-----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, UyHU5IChtOl/iZO/tzab+qrvbQ4wiRmXQjCMEEi/OZ6yDUyNCAP8vIBbhG73JABg QWP3W+7QYWaVRuKBbziQwg== 0000025445-98-000016.txt : 19981118 0000025445-98-000016.hdr.sgml : 19981118 ACCESSION NUMBER: 0000025445-98-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 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: 033-22904 FILM NUMBER: 98749513 BUSINESS ADDRESS: STREET 1: 100 FIRST STAMFORD PLACE CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 2033637300 10-Q 1 QUARTERLY 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, 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 October 31, 1998: Common stock, $1.00 Par Value - 68,624,818 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 Nine Months Ended September 30, September 30, 1998 1997 1998 1997 ---- ---- ---- ---- Net Sales $595,438 $534,818 $1,685,655 $1,520,915 Operating Costs and Expenses: Cost of Sales 426,946 391,023 1,210,772 1,104,977 Selling, general and Administrative 89,439 75,351 252,666 228,072 Depreciation and amortization 15,816 14,175 44,335 41,351 ------- ------- --------- --------- 532,201 480,549 1,507,773 1,374,400 Operating Profit 63,237 54,269 177,882 146,515 Other Income (Expense): Interest income 477 729 1,851 1,809 Interest expense (7,182) (6,046) (19,456) (17,989) Miscellaneous - net (14) (56) (228) 177 ------- ------- -------- -------- (6,719) (5,373) (17,833) (16,003) Income Before Taxes 56,518 48,896 160,049 130,512 Provision for Income Taxes 19,743 17,496 56,817 47,244 --------- --------- ----------- ----------- Net Income $ 36,775 $ 31,400 $ 103,232 $ 83,268 ========= ========= =========== =========== Net Income Per Share: Basic $.54 $.46 $1.51 $1.21 Diluted .53 .45 1.49 1.20 Average Basic Shares Outstanding 68,670 68,844 68,543 68,619 Average Diluted Shares Outstanding 69,407 69,737 69,415 69,416 Dividends Per Share $.10 $.08 $.27 $.25 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 Nine Months Ended September 30, September 30, 1998 1997 1998 1997 ---- ---- ---- ---- Net Income $36,775 $31,400 $103,232 $83,268 Other comprehensive income, net of tax- Foreign currency translation adjustments 164 (1,769) (4,127) (7,013) ------- -------- --------- -------- Comprehensive Income $36,939 $29,631 $ 99,105 $76,255 ======= ======== ========= ======== See Notes to Consolidated Financial Statements
-3- Part I - Financial Information Item 1. Financial Statements Crane Co. and Subsidiaries Consolidated Balance Sheets (In Thousands, Except Per Share Amounts) (Unaudited)
September 30, December 31, 1998 1997 1997 ---- ---- ---- Assets Current Assets Cash and cash equivalents $ 16,448 $ 21,863 $ 6,982 Accounts receivable 323,681 272,817 272,262 Inventories: Finished goods 144,778 110,069 113,496 Finished parts and subassemblies 53,745 45,940 46,351 Work in process 48,374 45,003 51,345 Raw materials 90,337 71,243 79,892 -------- -------- -------- 337,234 272,255 291,084 Other current assets 44,319 32,509 37,425 -------- -------- -------- Total Current Assets 721,682 599,444 607,753 Property, Plant and Equipment: Cost 640,398 574,943 582,704 Less accumulated depreciation 334,002 309,813 308,947 -------- -------- -------- 306,396 265,130 273,757 Other Assets 54,957 54,630 55,114 Intangibles 50,267 52,961 51,907 Cost in excess of net assets acquired 220,563 368,437 216,497 ---------- ---------- ---------- $1,501,739 $1,188,662 $1,209,094 ========== ========== ========== See Notes to Consolidated Financial Statements
-4- Part I - Financial Information Item 1. Financial Statements Crane Co. and Subsidiaries Consolidated Balance Sheets (In Thousands, Except Per Share Amounts) (Unaudited)
September 30, December 31, 1998 1997 1997 ---- ---- ---- Liabilities and Shareholders Equity Current Liabilities Current maturities of long-term debt $ 825 $ 1,063 $ 992 Loans payable 53,070 16,296 30,240 Accounts payable 147,202 125,232 122,616 Accrued liabilities 142,556 117,502 128,794 U.S. and foreign taxes on income 22,258 8,986 13,170 -------- -------- -------- Total Current Liabilities 365,911 269,079 295,812 Long-Term Debt 403,670 266,916 260,716 Deferred Income Taxes 47,752 55,951 46,007 Other Liabilities 28,818 26,551 25,618 Accrued Postretirement Benefits 40,665 42,106 41,838 Accrued Pension Liability 6,540 6,202 6,559 Preferred Shares, par value $.01 - - - 5,000,000 shares authorized Common Shareholders Equity: Common Shares, par value $1.00 68,625 68,819 68,313 120,000,000 shares authorized, 68,624,818, 68,818,704 and 68,312,730 shares outstanding Capital surplus 15,283 31,396 19,951 Retained earnings 545,152 436,023 460,830 Accumulated other comprehensive income (20,677) (14,381) (16,550) ----------- ----------- ----------- Total Common Shareholders Equity 608,383 521,857 532,544 ----------- ----------- ----------- $1,501,739 $1,188,662 $1,209,094 =========== =========== =========== See Notes to Consolidated Financial Statements
-5- Part I - Financial Information (Cont'd.) Item 1. Financial Statements Crane Co. and Subsidiaries Consolidated Statements of Cash Flows (In Thousands) (Unaudited)
September 30, 1998 1997 ---- ---- Cash flows from Operating activities: Net income $103,232 $ 83,268 Depreciation 28,551 27,622 Amortization 15,784 13,729 Deferred income taxes (169) (220) Cash used for operating working capital (10,349) (12,250) Other (3,786) (4,310) -------- -------- Total provided by operating activities 133,263 107,839 Cash flows used for Investing activities: Capital Expenditures (42,608) (31,049) Payments for acquisitions (225,394) (36,107) Proceeds from divestitures 4,276 - Proceeds from disposition of capital assets 774 4,457 --------- -------- Total used for investing activities (262,952) (62,699) Cash flows from Financing activities: Equity: Dividends paid (18,331) (17,170) Reacquisition of shares-open market (6,323) (4,857) Reacquisition of shares-stock incentive programs (10,922) (4,383) Stock options exercised 8,633 6,390 -------- -------- Net Equity (26,943) (20,020) Debt: Proceeds from issuance of long-term debt 143,565 - Repayments of long-term debt (943) (3,461) Net increase (decrease) in short-term debt 22,758 (10,710) -------- -------- Net Debt 165,380 (14,171) -------- -------- Total provided by (used for) financing activities 138,437 (34,191) Effect of exchange rate on cash and cash equivalents 718 (665) -------- ------- Increase in cash and cash equivalents 9,466 10,284 Cash and cash equivalents at beginning of period 6,982 11,579 --------- --------- Cash and cash equivalents at end of period $ 16,448 $ 21,863 ========= ========= Detail of Cash Provided by (Used for) Operating Working Capital (net of effects of acquisitions) Accounts Receivable $(22,430) $(34,055) Inventories (14,560) (1,650) Other current assets (2,413) 1,488 Accounts Payable 13,991 19,747 Accrued Liabilities 4,638 105 U.S. and foreign taxes on income 10,425 2,115 --------- --------- Total $(10,349) $(12,250) ========= ========= Supplemental disclosure of cash flow information: Interest paid $17,921 $16,963 Income taxes paid 43,388 39,876 See Notes to Consolidated Financial Statements
-6- Part I - Financial Information (Cont'd.) Notes to Consolidated Financial Statements (Unaudited) 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. Certain prior year amounts have been reclassified to conform to the 1998 presentation. 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 Nine Months Ended September 30, September 30, 1998 1997 1998 1997 ---- ---- ---- ---- (In thousands) Net Sales: Fluid Handling $108,010 $100,460 $ 339,108 $ 290,734 Aerospace 102,458 85,866 297,410 252,878 Engineered Materials 72,992 56,841 198,373 171,817 Crane Controls 32,294 32,821 102,514 98,149 Merchandising Systems 49,039 44,271 145,052 137,095 Wholesale Distribution 230,857 213,743 604,187 568,885 Other 3,108 3,675 9,984 10,071 Intersegment Elimination (3,320) (2,859) (10,973) (8,714) --------- --------- ----------- ----------- Total $595,438 $534,818 $1,685,655 $1,520,915 ========= ========= =========== =========== Operating Profit (Loss): Fluid Handling $ 2,969 $ 8,927 $ 18,693 $ 22,454 Aerospace 31,679 22,903 88,212 64,596 Engineered Materials 10,979 7,993 28,224 22,689 Crane Controls 2,277 3,353 8,254 8,560 Merchandising Systems 8,244 6,577 26,655 24,445 Wholesale Distribution 12,418 9,015 24,547 18,868 Other (212) 230 (438) 753 Corporate (5,132) (4,724) (16,268) (15,998) Intersegment Elimination 15 (5) 3 148 -------- -------- --------- --------- Total $63,237 $54,269 $177,882 $146,515 ======== ======== ========= =========
-7- Part I - Financial Information (Cont'd.) Notes to Consolidated Financial Statements 3. 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 $47.6 million at September 30, 1998, $52.1 million at September 30, 1997, and $46.6 million at December 31, 1997. 4. Intangibles Intangible assets are amortized on a straight-line basis over their estimated useful lives, which range form five to twenty years. Accumulated amortization was $21.7 million at September 30, 1998, $17.4 million at September 30, 1997 and $18.5 million at December 31, 1997 5. Cost in Excess of Net Assets Acquired Cost in excess of net assets acquired is amortized on a straight- line basis principally over a 15 to 40 years. Accumulated amortization was $45.9 million at September 30, 1998, $35.2 million at September 30, 1997 and $37.4 million at December 31, 1997. 6. 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:
Accumulated Other Comprehensive Income Accumulated other comprehensive income January 1, 1998 $(16,550) Foreign currency translation adjustment 108 --------- Accumulated other comprehensive income March 31, 1998 (16,442) Foreign currency translation adjustment (4,399) --------- Accumulated other comprehensive income June 30, 1998 (20,841) Foreign currency translation adjustment 164 --------- Accumulated other comprehensive income September 30, 1998 $(20,677) =========
-8- Part I - Financial Information (Cont'd) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Three Months Ended September 30, 1998 and 1997 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 regarding future financial performance, and assumptions or judgments concerning such performance. 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 THIRD QUARTER OF 1998 COMPARED TO THIRD QUARTER OF 1997 Net income for the quarter ended September 30, 1998 rose 17% to $36.8 million, or $.53 per diluted share outstanding, from the $31.4 million or $.45 per diluted share reported for the 1997 third quarter. Operating profit for the third quarter increased 17% to $63.2 million on a sales increase of 11% to $595.4 million. Operating margins for the quarter improved to 10.6% of sales from 10.1% in 1997. Cash flow (net income plus depreciation and amortization) per diluted share increased 16% for the quarter to $.76 per diluted share. FLUID HANDLING sales rose 8% from the prior year to $108.0 million, primarily due to recent acquisitions, despite a 24% decline in commercial valve/fittings shipments at Crane UK, and a decline in sales at Crane Nuclear compared to unusually strong results last year. Despite the contribution of $.9 million from acquisitions, operating profit was down $6.0 million from the prior year due to the lower sales in the businesses noted above. Included in the third quarter results was a $1.2 million charge to restructure the UK operation. Overall operating margins declined to 2.7% of sales compared to 8.9% in 1997. Operating margins for engineered valves and pumps remained strong. Order backlog before the contribution of acquisitions declined $14 million, but overall backlog was up $11 million, compared to the prior year. AEROSPACE sales increased $16.6 million, or 19%, in the quarter, with all businesses benefiting from strong demand from the airline industry. Operating profit increased 38% as Hydro-Aire and ELDEC benefited from higher production rates and higher aftermarket shipments. Interpoint also achieved improved results as it continued to focus on higher margin standard power and space products and reducing manufacturing costs. The Aerospace operating margin improved to 30.9% of sales compared to 26.7% in the third quarter of 1997. Order backlog totaled $293 million at September 30, 1998, up $2 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 September 30, 1998 and 1997 ENGINEERED MATERIALS sales increased $16.2 million or 28% while operating profit increased $3.0 million or 37%, to $11.0 million, compared to the 1997 third quarter. Kemlite sales increased 12% due to high market share and strong demand for fiberglass reinforced plastic panels (FRP) to the recreational vehicle, truck and truck trailer markets. In July, Crane became the market leader in the building products market for FRP panels with its acquisition of Sequentia, which contributed $13.2 million to revenues in the quarter. Resistoflex sales and operating profit decreased from the third quarter of 1997 due to lower demand in its domestic chemical process industry markets. The September 25th acquisition of the Plastic-Lined Piping Products division of Dow Chemical significantly strengthened the market position of Resistoflex. Order backlog of $22 million was down $1 million from 1997. CRANE CONTROLS sales were down 2% and operating profit decreased $1.1 million as all business units experienced weaker demand. Operating margins declined to 7.1% of sales compared to 10.2 % in 1997. Order backlog of $29 million decreased $1 million from the prior year. MERCHANDISING SYSTEMS sales increased $4.8 million or 11%, and operating profit was up 25% or $1.7 million. National Vendors sales were up 12% and operating profit increased 25%, and NRI's shipments of coin validators were up 7% with operating profit up 9%. Operating margins improved to 16.8% of sales compared to 14.9% in 1997. The overall order backlog increased to $17 million, up 18% from the prior year. WHOLESALE DISTRIBUTION sales increased $17.1 million or 8% and operating profit increased to $12.4 million, or 38%. Huttig increased sales $26.2 million and operating profit increased by $3.4 million. Crane Supply's sales and operating profit were up in Canadian dollars but down slightly in U.S. dollars due to weaker Canadian currency. Acquisitions contributed 80% of Huttig's sales increase and 40% of their profit increase. These gains more than offset the revenue lost from the sale of Valve Systems and Controls in the fourth quarter of 1997. Operating margins improved to 5.4% of sales compared to 4.2% in 1997. On August 17th, the company announced a 3 for 2 stock split and a 20% increase in its cash dividend per share. During the quarter, the company acquired Sequentia Holdings, Inc., Liberty Technologies, and the Plastic-Lined Piping Products Division of Dow Chemical for a total purchase price of $162 million. In September, the company accessed the public debt market by issuing $100 million in senior unsecured notes at a 6 3/4% coupon, maturing October 2006. The company's net debt to capital ratio increased to 42.0% at September 30, 1998, from 34.9% at December 31, 1997. -10- Part I - Financial Information (Cont'd) Item 3. Management's Discussion and Analysis of Financial Condition and Results of Operations Nine Months Ended September 30, 1998 and 1997 NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1997 For the nine months ended September 30, 1998, net income increased 24% to $103.2 million, or $1.49 per diluted share, from the $83.3 million, or $1.20 per share, in the comparable 1997 period. Operating profit for the nine months increased 21% to $177.9 million on a sales increase of 11% to $1.69 billion. Cash flow increased 18% for the nine months to $2.13 per diluted share. FLUID HANDLING sales rose 17%, to $339.1 million, from the prior year. The sales increase was due primarily to acquisitions and higher quarter turn valve sales and pump shipments. Operating profit decreased 17% from 1997 as a result of a decline in Crane Nuclear revenues relative to a very strong 1997 and lower results at Crane UK due to weaker domestic and export shipments and significant business restructuring costs in the first nine months. Higher SG&A spending at the pump businesses also contributed to the decline. These factors caused operating margin to decline to 5.5% of sales compared to 7.7% in 1997. Backlog increased by $11 million over 1997 due to acquisitions. AEROSPACE sales increased $44.5 million, or 18%, with Hydro-Aire and ELDEC benefiting from higher aircraft production and after-market shipments and Interpoint focusing on higher margin products and cost reduction. Operating profit increased $23.6 million and operating margins improved to 29.7% compared to 25.5% in 1997. Order backlog totaled $293 million, an increase of $2 million from the prior year. ENGINEERED MATERIALS sales increased $26.6 million, or 16%, while operating profit increased $5.5 million, or 24%. Kemlite and Cor Tec posted increases in sales of 16% and 27%, respectively, due to strong market demand and high market share. Resistoflex sales and operating profit decreased due to weak U.S. and Asian project orders. Operating margins improved to 14.2% of sales in 1998 compared to 13.2% in 1997. 1998 backlog decreased $1 million versus the same period in 1997. CRANE CONTROLS sales were up $4.4 million or 4% while operating profit decreased 4% and operating profit margins declined to 8.1% versus 8.7% in 1997 due to a higher percentage of lower margin sales and higher SG&A spending. Order backlog of $29 million decreased $1 million from the prior year. MERCHANDISING SYSTEMS sales and operating profit increased 6% and 9%, respectively. The increases were due to higher distribution sales in the U.S. and market share gain in the U.K. at National Vendors. This was partially offset by lower coin validator revenues at NRI, where sales and operating profit were up in local currency but down in dollar terms due to exchange rate fluctuations. Operating margins increased to 18.4% from 17.8% in 1997. The order backlog increased to $17 million, up 18% from the prior year level. WHOLESALE DISTRIBUTION sales increased $35.3 million, or 6%, and operating profit increased $5.7 million, or 30%. Acquisitions helped Huttig increase sales by 13% and operating profit by 38%. Crane Supply's sales increased 1% and operating profit increased 5%. These gains more than offset the revenue loss from the sale of Valve Systems and Controls in the fourth quarter of 1997. Operating margins improved to 4.1% of sales versus 3.3% in 1997. -11- Part I - Financial Information (Cont'd) Item 3. Management's Discussion and Analysis of Financial Condition and Results of Operations Nine Months Ended September 30, 1998 and 1997 Net interest expense for the quarter and nine months ended September 30, 1998 increased 26% and 9%, respectively, due to acquisitions made in the third quarter. The effective tax rate decreased to 35.5% for the nine months ended September 30, 1998 as opposed to 36.2% at September 30, 1997. LIQUIDITY AND CAPITAL RESOURCES During the nine months of 1998 the company generated $133.3 million of cash from operating activities, compared to $107.8 million in 1997. Net debt totaled 42.0 percent of capital at September 30, 1998 compared to 33.5% in 1997. The current ratio was 2.0 with working capital totaling $335.8 million at June 30, 1998 compared to 2.2 and $330.4 million at September 30, 1997. The company had unused credit lines of $398 million at September 30, 1998. YEAR 2000 READINESS The Year 2000 issue relates to most computer software programs using two digits, rather than four, to define the applicable year for dates. Any of the company's information technology (IT) and non-information technology (non-IT) systems and its products may recognize a date using "00" as the year 1900, rather than the year 2000. This could result in system failures or miscalculations, causing disruptions in operations, including the inability to process transactions and engage in similar normal business activities within the company and with third parties. Crane has implemented a Year 2000 program for its IT and non-IT systems and its products consisting of four phases: 1) awareness, formation, planning and management, 2) inventory, analysis, compliance testing, prioritization and planning, 3) implementation and validation, and 4) Year 2000 compliance. The company's senior management and Board of Directors receive regular updates on the status of the company's Year 2000 program. In addition, the company has contacted significant vendors and customers in order to determine the risks to the company for a third party's failure to remediate its own Year 2000 issues. While information obtained from these contacts will be used to mitigate these risks, there can be no assurance that any third party systems or products will be Year 2000 compliant on a timely basis or that non-compliance by such third parties will not have a material adverse effect on the company. The company's Year 2000 Program was initiated in 1997. Virtually all mission-critical systems, including IT and non-IT systems, are in the implementation phase or are compliant. Non mission-critical systems are in various phases of the program. It is expected that all mission-critical systems will be implemented, tested and validated by September of 1999. Year 2000 costs incurred to date are approximately $11.6 million, of which $3.5 million was expensed and $8.1 million was capitalized. Estimated future costs to complete the Year 2000 program are $15.3 million, of which $7.5 million will be expensed as incurred and the remaining $7.8 million will be capitalized. These costs have been, and will continue to be, funded from normal operating cash flows of the business. No other information technology projects have been or are being delayed by this program. -12- Part I - Financial Information (Cont'd) Item 3. Management's Discussion and Analysis of Financial Condition and Results of Operations Nine Months Ended September 30, 1998 and 1997 The company believes that completed and planned modifications and conversions of its software and hardware systems, its products and its efforts to verify the readiness and compliance of material third parties will allow it to meet its Year 2000 compliance schedule. However, the success of the Year 2000 compliance program is based on the availability of a variety of technical experts, expected successful software modifications being performed by third parties, timely delivery of new software and hardware systems, and other factors. A deficiency with respect to any of these factors could cause a failure in the company's Year 2000 program, in whole or in part. The failure to correct a material Year 2000 problem could result in an interruption in, or a failure of, certain normal business activities or operations, which could have a material adverse effect on the company's results of operations, liquidity or financial condition. Due to the inherent uncertainty in the Year 2000 problem, particularly in regard to third party vendor and customer Year 2000 readiness, the company is unable to determine at this time whether the consequences of any Year 2000 disruptions or failures will have a material adverse effect on the company's results of operations, liquidity or financial condition. Based on current information, the most reasonably likely worst case scenario would involve the temporary disruption of the company's ability to fulfill customer orders. No material adverse effect on the company's financial condition is expected from this specific scenario. Based on current information, cost estimates, program status and beliefs regarding the most reasonably likely worst case scenario, no contingency plans have been formulated. If material circumstances change, however, contingency plans may be created in the future. Part II - Other Information Item 6. Exhibits and Reports on Form 8-K 11. Computation of earnings per share for the quarters September 30, 1998 and 1997. 27. Article 5 of Regulation S-X Financial Data Schedule for the second quarter. -13- 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, 1998 By /s/ D.S. Smith ----------------- ---------- D.S. SMITH Vice President and Chief Financial Officer Date November 13, 1998 By /s/ M.L. Raithel ----------------- ------------ M.L. RAITHEL Controller -14- Crane Co. and Subsidiaries Exhibit 11 to Form 10-Q Computation of Net Income per Common Share Three and Nine Months Ended September 30, 1998 and 1997 (In Thousands, Except Per Share Amounts)
Three Months Ended Nine Months Ended September 30, September 30, 1998 1997 1998 1997 ---- ---- ---- ---- Basic Net Income Per Share: Net income $31,400 $103,232 $83,268 $36,775 ======= ======== ======= ======= Average Basic Shares Outstanding 68,670 68,844 68,543 68,619 Basic Net Income Per Share $ .54 $ .46 $ 1.51 $ 1.21 ======= ======== ======= ======= Diluted Net Income Per Share: Net income $31,400 $103,232 $83,268 $36,775 ======= ======== ======= ======= Average Basic Shares Outstanding 68,670 68,844 68,543 68,619 Add diluted effect of stock options 893 872 797 737 ------- -------- ------- ------- Average Diluted Shares Outstanding 69,737 69,415 69,416 69,407 ======= ======== ======= ======= Diluted Net Income Per Share $ .53 $ .45 $ 1.49 $ 1.20 ======= ======== ======= =======
-15- EX-27 2 ARTICLE 5 FDS FOR 2ND QUARTER 10-Q
5 1,000 3-MOS DEC-31-1998 Sep-30-1998 16,448 0 331,793 (8,112) 337,234 721,682 640,398 334,002 1,501,739 365,911 403,670 68,625 0 0 539,758 1,501,739 595,438 595,438 426,946 532,201 (14) 0 6,705 56,518 19,743 36,775 0 0 0 36,775 .54 .53
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