Crane Co. Reports Fourth Quarter Results; Posts Record EPS In 2012; Provides Updated 2013 EPS Guidance Of $4.10 - $4.30

Updated 2013 Guidance

The Company revised its preliminary 2013 guidance which was provided on December 20, 2012. The updated guidance reflects lower pension expense associated with the curtailment of the Company’s U.S. defined benefit pension plan, as well as a slightly reduced outlook for 2013 core sales growth of between 1% and 3% (excluding acquisition and foreign exchange impacts). Earnings per share in 2013 are now estimated to be in a range of $4.10 to $4.30, representing an increase of 11%-16% over 2012 earnings per diluted share of $3.70 (before Special Items and on a continuing operations basis, which excludes profits from discontinued operations of $0.05 per share in 2012). The 2013 guidance does not include potential impacts from the pending acquisition of MEI. Excluding inventory step-up and one-time transaction and integration costs, the Company expects MEI to be accretive to earnings within the first year of acquisition by approximately $.25 per share, including $.05 in synergies. The Company expects 2013 free cash flow (cash provided by operating activities less capital spending) to be in the range of $190 - $220 million, including the effect of asbestos related cash flows.

Segment-specific sales and operating profit guidance will be provided at the Company’s Investor Day conference on February 27, 2013.

Please see the Non-GAAP Financial Measures table attached to this press release for supporting details. Additional information with respect to the Company’s asbestos liability and related accounting provisions and cash requirements is set forth in the Current Report on Form 8-K filed with a copy of this press release.

Conference Call

Crane Co. has scheduled a conference call to discuss the fourth quarter financial results on Tuesday, January 29, 2013 at 10:00 A.M. (Eastern). All interested parties may listen to a live webcast of the call at http://www.craneco.com. An archived webcast will also be available to replay this conference call directly from the Company’s website.

Crane Co. Investor Day

The Company will hold its annual Investor Day conference on Wednesday, February 27, in New York City from 8:30 am to noon and will be available on the web at www.craneco.com.

Crane Co. is a diversified manufacturer of highly engineered industrial products. Founded in 1855, Crane provides products and solutions to customers in the aerospace, electronics, hydrocarbon processing, petrochemical, chemical, power generation, automated merchandising, transportation and other markets. The Company has five business segments: Aerospace & Electronics, Engineered Materials, Merchandising Systems, Fluid Handling, and Controls. Crane has approximately 11,000 employees in North America, South America, Europe, Asia and Australia. Crane Co. is traded on the New York Stock Exchange (NYSE:CR). For more information, visit www.craneco.com.

This press release 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 press release, 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, 2011 and subsequent reports filed with the Securities and Exchange Commission.

CRANE CO.
Income Statement Data
(in thousands, except per share data)
			Three Months Ended								Twelve Months Ended
			December 31,								December 31,
			2012				2011				2012				2011
Net Sales:
Aerospace & Electronics		$	176,081			$	171,973			$	701,208			$	677,663
Engineered Materials			46,900				45,037				216,503				220,071
Merchandising Systems			94,160				86,204				371,901				373,907
Fluid Handling			291,884				294,386				1,195,501				1,140,315
Controls			20,763				22,204				93,955				88,413
Total Net Sales		$	629,788			$	619,804			$	2,579,068			$	2,500,369
Operating Profit (Loss) from Continuing Operations:
Aerospace & Electronics		$	39,181			$	38,785			$	156,015			$	145,624
Engineered Materials			3,344				4,562				24,522				29,754
Merchandising Systems			10,447				7,705				33,771				30,337
Fluid Handling			39,247				38,329				148,167				149,803
Controls			2,300				2,336				12,813				11,228
Corporate			(18,336	)			(13,748	)			(64,847	)			(58,201	)
Asbestos Provision			-				(241,647	)			-				(241,647	)
Environmental Provision			-				(30,327	)			-				(30,327	)
Total Operating Profit (Loss) from Continuing Operations			76,183				(194,005	)			310,441				36,571
Interest Income			587				514				1,879				1,635
Interest Expense			(6,717	)			(6,730	)			(26,831	)			(26,255	)
Miscellaneous - Net			(180	)			(452	)			(884	)			2,810*
Income (Loss) from Continuing Operations Before Income Taxes			69,873				(200,673	)			284,605				14,761
Provision for Income Taxes			23,901				(74,991	)			88,416				(8,055	)
Income (Loss) from Continuing Operations			45,972				(125,682	)			196,189				22,816
Profit from Discontinued Operations attributable to common shareholders (a)			-				1,350				3,777				5,693
Gain from Sales of Discontinued Operations attributable to common shareholders (b)			-				-				29,445				-
Profit from Discontinued Operations attributable to common shareholders, net of tax (a)			-				878				2,456				3,700
Gain from Sales of Discontinued Operations attributable to common shareholders, net of tax (b)			-				-				19,176				-
Gain / Profit from Discontinued Operations, net of tax			-				878				21,632				3,700
Net income (loss) before allocation to noncontrolling interests			45,971				(124,805	)			217,821				26,516
Less: Noncontrolling interest in subsidiaries' earnings			327				324				828				201
Net income (loss) attributable to common shareholders		$	45,644			$	(125,129	)		$	216,993			$	26,315
Share Data:
Earnings (Loss) per share from Continuing Operations		$	0.79			$	(2.18	)		$	3.35			$	0.38
Earnings per share from Discontinued Operations			-				0.02				0.37				0.06
Earnings (Loss) per Diluted Share		$	0.79			$	(2.16	)		$	3.72			$	0.44
Average Diluted Shares Outstanding			57,783				57,903				58,293				59,204
Average Basic Shares Outstanding			57,008				57,903				57,443				58,120
Supplemental Data:
Cost of Sales		$	417,569			$	417,950			$	1,708,240			$	1,653,238
Asbestos Provision							241,647								241,647
Environmental Provision							30,327								30,327
Selling, General & Administrative			131,505				123,885				539,755				538,586
Repositioning Charges			4,531				-				20,632				-
Depreciation and Amortization **			14,141				15,735				57,263				62,943
Stock-Based Compensation Expense			4,459				3,840				17,319				14,972

* Primarily related to the sale of a building and the divestiture of a small product line in the three months ended March 31, 2011.

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

(a) Amounts represent the operating profit, and after-tax profit, from the Houston Service Center and Azonix Corporation businesses divested in June 2012.

(b) Amounts represent the pre-tax and after-tax gains from the June 2012 sales of both the Houston Service Center and the Azonix Corporation.

CRANE CO.
Condensed Balance Sheets
(in thousands)
			December 31,			December 31,
			2012			2011
ASSETS
Current Assets
Cash and Cash Equivalents		$	423,947		$	245,089
Accounts Receivable, net			333,330			349,250
Current Insurance Receivable - Asbestos			33,722			16,345
Inventories, net			352,725			360,689
Other Current Assets			36,797			60,859
Total Current Assets			1,180,521			1,032,232
Property, Plant and Equipment, net			268,283			284,146
Long-Term Insurance Receivable - Asbestos			171,752			208,952
Other Assets			455,530			497,377
Goodwill			813,792			820,824
Total Assets		$	2,889,878		$	2,843,531
LIABILITIES AND EQUITY
Current Liabilities
Notes Payable and Current Maturities of Long-Term Debt		$	1,123		$	1,112
Accounts Payable			182,731			194,158
Current Asbestos Liability			91,670			100,943
Accrued Liabilities			220,678			226,717
Income Taxes			15,686			10,165
Total Current Liabilities			511,888			533,095
Long-Term Debt			399,092			398,914
Long-Term Deferred Tax Liability			36,853			41,668
Long-Term Asbestos Liability			704,195			792,701
Other Liabilities			310,474			255,097
Total Equity			927,376			822,056
Total Liabilities and Equity		$	2,889,878		$	2,843,531

CRANE CO.
Condensed Statements of Cash Flows
(in thousands)
		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
			2012				2011				2012				2011
Operating Activities:
Net income attributable to common shareholders		$	45,644			$	(125,129	)		$	216,993			$	26,315
Noncontrolling interest in subsidiaries' earnings			327				324				828				201
Net income before allocations to noncontrolling interests			45,971				(124,805	)			217,821				26,516
Asbestos Provision			-				241,647				-				241,647
Environmental charge			-				30,327				-				30,327
Gain on divestiture			-				-				(29,445	)			(4,258	)
Restructuring - Non Cash			1,078				-				3,855				-
Depreciation and amortization			14,141				15,735				57,263				62,943
Stock-based compensation expense			4,459				3,840				17,319				14,972
Defined benefit plans and postretirement expense			5,321				1,959				20,090				6,770
Deferred income taxes			30,583				(66,574	)			55,000				(43,923	)
Cash provided by (used for) operating working capital			81,146				34,957				1,824				(41,955	)
Defined benefit plans and postretirement contributions			(1,041	)			(31,059	)	*		(5,504	)			(48,113	)
Environmental payments, net of reimbursements			(2,115	)			(799	)			(13,371	)			(9,534	)
Other			(6,134	)			(366	)			(12,139	)			(6,303	)
Subtotal			173,409				104,862				312,713				229,089
Asbestos related payments, net of insurance recoveries			(17,906	)			(20,044	)			(77,957	)			(79,277	)
Total provided by operating activities			155,503				84,818				234,756				149,812
Investing Activities:
Capital expenditures			(9,364	)			(7,034	)			(29,308	)			(34,737	)
Proceeds from disposition of capital assets			4,184				73				6,438				4,793
Payment for acquisition, net of cash acquired			-				(996	)			-				(36,590	)
Proceeds from divestiture			480				-				54,079				1,000
Total provided by (used for) investing activities			(4,700	)			(7,957	)			31,209				(65,534	)
Financing Activities:
Dividends paid			(15,976	)			(15,035	)			(61,974	)			(56,992	)
Reacquisition of shares on open market			-				(30,000	)			(49,991	)			(79,999	)
Stock options exercised - net of shares reacquired			4,630				3,295				13,056				23,232
Excess tax benefit from stock-based compensation			370				391				3,603				6,097
Change in short-term debt			-				333				-				(1,003	)
Total used for financing activities			(10,976	)			(41,016	)			(95,306	)			(108,665	)
Effect of exchange rate on cash and cash equivalents			3,584				(1,939	)			8,199				(3,465	)
Increase (decrease) in cash and cash equivalents			143,411				33,906				178,858				(27,852	)
Cash and cash equivalents at beginning of period			280,536				211,183				245,089				272,941
Cash and cash equivalents at end of period		$	423,947			$	245,089			$	423,947			$	245,089
* Includes a $30 million discretionary pension contribution.

CRANE CO.
Order Backlog
(in thousands)
		December 31,			September 30,			June 30,			March 31,			December 31,
		2012			2012			2012			2012			2011
Aerospace & Electronics		$	378,152		$	392,862		$	423,282		$	437,822		$	410,794
Engineered Materials			12,689			11,357			13,884			11,129			11,110
Merchandising Systems			14,686			19,957			23,587			30,033			15,212
Fluid Handling			326,863			330,824			334,696			337,538	*		313,715	*
Controls			16,507			17,296			16,187			29,770	**		27,120	**
Total Backlog		$	748,897		$	772,296		$	811,636		$	846,292		$	777,951

* Includes Order Backlog of $2.9 million at March 31, 2012 and $1.9 million at December 31, 2011 pertaining to a business divested in June 2012.

** Includes Order Backlog of $11.3 million at March 31, 2012 and $9.6 million at December 31, 2011 pertaining to a business divested in June 2012.

CRANE CO.
Non-GAAP Financial Measures
(in thousands)
		Three Months Ended								Twelve Months Ended								Percent Change			Percent Change
		December 31,								December 31,								December 31, 2012			December 31, 2012
			2012				2011				2012				2011			Three Months			Twelve Months
INCOME ITEMS
Net Sales		$	629,788			$	619,804			$	2,579,068			$	2,500,369			1.6	%		3.1	%
Operating Profit (Loss) from Continuing Operations			76,183				(194,005	)			310,441				36,571			N/A			748.9	%
Percentage of Sales			12.1	%			-31.3	%			12.0	%			1.5	%
Special Items impacting Operating Profit (Loss) from Continuing Operations:
Repositioning Charges (a)			4,531								20,632
Asbestos Provision - Pre-Tax (b)							241,647								241,647
Environmental Provision - Pre-Tax (c)							30,327								30,327
Non-deductible Acquisition Transaction Costs (d)			3,874								3,874
Operating Profit from Continuing Operations before Special Items		$	84,588			$	77,969			$	334,947			$	308,545			8.5	%		8.6	%
Percentage of Sales			13.4	%			12.6	%			13.0	%			12.3	%
Net Income (Loss) Attributable to Common Shareholders		$	45,644			$	(125,129	)		$	216,993			$	26,315
Per Diluted Share		$	0.79			$	(2.16	)		$	3.72			$	0.44			N/A			737.5	%
Special Items impacting Net Income (Loss) Attributable to Common Shareholders:
Repositioning Charges - Net of Tax (a)			3,896								16,724
Per Share		$	0.07							$	0.29
Asbestos Provision - Net of Tax (b)							157,071								157,071
Per Share						$	2.71							$	2.65
Environmental Provision - Net of Tax (c)							19,713								19,713
Per Share						$	0.34								0.33
Non-deductible Acquisition Transaction Costs (d)			3,874								3,874
Per Share		$	0.07							$	0.07
Gain on Divestitures - Net of Tax (e)											(19,176	)
Per Share										$	(0.33	)
Net Income Attributable To Common Shareholders Before Special Items		$	53,414			$	51,654			$	218,416			$	203,098			3.4	%		7.5	%
Per Diluted Share		$	0.92			$	0.88			$	3.75			$	3.43			5.3	%		9.2	%
Profit from Discontinued Operations attributable to common shareholders, net of tax (f)			-				(878	)			(2,456	)			(3,700	)
Per Share						$	(0.01	)		$	(0.04	)		$	(0.06	)
Net Income Attributable To Common Shareholders Before Special Items from Continuing Operations		$	53,414			$	50,776			$	215,960			$	199,398
Per Diluted Share		$	0.92			$	0.86			$	3.70			$	3.37			7.1	%		10.0	%

In the three months ended December 31, 2011, Average Shares Outstanding excluding the effect of diluted stock options were used to compute the per share amounts since this period was in a loss position. Had Net Income Attributable To Common Shareholders been reported for this period, Average Shares Outstanding would have included the effect of diluted stock options when computing per share amounts (see chart below).

		Average Basic Shares Outstanding			57,903
		Effect of Diluted Stock Options			915
		Average Shares Outstanding including the effect of Stock Options			58,818

(a) The Company incurred repositioning charges in the second quarter, third quarter and fourth 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, staff reduction actions and a pension curtailment charge.

(b) During the three months ended December 31, 2011, the Company recorded an Asbestos Provision.

(c) During the three months ended December 31, 2011, the Company recorded a charge related to an increase in the Company's expected liability at its Goodyear, AZ Superfund Site.

(d) During the three months ended December 31, 2012, the Company recorded non-deductible transaction costs associated with the potential acquisition of MEI.

(e) In June 2012, the Company divested of a business within the Fluid Handling segment (Houston Service Center) and a business within the Controls segment (Azonix Corporation). 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. In September 2012, the Company recorded a favorable price adjustment associated with the Azonix Corporation divestiture.

(f) Amounts represent the after-tax profit from the Houston Service Center and Azonix Corporation businesses divested in June 2012.

			Three Months Ended								Twelve Months Ended
			December 31,								December 31,
				2012				2011				2012				2011
CASH FLOW ITEMS
Cash Provided from Operating Activities before Asbestos - Related Payments			$	173,409			$	104,862			$	312,713			$	229,089
Asbestos Related Payments, Net of Insurance Recoveries				(17,906	)			(20,044	)			(77,957	)			(79,277	)
Cash Provided from Operating Activities				155,503				84,818				234,756				149,812
Less: Capital Expenditures				(9,364	)			(7,034	)			(29,308	)			(34,737	)
Free Cash Flow			$	146,139			$	77,784			$	205,448			$	115,075

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.

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.

Non-GAAP financial measures, which may be inconsistent with similarly captioned measures presented by other companies, should be viewed in the context of the definitions of the elements of such measures we provide and in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP.

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