EX-99.2 3 exhibit992q42015.htm EXHIBIT 99.2 Exhibit


Exhibit 99.2
CRANE CO.
Income Statement Data
(in millions, except per share data)
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31, 2015
 
December 31, 2015
 
 
 
2015
 
 
2014
 
 
2015
 
 
2014
Net Sales:
 
 
 
 
 
 
 
 
 
 
 
 
Fluid Handling
 
$
259.4

 
$
313.9

 
$
1,091.3

 
$
1,263.7

Payment & Merchandising Technologies
 
 
174

 
 
177.2

 
 
703.0

 
 
712.0

Aerospace & Electronics
 
 
190.9

 
 
182.3

 
 
691.3

 
 
696.0

Engineered Materials
 
 
56.4

 
 
57.2

 
 
254.8

 
 
253.3

    Total Net Sales
 
$
680.6

 
$
730.7

 
$
2,740.5

 
$
2,925.0

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Profit (Loss):
 
 
 
 
 
 
 
 
 
 
 
 
Fluid Handling
 
$
29.2

 
$
36.8

 
$
125.4

 
$
181.6

Payment & Merchandising Technologies
 
 
28.9

 
 
17.8

 
 
101.4

 
 
69.1

Aerospace & Electronics
 
 
46.9

 
 
39.9

 
 
145.1

 
 
138.2

Engineered Materials
 
 
9.5

 
 
7.2

 
 
48.4

 
 
36.8

Corporate
 
 
(11.0
)
 
 
(12.1
)
 
 
(47.5
)
 
 
(53.6
)
Environmental provision
 
 
—

 
 
—

 
 
—

 
 
(55.8
)
    Total Operating Profit
 
 
103.5

 
 
89.6

 
 
372.9

 
 
316.3

 
 
 
 
 
 
 
 
 
 
 
 
 
Interest Income
 
 
0.5

 
 
0.6

 
 
1.9

 
 
1.7

Interest Expense
 
 
(9.1
)
 
 
(10.1
)
 
 
(37.6
)
 
 
(39.2
)
Miscellaneous - Net
 
 
(0.4
)
 
 
3.8

 
 
(0.7
)
 
 
2.4

Income Before Income Taxes
 
 
94.4

 
 
83.8

 
 
336.5

 
 
281.2

Provision for Income Taxes
 
 
28.8

 
 
27.3

 
 
106.5

 
 
87.6

Net income before allocation to noncontrolling interests
 
 
65.6

 
 
56.6

 
 
230.0

 
 
193.6

    Less: Noncontrolling interest in subsidiaries' earnings
 
 
0.4

 
 
0.4

 
 
1.1

 
 
0.9

Net income attributable to common shareholders
 
$
65.2

 
$
56.2

 
$
228.9

 
$
192.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per Diluted Share
 
$
1.11

 
$
0.95

 
$
3.89

 
$
3.23

 
 
 
 
 
 
 
 
 
 
 
 
 
Average Diluted Shares Outstanding
 
 
58.7

 
 
59.3

 
 
58.8

 
 
59.6

Average Basic Shares Outstanding
 
 
58.1

 
 
58.5

 
 
58.1

 
 
58.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Supplemental Data:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Sales
 
$
441.4

 
$
480.0

 
$
1,783.4

 
$
1,901.2

Selling, General & Administrative
 
 
135.0

 
 
143.4

 
 
566.2

 
 
604.1

Environmental Provision
 
 
—

 
 
—

 
 
—

 
 
55.8

Repositioning Charges (see non-GAAP measures)
 
 
(0.1
)
 
 
11.1

 
 
11.6

 
 
22.7

Acquisition Related Charges (see non-GAAP measures)
 
 
0.8

 
 
6.6

 
 
6.6

 
 
24.9

Depreciation and Amortization *
 
 
17.1

 
 
17.8

 
 
67.0

 
 
75.8

Stock-Based Compensation Expense *
 
 
5.5

 
 
4.9

 
 
21.3

 
 
20.9

 
 
 
 
 
 
 
 
 
 
 
 
 
* Amount included within Cost of Sales and Selling, General & Administrative costs.

1


CRANE CO.
Condensed Balance Sheets
(in millions)
 
 
 
December 31,
2015
 
December 31,
2014
ASSETS
 
 
 
 
Current Assets
 
 
 
 
Cash and Cash Equivalents
 
$
363.5

 
$
346.3

Accounts Receivable, net
 
398.1

 
410.9

Current Insurance Receivable - Asbestos
 
20.5

 
20.5

Inventories, net
 
376.9

 
369.7

Other Current Assets
 
50.5

 
47.8

Total Current Assets
 
1,209.5

 
1,195.2

 
 
 
 
 
Property, Plant and Equipment, net
 
276.0

 
290.3

Long-Term Insurance Receivable - Asbestos
 
108.7

 
126.8

Other Assets
 
599.9

 
647.3

Goodwill
 
1,167.9

 
1,191.3

 
 
 
 
 
Total Assets
 
$
3,362.0

 
$
3,450.8

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current Liabilities
 
 
 
 
Notes Payable and Current Maturities of Long-Term Debt
 
$
49.6

 
$
100.8

Accounts Payable
 
223.3

 
228.8

Current Asbestos Liability
 
75.0

 
79.0

Accrued Liabilities
 
218.6

 
225.8

Income Taxes
 
20.8

 
5.6

Total Current Liabilities
 
587.3

 
640.0

 
 
 
 
 
Long-Term Debt
 
749.3

 
749.2

Long-Term Deferred Tax Liability
 
55.5

 
46.3

Long-Term Asbestos Liability
 
470.5

 
534.5

Other Liabilities
 
348.5

 
410.1

 
 
 
 
 
Total Equity
 
1,150.9

 
1,070.6

 
 
 
 
 
Total Liabilities and Equity
 
$
3,362.0

 
$
3,450.8


2


CRANE CO.
Condensed Statements of Cash Flows
(in millions)
 
 
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
 
2015
 
2014
 
2015
 
2014
Operating Activities:
 
 
 
 
 
 
 
 
Net income attributable to common shareholders
 
$
65.2

 
$
56.2

 
$
228.9

 
$
192.7

Noncontrolling interest in subsidiaries' earnings
 
0.4

 
0.4

 
1.1

 
0.9

Net income before allocations to noncontrolling interests
 
65.6

 
56.6

 
230.0

 
193.6

Environmental Provision
 
—

 
—

 
—

 
55.8

Gain on divestiture
 
—

 
(4.1
)
 
—

 
(4.1
)
Restructuring - Non Cash
 
0.5

 
—

 
2.0

 
1.0

Depreciation and amortization
 
17.1

 
17.8

 
67.0

 
75.8

Stock-based compensation expense
 
5.5

 
4.9

 
21.3

 
20.9

Defined benefit plans and postretirement expense
 
(1.9
)
 
(2.7
)
 
(11.6
)
 
(11.5
)
Deferred income taxes
 
5.9

 
34.2

 
29.3

 
37.9

Cash provided by operating working capital
 
44.9

 
69.8

 
(1.7
)
 
22.5

Defined benefit plans and postretirement contributions
 
(2.5
)
 
(2.8
)
 
(17.9
)
 
(25.5
)
Environmental payments, net of reimbursements
 
(4.6
)
 
(1.8
)
 
(18.2
)
 
(10.4
)
Other
 
(3.2
)
 
(6.2
)
 
(21.0
)
 
(30.5
)
  Subtotal
 
127.3

 
165.6

 
279.2

 
325.2

Asbestos related payments, net of insurance recoveries
 
(13.7
)
 
(15.1
)
 
(49.9
)
 
(61.3
)
  Total provided by operating activities
 
113.6

 
150.5

 
229.3

 
264.0

 
 
 
 
 
 
 
 
 
Investing Activities:
 
 
 
 
 
 
 
 
Capital expenditures
 
(11.4
)
 
(11.6
)
 
(39.6
)
 
(43.7
)
Proceeds from disposition of capital assets
 
2.5

 
4.7

 
4.4

 
9.7

Proceeds from divestiture
 
—

 
—

 
—

 
2.1

Proceeds from acquisition
 
—

 
—

 
—

 
6.1

 Total used for investing activities
 
(8.9
)
 
(6.9
)
 
(35.2
)
 
(25.9
)
 
 
 
 
 
 
 
 
 
Financing Activities:
 
 
 
 
 
 
 
 
Dividends paid
 
(19.2
)
 
(19.1
)
 
(76.6
)
 
(73.9
)
Reacquisition of shares on open market
 
—

 
(50.0
)
 
(25.0
)
 
(50.0
)
Stock options exercised - net of shares reacquired
 
1.6

 
(0.6
)
 
8.9

 
8.2

Excess tax benefit (shortfall) from stock-based compensation
 
0.3

 
(0.2
)
 
0.1

 
7.7

Repayment of credit facility
 
—

 
(14.0
)
 
(100.0
)
 
(25.0
)
Proceeds from issuance (repayment) of commercial paper
 
(48.2
)
 
—

 
48.8

 
—

 Total used for financing activities
 
(65.5
)
 
(83.9
)
 
(143.8
)
 
(133.0
)
 
 
 
 
 
 
 
 
 
Effect of exchange rate on cash and cash equivalents
 
(10.9
)
 
(15.2
)
 
(33.1
)
 
(29.5
)
Increase in cash and cash equivalents
 
28.3

 
44.6

 
17.2

 
75.6

Cash and cash equivalents at beginning of period
 
335.2

 
301.7

 
346.3

 
270.6

Cash and cash equivalents at end of period
 
$
363.5

 
$
346.3

 
$
363.5

 
$
346.3






3


CRANE CO.
Order Backlog
(in millions)
 
 
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
Fluid Handling
 
$
267.2

 
$
278.6

 
$
287.3

 
$
304.3

 
$
311.1

Payment & Merchandising Technologies
 
62.6

 
55.5

 
61.1

 
68.1

 
68.3

Aerospace & Electronics
 
436.4

 
459.9

 
448.1

 
446.1

 
422.0

Engineered Materials
 
15.2

 
13.7

 
15.4

 
18.6

 
16.7

    Total Backlog
 
$
781.5

 
$
807.8

 
$
811.9

 
$
837.2

 
$
818.1
















































4


CRANE CO.
Non-GAAP Financial Measures
(in millions, except per share data)
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
Percent Change
December 31, 2015
 
Percent Change
December 31, 2015
 
2015
 
2014
 
2015
 
2014
 
Three Months
 
Twelve Months
INCOME ITEMS
 
 
 
 
 
 
 
 
 
 
 
Net Sales
$
680.6

 
$
730.7

 
$
2,740.5

 
$
2,925.0

 
(6.9
)%
 
(6.3
)%
 
 
 
 
 
 
 
 
 
 
 
 
Operating Profit
103.5

 
89.6

 
372.9

 
316.3

 
15.5
 %
 
17.9
 %
Percentage of Sales
15.2
%
 
12.3
%
 
13.6
%
 
10.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Special Items impacting Operating Profit:
 
 
 
 
 
 
 
 
MEI acquisition related inventory and backlog amortization
—

 
—

 
—

 
4.8

 
 
 
 
MEI acquisition related integration costs
1.6

 
2.0

 
7.2

 
9.8

 
 
 
 
MEI acquisition related restructuring costs
(0.8
)
 
4.6

 
(0.6
)
 
10.3

 
 
 
 
Repositioning charges
(0.1
)
 
11.1

 
11.6

 
22.7

 
 
 
 
Lawsuit settlement charge
—

 
—

 
—

 
6.5

 
 
 
 
Environmental Provision
—

 
—

 
—

 
55.8

 
 
 
 
Operating Profit before Special Items
$
104.2


$
107.3


$
391.1


$
426.2

 
(2.9
)%
 
(8.2
)%
 


 
 
 
 
 
 
 
 
 
 
Percentage of Sales
15.3
%
 
14.7
%
 
14.3
%
 
14.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income Attributable to Common Shareholders
$
65.2

 
$
56.2

 
$
228.9

 
$
192.7

 
 
 
 
Per Share
$
1.11

 
$
0.95

 
$
3.89

 
$
3.23

 
17.3
 %
 
20.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
Special Items impacting Net Income Attributable to Common Shareholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MEI acquisition related inventory and backlog amortization - Net of Tax
—

 
—

 
—

 
3.0

 
 
 
 
Per Share
 
 
 
 
 
 
$
0.05

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MEI acquisition related integration charges - Net of Tax
1.0

 
1.4

 
4.8

 
7.1

 
 
 
 
Per Share
$
0.02

 
$
0.02

 
$
0.08

 
$
0.12

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MEI acquisition related restructuring charges - Net of Tax
(0.6
)
 
3.2

 
(0.3
)
 
7.0

 
 
 
 
Per Share
$
(0.01
)
 
$
0.05

 
$
(0.01
)
 
$
0.12

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repositioning charges - Net of Tax
0.2

 
9.9

 
9.2

 
18.0

 
 
 
 
Per Share
$
0.00

 
$
0.17

 
$
0.16

 
$
0.30

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lawsuit settlement charge - Net of Tax
—

 
—

 
—

 
4.2

 
 
 
 
Per Share
 
 
 
 
 
 
$
0.07

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Environmental Provision - Net of Tax
—

 
—

 
—

 
36.3

 
 
 
 
Per Share
 
 
 
 
 
 
$
0.61

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on business divestiture - Net of Tax
—

 
—

 
—

 
1.1

 
 
 
 
Per Share
 
 
 
 
 
 
$
0.02

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on real estate divestiture - Net of Tax
—

 
(3.5
)
 
—

 
(4.2
)
 
 
 
 
Per Share
 
 
$
(0.06
)
 
 
 
$
(0.07
)
 
 
 
 
Net Income Attributable To Common Shareholders Before Special Items
$
65.8

 
$
67.2

 
$
242.5

 
$
265.1

 
(2.1
)%
 
(8.5
)%
Per Share
$
1.12

 
$
1.13

 
$
4.13

 
$
4.45

 
(1.1
)%
 
(7.3
)%
 

5


CRANE CO.
Guidance
(in millions)

 
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2015 Full Year Guidance
 
 
2015
 
2014
 
2015
 
2014
 
Low
 
High
CASH FLOW ITEMS
 
 
 
 
 
 
 
 
 
 
 
 
Cash Provided by Operating Activities
 
 
 
 
 
 
 
 
 
 
 
 
  before Asbestos - Related Payments
 
$
127.3

 
$
165.6

 
$
279.2

 
$
325.2

 
$
290.0

 
$
320.0

Asbestos Related Payments, Net of Insurance Recoveries
 
(13.7
)
 
(15.1
)
 
(49.9
)
 
(61.3
)
 
(50.0
)
 
(50.0
)
Cash Provided by Operating Activities
 
113.6

 
150.5

 
229.3

 
263.9

 
240.0

 
270.0

Less: Capital Expenditures
 
(11.4
)
 
(11.6
)
 
(39.6
)
 
(43.7
)
 
(50.0
)
 
(50.0
)
Free Cash Flow
 
$
102.2

 
$
138.9

 
$
189.7

 
$
220.2

 
$
190.0

 
$
220.0

Certain non-GAAP measures have been provided to facilitate comparison with the prior year.
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that non-GAAP financial measures which exclude certain non-recurring items present additional useful comparisons between current results and results in prior operating periods, providing investors with a clearer view of the underlying trends of the business. Management also uses these non-GAAP financial measures in making financial, operating, planning and compensation decisions and in evaluating the Company's performance.
In addition, Free Cash Flow provides supplemental information to assist management and investors in analyzing the Company’s ability to generate liquidity from its operating activities. The measure of Free Cash Flow does not take into consideration certain other non-discretionary cash requirements such as, for example, mandatory principal payments on the Company's long-term debt. Non-GAAP financial measures, which may be inconsistent with similarly captioned measures presented by other companies, should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP.



6