Eastern Canada which negatively impacted Crane Plumbing sales and production through February. Overall operating profit margins declined to 12.3% of sales compared to 12.6% in 1997 as margin improvement at Kemlite and Cor Tec was more than offset by declines at Crane Plumbing and Resistoflex. Crane Controls sales, operating profit and operating margins increased for the quarter, continuing the trend of the fourth quarter of 1997. Operating profit increased 55% to $3.0 million on a 10% increase in shipments. All business units reported higher sales, operating profits and margins; overall operating profit margins improved to 8.5% of sales from 6.1% in the first quarter of 1997. Merchandising Systems operating profit was up 13% on a 9% increase in shipments. National Vendors sales were up $6.3 million (21%) due to higher export demand particularly in the United Kingdom, and higher sales to the domestic distributor market, largely as a result of the Polyvend acquisition in March 1997. This more than offset lower shipments at NRI as a key customer in the amusement industry delayed their orders pending the final decision regarding the planned introduction of the European Monetary Unit (EMU) scheduled for May 1998. Over all, operating margins improved to 18.9% of sales compared to 18.2% in 1997. Wholesale Distribution operating profit increased $1 million or 31% on a 3% increase in revenues. Huttig sales were up 10% or $13.2 million due to Huttig's acquisition of MALLCO Lumber and Building Materials Inc. in July 1997, and Crane Supply sales were up slightly. This more than offset the loss of revenues from the sale of Valve Systems and Controls in the fourth quarter of 1997. Operating profit margins improved to 2.6% of sales compared to 2% in 1997 with both Huttig and Crane Supply improving. -10- 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, 1998 and 1997 Net interest expense in the quarter was in line with the prior year. The effective tax rate decreased to 36.3 percent in the first quarter of 1998 compared to 36.7 percent in 1997. Liquidity and Capital Resources: During the three months of 1998 the company generated $41.7 million of cash from operating activities, compared to $31.4 million in 1997. Net debt totaled 31.6 percent of capital at March 31, 1998. The current ratio was 2.2 with working capital totaling $363.3 million at March 31, 1998 compared to $283.1 million at March 31, 1997. The company had unused credit lines of $422 million at March 31, 1998. 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, 1997. Item 4. Submission of Matters to a vote of Security Holders A) The Annual Meeting of shareholders was held on April 20, 1998. B)The following two Directors were reelected to serve for three years until the Annual Meeting of 2001. Mr. Richard S.Forte' Vote for - 40,165,793 Vote withheld - 532,563 Mr. Jean Gaulin Vote for - 40,170,711 Vote withheld - 527,645 C)The following Director was elected to serve for three years until the Annual Meeting of 2001. Mr. James L.L.Tullis Vote for - 39,934,132 Vote withheld - 764,224 D)The shareholders approved the selection of Deloitte & Touche LLP. as independent auditors for the company for 1997. Vote for - 40,546,302 Vote against - 78,286 Abstained - 73,768 -11- +Item 4.Submission of Matters to a vote of Security Holders E)The shareholders approved the 1998 Stock Option Plan. Vote for - 34,200,489 Vote against - 2,201,525 Abstained - 4,296,342 F)The shareholders approved the 1998 Restricted Stock Award Plan. Vote for - 27,403,103 Vote against - 8,946,386 Abstained - 4,348,867 G) The shareholders approved the 1998 Non-Employee Director Restricted Stock Plan. Vote for - 34,945,736 Vote against - 1,387,567 Abstained - 4,365,053 Item 6. Exhibits and Reports on Form 8-K 10. Material Contracts: (iii)Compensatory Plans There is incorporated by reference herein: (a) The Crane Co. 1998 Stock Option Plan contained in Exhibit 4.1 to the company's Registration Statement No. 333-50489 on Form S-8 filed with the Commission on April 20, 1998. (b) The Crane Co. 1998 Restricted Stock Award Plan contained in Exhibit 4.1 to the company's Registration Statement No. 333-50487 on Form S-8 filed with the Commission on April 20, 1998. (c) The Crane Co. 1998 Non-Employee Director Restricted Stock Award Plan contained in Exhibit 4.1 to the company's Registration Statement No. 333-50495 on Form S-8 filed with the Commission on April 20, 1998. 11.Computation of earnings per share for the quarters March 31, 1998 and 1997. 27.Article 5 of Regulation S-X Financial Data Schedule for the first 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 May 11, 1998 By /s/ D.S. Smith D.S. SMITH Vice President-Finance and Chief Financial Officer Date May 11, 1998 By /s/ M.L. Raithel M.L. RAITHEL Controller -13- Crane Co. and Subsidiaries Exhibit 11 to Form 10-Q Computation of Net Income per Common Share Three Months Ended March 31, 1998 and 1997 (In Thousands, Except Per Share Amounts)
Three Months Ended March 31, 1998 1997 Basic Net Income Per Share: Net income $ 29,899 $ 22,645 Average basic shares outstanding 45,591 45,578 Basic Net Income per share $ .66 $ .50 Diluted - Income Per Share: Net income $ 29,899 $ 22,645 Average basic shares outstanding 45,591 45,578 Add Diluted effect of stock options 614 460 Average diluted shares outstanding 46,205 46,038 Diluted Net Income per share $ .65 $ .49
-14- EX-27 2 ARTICLE 5 FDS FOR 1ST QUARTER 10-Q
5 1,000 3-MOS DEC-31-1998 Mar-31-1998 48,908 0 286,807 0 295,862 671,792 592,296 317,471 1,270,376 308,528 281,783 45,645 0 0 514,029 1,270,376 526,817 526,817 379,989 474,442 (77) 0 5,398 46,900 17,001 29,899 0 0 0 29,899 .66 .65
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