CRANE CO /DE/ - FORM 8-K - EX-99.2 - EXHIBIT99.2

Attached files

file	filename
8-K - 8-K - CRANE CO /DE/	a8-kxq32013asbestosander.htm
EX-99.1 - EXHIBIT99.1 - CRANE CO /DE/	exhibit991-pressreleasexq3.htm

CRANE CO.

Income Statement Data

(in thousands, except per share data)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013				2012
Net Sales:
Aerospace & Electronics	$	169,771		$	171,368		$	507,046			$	525,127
Engineered Materials	61,956			56,956			179,933				169,603
Merchandising Systems	83,636			92,489			257,927				277,741
Fluid Handling	322,152			325,168			968,926				976,809
Total Net Sales	$	637,515		$	645,981		$	1,913,832			$	1,949,280
Operating Profit (Loss) from Continuing Operations:
Aerospace & Electronics	$	38,105		$	39,833		$	115,257			$	116,834
Engineered Materials	10,792			7,226			28,538				21,178
Merchandising Systems	7,869			9,496			26,902				23,324
Fluid Handling	46,594			45,736			146,688				119,433
Corporate	(14,351		)	(15,707		)	(52,630		)		(46,511		)
Total Operating Profit from Continuing Operations	89,009			86,584			264,755				234,258


Interest Income	337			443			1,488				1,292
Interest Expense	(6,688		)	(6,618		)	(20,651		)		(20,114		)
Miscellaneous- Net	(456		)	(6		)	(170		)		(704		)
Income from Continuing Operations Before Income Taxes	82,202			80,403			245,422				214,732
Provision for Income Taxes	24,719			23,997			74,583				64,515
Income from Continuing Operations	57,483			56,406			170,839				150,217

Profit from Discontinued Operations attributable to common shareholders	—			—			—			3,777	3,777
Gain from Sales of Discontinued Operations attributable to common shareholders	—			1,385			—			29,445	29,445

Profit from Discontinued Operations attributable to common shareholders, net of tax	—			—			—				2,456
Gain from Sales of Discontinued Operations attributable to common shareholders, net of tax	—			901			—				19,177
Gain / Profit from Discontinued Operations, net of tax	—			901			—				21,633

Net income before allocation to noncontrolling interests	57,483			57,307			170,839				171,850

Less: Noncontrolling interest in subsidiaries' earnings	352			182			1,043				501

Net income attributable to common shareholders	$	57,131		$	57,125		$	169,796			$	171,349



Share Data:
Earnings per share from Continuing Operations	$	0.97	$	0.97	$	2.89	$	2.56
Earnings per share from Discontinued Operations	—		0.02		—		0.37
Earnings per Diluted Share^(a)	$	0.97	$	0.99	$	2.89	$	2.93

Average Diluted Shares Outstanding	59,035		57,873		58,737		58,435
Average Basic Shares Outstanding	58,093		57,123		57,814		57,565
Supplemental Data:
Cost of Sales	$	421,317	$	424,954	$	1,257,161	$	1,290,671
Selling, General & Administrative	127,189		133,089		391,916		408,250
Repositioning Charges	—		1,354		—		16,101
Depreciation and Amortization *	12,435		13,174		38,159		42,122
Stock-Based Compensation Expense	5,913		4,402		16,299		12,860



*	Amount included within cost of sales and selling, general & administrative costs.



^(a)	Earnings per share amounts may not add due to rounding

CRANE CO.

Condensed Balance Sheets

(in thousands)



	September 30, 2013		December 31, 2012
ASSETS
Current Assets
Cash and Cash Equivalents	$	403,404	$	423,947
Accounts Receivable, net	382,348		333,330
Current Insurance Receivable - Asbestos	33,722		33,722
Inventories, net	361,026		352,725
Other Current Assets	39,698		36,797
Total Current Assets	1,220,198		1,180,521

Property, Plant and Equipment, net	259,551		268,283
Long-Term Insurance Receivable - Asbestos	147,953		171,752
Other Assets	419,169		455,530
Goodwill	811,274		813,792

Total Assets	$	2,858,145	$	2,889,878

LIABILITIES AND EQUITY
Current Liabilities
Notes Payable and Current Maturities of Long-Term Debt	$	124,672	$	1,123
Accounts Payable	175,731		182,731
Current Asbestos Liability	91,670		91,670
Accrued Liabilities	189,781		220,678
Income Taxes	10,874		15,686
Total Current Liabilities	592,728		511,888

Long-Term Debt	199,220		399,092
Long-Term Deferred Tax Liability	36,145		36,853
Long-Term Asbestos Liability	632,081		704,195
Other Liabilities	288,495		310,474

Total Equity	1,109,476		927,376

Total Liabilities and Equity	$	2,858,145	$	2,889,878

CRANE CO.

Condensed Statements of Cash Flows

(in thousands)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Operating Activities:
Net income attributable to common shareholders	$	57,131		$	57,125		$	169,796		$	171,349
Noncontrolling interest in subsidiaries' earnings	352			182			1,043			501
Net income before allocations to noncontrolling interests	57,483			57,307			170,839			171,850
Gain on divestiture	—			(1,385		)	—			(29,445		)
Restructuring - Non Cash	—			16			—			2,777
Depreciation and amortization	12,435			13,174			38,159			43,122
Stock-based compensation expense	5,913			4,402			16,299			12,860
Defined benefit plans and postretirement expense	1,180			4,796			3,539			14,769
Deferred income taxes	8,477			8,674			18,124			24,417
Cash provided by (used for) operating working capital	25,277			11,292			(88,808		)	(79,322		)
Defined benefit plans and postretirement contributions	(2,664		)	(1,642		)	(13,185		)	(4,463		)
Environmental payments, net of reimbursements	(5,727		)	(3,953		)	(11,202		)	(11,256		)
Other	(2,546		)	(8,696		)	5,548			(6,005		)
Subtotal	99,828			83,985			139,313			139,304
Asbestos related payments, net of insurance recoveries	(19,374		)	(20,834		)	(48,314		)	(60,051		)
Total provided by operating activities	80,454			63,151			90,999			79,253
Investing Activities:
Capital expenditures	(6,977		)	(6,164		)	(19,016		)	(19,944		)
Proceeds from disposition of capital assets	85			396			372			2,254
Payment for acquisition, net of cash acquired	—			—			—			—
Proceeds from divestiture	—			934			—			53,599
Total used for investing activities	(6,892		)	(4,834		)	(18,644		)	35,909
Financing Activities:
Dividends paid	(17,440		)	(15,923		)	(49,778		)	(45,998		)
Reacquisition of shares on open market	—			(20,000		)	—			(49,991		)
Stock options exercised - net of shares reacquired	4,041			—			24,083			8,426
Excess tax benefit from stock-based compensation	865			(45		)	5,787			3,233
Change in short-term debt	110,292			—			123,197			—
Repayment of long-term debt	(200,000		)	—			(200,000		)	—
Total used for financing activities	(102,242		)	(35,968		)	(96,711		)	(84,330		)

Effect of exchange rate on cash and cash equivalents	11,166			5,888			3,813			4,615
Increase (decrease) in cash and cash equivalents	(17,514		)	28,237			(20,543		)	35,447
Cash and cash equivalents at beginning of period	420,918			252,299			423,947			245,089
Cash and cash equivalents at end of period	$	403,404		$	280,536		$	403,404		$	280,536

CRANE CO.

Order Backlog

(in thousands)



	September 30, 2013		June 30, 2013		March 31, 2013		December 31, 2012		September 30, 2012
Aerospace & Electronics	$	381,830	$	403,400	$	397,518	$	378,152	$	392,862
Engineered Materials	12,572		14,122		16,138		12,689		11,357
Merchandising Systems	23,901		25,641		21,399		14,686		19,957
Fluid Handling	355,192		349,545		365,231		343,370		348,120
Total Backlog	$	773,495	$	792,708	$	800,286	$	748,897	$	772,296

CRANE CO.

Non-GAAP Financial Measures

(in thousands)



	Three Months Ended September 30,						Nine Months Ended September 30,						Percent Change September 30, 2013		Percent Change September 30, 2013
	2013			2012			2013			2012			Three Months		Nine Months
INCOME ITEMS
Net Sales	$	637,515		$	645,981		$	1,913,832		$	1,949,280		(1.3	)%	(1.8	)%
Operating Profit from Continuing Operations	89,009			86,584			264,755			234,258			2.8	%	13.0	%
Percentage of Sales	14.0		%	13.4		%	13.8		%	12.0		%
Special Items impacting Operating Profit from Continuing Operations:
Non-deductible Acquisition Transaction Costs (a)	2,854						12,595
Repositioning Charges (b)				1,354						16,101
Operating Profit from Continuing Operations before Special Items	$	91,863		$	87,938		$	277,350		$	250,359		4.5	%	10.8	%

Percentage of Sales	14.4		%	13.6		%	14.5		%	12.8		%

Net Income Attributable to Common Shareholders	$	57,131		$	57,125		$	169,796		$	171,349
Per Share	$	0.97		$	0.99		$	2.89		$	2.93		(2.0	)%	(1.4	)%

Special Items impacting Net Income Attributable to Common Shareholders:
Non-deductible Acquisition Transaction Costs (a)	2,854						12,595
Per Share	0.05						0.21

Repositioning Charges - Net of Tax (b)				948						12,828
Per Share				0.02						0.22

Withholding taxes related to acquisition funding (c)	1,240						1,700
Per Share	0.02						0.03

Gain on Divestitures - Net of Tax (d)				(900		)				(19,176		)
Per Share				(0.02		)				(0.33		)

Net Income Attributable To Common Shareholders Before Special Items	$	61,225		$	57,173		$	184,091		$	165,001		7.1	%	11.6	%
Per Diluted Share	$	1.04		$	0.99		$	3.13		$	2.82		5.0	%	11.0	%



	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Adjusted EBITDA Schedule (Non-GAAP)
Net Income Attributable To Common Shareholders Before Special Items from Continuing Operations	$	61,225	$	57,173	$	184,091	$	165,001
Interest, Net	6,351		6,175		19,163		18,822
Provision for Income Taxes	23,479		23,997		72,883		64,515
Depreciation and Amortization	12,435		13,174		38,159		42,122
Stock Based Compensation	5,913		4,402		16,299		12,860
Adjusted EBITDA from Continuing Operations (Non-GAAP)	$	109,403	$	104,921	$	330,595	$	303,320	4.3	%	9.0	%

(a) During the three and nine months ended September 30, 2013, the Company recorded non-deductible transaction costs associated with the potential acquisition of MEI.

(b) The Company incurred repositioning charges in the second quarter of 2012, associated with productivity actions. The charges included severance and impairment costs related to the shutdown of certain facilities, the transfer of certain manufacturing operations, and staff reduction actions.

(c) In the three and nine months ended September 30, 2013, the Company incurred withholding taxes related to the cash marshalling activities supporting the potential acquisition of MEI.

(d) In June 2012, the Company divested of a business within the Fluid Handling segment and a business within the Controls segment. The associated gains were included in the “Gain from Sale of Discontinued Operations attributable to common shareholders, net of tax" section on the accompanying Income Statement Data.



	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
CASH FLOW ITEMS
Cash Used for Operating Activities
before Asbestos - Related Payments	$	99,828		$	83,985		$	139,313		$	139,304
Asbestos Related Payments, Net of Insurance Recoveries	(19,374		)	(20,834		)	(48,314		)	(60,051		)
Cash Used for Operating Activities	80,454			63,151			90,999			79,253
Less: Capital Expenditures	(6,977		)	(6,164		)	(19,016		)	(19,944		)
Free Cash Flow	$	73,477		$	56,987		$	71,983		$	59,309



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.
The Company's definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net income before special items plus an add-back for net interest, provision for income taxes, depreciation, amortization and stock-based compensation. Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because Adjusted EBITDA provides additional information with respect to the Company’s operating 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.

CRANE CO /DE/ - FORM 8-K - EX-99.2 - EXHIBIT99.2 - October 28, 2013

Attached files

CRANE CO /DE/ Reports