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
<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 Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
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
</TABLE>
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<PAGE>
Part I - Financial Information
Item 1. Financial Statements
<TABLE>
Crane Co. and Subsidiaries
Consolidated Statements of Comprehensive Income
(In Thousands)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
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
</TABLE>
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<PAGE>
<TABLE>
Part I - Financial Information
Item 1. Financial Statements
Crane Co. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
September 30, December 31,
1998 1997 1997
---- ---- ----
Assets
<S> <C> <C> <C>
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
</TABLE>
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<PAGE>
<TABLE>
Part I - Financial Information
Item 1. Financial Statements
Crane Co. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
September 30, December 31,
1998 1997 1997
---- ---- ----
Liabilities and Shareholders Equity
<S> <C> <C> <C>
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
</TABLE>
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<PAGE>
<TABLE>
Part I - Financial Information (Cont'd.)
Item 1. Financial Statements
Crane Co. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
<CAPTION>
September 30,
1998 1997
---- ----
<S> <C> <C>
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
</TABLE>
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<PAGE>
Part I - Financial Information (Cont'd.)
Notes to Consolidated Financial Statements (Unaudited)
<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.
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:
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
(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
======== ======== ========= =========
</TABLE>
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<PAGE>
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:
<TABLE>
<CAPTION>
Accumulated
Other
Comprehensive
Income
<S> <C>
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)
=========
</TABLE>
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<PAGE>
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.
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<PAGE>
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.
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<PAGE>
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.
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<PAGE>
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-
<PAGE>
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.
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<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 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
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<PAGE>
<TABLE>
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)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
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
======= ======== ======= =======
</TABLE>
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> Sep-30-1998
<CASH> 16,448
<SECURITIES> 0
<RECEIVABLES> 331,793
<ALLOWANCES> (8,112)
<INVENTORY> 337,234
<CURRENT-ASSETS> 721,682
<PP&E> 640,398
<DEPRECIATION> 334,002
<TOTAL-ASSETS> 1,501,739
<CURRENT-LIABILITIES> 365,911
<BONDS> 403,670
<COMMON> 68,625
0
0
<OTHER-SE> 539,758
<TOTAL-LIABILITY-AND-EQUITY> 1,501,739
<SALES> 595,438
<TOTAL-REVENUES> 595,438
<CGS> 426,946
<TOTAL-COSTS> 532,201
<OTHER-EXPENSES> (14)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,705
<INCOME-PRETAX> 56,518
<INCOME-TAX> 19,743
<INCOME-CONTINUING> 36,775
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,775
<EPS-PRIMARY> .54
<EPS-DILUTED> .53
</TABLE>
