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, 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 October 31, 1994:
Common stock, $1.00 Par Value - 30,102,220 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>
Periods Ended September 30,
Three Months Nine Months
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net Sales $451,108 $337,924$1,211,542 $987,930
Operating Costs and Expenses:
Cost of sales 339,806 263,867 924,329 765,126
Selling, general and administrative 65,508 44,613 177,218 134,589
Depreciation and amortization 13,313 7,294 33,763 21,751
418,627 315,774 1,135,310 921,466
Operating Profit 32,481 22,150 76,232 66,464
Other Income (Deductions):
Interest income 467 1,232 2,918 3,718
Interest expense (7,623) (2,872) (16,972) (8,508)
Miscellaneous - net 626 563 1,355 938
(6,530) (1,077) (12,699) (3,852)
Income Before Taxes 25,951 21,073 63,533 62,612
Provision for Income Taxes 9,949 8,311 24,456 23,358
Net Income $ 16,002 $ 12,762 $ 39,077 $ 39,254
Net Income Per Share $.53 $.42 $1.30 $1.30
Average Shares Outstanding 30,219 30,294 30,129 30,233
Dividends Per Share $ .1875 $ .1875 $ .5625 $ .5625
<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)
(Unaudited)
<CAPTION>
September 30, December 31,
1994 1993 1993
Assets
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 2,470 $ 44,365 $ 12,592
Accounts receivable, less allowance
of $4,221 ($1,901 at Sept. 30, 1993
and $3,054 at December 31, 1993) 245,778 179,810 178,767
Inventories at lower of cost, principally
LIFO, or market; replacement cost would
be higher by approximately $56,250
($53,626 at Sept. 30, 1993 and $54,470 at
December 31, 1993)
Finished goods 123,367 110,329 119,014
Finished parts and subassemblies 27,308 16,705 24,261
Work in process 41,588 23,564 22,516
Raw materials 52,051 19,654 27,908
244,314 170,252 193,699
Other current assets 13,648 9,635 8,488
Total Current Assets 506,210 404,062 393,546
Property, Plant and Equipment:
Cost 524,297 387,318 421,708
Less accumulated depreciation 246,166 219,083 222,314
278,131 168,235 199,394
Other Assets 24,962 23,710 31,563
Intangibles, less accumulated amortization
of $6,833 ($5,671 at Sept. 30, 1993 and
$5,885 at December 31, 1993.) 66,179 4,570 6,579
Cost in excess of net assets acquired
less accumulated amortization of
$15,621 ($11,302 at Sept. 30, 1993
and $11,812 at December 31, 1993) 171,818 60,899 113,083
$1,047,300 $661,476 $744,165
<FN>
See Notes to Consolidated Financial Statements
-3-
/TABLE
<PAGE>
<PAGE>
<TABLE>
Part I - Financial Information
<CAPTION>
September 30, December 31,
1994 1993 1993
Liabilities and Shareholders' Equity
<S> <C> <C> <C>
Current Liabilities:
Current maturities of long-term debt $ 1,453 $ 6,039 $ 3,852
Loans payable 28,816 41,740 108,048
Accounts payable 100,231 71,131 73,385
Accrued liabilities 110,109 72,918 81,107
U.S and foreign taxes on income 5,402 52 5,291
Total Current Liabilities 246,011 191,880 271,683
Long-Term Debt 386,302 105,492 105,557
Deferred Income Taxes 22,929 6,097 6,138
Reserves and Other Liabilities 23,217 19,701 20,631
Accrued Postretirement Benefits 43,162 40,214 42,570
Accrued Pension Liability 6,991 7,701 6,767
Preferred Shares, Par Value $.01
Authorized - 5,000 Shares - - -
Common Shareholders' Equity:
Common shares 30,102 30,031 29,863
Capital surplus 14,081 13,992 10,160
Retained earnings 284,478 258,993 236,666
Currency translation adjustment (9,973) (12,625) (12,870)
Total Common Shareholders' Equity 318,688 290,391 290,819
$1,047,300 $661,476 $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>
Nine Months Ended
September 30,
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $ 39,077 $ 39,254
Depreciation 26,075 17,891
Amortization 7,687 3,860
Deferred taxes 204 (14)
Cash used for operating
working capital (12,845) (19,249)
Other (4,185) (754)
Total from operating activities 56,013 40,988
Cash flows from investing activities:
Capital expenditures (21,915) (24,260)
Payments for acquisitions (161,424) (10,086)
Proceeds from divestitures 2,580 6,029
Proceeds from disposition of capital assets 3,540 961
Proceeds from the sale of equity investments - -
Total used for investing activities (177,219) (27,356)
Cash flows from financing activities:
Equity:
Dividends paid (16,884) (16,882)
Reacquisition of shares (42) (6,150)
Stock options exercised 1,041 3,293
Net Equity (15,885) (19,739)
Debt:
Proceeds from issuance of long-term debt 283,179 -
Repayments of long-term debt (75,164) (8,815)
Net (decrease)increase in short-term debt (81,133) 10,222
Net Debt 126,882 1,407
Total from financing activities (110,997) (18,332)
Effect of exchange rate on cash and cash equivalents 87 (39)
Decrease in cash and cash equivalents (10,122) (4,739)
Cash and cash equivalents at beginning of period 12,592 49,104
Cash and cash equivalents at end of period $ 2,470 $ 44,365
Detail of Cash (Used for) Provided From Operating
Working Capital:
Accounts receivable $(21,075) $(23,226)
Inventories 8,777 (5,133)
Other current assets (4,607) (1,885)
Accounts payable 9,815 11,616
Accrued liabilities (2,528) (2,000)
U.S. and foreign taxes on income (3,227) 1,379
Total $(12,845) $(19,249)
Supplemental disclosure of cash flow information:
Interest paid $ 17,039 $ 16,183
Income taxes paid 24,269 26,930
See Notes to Consolidated Financial Statements
-5-
</TABLE>
<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. Significant changes in the balance sheet since December 31, 1993 are from
the Mark Controls and ELDEC acquisitions in 1994.
3. Sales and operating profit by segment are as follows:
<CAPTION>
Periods Ended September 30,
Three Months Nine Months
1994 1993 1994 1993
<S> <C> <C> <C> <C>
(In thousands)
Net Sales:
Fluid Handling $ 81,921 $ 47,719 $226,698 $149,059
Aerospace 46,413 24,378 113,936 79,415
Engineered Materials 50,975 37,925 153,543 119,803
Crane Controls 27,642 8,323 59,039 26,843
Merchandising Systems 42,883 39,824 119,482 131,677
Wholesale Distribution 203,193 180,440 543,937 486,812
Other 2,478 4,364 9,763 10,388
Intersegment Elimination (4,397) (5,049) (14,856) (16,067)
Total $451,108 $337,924 $1,211,542 $987,930
Operating Profit (Loss):
Fluid Handling $ 5,866 $ 1,566 $ 13,750 $ 5,512
Aerospace 9,522 6,950 20,500 24,005
Engineered Materials 6,111 4,018 18,534 10,197
Crane Controls 1,697 147 3,759 695
Merchandising Systems 5,275 4,948 16,274 19,840
Wholesale Distribution 6,835 6,803 12,686 14,124
Other (427) 695 (528) 1,182
Corporate (2,517) (3,114) (8,759) (9,268)
Intersegment Elimination 119 137 16 177
Total $ 32,481 $ 22,150 $ 76,232 $ 66,464
4. Proforma financial information assuming the acquisitions of ELDEC and Mark
Controls Corporation had taken place as of the beginning of the nine month
periods ended September 30, 1994 and September 30, 1993 is provided below:
<CAPTION>
Nine Months Ended
9/30/94 9/30/93
<S> <C> <C>
(in thousands)
Net Sales $1,271,632 $1,153,547
Operating Profit 78,311 72,932
Net Income 38,612 35,850
Income Per Share 1.28 1.19
-6-
</TABLE>
<PAGE>
<TABLE>
Part I - Financial Information (Cont'd.)
Notes to Consolidated Financial Statements
5. Crane Co. (The company) is still in the process of evaluating the
allocation of purchase price to certain assets and contingent
liabilities for the following acquisitions as of 9/30/94 because
all the information necessary for these valuations is not available.
<CAPTION>
Acquisition
Date
Burks Pumps 12/29/93
ELDEC 03/18/94
Mark Controls 04/27/94
The company plans to complete the allocation within a year and
believes any adjustment to its preliminary allocations of
purchase price will be immaterial to the financial statements.
6. Supplemental schedule on non-cash financing activities:
Crane Co. purchased all of the capital stock of ELDEC
Corporation in March 1994 for $77,300 and Mark Controls
Corporation in April 1994 for $96,000. The fair value of
assets and liabilities at the date of acquisition are
presented as follows:
Mark
ELDEC Controls
<S> <C> <C>
(in thousands)
Fair value of assets acquired $138,951 $170,288
Cash paid for capital stock (77,300) (96,900)
Assumption of liabilities $ 61,651 $ 73,388
-7-
</TABLE>
<PAGE>
<PAGE>
Part I - Financial Information (Cont'd)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Three and Nine Months Ended September 30, 1994 and 1993
[CAPTION]
Results From Operations:
Third Quarter of 1994 Compared to Third Quarter of 1993:
Net income for the quarter ended September 30, 1994 was $16.0
million or $.53 per share, up 25 percent from the $12.8 million
and $.42 per share reported in the same period last year.
Sales in the third quarter were $451.1 million, up 34 percent
from $337.9 million last year, and operating profit increased
47 percent to $32.5 million.
Sales and operating profit in the Fluid Handling segment were
up sharply for the third quarter compared to prior year due to
the Burks Pumps and Mark Controls acquisitions, and because of
improved sales and operating performance in the North American
and United Kingdom valve businesses.
Aerospace segment sales were up for the three month period due
to the March 1994 acquisition of ELDEC which more than offset
sales declines at Hydro-Aire and Lear Romec. Similarly,
operating profit increased in the quarter as ELDEC results more
than offset declines at Hydro-Aire and Lear Romec.
Higher sales and operating profit in the Engineered Materials
business for the three month period are largely due to results at
Kemlite. The October 1993 acquisition of Filon, and a very strong
market in transportation and recreational vehicles have both
contributed to Kemlite's performance. Crane Plumbing contributed
marginally to the favorable sales and operating profit comparisons
for the third quarter. Cortec and Resistoflex results were lower in
the three month period.
Crane Controls sales and operating profit improvement in the three
month period compared to the prior year is due to the inclusion of
the controls products businesses acquired as part of Mark Controls
in April 1994. Ferguson's operating was comparable to the prior
year.
Merchandising Systems operating profit in the third quarter was up
7% on an 8% increase in sales, with most of the improvement coming
at National Vendors. Domestic shipments are stronger, as new product
introductions continue to increase market share, but European market
conditions remain weak.
-8-
<PAGE>
Part I - Financial Information (Cont'd)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Three and Nine Months Ended September 30, 1994 and 1993
[CAPTION]
Results From Operations:
Wholesale Distribution sales were up for the three month period due
to acquisitions and improvement in the markets served by Huttig Sash
and Door. Operating profit was flat as a poor performance at Huttig
manufacturing operations and a few Huttig branches as well as
unfavorable price trends for commodity millwork products offset the
higher sales volume. Crane Supply sales and operating profit have
increased slightly from the prior year.
Interest expense increased $5.5 million due to debt financed
acquisitions.
The effective tax rate decreased to 38.3% in the third quarter
of 1994 compared to 39.4% in 1993 due to a $.4 million tax
refund received in the third quarter of 1994.
-9-
<PAGE>
<PAGE>
Part I - Financial Information (Cont'd)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Three and Nine Months Ended September 30, 1994 and 1993
[CAPTION]
Results From Operations:
Nine Months Ended September 30, 1994 Compared to Nine Months
Ended September 30, 1993:
For the nine month period, net income this year of $39.1
million or $1.30 per share was virtually identical to last
year on a sales increase of 23 percent to $1.2 billion. For
nine months, operating profit was up 15 percent to $76.2
million.
Fluid Handling operating profit increased $8.2 million for the
nine month period on sales of $226.7 million compared to 1993
due to the Burks Pumps and Mark Controls acquisitions. The
integration of Deming and Burks into Crane Pumps and Systems
is proceeding according to plan, and actions to improve sales
and operating performance at the combined Crane and Mark
Controls valve operations are showing positive results.
Aerospace segment sales were up 44 percent to $113.9 million
in the nine month period compared to 1993 and were due to the
acquisition of ELDEC. Operating profit was down 15 percent to
$20.5 million in the nine month period. The ELDEC results,
which were included for only six months this year, were not
sufficient to offset the effect of the unfavorable comparisons
at the other units. The ELDEC acquisition continues to meet
Crane's expectations.
Engineered Materials operating profit increased by 82 percent to
$18.5 million in the nine months compared to 1993 on sales of
$153.5 million an increase of 28 percent. The improved performance
was due mainly to the Filon acquisition and a very strong
transportation and recreational vehicle market.
Crane Controls reported operating profit of $3.8 million compared
to .7 million in 1993 on sales of $59 million during the nine
month period due mainly to the Mark Controls acquisition.
Merchandising Systems sales were $119.5 million down $12.2 million
from last year. Operating profit of $16.2 million decreased 18%
from 1993 due to the absence of business with the Post Office this
year at National Vendors, and the impact of a weak European
economy on both National Vendors and NRI.
-10-
<PAGE>
Part I - Financial Information (Cont'd)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Three and Nine Months Ended September 30, 1994 and 1993
[CAPTION]
Results From Operations:
Wholesale Distribution reported earnings of $12.7 million,
compared to $14.1 million in 1993. All three operating units
Huttig, Crane Supply and Valve Systems had lower results. Huttig
was down the most due to poor results at its manufacturing
operations, a few problem branches and unfavorable price trends
for commodity millwork products.
Net interest expense increased $9.3 million in the first nine
months of 1994 due to debt financed acquisitions partially
offset by interest on a refund of taxes paid in prior periods.
The effective tax rate increased to 38.5% in 1994 from 37.3%
in 1993. The increase was the result of an increase in non-tax
deductible goodwill on acquisitions and higher foreign losses
with no tax benefit.
-11-
<PAGE>
Part I - Financial Information (Cont'd)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Three and Nine Months Ended September 30, 1994 and 1993
[CAPTION]
Liquidity and Capital Resources:
During the first nine months of 1994 the company generated
$56.0 million of cash from operating activities, compared to
$41.0 million in 1993. Net debt totaled 57 percent of capital
at September 30, 1994. The current ratio of 2.1 remained the
same as last year with working capital totaling $260 million
and $212 million in 1994 and 1993, respectively. Interest
coverage as a result of recent acquisitions declined to 4.7,
compared to 8.4 at September 30, 1994. The company had unused
credit lines of $322 million at September 30, 1994.
The $281 million increase in long term debt from December 31, 1993
is explained below and was used primarily to finance acquisitions.
[CAPTION]
Principal Rate
[S] [C] [C]
Notes Due 1999 150,000,000 7.25%
Domestic Revolving
Credit Agreement 100,000,000 4.68%
Miscellaneous Foreign
Revolving Credit
Agreements 31,000,000 6.75%-6.94%
-12-
<PAGE>
<PAGE>
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
11. Computation of earnings per share for the quarters
and nine months ended September 30, 1994 and 1993.
27. Article 5 of Regulation S-X Financial Data Schedule
for the third quarter.
-13-
<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 November 11, 1994 By D.S. SMITH
D.S. SMITH
Vice President-Finance
and Chief Financial Officer
Date November 11, 1994 By M.L. RAITHEL
M.L. RAITHEL
Controller
-14-
<PAGE>
<PAGE>
<TABLE>
Crane Co. and Subsidiaries
Exhibit A to Form 10-Q
Computation of Net Income per Common Share
Three Months and Nine Months ended September 30, 1994 and 1993
(In Thousands, Except Per Share Amounts)
<CAPTION>
Periods Ended September 30,
Three Months Nine Months
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Primary Net Income Per Share:
Net income available
to shareholders $16,002 $12,762 $39,077 $39,254
Average primary shares outstanding 30,219 30,294 30,129 30,233
Net income $.53 $.42 $1.30 $1.30
Fully Diluted - Income Per Share:
Net income $16,002 $12,762 $39,077 $39,254
Add back interest, net of tax,
assuming the conversion of
debentures - 6 12 20
Net income available to
shareholders, assuming the
conversion of debentures $16,002 $12,768 $39,089 $39,274
Average primary shares outstanding 30,219 30,294 30,129 30,233
Add:
Adjustment for further dilutive
effect of stock options (ending
market price higher than average
market price used in primary
shares calculation) - 12 - 11
Shares reserved for conversion
of debentures 178 117 191
Average fully diluted shares
outstanding 30,219 30,484 30,246 30,435
Net income $.53 $.42 $1.29 $1.29
</TABLE>
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 2,470
<SECURITIES> 49
<RECEIVABLES> 245,778
<ALLOWANCES> 0
<INVENTORY> 244,314
<CURRENT-ASSETS> 506,210
<PP&E> 524,297
<DEPRECIATION> 246,166
<TOTAL-ASSETS> 1,047,300
<CURRENT-LIABILITIES> 246,011
<BONDS> 0
<COMMON> 30,102
0
0
<OTHER-SE> 288,586
<TOTAL-LIABILITY-AND-EQUITY> 1,047,300
<SALES> 1,211,542
<TOTAL-REVENUES> 1,211,542
<CGS> 924,329
<TOTAL-COSTS> 1,135,310
<OTHER-EXPENSES> (1,355)
<LOSS-PROVISION> 1,326
<INTEREST-EXPENSE> 14,054
<INCOME-PRETAX> 63,533
<INCOME-TAX> 24,456
<INCOME-CONTINUING> 39,077
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,077
<EPS-PRIMARY> 1.30
<EPS-DILUTED> 1.29
</TABLE>
