CRANE CO /DE/ - FORM 8-K - EX-99.2 - EXHIBIT 99.2

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8-K - 8-K - CRANE CO /DE/	a8-kxq42013asbestosander.htm
EX-99.1 - EXHIBIT 99.1 - CRANE CO /DE/	exhibit991-pressreleasexq4.htm

Exhibit 99.2

CRANE CO.

Income Statement Data

(in thousands, except per share data)



	Three Months Ended December 31,						Twelve Months Ended December 31,
	2013			2012			2013			2012
Net Sales:
Aerospace & Electronics	$	186,737		$	176,081		$	693,783		$	701,208
Engineered Materials	52,365			46,900			232,298			216,503
Merchandising Systems	122,649			94,160			380,576			371,901
Fluid Handling	319,698			312,647			1,288,624			1,289,456
Total Net Sales	$	681,449		$	629,788		$	2,595,281		$	2,579,068
Operating Profit (Loss) from Continuing Operations:
Aerospace & Electronics	$	44,719		$	39,181		$	159,976		$	156,015
Engineered Materials	5,809			3,344			34,347			24,522
Merchandising Systems	7,920			10,447			34,822			33,771
Fluid Handling	48,191			41,547			194,879			160,980
Corporate	(23,518		)	(18,336		)	(76,148		)	(64,847		)
Total Operating Profit from Continuing Operations	83,121			76,183			347,876			310,441

Interest Income	379			587			1,867			1,879
Interest Expense	(5,809		)	(6,717		)	(26,460		)	(26,831		)
Miscellaneous- Net	2,903			(181		)	2,733			(884		)
Income from Continuing Operations Before Income Taxes	80,594			69,872			326,016			284,605
Provision for Income Taxes	30,482			23,901			105,065			88,416
Income from Continuing Operations	50,112			45,971			220,951			196,189

Profit from Discontinued Operations attributable to common shareholders	—			—			—			3,777
Gain from Sales of Discontinued Operations attributable to common shareholders	—			—			—			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	—			—			—			19,176
Gain / Profit from Discontinued Operations, net of tax	—			—			—			21,632

Net income before allocation to noncontrolling interests	50,112			45,971			220,951			217,821

Less: Noncontrolling interest in subsidiaries' earnings	406			327			1,449			828

Net income attributable to common shareholders	$	49,706		$	45,644		$	219,502		$	216,993

Share Data:
Earnings per share from Continuing Operations	$	0.84		$	0.79		$	3.73		$	3.35
Earnings per share from Discontinued Operations	—			—			—			0.37
Earnings per Diluted Share (a)	$	0.84		$	0.79		$	3.73		$	3.72



Average Diluted Shares Outstanding	59,156		57,783		58,839		58,293
Average Basic Shares Outstanding	58,161		57,008		57,896		57,443

Supplemental Data:
Cost of Sales	$	454,598	$	417,569	$	1,711,759	$	1,708,240
Selling, General & Administrative	143,730		131,505		535,646		539,755
Repositioning Charges	—		4,531		—		20,632
Depreciation and Amortization *	16,678		14,141		54,837		57,263
Stock-Based Compensation Expense	6,492		4,459		22,791		17,319



*	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)



	December 31, 2013		December 31, 2012
ASSETS
Current Assets
Cash and Cash Equivalents	$	270,643	$	423,947
Accounts Receivable, net	437,541		333,330
Current Insurance Receivable - Asbestos	22,783		33,722
Inventories, net	368,886		352,725
Other Current Assets	30,295		36,797
Total Current Assets	1,130,148		1,180,521

Property, Plant and Equipment, net	305,055		268,283
Long-Term Insurance Receivable - Asbestos	148,222		171,752
Other Assets	692,345		455,530
Goodwill	1,279,689		813,792

Total Assets	$	3,555,459	$	2,889,878

LIABILITIES AND EQUITY
Current Liabilities
Notes Payable and Current Maturities of Long-Term Debt	$	125,826	$	1,123
Accounts Payable	229,829		182,731
Current Asbestos Liability	88,038		91,670
Accrued Liabilities	223,172		220,678
Income Taxes	2,062		15,686
Total Current Liabilities	668,927		511,888

Long-Term Debt	744,693		399,092
Long-Term Deferred Tax Liability	76,347		36,853
Long-Term Asbestos Liability	610,530		704,195
Other Liabilities	238,289		310,474

Total Equity	1,216,673		927,376

Total Liabilities and Equity	$	3,555,459	$	2,889,878

CRANE CO.

Condensed Statements of Cash Flows

(in thousands)



	Three Months Ended December 31,						Twelve Months Ended December 31,
	2013			2012			2013			2012
Operating Activities:
Net income attributable to common shareholders	$	49,706		$	45,644		$	219,502		$	216,993
Noncontrolling interest in subsidiaries' earnings	406			327			1,449			828
Net income before allocations to noncontrolling interests	50,112			45,971			220,951			217,821
Gain on divestiture	(2,727		)	—			(2,727		)	(29,445		)
Restructuring - Non Cash	—			1,078			—			3,855
Depreciation and amortization	16,678			14,141			54,837			57,263
Stock-based compensation expense	6,492			4,459			22,791			17,319
Defined benefit plans and postretirement expense	1,240			5,321			4,779			20,090
Deferred income taxes	37,556			30,583			55,680			55,000
Cash provided by (used for) operating working capital	66,850			81,146			(21,958		)	1,824
Defined benefit plans and postretirement contributions	(2,744		)	(1,041		)	(15,929		)	(5,504		)
Environmental payments, net of reimbursements	(4,201		)	(2,115		)	(15,403		)	(13,371		)
Other	(6,311		)	(6,134		)	(763		)	(12,139		)
Subtotal	162,945			173,409			302,258			312,713
Asbestos related payments, net of insurance recoveries	(14,513		)	(17,906		)	(62,827		)	(77,957		)
Total provided by operating activities	148,432			155,503			239,431			234,756

Investing Activities:
Capital expenditures	(10,444		)	(9,364		)	(29,460		)	(29,308		)
Proceeds from disposition of capital assets	83			4,184			455			6,438
Payment for acquisition, net of cash acquired	(801,781		)	—			(801,781		)	—
Proceeds from divestiture	6,836			480			6,836			54,079
Total (used for) provided by investing activities	(805,306		)	(4,700		)	(823,950		)	31,209

Financing Activities:
Dividends paid	(17,494		)	(15,976		)	(67,272		)	(61,974		)
Reacquisition of shares on open market	—			—			—			(49,991		)
Stock options exercised - net of shares reacquired	839			4,630			24,922			13,056
Excess tax benefit from stock-based compensation	566			370			6,353			3,603
Change in short-term debt	1,482			—			124,679			—
New Debt	543,994			—			543,994			—
Repayment of long-term debt	—			—			(200,000		)	—
Total provided by (used for) financing activities	529,387			(10,976		)	432,676			(95,306		)

Effect of exchange rate on cash and cash equivalents	(5,274		)	3,584			(1,461		)	8,199
Increase (decrease) in cash and cash equivalents	(132,761		)	143,411			(153,304		)	178,858
Cash and cash equivalents at beginning of period	403,404			280,536			423,947			245,089
Cash and cash equivalents at end of period	$	270,643		$	423,947		$	270,643		$	423,947

CRANE CO.

Order Backlog

(in thousands)



	December 31, 2013			September 30, 2013		June 30, 2013		March 31, 2013		December 31, 2012
Aerospace & Electronics	$	361,323		$	381,830	$	403,400	$	397,518	$	378,152
Engineered Materials	14,661			12,572		14,122		16,138		12,689
Merchandising Systems	51,888		*	23,901		25,641		21,399		14,686
Fluid Handling	333,860			355,192		349,545		365,231		343,370
Total Backlog	$	761,732		$	773,495	$	792,708	$	800,286	$	748,897



* Includes 31.9 million of backlog pertaining to the MEI/Conlux business acquired in December 2013.

CRANE CO.

Non-GAAP Financial Measures

(in thousands)



	Three Months Ended December 31,						Twelve Months Ended December 31,						Percent Change December 31, 2013		Percent Change December 31, 2013
	2013			2012			2013			2012			Three Months		Twelve Months
INCOME ITEMS
Net Sales	$	681,449		$	629,788		$	2,595,281		$	2,579,068		8.2	%	0.6	%

Operating Profit from Continuing Operations	83,121			76,183			347,876			310,441			9.1	%	12.1	%
Percentage of Sales	12.2		%	12.1		%	13.4		%	12.0		%

Special Items impacting Operating Profit from Continuing Operations:
Acquisition Transaction Costs (a)	10,170			3,874			22,765			3,874
Acquisition related inventory and backlog amortization (b)	4,654						4,654
Repositioning Charges (c)				4,531						20,632
Operating Profit from Continuing Operations before Special Items	$	97,945		$	84,588		$	375,295		$	334,947		15.8	%	12.0	%
Percentage of Sales	14.4		%	13.4		%	14.5		%	13.0		%

Net Income Attributable to Common Shareholders	$	49,706		$	45,644		$	219,502		$	216,993
Per Share	$	0.84		$	0.79		$	3.73		$	3.72		6.4	%	0.2	%

Special Items impacting Net Income Attributable to Common Shareholders:
Acquisition Transaction Costs - Net of Tax (a)	9,837			3,874			22,432			$	3,874
Per Share	$	0.17		$	0.07		$	0.38		0.07
Acquisition related inventory and backlog amortization - Net of Tax (b)	2,839						2,839
Per Share	0.05						0.05
Repositioning Charges - Net of Tax (c)				3,896						16,724
Per Share				$	0.07					$	0.29

Withholding taxes related to acquisition funding (d)	1,192						2,892
Per Share	$	0.02					$	0.05
Acquisition remedy related gain on sale of product line - Net of Tax (e)	(2,006		)				(2,006		)
Per Share	(0.03		)				$	(0.03	)
Gain on Divestitures - Net of Tax (f)										$	(19,176	)
Per Share										$	(0.33	)
Net Income Attributable To Common Shareholders Before Special Items	$	61,568		$	53,414		$	245,659		$	218,416		15.3	%	12.5	%
Per Share	$	1.04		$	0.92		$	4.18		$	3.75		12.6	%	11.4	%

Profit from Discontinued Operations attributable to common shareholders, net of tax	—			—			—			(2,456		)
Per Share										$	(0.04	)
Net Income Attributable To Common Shareholders Before Special Items from Continuing Operations	$	61,568		$	53,414		$	245,659		$	215,960
Per Share	$	1.04		$	0.92		$	4.18		$	3.70		12.6	%	12.7	%



	Three Months Ended December 31,				Twelve Months Ended December 31,
	2013		2012		2013		2012
Adjusted EBITDA Schedule (Non-GAAP)
Net Income Attributable To Common Shareholders Before Special Items from Continuing Operations	$	61,568	$	53,414	$	245,659	$	218,416
Interest, Net	5,430		6,130		24,593		24,952
Provision for Income Taxes	30,717		23,901		103,600		88,416
Depreciation and Amortization	16,678		14,141		54,837		57,263
Stock Based Compensation	6,492		4,459		22,791		17,319
Adjusted EBITDA from Continuing Operations (Non-GAAP)	$	120,885	$	102,045	$	451,480	$	406,366	18.5	%	11.1	%

(a) During the three and twelve months ended December 31, 2013, the Company recorded transaction costs associated with the potential acquisition of MEI/Conlux.

(b) During the three months ended December 31, 2013, the Company recorded inventory step-up and backlog amortization relating to the acquisition of MEI/Conlux.

(c) The Company incurred repositioning charges in the three and twelve months ended December 31, 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.

(d) In the three and twelve months ended December 31, 2013, the Company incurred withholding taxes related to cash marshalling activities supporting the acquisition of MEI/Conlux

(e) In December 2013, the Company divested a product line within the Merchandising Systems segment pertaining to the execution of remedies associated with the MEI/Conlux acquisition.

(f) In June 2012, the Company divested 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.



	2014 Full Year Guidance
2014 Earnings Per Share Guidance	Low		High

Earnings Per Share - GAAP basis	$	4.28	$	4.48
Acquisition integration costs, inventory step-up and backlog amortization - Net of Tax (g)	0.22		0.22
Anticipated facility repositioning actions, net of real estate divestiture gains - Net of Tax (h)	0.05		0.05
Earnings Per Share - Non-GAAP basis	$	4.55	$	4.75

(g) In connection with the MEI/Conlux acquisition, the Company expects to incur transaction and integration related costs, and inventory step up and backlog amortization charges in a range of $18 million to $21 million. The $0.22 represents the estimated Earnings Per Share impact for the mid-point of the $18 million to $21 million range.
(h) In 2014, the Company expects to incur costs associated with facility repositioning actions related to the consolidation of certain smaller manufacturing sites and expects to record gains from the sale of certain Company owned real estate.



	Three Months Ended December 31,						Twelve Months Ended December 31,
	2013			2012			2013			2012
CASH FLOW ITEMS
Cash Provided from Operating Activities
before Asbestos - Related Payments	$	162,945		$	173,409		$	302,258		$	312,713
Asbestos Related Payments, Net of Insurance Recoveries	(14,513		)	(17,906		)	(62,827		)	(77,957		)
Cash Provided from Operating Activities	148,432			155,503			239,431			234,756
Less: Capital Expenditures	(10,444		)	(9,364		)	(29,460		)	(29,308		)
Free Cash Flow	$	137,988		$	146,139		$	209,971		$	205,448



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.

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CRANE CO /DE/ Reports

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