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, 1997
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, 1997:
Common stock, $1.00 Par Value - 45,792,910 shares
<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
March 31,
1997 1996
<S> <C> <C>
Net Sales $ 467,333 $ 436,463
Operating Costs and Expenses:
Cost of sales 338,160 319,982
Selling, general and
administrative 74,814 70,358
Depreciation & amortization 13,364 12,150
426,338 402,490
Operating Profit 40,995 33,973
Other Income (Expense):
Interest income 692 533
Interest expense (5,957) (5,862)
Miscellaneous - net 16 836
(5,249) (4,493)
Income Before Taxes 35,746 29,480
Provision for Income Taxes 13,101 11,272
Net Income $ 22,645 $ 18,208
Net Income Per Share $ .49 $ .40
Average Shares Outstanding 46,337 45,780
Dividends Per Share $ .125 $ .125
<FN>
See Notes to Consolidated Financial Statements
</TABLE>
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<PAGE>
<TABLE>
Part I - Financial Information
Crane Co. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Per Share Amounts)
<CAPTION>
March 31, December 31,
1997 1996 1996
(Unaudited)
Assets
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 3,578 $ 4,748 $
11,579
Accounts receivable 250,001
275,892 253,729
Inventories
Finished goods 121,503 119,859
124,490
Finished parts and
subassemblies 37,265 38,423
35,507
Work in process 46,374 34,863
43,894
Raw materials 65,489 54,780
63,383
270,631 247,925
267,274
Other current assets 8,666 7,333
7,432
Total Current Assets 558,767 510,007
540,014
Property, Plant and Equipment:
Cost 562,406 513,772
547,566
Less accumulated depreciation 299,907 273,652
289,219
262,499 240,120
258,347
Other Assets 29,100 27,073
29,879
Intangibles, 54,447 58,481
55,862
Cost in excess of net assets
acquired 216,915 169,041
204,753
$ 1,121,728 $1,004,722 $ 1,088,8
55
<FN>
See Notes to Consolidated Financial Statements
-3-
</TABLE>
<PAGE>
<TABLE>
Part I - Financial Information
<CAPTION>
March 31, December 31,
1997 1996 1996
(Unaudited)
Liabilities and Shareholders' Equity
<S> <C> <C> <C>
Current Liabilities:
Current maturities of long-term debt $ 1,067 $ 772 $$ 1,251
Loans payable 28,800 17,799 23,937
Accounts payable 117,123 103,042 105,082
Accrued liabilities 109,634 106,680 116,488
U.S. and foreign taxes on income 18,999 19,788 7,095
Total Current Liabilities 275,623 248,081 253,853
Long-Term Debt 266,875 265,238 267,795
Deferred Income Taxes 29,515 28,456 29,774
Other Liabilities 27,207 22,081 25,126
Accrued Postretirement Benefits 42,959 43,090 43,155
Accrued Pension Liability 6,210 8,377 6,483
Preferred Shares, Par Value $.01
Authorized - 5,000 Shares - - -
Common Shareholders' Equity:
Common shares 45,565 45,306 45,660
Capital surplus 26,577 13,482 29,756
Retained earnings 412,742 341,287 394,621
Currency translation adjustment (11,545) (10,676) (7,368)
Total Common Shareholders' Equity 473,339 389,399 462,669
$ 1,121,728 $ 1,004,722 $ 1,088,855
<FN>
See Notes to Consolidated Financial Statements
-4-
</TABLE>
<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,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 22,645 $ 18,208
Depreciation 9,085 8,636
Amortization 4,279 3,514
Deferred taxes (776) (288)
Cash used for operating working capital (5,516) (9,197)
Other 1,662 (90)
Total from operating activities 31,379 20,783
Cash flows from investing activities:
Capital expenditures (10,192) (6,864)
Payments for acquisitions (19,820) -
Proceeds from divestitures - 1,555
Proceeds from disposition of capital assets 159 990
Total used for investing activities (29,853) (4,319)
Cash flows from financing activities:
Equity:
Dividends paid (5,699) (5,662)
Reacquisition of shares (4,007) (1,521)
Stock options exercised 803 3,281
Net Equity (8,903) (3,902)
Debt:
Proceeds from issuance of long-term debt - -
Repayments of long-term debt (1,016) (17,688)
Net increase in short-term debt 707 4,432
Net Debt (309) (13,256)
Total(used for)provided from financing activities (9,212) (17,158)
Effect of exchange rate on cash and cash equivalents (315) (34)
Decrease in cash and cash equivalents (8,001) (728)
Cash and cash equivalents at beginning of period 11,579 5,476
Cash and cash equivalents at end of period $ 3,578 $ 4,748
Detail of Cash (Used for) Provided From
Operating Working Capital:
Accounts receivable $ (18,179) $ (10,313)
Inventories (2,533) (3,553)
Other current assets (246) (596)
Accounts payable 12,087 6,690
Accrued liabilities (8,731) (8,503)
U.S. and foreign taxes on income 12,086 7,078
Total $ (5,516) $ (9,197)
Supplemental disclosure of cash flow information:
Interest paid $ 4,966 $ 5,187
Income taxes paid 955 4,038
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.
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, 1996.
2. Sales and operating profit by segment are as follows:
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
(In thousands)
Net Sales:
Fluid Handling $ 88,115 $ 92,230
Aerospace 81,894 58,321
Engineered Materials 56,372 50,738
Crane Controls 31,753 33,783
Merchandising Systems 42,466 44,072
Wholesale Distribution 166,901 159,420
Other 2,954 2,580
Intersegment Elimination (3,122) (4,681)
Total $ 467,333 $ 436,463
Operating Profit (Loss):
Fluid Handling $ 6,089 $ 5,038
Aerospace 19,798 15,283
Engineered Materials 7,114 5,240
Crane Controls 1,929 3,477
Merchandising Systems 7,741 5,866
Wholesale Distribution 3,383 3,560
Other 316 51
Corporate (5,383) (4,572)
Intersegment Elimination 8 30
Total $ 40,995 $ 33,973
-6-
</TABLE>
<PAGE>
Part I - Financial Information (Cont'd.)
Notes to Consolidated Financial Statements
3. Restatements
Share and per share data for the period ending March 31, 1996
has been restated to reflect the three-for-two stock split
effected on December 12, 1996.
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 $51,280,000 at
March 31, 1997, $51,934,000 at March 31, 1996, and $49,260,000
at December 31, 1996.
5. Earning Per Share
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share,
(SFAS128). The company plans to adopt SFAS128 for both interim
and annual periods after December 15, 1997, as required by the
statement. Pro forma amounts as if the statement had been
adopted for the first quarter of 1997 are as follows:
Three Months Ended
March 31,
1997 1996
Basic Earnings Per Share $ .50 $ .40
Fully Diluted Earnings Per Share $ .49 $ .40
-7-
<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, 1997 and 1996
[CAPTION]
Results From Operations:
First Quarter of 1997 Compared to First Quarter of 1996:
Net income for the quarter ended March 31, 1997 set a first quarter
record of $22.6 million or $.49 per share, a 24 percent increase
from the $18.2 million or $.40 per share reported for the same
period last year. Sales in the quarter were $467.3 million, up 7
percent from last year, and operating profit increased 21 percent to
$41 million.
Fluid Handling sales declined 4.5 percent as lower margin project
business was down in the first quarter of 1997 compared to the prior
year level. Operating profit increased 21 percent as profit margins
improved to 6.9 percent of sales as compared to 5.5 percent in the
prior year. The improvement in profit was attributable to both the
valves and pumps operations. North American valves margins were up
significantly, with the bronze valve and quarter turn valve
businesses greatly improved. The pumps business benefited from
higher sales, and lower costs associated with manufacturing
efficiencies and improved product sourcing.
In early April, the company acquired the Nuclear Valve Business of
ITI MOVATS, a leading supplier of valve diagnostic equipment and
valve services to the commercial nuclear power industry. MOVATS
will be integrated with the company's Nuclear Valve Division which
together will provide a complete package of nuclear valves,
diagnostics and valve services to the nuclear power industry.
Aerospace sales increased 40 percent in the quarter with Interpoint
and Grenson, acquired in October 1996, contributing nearly two-
thirds of the increase. Excluding the acquisitions, sales improved
14 percent with all businesses reporting higher sales because of
continued high aircraft production levels. Operating profit
improved 30 percent because of the increased sales level and the
acquisitions. Profit margins declined to 24.2 percent of sales from
26.2 percent last year due, in large part, to the inclusion of
Interpoint. Margins at Hydro-Aire and Lear Romec exceeded the prior
year while margins at ELDEC declined because of higher research and
development costs for new aerospace programs.
Engineered Materials sales and operating profit improved 11 percent
and 36 percent, respectively, compared to the first quarter last
year. All operations experienced higher shipments with significant
contributions from Kemlite and Resistoflex. Kemlite sales improved
nearly 11 percent on strong demand in the recreational vehicle
market. Resistoflex continued to benefit from project wins in North
America and Asia. For the group as a whole, profit margins improved
to 12.6 percent of sales as compared to 10.3 percent.
-8-
<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, 1997 and 1996
In mid March, the company purchased the transportation product
business of Sequentia, Incorporated. This business produces
fiberglass reinforced plastic panels for the truck body, trailer and
container OEM markets, and it will be integrated into Kemlite.
Crane Controls sales declined 6 percent while operating profit
declined 45 percent from the 1996 first quarter. All businesses
reported lower profit margins. In particular, margins at Ferguson
and Ferguson Europe were substantially lower as a result of weak
sales.
Merchandising Systems sales declined 4 percent but operating profit
jumped 32 percent. National Vendors continued to benefit from the
plant expansion and modernization program completed last year and
operating margins improved, despite an 8 percent decline in sales
mainly due to weak national account activity. NRI margins more than
doubled because of greater sales volume and significant improvements
in operating efficiencies. Margins for the group in total were 18.2
percent of sales compared with 13.3 percent last year.
In mid March, the company acquired Polyvend, Inc., a manufacturer of
snack and food vending machines. Polyvend's product line will be
integrated with National Vendors' manufacturing plant in St. Louis.
The acquisition greatly expands National Vendors' distribution
network.
Wholesale Distribution sales increased 5 percent. Huttig's
distribution business was responsible for most of the sales gain,
benefiting from strong housing activity in the West, Northeast and
Florida. Operating profit declined 5 percent as higher raw material
costs put pressure on margins at Huttig's manufacturing business.
In addition, reduced building activity in Ontario negatively
impacted results at Crane Supply.
Net interest expense in the quarter was in line with the prior year.
The effective tax rate decreased to 36.7 percent in the first
quarter of 1997 compared to 38.2 percent in 1996.
Liquidity and Capital Resources:
During the three months of 1997 the company generated $31.4 million
of cash from operating activities, compared to $20.8 million in
1996. In addition, the company paid $19.8 million in cash for
Polyvend and Sequentia, and repurchased 143,500 shares of Crane Co.
stock in the open market at a cost of $4 million.
Net debt totaled 38.2 percent of capital at March 31, 1997. The
current ratio was 2.0 with working capital totaling $283.1 million
at March 31, 1997 compared to $262.0 million at March 31, 1996. The
company had unused credit lines of $444 million at March 31, 1997.
-9-
<PAGE>
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, 1996.
Item 4. Submission of Matters to a vote of Security Holders
A) The Annual Meeting of shareholders was held on April 21,
1997.
B)The following three Directors were reelected to serve for three
years until the Annual Meeting of 2000.
Mr. R.S. Evans
Vote for - 39,587,622
Vote withheld - 551,782
Mr. Dorsey R. Gardner
Vote for - 39,598,144
Vote withheld - 541,260
Mr. Dwight C. Minton
Vote for - 39,604,255
Vote withheld - 535,149
C)The shareholders approved the selection of Deloitte & Touche
LLP. as independent auditors for the company for 1997.
Vote for - 39,927,183
Vote against - 94,573
Abstained - 117,648
Item 6. Exhibits and Reports on Form 8-K
11.Computation of earnings per share for the
quarters March 31, 1997 and 1996.
27.Article 5 of Regulation S-X Financial Data Schedule
for the first quarter.
-10-
<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 5, 1997 By /s/ D.S. Smith
D.S. SMITH
Vice President-Finance
and Chief Financial Officer
Date May 5, 1997 By /s/ M.L. Raithel
M.L. RAITHEL
Controller
-11-
<PAGE>
<TABLE>
Crane Co. and Subsidiaries
Exhibit 11 to Form 10-Q
Computation of Net Income per Common Share
Three Months Ended March 31, 1997 and 1996
(In Thousands, Except Per Share Amounts)
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Primary Net Income Per Share:
Net income available
to shareholders $ 22,645 $ 18,208
Average primary shares outstanding 46,337 45,780
Net Income $ .49 $ .40
Fully Diluted - Income Per Share:
Net income $ 22,645 $ 18,208
Add back interest, net of tax,
assuming the conversion of
debentures - -
Net income available to
shareholders, assuming the
conversion of debentures $ 22,645 $ 18,208
Average primary shares outstanding 46,337 45,780
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 - -
Average fully diluted shares
outstanding 46,337 45,780
Net income $ .49 $ .40
</TABLE>
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> Mar-31-1997
<CASH> 3,578
<SECURITIES> 0
<RECEIVABLES> 275,892
<ALLOWANCES> 0
<INVENTORY> 270,631
<CURRENT-ASSETS> 558,767
<PP&E> 562,406
<DEPRECIATION> 299,907
<TOTAL-ASSETS> 1,121,728
<CURRENT-LIABILITIES> 275,623
<BONDS> 266,875
<COMMON> 45,565
0
0
<OTHER-SE> 427,774
<TOTAL-LIABILITY-AND-EQUITY> 1,121,728
<SALES> 467,333
<TOTAL-REVENUES> 467,333
<CGS> 348,727
<TOTAL-COSTS> 426,338
<OTHER-EXPENSES> 16
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,265
<INCOME-PRETAX> 35,746
<INCOME-TAX> 13,101
<INCOME-CONTINUING> 22,645
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,645
<EPS-PRIMARY> .49
<EPS-DILUTED> .49
</TABLE>
