<PAGE>
<PAGE>
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, 1994
---------------------------------
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 29, 1994:
Common stock, $1.00 Par Value - 29,912,152 shares
-------------------------------------------------
<PAGE>
<PAGE>
Part I - Financial Information
Item 1. Financial Statements
--------------------
<TABLE>
Crane Co. and Subsidiaries
Consolidated Statements of Income
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
Three Months Ended
-----------------------
1994 1993
---- ----
<S> <C> <C>
Net Sales $331,705 $312,313
Operating Costs and Expenses:
Cost of sales 259,754 241,804
Selling, general and administrative 48,816 44,499
Depreciation and amortization 8,308 7,296
-------- --------
316,878 293,599
-------- --------
Operating Profit 14,827 18,714
Other Income (Deductions):
Interest income 711 1,064
Interest expense (3,326) (2,840)
Miscellaneous - net 241 85
-------- --------
(2,374) (1,691)
-------- --------
Income Before Taxes 12,453 17,023
Provision for Income Taxes 5,044 6,257
-------- --------
Net Income $ 7,409 $ 10,766
======== ========
Net Income Per Share $ .25 $ .36
======== ========
Average Shares Outstanding 30,051 30,193
Dividends Per Share $ .1875 $ .1875
<FN>
See Notes to Consolidated Financial Statements
</TABLE>
-2-
<PAGE>
<PAGE>
<TABLE>
Part I - Financial Information
Crane Co. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Per Share Amounts)
<CAPTION>
March 31, December 31,
1994 1993 1993
----------------- ------------
(Unaudited)
Assets
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ - $ 45,652 $ 12,592
Accounts receivable, less allowance
of $3,034 ($1,720 at March 31, 1993
and $3,054 at December 31, 1993) 207,575 173,588 178,767
Inventories at lower of cost, principally
LIFO, or market; replacement cost would
be higher by approximately $54,763
($50,817 at March 31, 1993 and $54,470 at
December 31, 1993)
Finished goods 128,955 115,617 119,014
Finished parts and subassemblies 24,166 20,266 24,261
Work in process 33,749 24,494 22,516
Raw materials 35,432 19,715 27,908
-------- -------- --------
222,302 180,092 193,699
Other current assets 8,191 7,653 8,488
-------- -------- --------
Total Current Assets 438,068 406,985 393,546
Property, Plant and Equipment:
Cost 480,594 378,811 421,708
Less accumulated depreciation 227,415 211,782 222,314
-------- -------- --------
253,179 167,029 199,394
Other Assets 60,158 27,555 38,142
Cost in excess of net assets acquired
less accumulated amortization of
$12,657 ($10,362 at March 31, 1993
and $11,812 at December 31, 1993) 120,772 63,918 113,083
-------- -------- --------
$872,177 $665,487 $744,165
======== ======== ========
<FN>
See Notes to Consolidated Financial Statements
-3-
/TABLE
<PAGE>
<PAGE>
<TABLE>
Part I - Financial Information
<CAPTION>
March 31, December 31,
1994 1993 1993
----------------- ------------
(Unaudited)
Liabilities and Shareholders' Equity
<S> <C> <C> <C>
Current Liabilities:
Current maturities of long-term debt $ 2,424 $ 11,814 $ 3,852
Loans payable 49,085 40,692 108,048
Accounts payable 91,565 78,142 73,385
Accrued liabilities 99,684 70,536 81,107
U.S and foreign taxes on income 10,601 4,104 5,291
-------- -------- --------
Total Current Liabilities 253,359 205,288 271,683
Long-Term Debt 244,764 108,295 105,557
Deferred Income Taxes 12,293 3,829 6,138
Reserves and Other Liabilities 19,393 22,707 20,631
Accrued Postretirement Benefits 43,068 39,634 42,570
Accrued Pension Liability 6,761 7,710 6,767
Preferred Shares, Par Value $.01
Authorized - 5,000 Shares - - -
Common Shareholders' Equity:
Common shares 29,911 29,988 29,863
Capital surplus 10,871 15,512 10,160
Retained earnings 265,704 242,184 263,666
Currency translation adjustment (13,947) (9,660) (12,870)
-------- -------- --------
Total Common Shareholders' Equity 292,539 278,024 290,819
-------- -------- --------
$872,177 $665,487 $744,165
======== ======== ========
<FN>
See Notes to Consolidated Financial Statements
-4-
</TABLE>
<PAGE>
<PAGE>
<TABLE>
Part I - Financial Information (Cont'd.)
Crane Co. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
-----------------------
1994 1993
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 7,409 $ 10,766
Depreciation 6,978 6,052
Amortization 1,330 1,244
Deferred taxes 153 (381)
Cash used for operating working capital (3,650) (5,795)
Other (172) (438)
-------- --------
Total from operating activities 12,048 11,448
-------- --------
Cash flows from investing activities:
Capital expenditures (5,769) (10,002)
Payments for acquisitions, net of cash acquired (68,734) (6,973)
Proceeds from disposition of capital assets 280 274
-------- --------
Total used for investing activities (74,223) (16,701)
-------- --------
Cash flows from financing activities:
Equity:
Dividends paid (5,608) (5,624)
Reacquisition of shares (42) -
Stock options exercised 785 270
-------- --------
Net Equity (4,865) (5,354)
-------- --------
Debt:
Proceeds from issuance of long-term debt 14,460 -
Repayments of long-term debt (1,053) (307)
Net increase in short-term debt 41,024 7,460
-------- --------
Net Debt 54,431 7,153
-------- --------
Total from financing activities 49,566 1,799
Effect of exchange rate on cash and cash equivalents 17 2
-------- --------
Decrease in cash and cash equivalents (12,592) (3,452)
Cash and cash equivalents at beginning of period 12,592 49,104
-------- --------
Cash and cash equivalents at end of period $ - $ 45,652
======== ========
See Notes to Consolidated Financial Statements
-5-
</TABLE>
<PAGE>
<PAGE>
<TABLE>
Part I - Financial Information (Cont'd.)
Crane Co. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
-----------------------
1994 1993
-------- --------
<S> <C> <C>
Detail of Cash (Used for) Provided From Operating
Working Capital:
Accounts receivable $ (7,693) $(11,351)
Inventories (8,152) (15,227)
Other current assets 452 187
Accounts payable 9,232 18,455
Accrued liabilities (538) (769)
U.S. and foreign taxes on income 3,049 2,910
-------- --------
Total $ (3,650) $ (5,795)
======== ========
Supplemental disclosure of cash flow information:
Interest paid $ 5,831 $ 6,480
Income taxes paid 1,952 3,389
See Notes to Consolidated Financial Statements
-6-
/TABLE
<PAGE>
<PAGE>
Part I - Financial Information (Cont'd.)
Notes to Consolidated Financial Statements
------------------------------------------
<TABLE>
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:
<CAPTION>
Three Months Ended March 31,
------------------------------
1994 1993
-------- --------
<S> <C> <C>
(In thousands)
Net Sales:
Engineered Industrial Products $179,906 $171,457
Wholesale Distribution 154,803 144,137
Intersegment Elimination (3,004) (3,281)
-------- --------
Total $331,705 $312,313
======== ========
Operating Profit:
Engineered Industrial Products $ 16,704 $ 19,889
Wholesale Distribution 1,232 1,809
Corporate (3,109) (2,984)
-------- --------
Total $ 14,827 $ 18,714
======== ========
</TABLE>
<TABLE>
3. Proforma financial information assuming the acquisition of ELDEC Corporation
had taken place as of the beginning of the three month periods ended March 31,
1994 and March 31, 1993 is provided below:
The allocation of the purchase price is preliminary and a final valuation will have
an effect on this allocation, although a final valuation is not expected to have
a material effect on the financial statements.
<CAPTION>
Three Months Ended
----------------------
3/31/94 3/31/93
------- -------
<S> <C> <C>
(In thousands)
Net Sales $359,068 $339,243
Operating Profit 14,398 19,544
Net Income 5,863 10,140
Income Per Share .20 .34
-7-
</TABLE>
<PAGE>
<TABLE>
Part I - Financial Information (Cont'd.)
<CAPTION>
Notes to Consolidated Financial Statements
------------------------------------------
4. Supplemental schedule on non-cash financing activities:
The Company entered into a three year revolving credit agreement in April 1994
resulting in a reclass of $100,000 of short-term debt to long-term.
Crane Co. purchased all of the Capital Stock of ELDEC Corporation in March 1994
for $77,300. The fair values of ELDEC's assets and liabilities at the date of
acquisition are presented as follows.
<S> <C>
(In thousands)
Fair value of assets acquired $138,951
Cash paid for capital stock (77,300)
--------
Assumption of liabilities $ 61,651
</TABLE>
-8-
<PAGE>
<PAGE>
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, 1994 and 1993
------------------------------------------
Results From Operations:
First Quarter of 1994 Compared to First Quarter of 1993:
Sales for the first quarter were up 6 percent to $332 million
and operating profit was down 21 percent to $14.8 million.
Including the effect of a higher tax rate, net income was $7.4
million, or 25 cents per share, down from last year's first
quarter earnings of $10.8 million, or 36 cents per share. The
company anticipates that the quarterly comparisons for the
balance of the year will be more favorable.
The increase in sales was primarily due to the Filon and Burks
acquisitions, plus increased quarterly sales at Huttig, which
together more than offset sales declines at Hydro-Aire and
National Vendors. The resultant operating profit reduction at
these latter two businesses more than offset increased operating
profit contributions from those Crane businesses with higher
sales.
Engineered Industrial Products, Crane's largest business
segment, had sales of $179.9 million for the first quarter of
1994, 5 percent above last year's quarter but operating profit
of $16.7 million was 16 percent lower than the $19.9 million
reported in the first quarter last year. Kemlite's results
remained strong in the quarter, continuing to benefit from the
Filon acquisition, with earnings more than double the prior
year's level on an 87 percent increase in shipments. Sales to
Kemlite's principal markets, truck trailer transportation,
recreational vehicle and building products, showed significant
improvement. Crane Pumps & Systems was significantly
strengthened by the acquisition of Burks Pumps, with sales up
$14.7 million from the prior year. Crane Pumps now markets ten
different pump lines to niche markets, serving the processing,
industrial, municipal and construction industries. In addition,
Crane Valves had improved sales and earnings worldwide compared
to the prior year.
These improvements were more than offset by lower results at
Hydro-Aire and National Vendors. Hydro-Aire's sales were 33
percent below the 1993 level as it adjusted its shipment levels
to changes in production schedules at the major airframe
manufacturers. National Vendors' quarterly sales declined $6.9
million due entirely to the absence of a post office commodity
vendor contract this year.
-9-
<PAGE>
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, 1994 and 1993
------------------------------------------
Results From Operations:
The Wholesale Distribution segment sales increased 7 percent,
but operating profit was $1.2 million, compared to $1.8 million
in the same period last year. Though Huttig increased sales for
the quarter, profits were down slightly due to unfavorable
commodity millwork prices and bad weather. Profits at Canada
Supply were down due to lower sales volume.
Miscellaneous income increased $.2 million from last year due
to gains on the sale of capital assets.
Interest expense increased $.8 million due to higher
borrowing levels and lower bank interest income.
The effective tax rate increased to 40.5% compared to 36.8% in
1993. The increase was due to the 1% rate increase from 34% to
35% the lack of foreign tax carrybacks at Crane's German
operation, and a favorable adjustment in 1993 due to the
adoption of SFAS 109, Accounting for Income Taxes.
The Company adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," in January 1994 which had no
material effect on earnings and financial position.
-10-
<PAGE>
<PAGE>
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, 1994 and 1993
------------------------------------------
Liquidity and Capital Resources:
During the first quarter of 1994 the company generated $12.0
million of cash from operating activities, compared to $11.4
million for the same period of 1993. The company's financial
position remained strong, with net debt at 50 percent of
capital. The current ratio decreased to 1.7 from 2.0 with
working capital totaling $185 million and $202 million in 1994
and 1993, respectively. Interest coverage decreased to 4.7,
compared to 7.0 at March 31, 1993. At March 31, 1994 the company
had unused credit lines of $187 million.
In the first quarter the company purchased ELDEC Corporation
for a cost of $94 million. ELDEC designs and manufactures a
variety of electronic systems and components for the aerospace
market, with the dominant market position in proximity switches
and fuel flowmeters.
On April 27th Crane successfully completed its all-cash tender
offer for Mark Controls Corporation at a total cost of
approximately $142,500,000, including debt assumed and
transaction costs. Mark Controls is a manufacturer of fluid
control products and will be a positive addition to our global
valve business.
Concurrent with the acquisition of Mark Controls Corporation,
Crane entered into a $200,000,000 three year revolving credit
agreement with certain banks and Morgan Guaranty Trust Company
of New York as agent.
-11-
<PAGE>
<PAGE>
Part II - Other Information
Item 4. Submission of Matters to a vote of Security Holders
--------------------------------------------------
A.) The Annual Meeting of shareholders was held on May 9, 1994.
B.) The following three Directors were reelected to serve for
three years until the Annual Meeting of 1997.
Mr. R.S. Evans
Vote for -- 25,754,837
Vote withheld -- 310,563
Mr. Dorsey R. Gardner
Vote for -- 24,581,249
Vote withheld -- 1,484,151
Mr. Dwight C. Minton
Vote for -- 25,754,960
Vote withheld -- 310,440
The following Directors continued their term of office:
Mr. Mone Anathan, III
Mr. E. Thayer Bigelow, Jr.
Mr. Richard S. Forte`
Mr. Charles J. Queenan, Jr.
Mr. Arthur A. Seeligson, Jr.
Mr. Boris Yavitz
C.) The shareholders approved the selection of Deloitte & Touche
as independent auditors for the company for 1994.
Vote for -- 25,907,319
Vote against -- 82,228
Abstained -- 75,853
Brokers Non-Vote -- 0
D.) Approval of the Company's EVA Incentive Compensation Plan for
Executive Officers.
Vote for -- 23,577,240
Vote against -- 2,081,984
Abstained -- 406,176
Brokers Non Vote -- 0
-12-
<PAGE>
Part II -Other Information
Item 5. Other Information
-----------------
In March D.S. Smith was elected Vice President, Finance and
Chief Financial Officer of the company. Mr. Smith replaced
J.P. Cronin who had resigned.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
A. Reports on form 8-K
1.) 8-K filed March 31, 1994 regarding acquisition of ELDEC
Corporation.
2.) 8-KA filed May 2, 1994 regarding acquisition of ELDEC
Corporation.
1. Incorporating by reference audited 3/31/93 ELDEC
Corporation financial statements.
2. Including (a) Nine months ended 12/26/93 and 12/27/92
unaudited income statement and 12/26/93
unaudited balance sheet for ELDEC
Corporation.
(b) Crane Co. Pro-Forma financial
information relative to ELDEC
Corporation.
3.) 8-K filed May 12, 1994 regarding acquisition of Mark Controls
Corporation and execution of a $200,000,000 revolving credit
agreement.
4.) 8-KA filed May 12, 1994 regarding acquisition of Mark
Controls Corporation.
1. Incorporating by reference audited 12/31/93 Mark
Controls Corporation financial statements.
2. Including Pro-Forma financial information relative to
Mark Controls and ELDEC Corporation.
B. Exhibits
2. Plan of Acquisition
-------------------
With respect to the acquisition of ELDEC Corporation, there
is incorporated by reference herein:
1.) Agreement for merger and reorganization dated as of
February 11, 1994 among Crane Acquisition Corp. and
ELDEC Corporation contained in Exhibit C (1) to
Schedule 14D-1 filed February 17, 1994.
2.) Stock purchase agreement made and entered into as of
February 11, 1994 among the individual shareholders
and trusts described in Schedule A thereto, Crane Co.
and Crane Acquisition Corp. contained in Exhibit C (2)
to Schedule 14D-1 filed February 17, 1994.
4. Instruments defining the rights of security holders
---------------------------------------------------
including indentures
--------------------
There is incorporated by reference herein a
$200,000,000 credit agreement dated as of April 26,
1994 and Amendment no. 1 thereto dated as of May 11,
1994 contained in Exhibit A to Form 8-K filed May 12,
1994.
-13-
<PAGE>
11. Computation of earnings per share for the quarters ended
March 31, 1994 and 1993.
-14-
<PAGE>
<PAGE>
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 16, 1994 By /s/ D. S. SMITH
------------ -------------------------
D. S. SMITH
Vice President-Finance
and Chief Financial Officer
Date May 16, 1994 By /s/ M. L. RAITHEL
------------ ------------------------
M. L. RAITHEL
Controller
-15-
<PAGE>
<TABLE>
Crane Co. and Subsidiaries
Exhibit 11 to Form 10-Q
Computation of Net Income per Common Share
Three Months ended March 31, 1994 and 1993
(In Thousands Except Per Share Amounts)
<CAPTION>
Three Months Ended
March 31,
------------------
1994 1993
-------- -------
<S> <C> <C>
Primary Net Income Per Share:
Net income available to shareholders $ 7,409 $10,766
======= =======
Average primary shares outstanding 30,051 30,193
Net income $ .25 $ .36
======= =======
Fully Diluted - Income Per Share:
Net income $ 7,409 $10,766
Add back interest, net of tax,
assuming the conversion of
debentures 6 7
------- -------
Net income available to shareholders,
assuming the conversion of debentures $ 7,415 $10,773
======= =======
Average primary shares outstanding 30,051 30,193
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 171 210
------- -------
Average fully diluted shares outstanding 30,222 30,403
======= =======
Net income $ .25 $ .35
======= =======
</TABLE>
-16-
<PAGE>
