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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Mark One:
For the Quarterly Period Ended March 31, 2012 OR
For the Transition Period from to Commission File Number: 1-1657 CRANE CO. (Exact name of registrant as specified in its charter)
Registrants telephone number, including area code: 203-363-7300 (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 ¨ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x The number of shares outstanding of the issuers classes of common stock, as of April 30, 2012 Common stock, $1.00 Par Value 58,811,258 shares PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS CRANE CO. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS) (UNAUDITED)
See Notes to Condensed Consolidated Financial Statements. 2 CRANE CO. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED)
See Notes to Condensed Consolidated Financial Statements. 3 CRANE CO. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED)
See Notes to Condensed Consolidated Financial Statements. 4 CRANE CO. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
See Notes to Condensed Consolidated Financial Statements. 5 CRANE CO. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and 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 periods presented. These interim condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2011. Recent Accounting Pronouncements In December 2011, the FASB issued amended guidance on the disclosure requirements on the offsetting of financial assets and liabilities. The amended disclosures will enable financial statement users to compare balance sheets prepared under U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS), which are subject to different offsetting models. The disclosures will be limited to financial instruments and derivatives instruments that are either offset in accordance with the U.S. GAAP offsetting guidance or subject to enforceable master netting arrangements or similar agreements. The Company is currently evaluating the impact of the amended guidance on its disclosures. 6 Note 2Segment Results The Companys segments are reported on the same basis used internally for evaluating performance and for allocating resources. The Company has five reportable segments: Aerospace & Electronics, Engineered Materials, Merchandising Systems, Fluid Handling and Controls. Furthermore, Corporate consists of corporate office expenses including compensation, benefits, occupancy, depreciation, and other administrative costs. Assets of the reportable segments exclude general corporate assets, which principally consist of cash, deferred tax assets, insurance receivables, certain property, plant and equipment, and certain other assets. Financial information by reportable segment is set forth below:
Note 3Earnings Per Share The Companys basic earnings per share calculations are based on the weighted average number of common shares outstanding during the year. Shares of restricted stock are included in the computation of both basic and diluted earnings per share. Potentially dilutive securities include outstanding stock options, Restricted Share Units, Deferred Stock Units and Performance-based Restricted Share Units. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury method. Diluted earnings per share gives effect to all potentially dilutive common shares outstanding during the year.
The computation of diluted earnings per share excludes the effect of the potential exercise of stock options when the average market price of the common stock is lower than the exercise price of the related stock options during the period (1.6 million and 0.5 million average options for the first quarter of 2012 and 2011, respectively). 8 Note 4Changes in Equity and Comprehensive Income A summary of the changes in equity for the three months ended March 31, 2012 and 2011 is provided below:
The table below provides the accumulated balances for each classification of accumulated other comprehensive income, as reflected on the Condensed Consolidated Balance Sheets.
Note 5Acquisitions Acquisitions are accounted for in accordance with the guidance for business combinations. Accordingly, the Company makes an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities. The Company obtains this information during due diligence and through other sources. In the months after closing, as the Company obtains additional information about these assets and liabilities, including through tangible and intangible asset appraisals, it is able to refine the estimates of fair value and more accurately allocate the purchase price. Only items identified as of the acquisition date are considered for subsequent adjustment. The Company will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required. In July 2011, the Company completed the acquisition of W.T. Armatur GmbH & Co. KG (WTA), a manufacturer of bellows sealed globe valves, as well as certain types of specialty valves, for chemical, fertilizer and thermal oil applications for a purchase price of $37 million in cash and $1 million of assumed debt. WTAs 2010 sales were approximately $21 million and has been integrated into the Companys Fluid Handling segment. In connection with 9 the WTA acquisition, the purchase price and initial recording of the transaction were based on preliminary valuation assessments and are subject to change. The initial allocation of the aggregate purchase price was made in the third quarter of 2011 and resulted in current assets of $8 million; property, plant, and equipment of $12 million; identified intangible assets of $9 million, which primarily consist of customer relationships; goodwill of $12 million; and current liabilities of $4 million. The amount allocated to goodwill reflects the benefits the Company expects to realize from the acquisition, as the acquisition is expected to strengthen and broaden the Companys portfolio by providing valves with zero fugitive emissions used in severe service applications. The goodwill from this acquisition is deductible for tax purposes. The pro forma impact of this acquisition on the Companys historical results of operations was not material. See Note 6 for further details on purchase price allocation. Note 6Goodwill and Intangible Assets The Companys business acquisitions have typically resulted in the recognition of goodwill and other intangible assets. The Company follows the provisions under Accounting Standards Codification (ASC) Topic 350, Intangibles Goodwill and Other (ASC 350) as it relates to the accounting for goodwill in the Condensed Consolidated Financial Statements. These provisions require that the Company, on at least an annual basis, evaluate the fair value of the reporting units to which goodwill is assigned and attributed and compare that fair value to the carrying value of the reporting unit to determine if an impairment has occurred. The Company performs its annual impairment testing during the fourth quarter. Impairment testing takes place more often than annually if events or circumstances indicate a change in status that would indicate a potential impairment. The Company believes that there have been no events or circumstances which would more likely than not reduce the fair value for its reporting units below its carrying value. A reporting unit is an operating segment unless discrete financial information is prepared and reviewed by segment management for businesses one level below that operating segment (a component), in which case the component would be the reporting unit. In certain instances, the Company has aggregated components of an operating segment into a single reporting unit based on similar economic characteristics. At March 31, 2012, the Company had twelve reporting units. When performing its annual impairment assessment, the Company compares the fair value of each of its reporting units to its respective carrying value. Goodwill is considered to be potentially impaired when the net book value of the reporting unit exceeds its estimated fair value. Fair values are established primarily by discounting estimated future cash flows at an estimated cost of capital which varies for each reporting unit and which, as of the Companys most recent annual impairment assessment, ranged between 8% and 17% (a weighted average of 11%), reflecting the respective inherent business risk of each of the reporting units tested. This methodology for valuing the Companys reporting units (commonly referred to as the Income Method) has not changed since the adoption of the provisions under ASC 350. The determination of discounted cash flows is based on the businesses strategic plans and long-range planning forecasts, which change from year to year. The revenue growth rates included in the forecasts represent best estimates based on current and forecasted market conditions. Profit margin assumptions are projected by each reporting unit based on the current cost structure and anticipated net cost increases/reductions. There are inherent uncertainties related to these assumptions, including changes in market conditions, and managements judgment in applying them to the analysis of goodwill impairment. In addition to the foregoing, for each reporting unit, market multiples are used to corroborate its discounted cash flow results where fair value is estimated based on earnings multiples determined by available public information of comparable businesses. While the Company believes it has made reasonable estimates and assumptions to calculate the fair value of its reporting units, it is possible a material change could occur. If actual results are not consistent with managements estimates and assumptions, goodwill and other intangible assets may then be determined to be overstated and a charge would need to be taken against net earnings. Furthermore, in order to evaluate the sensitivity of the fair value calculations on the goodwill impairment test performed during the fourth quarter of 2011, the Company applied a hypothetical, reasonably possible 10% decrease to the fair values of each reporting unit. The effects of this hypothetical 10% decrease would still result in the fair value calculation exceeding the carrying value for each reporting unit. 10 Changes to goodwill are as follows:
For the year ended December 31, 2011, the additions to goodwill represent the initial purchase price allocation related to WTA, and the adjustments to purchase price allocations pertain to the December 2010 acquisition of Money Controls and the February 2010 acquisition of Merrimac Industries, Inc. (Merrimac). Changes to intangible assets are as follows:
For the year ended December 31, 2011, the additions relate to the December 2010 acquisition of Money Controls and the July 2011 acquisition of WTA. As of March 31, 2012, the Company had $143.5 million of net intangible assets, of which $30.5 million were intangibles with indefinite useful lives, consisting of trade names. The Company amortizes the cost of other intangibles over their estimated useful lives unless such lives are deemed indefinite. Intangibles with indefinite useful lives are tested annually for impairment, or when events or changes in circumstances indicate the potential for impairment. If the carrying amount of the intangibles with indefinite useful lives exceeds the fair value, the intangible asset is written down to its fair value. Fair value is calculated using discounted cash flows. 11 A summary of intangible assets follows:
Amortization expense for these intangible assets is currently estimated to be approximately $14.7 million in total for the remaining three quarters in 2012, $18.1 million in 2013, $16.2 million in 2014, $13.6 million in 2015, $12.1 million in 2016 and $38.3 million in 2017 and thereafter. Note 7Accrued Liabilities Accrued liabilities consist of:
The Company accrues warranty liabilities when it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. Warranty provision is included in cost of sales in the Condensed Consolidated Statements of Operations. A summary of the warranty liabilities is as follows:
12 Note 8Commitments and Contingencies Asbestos Liability Information Regarding Claims and Costs in the Tort System As of March 31, 2012, the Company was a defendant in cases filed in numerous state and federal courts alleging injury or death as a result of exposure to asbestos. Activity related to asbestos claims during the periods indicated was as follows:
Of the 57,398 pending claims as of March 31, 2012, approximately 19,400 claims were pending in New York, approximately 9,900 claims were pending in Texas, approximately 5,500 claims were pending in Mississippi, and approximately 5,500 claims were pending in Ohio, all jurisdictions in which legislation or judicial orders restrict the types of claims that can proceed to trial on the merits. Substantially all of the claims the Company resolves are either dismissed or concluded through settlements. To date, the Company has paid two judgments arising from adverse jury verdicts in asbestos matters. The first payment, in the amount of $2.54 million, was made on July 14, 2008, approximately two years after the adverse verdict in the Joseph Norris matter in California, after the Company had exhausted all post-trial and appellate remedies. The second payment, in the amount of $0.02 million, was made in June 2009 after an adverse verdict in the Earl Haupt case in Los Angeles, California on April 21, 2009. The Company has tried several cases resulting in defense verdicts by the jury or directed verdicts for the defense by the court, one of which, the Patrick ONeil claim in Los Angeles, was reversed on appeal. In an opinion dated January 12, 2012, the California Supreme Court reversed the decision of the Court of Appeal and instructed the trial court to enter a judgment of nonsuit in favor of the defendants. On March 14, 2008, the Company received an adverse verdict in the James Baccus claim in Philadelphia, Pennsylvania, with compensatory damages of $2.45 million and additional damages of $11.9 million. The Companys post-trial motions were denied by order dated January 5, 2009. The case was concluded by settlement in the fourth quarter of 2010 during the pendency of the Companys appeal to the Superior Court of Pennsylvania. 13 On May 16, 2008, the Company received an adverse verdict in the Chief Brewer claim in Los Angeles, California. The amount of the judgment entered was $0.68 million plus interest and costs. The Company is pursuing an appeal in this matter. On February 2, 2009, the Company received an adverse verdict in the Dennis Woodard claim in Los Angeles, California. The jury found that the Company was responsible for one-half of one percent (0.5%) of plaintiffs' damages of $16.93 million; however, based on California court rules regarding allocation of damages, judgment was entered against the Company in the amount of $1.65 million, plus costs. Following entry of judgment, the Company filed a motion with the trial court requesting judgment in the Company's favor notwithstanding the jury's verdict, and on June 30, 2009, the court advised that the Company's motion was granted and judgment was entered in favor of the Company. The trial courts ruling was affirmed on appeal by order dated August 25, 2011. The plaintiffs appealed that ruling to the Supreme Court of California, which dismissed the appeal on February 29, 2012; the matter is now finally determined in the Companys favor. On March 23, 2010, a Philadelphia County, Pennsylvania, state court jury found the Company responsible for a 1/11th share of a $14.5 million verdict in the James Nelson claim, and for a 1/20th share of a $3.5 million verdict in the Larry Bell claim. On February 23, 2011, the court entered judgment on the verdicts in the amount of $0.2 million against the Company, only, in Bell, and in the amount of $4.0 million, jointly, against the Company and two other defendants in Nelson, with additional interest in the amount of $0.01 million being assessed against the Company, only, in Nelson. All defendants, including the Company, and the plaintiffs took timely appeals of certain aspects of those judgments. The Nelson appeal is pending. The Company resolved the Bell appeal by settlement, which is reflected in the settled claims for 2012. On August 17, 2011, a New York City state court jury found the Company responsible for a 99% share of a $32 million verdict on the Ronald Dummitt claim. The Company has filed post-trial motions seeking to overturn the verdict, to grant a new trial, or to reduce the damages, which the Company argues are excessive under New York appellate case law governing awards for non-economic losses. The Court held oral argument on these motions on October 18, 2011, and a written decision is expected to be issued. The Company anticipates that it will likely appeal any judgment that may be entered on the verdict. On March 9, 2012, a Philadelphia County, Pennsylvania, state court jury found the Company responsible for a 1/8th share of a $123,000 verdict in the Frank Paasch claim. The Company and plaintiffs have filed post-trial motions. The Company anticipates that it will likely appeal any judgment that may be entered on the verdict. Such judgment amounts are not included in the Companys incurred costs until all available appeals are exhausted and the final payment amount is determined. The gross settlement and defense costs incurred (before insurance recoveries and tax effects) for the Company for the three-month periods ended March 31, 2012 and 2011 totaled $23.6 million and $27.6 million, respectively. In contrast to the recognition of settlement and defense costs, which reflect the current level of activity in the tort system, cash payments and receipts generally lag the tort system activity by several months or more, and may show some fluctuation from quarter to quarter. Cash payments of settlement amounts are not made until all releases and other required documentation are received by the Company, and reimbursements of both settlement amounts and defense costs by insurers may be uneven due to insurer payment practices, transitions from one insurance layer to the next excess layer and the payment terms of certain reimbursement agreements. The Companys total pre-tax payments for settlement and defense costs, net of funds received from insurers, for the three-month periods ended March 31, 2012 and 2011 totaled a $18.2 million net payment and $12.7 million net payment, respectively. Detailed below are the comparable amounts for the periods indicated. 14
The amounts shown for settlement and defense costs incurred, and cash payments, are not necessarily indicative of future period amounts, which may be higher or lower than those reported. Cumulatively through March 31, 2012, the Company has resolved (by settlement or dismissal) approximately 87,000 claims, not including the MARDOC claims referred to above. The related settlement cost incurred by the Company and its insurance carriers is approximately $340 million, for an average settlement cost per resolved claim of approximately $4,000. The average settlement cost per claim resolved during the years ended December 31, 2011, 2010 and 2009 was $4,123, $7,036 and $4,781 respectively. Because claims are sometimes dismissed in large groups, the average cost per resolved claim, as well as the number of open claims, can fluctuate significantly from period to period. In addition to large group dismissals, the nature of the disease and corresponding settlement amounts for each claim resolved will also drive changes from period to period in the average settlement cost per claim. Accordingly, the average cost per resolved claim is not considered in the Companys periodic review of its estimated asbestos liability. For a discussion regarding the four most significant factors affecting the liability estimate, see Effects on the Condensed Consolidated Financial Statements. Effects on the Condensed Consolidated Financial Statements The Company has retained the firm of Hamilton, Rabinovitz & Associates, Inc. (HR&A), a nationally recognized expert in the field, to assist management in estimating the Companys asbestos liability in the tort system. HR&A reviews information provided by the Company concerning claims filed, settled and dismissed, amounts paid in settlements and relevant claim information such as the nature of the asbestos-related disease asserted by the claimant, the jurisdiction where filed and the time lag from filing to disposition of the claim. The methodology used by HR&A to project future asbestos costs is based largely on the Companys experience during a base reference period of eleven quarterly periods (consisting of the two full preceding calendar years and three additional quarterly periods to the estimate date) for claims filed, settled and dismissed. The Companys experience is then compared to the results of previously conducted epidemiological studies estimating the number of individuals likely to develop asbestos-related diseases. Those studies were undertaken in connection with national analyses of the population of workers believed to have been exposed to asbestos. Using that information, HR&A estimates the number of future claims that would be filed against the Company and estimates the aggregate settlement or indemnity costs that would be incurred to resolve both pending and future claims based upon the average settlement costs by disease during the reference period. This methodology has been accepted by numerous courts. After discussions with the Company, HR&A augments its 15 liability estimate for the costs of defending asbestos claims in the tort system using a forecast from the Company which is based upon discussions with its defense counsel. Based on this information, HR&A compiles an estimate of the Companys asbestos liability for pending and future claims, based on claim experience during the reference period and covering claims expected to be filed through the indicated forecast period. The most significant factors affecting the liability estimate are (1) the number of new mesothelioma claims filed against the Company, (2) the average settlement costs for mesothelioma claims, (3) the percentage of mesothelioma claims dismissed against the Company and (4) the aggregate defense costs incurred by the Company. These factors are interdependent, and no one factor predominates in determining the liability estimate. Although the methodology used by HR&A will also show claims and costs for periods subsequent to the indicated period (up to and including the endpoint of the asbestos studies referred to above), management believes that the level of uncertainty regarding the various factors used in estimating future asbestos costs is too great to provide for reasonable estimation of the number of future claims, the nature of such claims or the cost to resolve them for years beyond the indicated estimate. In the Companys view, the forecast period used to provide the best estimate for asbestos claims and related liabilities and costs is a judgment based upon a number of trend factors, including the number and type of claims being filed each year; the jurisdictions where such claims are filed, and the effect of any legislation or judicial orders in such jurisdictions restricting the types of claims that can proceed to trial on the merits; and the likelihood of any comprehensive asbestos legislation at the federal level. In addition, the dynamics of asbestos litigation in the tort system have been significantly affected over the past five to ten years by the substantial number of companies that have filed for bankruptcy protection, thereby staying any asbestos claims against them until the conclusion of such proceedings, and the establishment of a number of post-bankruptcy trusts for asbestos claimants, which are estimated to provide $30 billion for payments to current and future claimants. These trend factors have both positive and negative effects on the dynamics of asbestos litigation in the tort system and the related best estimate of the Companys asbestos liability, and these effects do not move in a linear fashion but rather change over multi-year periods. Accordingly, the Companys management continues to monitor these trend factors over time and periodically assesses whether an alternative forecast period is appropriate. Each quarter, HR&A compiles an update based upon the Companys experience in claims filed, settled and dismissed during the updated reference period (consisting of the preceding eleven quarterly periods) as well as average settlement costs by disease category (mesothelioma, lung cancer, other cancer, asbestosis and other non-malignant conditions) during that period. In addition to this claims experience, the Company also considers additional quantitative and qualitative factors such as the nature of the aging of pending claims, significant appellate rulings and legislative developments, and their respective effects on expected future settlement values. As part of this process, the Company also takes into account trends in the tort system such as those enumerated above. Management considers all these factors in conjunction with the liability estimate of HR&A and determines whether a change in the estimate is warranted. Liability Estimate. With the assistance of HR&A, effective as of December 31, 2011, the Company updated and extended its estimate of the asbestos liability, including the costs of settlement or indemnity payments and defense costs relating to currently pending claims and future claims projected to be filed against the Company through 2021. The Companys previous estimate was for asbestos claims filed or projected to be filed through 2017. As a result of this updated estimate, the Company recorded an additional liability of $285 million as of December 31, 2011. The Companys decision to take this action at such date was based on several factors which contribute to the Companys ability to reasonably estimate this liability for the additional period noted. First, the number of mesothelioma claims (which although constituting approximately 8% of the Companys total pending asbestos claims, have accounted for approximately 90% of the Companys aggregate settlement and defense costs) being filed against the Company and associated settlement costs have recently stabilized. In the Companys opinion, the outlook for mesothelioma claims expected to be filed and resolved in the forecast period is reasonably stable. Second, there have been favorable developments in the trend of case law which has been a contributing factor in stabilizing the asbestos claims activity and related settlement costs. Third, there have been significant actions taken by certain state legislatures and courts 16 over the past several years that have reduced the number and types of claims that can proceed to trial, which has been a significant factor in stabilizing the asbestos claims activity. Fourth, the Company has now entered into coverage-in-place agreements with almost all of its excess insurers, which enables the Company to project a more stable relationship between settlement and defense costs paid by the Company and reimbursements from its insurers. Taking all of these factors into account, the Company believes that it can reasonably estimate the asbestos liability for pending claims and future claims to be filed through 2021. While it is probable that the Company will incur additional charges for asbestos liabilities and defense costs in excess of the amounts currently provided, the Company does not believe that any such amount can be reasonably estimated beyond 2021. Accordingly, no accrual has been recorded for any costs which may be incurred for claims which may be made subsequent to 2021. Management has made its best estimate of the costs through 2021 based on the analysis by HR&A completed in January 2012. As of March 31, 2012, the Companys actual experience during the updated reference period for mesothelioma claims filed and dismissed generally approximated the assumptions in the Companys liability estimate. In addition to this claims experience, the Company considered additional quantitative and qualitative factors such as the nature of the aging of pending claims, significant appellate rulings and legislative developments, and their respective effects on expected future settlement values. Based on this evaluation, the Company determined that no change in the estimate was warranted for the period ended March 31, 2012. A liability of $894 million was recorded as of December 31, 2011 to cover the estimated cost of asbestos claims now pending or subsequently asserted through 2021, of which approximately 80% is attributable to settlement and defense costs for future claims projected to be filed through 2021. The liability is reduced when cash payments are made in respect of settled claims and defense costs. The liability was $871 million as of March 31, 2012. It is not possible to forecast when cash payments related to the asbestos liability will be fully expended; however, it is expected such cash payments will continue for a number of years past 2021, due to the significant proportion of future claims included in the estimated asbestos liability and the lag time between the date a claim is filed and when it is resolved. None of these estimated costs have been discounted to present value due to the inability to reliably forecast the timing of payments. The current portion of the total estimated liability at March 31, 2012 was $101 million and represents the Companys best estimate of total asbestos costs expected to be paid during the twelve-month period. Such amount is based upon the HR&A model together with the Companys prior year payment experience for both settlement and defense costs. Insurance Coverage and Receivables. Prior to 2005, a significant portion of the Companys settlement and defense costs were paid by its primary insurers. With the exhaustion of that primary coverage, the Company began negotiations with its excess insurers to reimburse the Company for a portion of its settlement and/or defense costs as incurred. To date, the Company has entered into agreements providing for such reimbursements, known as coverage-in-place, with eleven of its excess insurer groups. Under such coverage-in-place agreements, an insurers policies remain in force and the insurer undertakes to provide coverage for the Companys present and future asbestos claims on specified terms and conditions that address, among other things, the share of asbestos claims costs to be paid by the insurer, payment terms, claims handling procedures and the expiration of the insurers obligations. Similarly, under a variant of coverage-in-place, the Company has entered into an agreement with a group of insurers confirming the aggregate amount of available coverage under the subject policies and setting forth a schedule for future reimbursement payments to the Company based on aggregate indemnity and defense payments made. In addition, with six of its excess insurer groups, the Company entered into policy buyout agreements, settling all asbestos and other coverage obligations for an agreed sum, totaling $79.5 million in aggregate. Reimbursements from insurers for past and ongoing settlement and defense costs allocable to their policies have been made in accordance with these coverage-in-place and other agreements. All of these agreements include provisions for mutual releases, indemnification of the insurer and, for coverage-in-place, claims handling procedures. With the agreements referenced above, the Company has concluded settlements with all but one of its solvent excess insurers whose policies are expected to respond to the aggregate costs included in the updated liability estimate. That insurer, which issued a single applicable policy, has been paying the shares of defense and indemnity costs the Company has allocated to it, subject to a reservation of rights. There are no pending legal proceedings between the Company and any insurer contesting the Companys asbestos claims under its insurance policies. 17 In conjunction with developing the aggregate liability estimate referenced above, the Company also developed an estimate of probable insurance recoveries for its asbestos liabilities. In developing this estimate, the Company considered its coverage-in-place and other settlement agreements described above, as well as a number of additional factors. These additional factors include the financial viability of the insurance companies, the method by which losses will be allocated to the various insurance policies and the years covered by those policies, how settlement and defense costs will be covered by the insurance policies and interpretation of the effect on coverage of various policy terms and limits and their interrelationships. In addition, the timing and amount of reimbursements will vary because the Companys insurance coverage for asbestos claims involves multiple insurers, with different policy terms and certain gaps in coverage. In addition to consulting with legal counsel on these insurance matters, the Company retained insurance consultants to assist management in the estimation of probable insurance recoveries based upon the aggregate liability estimate described above and assuming the continued viability of all solvent insurance carriers. Based upon the analysis of policy terms and other factors noted above by the Companys legal counsel, and incorporating risk mitigation judgments by the Company where policy terms or other factors were not certain, the Companys insurance consultants compiled a model indicating how the Companys historical insurance policies would respond to varying levels of asbestos settlement and defense costs and the allocation of such costs between such insurers and the Company. Using the estimated liability as of December 31, 2011 (for claims filed or expected to be filed through 2021), the insurance consultants model forecasted that approximately 25% of the liability would be reimbursed by the Companys insurers. While there are overall limits on the aggregate amount of insurance available to the Company with respect to asbestos claims, those overall limits were not reached by the total estimated liability currently recorded by the Company, and such overall limits did not influence the Company in its determination of the asset amount to record. The proportion of the asbestos liability that is allocated to certain insurance coverage years, however, exceeds the limits of available insurance in those years. The Company allocates to itself the amount of the asbestos liability (for claims filed or expected to be filed through 2021) that is in excess of available insurance coverage allocated to such years. An asset of $225 million was recorded as of December 31, 2011 representing the probable insurance reimbursement for such claims expected through 2021. The asset is reduced as reimbursements and other payments from insurers are received. The asset was $221 million as of March 31, 2012. The Company reviews the aforementioned estimated reimbursement rate with its insurance consultants on a periodic basis in order to confirm its overall consistency with the Companys established reserves. The reviews encompass consideration of the performance of the insurers under coverage-in-place agreements and the effect of any additional lump-sum payments under policy buyout agreements. Since December 2011, there have been no developments that have caused the Company to change the estimated 25% rate, although actual insurance reimbursements vary from period to period, and will decline over time, for the reasons cited above. Uncertainties. Estimation of the Companys ultimate exposure for asbestos-related claims is subject to significant uncertainties, as there are multiple variables that can affect the timing, severity and quantity of claims. The Company cautions that its estimated liability is based on assumptions with respect to future claims, settlement and defense costs based on past experience that may not prove reliable as predictors. A significant upward or downward trend in the number of claims filed, depending on the nature of the alleged injury, the jurisdiction where filed and the quality of the product identification, or a significant upward or downward trend in the costs of defending claims, could change the estimated liability, as would substantial adverse verdicts at trial that withstand appeal. A legislative solution, structured settlement transaction, or significant change in relevant case law could also change the estimated liability. The same factors that affect developing estimates of probable settlement and defense costs for asbestos-related liabilities also affect estimates of the probable insurance reimbursements, as do a number of additional factors. These additional factors include the financial viability of the insurance companies, the method by which losses will be allocated to the various insurance policies and the years covered by those policies, how settlement and defense costs will be covered by the insurance policies and interpretation of the effect on coverage of various policy terms and limits and their interrelationships. In addition, due to the uncertainties inherent in litigation matters, no assurances can be given regarding the outcome of any litigation, if necessary, to enforce the Company's rights under its insurance policies or settlement agreements. 18 Many uncertainties exist surrounding asbestos litigation, and the Company will continue to evaluate its estimated asbestos-related liability and corresponding estimated insurance reimbursement as well as the underlying assumptions and process used to derive these amounts. These uncertainties may result in the Company incurring future charges or increases to income to adjust the carrying value of recorded liabilities and assets, particularly if the number of claims and settlement and defense costs change significantly, or if there are significant developments in the trend of case law or court procedures, or if legislation or another alternative solution is implemented; however, the Company is currently unable to estimate such future changes and, accordingly, while it is probable that the Company will incur additional charges for asbestos liabilities and defense costs in excess of the amounts currently provided, the Company does not believe that any such amount can be reasonably determined beyond 2021. Although the resolution of these claims may take many years, the effect on the results of operations, financial position and cash flow in any given period from a revision to these estimates could be material. Other Contingencies Environmental Matters For environmental matters, the Company records a liability for estimated remediation costs when it is probable that the Company will be responsible for such costs and they can be reasonably estimated. Generally, third party specialists assist in the estimation of remediation costs. The environmental remediation liability as of March 31, 2012 is substantially related to the former manufacturing site in Goodyear, Arizona (the Goodyear Site) discussed below. The Goodyear Site was operated by UniDynamics/Phoenix, Inc. (UPI), which became an indirect subsidiary of the Company in 1985 when the Company acquired UPIs parent company, UniDynamics Corporation. UPI manufactured explosive and pyrotechnic compounds, including components for critical military programs, for the U.S. government at the Goodyear Site from 1962 to 1993, under contracts with the Department of Defense and other government agencies and certain of their prime contractors. No manufacturing operations have been conducted at the Goodyear Site since 1994. The Goodyear Site was placed on the National Priorities List in 1983, and is now part of the Phoenix-Goodyear Airport North Superfund Site. In 1990, the U.S. Environmental Protection Agency (EPA) issued administrative orders requiring UPI to design and carry out certain remedial actions, which UPI has done. Groundwater extraction and treatment systems have been in operation at the Goodyear Site since 1994. A soil vapor extraction system was in operation from 1994 to 1998, was restarted in 2004, and is currently in operation. The Company recorded a liability in 2004 for estimated costs to remediate the Goodyear Site. On July 26, 2006, the Company entered into a consent decree with the EPA with respect to the Goodyear Site providing for, among other things, a work plan for further investigation and remediation activities (inclusive of a supplemental remediation investigation and feasibility study). During the fourth quarter of 2007, the Company and its technical advisors determined that changing groundwater flow rates and contaminant plume direction at the Goodyear Site required additional extraction systems as well as modifications and upgrades of the existing systems. In consultation with its technical advisors, the Company prepared a forecast of the expenditures required for these new and upgraded systems as well as the costs of operation over the forecast period through 2014. Taking these additional costs into consideration, the Company estimated its liability for the costs of such activities through 2014 to be $41.5 million as of December 31, 2007. During the fourth quarter of 2008, based on further consultation with the Companys advisors and the EPA and in response to groundwater monitoring results that reflected a continuing migration in contaminant plume direction during the year, the Company revised its forecast of remedial activities to increase the level of extraction systems and the number of monitoring wells in and around the Goodyear Site, among other things. As of December 31, 2008, the revised liability estimate was $65.2 million which resulted in an additional charge of $24.3 million during the fourth quarter of 2008. During the fourth quarter of 2011, additional remediation activities were determined to be required, in consultation with our advisors, to further address the migration of the contaminant 19 plume. As a result, the Company recorded a charge of $30.3 million during the fourth quarter of 2011, extending the accrued costs through 2016. The total estimated gross liability was $62.4 million as of March 31, 2012, and as described below, a portion is reimbursable by the U.S. Government. The current portion of the total estimated liability was approximately $16.0 million and represents the Companys best estimate, in consultation with its technical advisors, of total remediation costs expected to be paid during the twelve-month period. Estimates of the Companys environmental liabilities at the Goodyear Site are based on currently available facts, present laws and regulations and current technology available for remediation, and are recorded on an undiscounted basis. These estimates consider the Companys prior experience in the Goodyear Site investigation and remediation, as well as available data from, and in consultation with, the Companys environmental specialists. Estimates at the Goodyear Site are subject to significant uncertainties caused primarily by the dynamic nature of the Goodyear Site conditions, the range of remediation alternatives available, together with the corresponding estimates of cleanup methodology and costs, as well as ongoing, required regulatory approvals, primarily from the EPA. Accordingly, it is likely that upon completing the supplemental remediation investigation and feasibility study and reaching a final work plan in or before 2016, an adjustment to the Companys liability estimate may be necessary to account for the agreed upon additional work as further information and circumstances regarding the Goodyear Site characterization develop. While actual remediation cost therefore may be more than amounts accrued, the Company believes it has established adequate reserves for all probable and reasonably estimable costs. It is not possible at this point to reasonably estimate the amount of any obligation in excess of the Companys current accruals through the 2016 forecast period because of the aforementioned uncertainties, in particular, the continued significant changes in the Goodyear Site conditions and additional expectations of remediation activities experienced in recent years. On July 31, 2006, the Company entered into a consent decree with the U.S. Department of Justice on behalf of the Department of Defense and the Department of Energy pursuant to which, among other things, the U.S. Government reimburses the Company for 21% of qualifying costs of investigation and remediation activities at the Goodyear Site. As of March 31, 2012, the Company has recorded a receivable of $12.7 million for the expected reimbursements from the U.S. Government in respect of the aggregate liability as at that date. The receivable is reduced as reimbursements and other payments from the U.S. Government are received. The Company has been identified as a potentially responsible party (PRP) with respect to environmental contamination at the Crab Orchard National Wildlife Refuge Superfund Site (the Crab Orchard Site). The Crab Orchard Site is located near Marion, Illinois, and consists of approximately 55,000 acres. Beginning in 1941, the United States used the Crab Orchard Site for the production of ordnance and other related products for use in World War II. In 1947, the Crab Orchard Site was transferred to the United States Fish and Wildlife Service (FWS), and about half of the Crab Orchard Site was leased to a variety of industrial tenants whose activities (which continue to this day) included manufacturing ordnance and explosives. A predecessor to the Company formerly leased portions of the Crab Orchard Site, and conducted manufacturing operations at the Crab Orchard Site from 1952 until 1964. General Dynamics Ordnance and Tactical Systems, Inc. (GD-OTS) is in the process of conducting the remedial investigation and feasibility study at the Crab Orchard Site, pursuant to an Administrative Order on Consent between GD-OTS and the U.S. Fish and Wildlife Service, the EPA and the Illinois Environmental Protection Agency. The Company is not a party to that agreement, and has not been asked by any agency of the United States Government to participate in any investigative or remedial activity relative to the Crab Orchard Site. The Company has been informed that GD-OTS completed a Phase I remedial investigation in 2008, and a Phase II remedial investigation in 2010. Additionally, FWS completed its human health and baseline ecological risk assessments in 2010, and submitted a revised human health risk assessment in December 2011. The draft remedial investigation, and revised human health risk assessment and baseline ecological risk reports are currently under review by FWS and GD-OTS respectively. A revised draft remedial investigation report was submitted in late December 2011, and GD-OTS is awaiting comments from FWS. Submission of a final remedial investigation report is projected for late 2012. Work on interim deliverables for the feasibility study is underway, and the draft feasibility study is expected to be submitted in March 20 2013. GD-OTS has asked the Company to participate in a voluntary cost allocation exercise, but the Company, along with a number of other PRPs that were contacted, declined citing the absence of certain necessary parties as well as an underdeveloped environmental record. In light of the ongoing investigative activities, and the apparent willingness of the US government to consider participation in an allocation proceeding, it is possible that an allocation proceeding may go forward beginning after submission of the final remedial investigation report in late 2012. The Company does not believe it likely that any determination of the allocable share of the various PRPs, including the U.S. Government, will be completed before late 2013. Although a loss is probable, it is not possible at this time to reasonably estimate the amount of any obligation for remediation of the Crab Orchard Site because the extent of the environmental impact, allocation among PRPs, remediation alternatives, and concurrence of regulatory authorities have not yet advanced to the stage where a reasonable estimate can be made. The Company has notified its insurers of this potential liability and will seek coverage under its insurance policies. Other Proceedings On January 8, 2010, a lawsuit related to the acquisition of Merrimac was filed in the Superior Court of the State of New Jersey. The action, brought by a purported stockholder of Merrimac, names Merrimac, each of Merrimacs directors, and Crane Co. as defendants, and alleges, among other things, breaches of fiduciary duties by the Merrimac directors, aided and abetted by Crane Co., that resulted in the payment to Merrimac stockholders of an allegedly unfair price of $16.00 per share in the acquisition and unjust enrichment of Merrimacs directors. The complaint seeks certification as a class of all Merrimac stockholders, except the defendants and their affiliates, and unspecified damages. Simultaneously with the filing of the complaint, the plaintiff filed a motion that sought to enjoin the transaction from proceeding. After a hearing on January 14, 2010, the court denied the plaintiffs motion. All defendants thereafter filed motions seeking dismissal of the complaint on various grounds. After a hearing on March 19, 2010, the court denied the defendants motions to dismiss and ordered the case to proceed to pretrial discovery. All defendants have filed their answers and deny any liability. The Court certified the class, and the parties are engaged in pre-trial discovery. The Company believes that it has valid defenses to the underlying claims raised in the complaint. The Company has given notice of this lawsuit to Merrimac's and the Companys insurance carriers and will seek coverage for any resulting loss. As of March 31, 2012, no loss amount has been accrued in connection with this lawsuit because a loss is not considered probable, nor can an amount be reasonably estimated. The Company is defending a series of five separate lawsuits, which have now been consolidated, revolving around a fire that occurred in May 2003 at a chicken processing plant located near Atlanta, Georgia that destroyed the plant. The aggregate damages demanded by the plaintiff, consisting largely of an estimate of lost profits which continues to grow with the passage of time, are currently in excess of $260 million. These lawsuits contend that certain fiberglass-reinforced plastic material manufactured by the Company that was installed inside the plant was unsafe in that it acted as an accelerant, causing the fire to spread rapidly, resulting in the total loss of the plant and property. In September 2009, the trial court entertained motions for summary judgment from all parties, and subsequently denied those motions. In November 2009, the Company sought and was granted permission to appeal the trial courts denial of its motions. The appellate court issued its opinion on November 24, 2010, rejecting the plaintiffs claims for per se negligence and statutory violations of the Georgia Life Safety Code, but allowing the plaintiffs to proceed on their ordinary negligence claim, which alleges that the Company failed to adequately warn end users of how the product would perform in a fire. The Company believes that it has valid defenses to the remaining claims alleged in these lawsuits. The trial commenced on April 12, 2012, and a verdict is expected in early May 2012. The Company has given notice of these lawsuits to its insurance carriers and will seek coverage for any resulting losses. The Companys carriers have issued standard reservation of rights letters but are engaged with the Companys trial counsel to monitor the defense of these claims. If the plaintiffs in these lawsuits were to prevail at trial and be awarded the full extent of their claimed damages, and insurance coverage were not fully available, the resulting liability could have a material effect on the Companys results of operations and cash flows in the periods affected. As of March 31, 2012, no loss amount has been accrued in connection with these suits because a loss is not considered probable, nor can an amount be reasonably estimated. 21 Pursuant to recently enacted regulations in New Jersey, the Company performed certain tests of the indoor air quality of approximately 40 homes in a residential area surrounding a former manufacturing facility in Roseland, New Jersey, to determine if any contaminants (volatile organic compound vapors from groundwater) from the facility were present in those homes. The Company installed vapor mitigation equipment in three homes where contaminants were found. On April 15, 2011, those three homeowners, and the tenants in one of those homes, filed separate suits against the Company seeking unspecified compensatory and punitive damages for their lost property value and nuisance. In addition, a homeowner in the testing area, whose home tested negative for the presence of contaminants, filed a class action suit against the Company on behalf of himself and 142 other homeowners in the surrounding area, claiming damages in the nature of loss of value on their homes due to their proximity to the facility. It is not possible at this time to reasonably estimate the amount of a loss and therefore, no loss amount has been accrued for the claims because among other things, the extent of the environmental impact, consideration of other factors affecting value have not yet advanced to the stage where a reasonable estimate can be made. A number of other lawsuits, claims and proceedings have been or may be asserted against the Company relating to the conduct of its business, including those pertaining to product liability, patent infringement, commercial, employment, employee benefits, environmental and stockholder matters. While the outcome of litigation cannot be predicted with certainty, and some of these other lawsuits, claims or proceedings may be determined adversely to the Company, the Company does not believe that the disposition of any such other pending matters is likely to have a material impact on its financial condition or liquidity, although the resolution in any reporting period of one or more of these matters could have a significant impact on the Companys results of operations and cash flows for that period. Other Commitments The Company entered into a seven year operating lease for an airplane in the first quarter of 2007 which includes a maximum residual value guarantee of $14.1 million by the Company if the fair value of the airplane is less than $22.1 million. This commitment is secured by the leased airplane and the residual value guarantee liability is $2.3 million as of March 31, 2012. 22 Note 9Pension and Other Postretirement Benefit Plans The components of net periodic cost are as follows:
The Company expects, based on current actuarial calculations, to contribute approximately $5 million to its defined benefit plans and $1 million to its other postretirement benefit plans in 2012, of which $0.8 million and $0.3 million have been contributed during the first quarter of 2012, respectively. The Company contributed $47.5 million to its defined benefit plans and $1.4 million to its other postretirement benefit plans in 2011. Cash contributions for subsequent years will depend on a number of factors, including the impact of the Pension Protection Act signed into law in 2006, changes in minimum funding requirements, long-term interest rates, the investment performance of plan assets and changes in employee census data affecting the Companys projected benefit obligations. Note 10Income Taxes The Company calculates its income tax provision in accordance with the requirements of ASC Topic 740, Income Taxes. The Companys effective tax rate of 29% for the three months ended March 31, 2012 is lower than the Companys effective tax rate of 31% for the three months ended March 31, 2011 primarily due to a lower rate on non-U.S. earnings partially offset by the statutory expiration of the U.S. federal research tax credit as of December 31, 2011. The Companys effective tax rate for the three months ended March 31, 2012 is lower than the statutory U.S. federal tax rate primarily as a result of income earned in jurisdictions with tax rates lower than the U.S. statutory rate, and the U.S. federal tax benefit for domestic manufacturing activities. These items are partially offset by net U.S. state taxes and certain expenses that are statutorily non-deductible for income tax purposes. During the three months ended March 31, 2012, the Companys gross unrecognized tax benefits increased by $0.4 million as a result of tax positions taken in both the current and prior periods. During the three months ended March 31, 2012, the total amount of unrecognized tax benefits that, if recognized, would affect the Companys effective tax rate increased by $0.5 million. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of its income tax expense. During the three months ended March 31, 2012, the Company recognized $0.1 million of interest and penalty expense related to unrecognized tax benefits in its consolidated statement of operations. As of March 31, 2012 and December 31, 2011, the Company had accrued $0.7 million and $0.6 million, respectively, of interest and penalty expense related to unrecognized tax benefits on its consolidated balance sheet. As of March 31, 2012, it is reasonably possible that the Companys unrecognized tax benefits will not significantly change during the next twelve months. 23 The Companys income tax returns are subject to examination by the U.S. federal, U.S. state and local, and non-U.S. tax authorities. The Internal Revenue Service (IRS) has completed its examinations of the Companys consolidated U.S. federal income tax returns through 2008; however, the 2008 federal income tax return of an acquired subsidiary remains open to examination. With few exceptions, the Company is no longer subject to U.S. state and local or non-U.S. income tax examinations for years before 2007. In March 2012, the German tax authorities commenced an examination of the 2006 through 2009 income tax returns of a German subsidiary of the Company. As of March 31, 2012, the Company and its subsidiaries are under examination in additional jurisdictions, including Canada (2007 through 2009), Germany (2000 through 2005), and California (2007 and 2008). The Company believes that adequate accruals have been provided for all jurisdictions open years. Note 11Long-Term Debt and Notes Payable The following table summarizes the Companys debt as of March 31, 2012 and December 31, 2011:
Note 12Derivative Instruments and Hedging Activities The Company is exposed to certain risks related to its ongoing business operations, including market risks related to fluctuation in currency exchange. The Company uses foreign exchange contracts to manage the risk of certain cross-currency business relationships to minimize the impact of currency exchange fluctuations on the Companys earnings and cash flows. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. As of March 31, 2012, the foreign exchange contracts designated as hedging instruments did not have a material impact on the Companys statement of operations, balance sheet or cash flows. Foreign exchange contracts not designated as hedging instruments which primarily pertain to foreign exchange fluctuation risk of intercompany positions, had a notional value of $172 million and $155 million as of March 31, 2012 and December 31, 2011, respectively. The settlement of derivative contracts for the three months ended March 31, 2012 and 2011resulted in a net cash outflow of $5.8 million and a net cash inflow of $5.5 million, respectively, and is reported with Total (used for) provided by operating activities on the Condensed Consolidated Statements of Cash Flows. Note 13Fair Value Measurements Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are to be considered from the perspective of a market participant that holds the asset or owes the liability. The standards also establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. 24 The standards describe three levels of inputs that may be used to measure fair value: Level 1: Quoted prices in active markets for identical or similar assets and liabilities. Level 2: Quoted prices for identical or similar assets and liabilities in markets that are not active or observable inputs other than quoted prices in active markets for identical or similar assets and liabilities. Level 2 assets and liabilities include over-the-counter derivatives, principally forward foreign exchange contracts, whose value is determined using pricing models with inputs that are generally based on published foreign exchange rates and exchange traded prices, adjusted for other specific inputs that are primarily observable in the market or can be derived principally from or corroborated by observable market data. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The following table summarizes assets and liabilities measured at fair value on a recurring basis at the dates indicated:
Valuation TechniqueThe Companys derivative assets and liabilities include foreign exchange contract derivatives that are measured at fair value using internal models based on observable market inputs such as forward rates and interest rates. Based on these inputs, the derivatives are classified within Level 2 of the valuation hierarchy. The carrying value of the Companys financial assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable and short-term loans payable approximate fair value, without being discounted, due to the short periods during which these amounts are outstanding. Long-term debt rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value for debt issues that are not quoted on an exchange. The estimated fair value of long-term debt is measured using Level 2 inputs and was $415.3 million and $419.0 million at March 31, 2012 and December 31, 2011, respectively. 25 CRANE CO. AND SUBSIDIARIES MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Part I Financial Information
This Quarterly Report on Form 10-Q contains information about Crane Co., some of which includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical information or statements about our current condition. You can identify forward-looking statements by the use of terms such as believes, contemplates, expects, may, could, should, would, or anticipates, other similar phrases, or the negatives of these terms. Reference herein to Crane, we, us, and, our refer to Crane Co. and its subsidiaries unless the context specifically states or implies otherwise. References to core business or core sales in this report include sales from acquired businesses starting from and after the first anniversary of the acquisition, but exclude currency effects. Amounts in the following discussion are presented in millions, except employee, share and per share data, or unless otherwise stated. We have based the forward-looking statements relating to our operations on our current expectations, estimates and projections about us and the markets we serve. We caution you that these statements are not guarantees of future performance and involve risks and uncertainties. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. There are a number of other factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking statements. The factors that we currently believe to be material are detailed in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed with the Securities and Exchange Commission and are incorporated by reference herein. Overview We are a diversified manufacturer of highly engineered industrial products. Our business consists of five segments: Aerospace & Electronics, Engineered Materials, Merchandising Systems, Fluid Handling and Controls. Our primary markets are aerospace, defense electronics, non-residential construction, recreational vehicle (RV), transportation, automated merchandising, chemical, pharmaceutical, oil, gas, power, nuclear, building services and utilities. Our strategy is to grow the earnings and cash flows of niche businesses with leading market shares, acquire businesses that fit strategically with existing businesses, aggressively pursue operational and strategic linkages among our businesses, build a performance culture focused on productivity and continuous improvement, continue to attract and retain a committed management team whose interests are directly aligned with those of our shareholders and maintain a focused, efficient corporate structure. Outlook Our sales depend heavily on industries that are cyclical in nature, or are subject to market conditions which may cause customer demand for our products to be volatile. These industries are subject to fluctuations in domestic and international economies as well as to currency fluctuations, inflationary pressures, and commodity costs. The global economic recovery remains uncertain due, in part, to persistent high unemployment in the U.S. and Europe, a weak U.S. and European housing market, government budget reduction plans, and concerns over the deepening European sovereign debt crisis. Although a slower global economy is likely, we believe we are well positioned to achieve profitable growth in 2012. We expect a combination of limited market growth and gains in market share to drive profitable growth in 2012, albeit at a reduced, year-over-year rate compared to 2011. We expect further improvements in our longer, late cycle businesses within Fluid Handling and Aerospace & Electronics while our outlook is relatively stable for our short cycle businesses (Engineered Materials and Merchandising Systems), with the potential for slight improvement in 2012. Specifically, in 2012, we expect core sales to increase 5% to 6%, sales from our acquisitions, net of divestures to increase less than 1% and unfavorable foreign exchange of 2%. In aggregate, we expect total year-over-year sales growth of 3% to 5%. 26 Aerospace & Electronics In 2012, we believe market conditions in the aerospace industry will remain positive despite high fuel prices and, accordingly, we expect to achieve higher sales and profits in our Aerospace Group as we benefit from higher build rates for large commercial aircraft, new products and an expanded global sales force. In addition, we expect an increase in aftermarket sales resulting from continued commercial airline growth. We forecast reasonably stable results for our Electronics Group despite reductions in overall defense spending, as we expect growth in our commercial business, which comprises about 39% of Electronics sales, to offset a slight decline in defense related sales. Engineered Materials In 2012, we expect a modest increase in sales volume and operating profit in our Engineered Materials segment despite challenging end market conditions, as we leverage market share gains and benefit from new product applications. Merchandising Systems In 2012, we expect relatively flat sales for our Merchandising Systems segment, reflecting modest core growth offset by unfavorable foreign exchange translation. Operating profit is expected to improve led by productivity initiatives across the segment. In Payment Solutions, despite headwinds in the first half of 2012 related to the German gaming market, we expect sales to increase modestly due to a gradual improvement in market demand for new products. In Vending Solutions, we expect revenue to remain close to 2011 levels, reflecting continued economic uncertainty. Fluid Handling For 2012, in our Fluid Handling segment, we expect further sales growth and margin improvement over 2011 levels led by a continuing recovery in our Energy and ChemPharma business units, which are positioned to benefit from exposure to their late cycle end markets and an expanded sales force. We expect unfavorable foreign exchange translation to partially offset core sales growth in 2012. We also expect to see continued improvement in both our MRO and project business. Refining quote activity is improving in both the U.S. and the Middle East, and we expect this trend to continue in 2012. Market conditions in Europe have stabilized since the fourth quarter of 2011, but remain somewhat depressed, reflecting economic uncertainty. Demand from global power markets has softened, with some customers delaying delivery dates. Controls In our Controls segment, we anticipate further growth in the oil and gas, transportation and industrial end markets which should result in higher sales and operating profit in 2012. 27 Results from Operations Three Month Periods Ended March 31 All comparisons below refer to the first quarter 2012 versus the first quarter 2011, unless otherwise specified. First quarter of 2012 compared with first quarter of 2011
First quarter 2012 sales increased $46.9 million, or 7.7% compared to the first quarter of 2011. Core business sales for the first quarter increased approximately $47.9 million, or 7.8%. Sales also increased $4.4 million, due to the net impact of divestitures and acquisitions. The impact of currency translation decreased reported sales by approximately $5.4 million as the U.S. dollar strengthened against other major currencies in the first quarter of 2012 compared to the first quarter of 2011. Net sales related to operations outside the U.S. were 40.9% and 41.1% of total net sales for the quarters ended March 31, 2012 and 2011, respectively. Operating profit was $79.6 million in the first quarter 2012 compared to $72.9 million in the same period of 2011. The increase in operating profit reflected improved performance in our Fluid Handling, Aerospace & Electronics and Controls segments. Operating profit margins were 12.1% in the first quarter of 2012, compared to 11.9% in the comparable period in 2011. Miscellaneous net decreased by $4.0 million in the first quarter 2012 compared to the same period of 2011. The decrease primarily reflected the absence of a net gain primarily associated with the sale of a building in Ontario, Canada in 2011 and the divestiture of a small product line. Our effective tax rate is affected by a number of items, both recurring and discrete, including the amount of income we earn in different jurisdictions and their respective statutory tax rates, changes in the valuation of our deferred tax assets and liabilities, changes in tax laws, regulations and accounting principles, the continued availability of statutory tax credits and deductions, the continued reinvestment of our overseas earnings, and examinations initiated by tax authorities around the world. Our effective tax rate of 29% for the three months ended March 31, 2012 is lower than our effective rate of 31% for the three months ended March 31, 2011 primarily due to a lower rate on non-U.S. earnings partially offset by the statutory expiration of the U.S. federal research tax credit as of December 31, 2011. 28 Segment Results Aerospace & Electronics
The first quarter 2012 sales increase of $13.2 million reflected sales increases of $10.2 million and $3.0 million in the Aerospace Group and Electronics Group, respectively. The segments operating profit increased $4.0 million, or 11.8%, in the first quarter of 2012 when compared to the same period in the prior year, driven by strong sales growth and margin improvement in the Aerospace Group which more than offset a decrease in the Electronics Group. Aerospace Group sales of $108.9 million increased $10.2 million, or 10.4%, from $98.6 million in the prior year period. The increase was due to higher original equipment manufacturers (OEM) product sales of 13.7% and higher aftermarket product sales of 5.7%. The OEM sales increase reflects higher commercial product sales associated with business jets and large aircraft while sales associated with regional aircraft grew only slightly. The aftermarket sales increase reflects higher commercial repair and overhaul product sales. During the first quarter of 2012, sales to OEMs and sales to aftermarket customers were 60.8% and 39.2%, respectively, of total sales, compared to 59.1% and 40.9%, respectively, in the same period last year. Aerospace operating profit increased by $5.0 million in the first quarter of 2012, compared to the first quarter of 2011, primarily due to leverage on the higher sales volume. Electronics Group sales of $66.3 million increased $3.0 million, or 4.7%, from $63.3 million in the prior year period reflecting higher sales of our Custom Power Solutions products. Operating profit decreased $1.0 million compared to the first quarter of 2011, primarily reflecting a change in the product mix. The Aerospace & Electronics segment backlog was $437.8 million at March 31, 2012, compared with $410.8 million at December 31, 2011 and $454.6 million at March 31, 2011. 29 Engineered Materials
First quarter 2012 sales of $58.2 million decreased $3.7 million, or 5.9%, reflecting lower sales to our transportation-related customers and RV manufacturers, slightly offset by an increase in sales to our building products customers. We experienced an 18.9% sales decrease to our transportation-related customers, reflecting slower acceptance of new products and a reduction in market share due to competitive conditions. Sales to our traditional RV manufacturers decreased by 3.3% reflecting lower OEM shipments to RV dealers as RV OEMs are cautious about retail customer demand, particularly in light of high gasoline prices. Sales to our building products customers increased by 2.5% aided by market share increases and new product sales. Operating profit in the first quarter of 2012 decreased $1.7 million, or 17.1%, primarily as a result of lower sales. The Engineered Materials segment backlog was $11.1 million at March 31, 2012, compared with $11.1 million at December 31, 2011 and $13.8 million at March 31, 2011. Merchandising Systems
First quarter 2012 sales decreased $7.2 million, or 7.6%, reflecting a core sales decrease of $6.2 million, or 6.6%, and unfavorable foreign currency translation of $1.0 million, or 1.0%. We experienced lower sales in our Payment Solutions business, and to a lesser extent in our Vending Solutions business, particularly in Europe. The decline in Payment Solutions is primarily related to German legislation which began to negatively impact a portion of our gaming-related sales in the second half of 2011. Operating profit was generally flat, in the first quarter of 2012, reflecting solid productivity gains and the absence of a non-recurring purchase accounting charge of $1.7 million associated with our Money Controls acquisition in 2011 which offset the impact of lower sales and the costs to settle a lawsuit in 2012. The Merchandising Systems segment backlog was $30.0 million at March 31, 2012, compared with $15.2 million at December 31, 2011 and $25.0 million at March 31, 2011. Fluid Handling
First quarter 2012 sales increased $37.7 million, or 14.3%, including an increase in core sales of $37.4 million, or 14.2%, and a sales increase resulting from the acquisition of WTA of $4.4 million, or 1.7%, slightly offset by unfavorable foreign currency exchange of $4.1 million, or 1.6%. The core sales performance reflected sales growth in our later, long cycle Energy and ChemPharma businesses due to strong demand in the North America chemical 30 industry as well as generally higher sales in the remaining businesses across the segment. Operating profit in the first quarter of 2012 increased $4.2 million reflecting the higher sales which more than offset throughput inefficiencies and higher manufacturing costs in certain European manufacturing operations. The Fluid Handling segment backlog was $337.5 million at March 31, 2012, compared with $313.8 million at December 31, 2011 and $305.3 million at March 31, 2011. Controls
The first quarter 2012 sales increase of $6.8 million, or 23.9%, reflected improvement in industrial, transportation and upstream oil and gas related demand. Operating profit increased $1.6 million, or 51.1%, reflecting the leverage on the higher sales. The Controls segment backlog was $29.8 million at March 31, 2012, compared with $27.1 million at December 31, 2011 and $24.1 million at March 31, 2011. 31 Liquidity and Capital Resources Our operating philosophy is to deploy cash provided from operating activities, when appropriate, to provide value to shareholders by reinvesting in existing businesses, by making acquisitions that will complement our portfolio of businesses, by paying dividends and/or repurchasing shares. Cash and cash equivalents decreased by $49 million to $196 million at March 31, 2012 compared with $245 million at December 31, 2011. Our current cash balance, together with cash we expect to generate from future operations and the $300 million available under our existing committed revolving credit facility, are expected to be sufficient to finance our short- and long-term capital requirements, as well as fund payments associated with our asbestos and environmental liabilities and expected pension contributions. In addition, we believe our credit ratings afford us adequate access to public and private markets for debt. We have no borrowings outstanding, as of March 31, 2012, under our five-year $300 million Amended and Restated Credit Agreement, which expires in September 2012. We expect to enter into an updated credit agreement in the second quarter of this year. Also, there are no significant debt maturities coming due until the third quarter of 2013, when senior unsecured notes having an aggregate principal amount of $200 million mature. We have approximately $196 million of cash held by our non-U.S. subsidiaries as of March 31, 2012, which is subject to additional tax upon repatriation to the U.S. Our intent is to permanently reinvest the earnings of our non-U.S. operations, and current plans do not anticipate that we will need funds generated from our non-U.S. operations to fund our U.S. operations. In the event we were to repatriate the cash balances of our non-U.S. subsidiaries, we would provide for and pay additional U.S. and non-U.S. taxes in connection with such repatriation. Operating Activities Cash used for operating activities was $42.8 million in the first three months of 2012, an increase of $26.6 million compared to the first three months of 2011. The increase resulted primarily from higher working capital requirements to support improving sales trends, partially offset by higher earnings. Net asbestos-related payments in the first three months of 2012 and 2011 were $18.2 million and $12.7 million, respectively. Investing Activities Cash flows relating to investing activities consist primarily of cash used for acquisitions and capital expenditures and cash provided by divestitures of businesses or assets. Cash used for investing activities was $7.0 million in the first three months of 2012, compared to $2.6 million used in the comparable period of 2011. The increase of cash used for investing activities was primarily due to the absence of proceeds received from the sale of a building in Ontario, Canada, in 2011. This was partially offset by a decline in capital spending of $0.9 million to $7.2 million in the first quarter of 2012 compared to $8.1 million in the first quarter of 2011. Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development and improving information systems. We expect our capital expenditures to approach $40 million in 2012. Financing Activities Financing cash flows consist primarily of payments of dividends to shareholders, share repurchases, repayments of indebtedness and proceeds from the issuance of common stock. Cash used for financing activities was $4.0 million during the first three months of 2012 compared to $27.0 million used during the first three months of 2011. The decrease of cash used for financing activities during the first three months of 2012 was driven by dividends paid of $15.1 million, partially offset by net proceeds received from employee stock option exercises of $8.4 million. The first three months of 2011 included a repurchase of 634,900 shares of our common stock at a cost of $30 million. 32 Recent Accounting Pronouncements Information regarding new accounting pronouncements is included in Note 2 to the Condensed Consolidated Financial Statements. 33
There have been no material changes in the information called for by this item since the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2011.
Disclosure Controls and Procedures. The Companys Chief Executive Officer and Principal Financial Officer have evaluated the effectiveness of the design and operation of the Companys disclosure controls and procedures as of the end of the period covered by this quarterly report. The Companys disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that are filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commissions rules and forms and that the information is accumulated and communicated to the Companys Chief Executive Officer and Principal Financial Officer to allow timely decisions regarding required disclosure. Based on this evaluation, the Companys Chief Executive Officer and Principal Financial Officer have concluded that these controls are effective as of the end of the period covered by this quarterly report. Changes in Internal Control over Financial Reporting. During the fiscal quarter ended March 31, 2012, there have been no changes in the Companys internal control over financial reporting, identified in connection with our evaluation thereof, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting. 34 Part II Other Information
Discussion of legal matters is incorporated by reference from Part 1, Item 1, Note 9, Commitments and Contingencies, of this Quarterly Report on Form 10-Q, and should be considered an integral part of Part II, Item 1, Legal Proceedings.
Information regarding risk factors appears in Managements Discussion and Analysis of Financial Condition and Results of Operations Information Relating to Forward-Looking Statements, in Part I Item 2 of this Quarterly Report on Form 10-Q and in Item 1A of Crane Co.s Annual Report on Form 10-K for the year ended December 31, 2011. There has been no significant change to the risk factors disclosed in the Companys Annual Report on Form 10-K for the year ended December 31, 2011.
The table above only relates to the open-market repurchases of our common stock during the quarter. We routinely receive shares of our common stock as payment for stock option exercises and the withholding taxes due on stock option exercises and the vesting of restricted stock awards from stock-based compensation program participants.
Not applicable 35
Notes to Exhibits List: Attached as Exhibit 101 to this Quarterly Report on Form 10-Q are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations for the three months ended March 31, 2012 and 2011, respectively; (ii) the Condensed Consolidated Balance Sheets at March 31, 2012 and December 31, 2011; and (iii) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and 2011, respectively. Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is not deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. 36 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.
37 Exhibit Index
Notes to Exhibits List: Attached as Exhibit 101 to this Quarterly Report on Form 10-Q are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations for the three months ended March 31, 2012 and 2011, respectively; (ii) the Condensed Consolidated Balance Sheets at March 31, 2012 and December 31, 2011; and (iii) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and 2011, respectively. Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is not deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. 38 |


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The Restoration After Steelcase acquired the Meyer May house in 1985, extensive research was done to determine the original design. Bit by bit, the evidence accumulated until Wright's 1909 vision was revealed. The restoration took two years and included demolition of a 1922 addition plus painstaking, expert attention to hundreds of exterior and interior details. It's the most completely restored of Wright's homes.
Tour The House When Wright designed the Meyer May house for a prominent Grand Rapids clothier, he had fully developed his Prairie style of architecture. Today, as a meticulous restoration complete with original furnishings and faithfully executed reproductions, the Meyer May house provides the rare opportunity to experience a Prairie house exactly as he intended. Take an online tour or visit the Meyer May house at 450 Madison Avenue SE, Grand Rapids, MI 49503 — Tuesdays & Thursdays from 10 a.m. to 2 p.m. Sundays from 1-5 p.m. — Last tour starts 1 hr. prior to closing — Free admission — No reservations needed for groups of 10 or less — Closed holidays — Call (616) 246-4821 for tour information and group reservations VIEW GALLERIES > VIEW CHRONOLOGY >
Docent Stories For the past 22 years, trained volunteer docents have deepened visitors' experience of the Meyer May house. Their unique perspectives and memories offer intimate insights into the continuing impact of Wright's work and its significance today. Discover the memorable stories behind a docent's picture or name.
Paul Asselin Since 2009
Cindy Bandstra Since 1987
Kira Block Since 1987
Erwin Broekhuis Since 1990
Jim Brown Since 1998
Scott Bultman Since 1998
Sue Cone Since 2001
Sandy Connor Since 1987
Kathryn Day-Murray Since 2008
Kathy Deane Since 1998
Don Dekker Since 2001
Jeff Dekker Since 1998
Pat DeMey Since 2001
Wendy DeNolf Since 1994
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Karen Hartley Since 1987
Dave Hoogterp Since 1989
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Jon Miller Since 2006
Jim Myaard Since 2009
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Terri Piersma Since 2001
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Carol Sabatini Since 1998
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Ardon Schambers Since 1998
Barb Schambers Since 1989
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Jeff Schutte Since 1987
Deb Shrontz Since 2008
Jean Smith Since 1987
Lois Tomasiewicz Since 1987
Dan VanTil Since 2001
Nan Wernette Since 2001
Chris Woomer Since 1998 |

subset: commoncrawl


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The Future
Many decades of research and analysis will be required before the information embedded in the human genome is understood in detail. Over time, the causes of more and more human diseases will be understood at the fundemental level of molecules. Such knowledge is likely to revolutionize medicine. New drugs will target the underlying causes of disease. Genetic testing before prescribing drugs will ensure that individuals take drugs that will treat their ailments effectively, without dangerous side effects.
Our understanding of basic biology undoubtedly will grow as well in the wake of the Human Genome Project. Scientists will better understand the essential components of life, how cells and organisms work, and how species evolved on Earth.
The Human Genome Project is likely to affect the course of science and medicine throughout the 21st century. Tension may well grow between scientific advances and people's desire for a simpler way of life. The challenge will be to maintain a healthy balance, to avoid the potential dangers arising from advances in genetics and to put them, instead, to good use. This is, after all, a very old mandate:
The bravest are surely those who have the clearest vision of what is before them, glory and danger alike, and yet notwithstanding go out to meet it. -Thucydides
Last Reviewed: April 10, 2012


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ABC News' Matt Jaffe reports:
Chicago schools chief Arne Duncan, one of President-elect Barack Obama's possible picks for Secretary of Education, visited the Department of Education Thursday morning in Washington D.C., but cautioned that his trip had nothing to do with any speculation that he might be named to lead the Department.
"Obviously it is flattering," Duncan told ABC News. "But I'm spending like no time thinking about it."
Duncan traveled to D.C. for a Jobs for America's Graduates board meeting, but took time to brief outgoing Education Secretary Margaret Spellings on a Dec. 11 press conference the two will hold in Chicago on the Teacher Incentive Fund.
"There's no story here," he said, noting that the possibility of replacing Spellings did not come up in their meeting.
Duncan emphasized that at the present time he is only concentrating on his current Chicago post.
"I've really been focused on Chicago," he said. "That's where my head's been. That's my job. I've got more than 5,000 kids that need me thinking about them. That's what I'm focused on every day."
The Chicago schools boss said that with Obama set to take over the Oval Office next month, there's reason for optimism about the nation's education system.
"There's a huge opportunity for him to the best education president in decades," he said. "He's got this very thoughtful, comprehensive strategy looking at child education and affordability on the higher education side. He's got this extraordinary interest in making a difference in the lives of the country's children."
"A lot of his education strategy has been based on his work in Chicago," he continued. "He did a lot of visiting schools here, talked about schools in speeches and actually wrote about it in his book."
Duncan called Obama's election victory "amazing — absolutely amazing".
"I couldn't be more proud of what he's done and what he's gonna do," he said. "Quality education made a huge difference in the lives of he and Michelle. It's part of their core. These are people who came from humble beginnings and worked hard in school and did well. They lived it."
– Matt Jaffe


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It was in the year 1838 that the first Catholic families settled in North Ridgeville. Over the next many years, new German Catholic families moved into the area. At first, these families needed to travel elsewhere to attend Mass. They then organized themselves and raised enough funds to buy land and erect a church. The Bishop agreed, established a mission, and on Christmas Day, 1875, the first Mass was celebrated. It was named after the person who donated the most money to the building fund, Mr. Peter Meyer. Father Jacob Heidegger was appointed its first administrator. The congregation opened its school one year after the church's dedication. In 1879, St. Peter community was given parochial status with Father Victor Haussner being named its first pastor. After Father Haussner's death in 1881, St. Peter's had a regular turn-over of priests. Its status also went back and forth between parochial and missionary status. In 1909, a new pastor, Father Joseph Trapp, was appointed when the community was permanently given parochial status. A new school was erected the year after which was run by the Sisters of Notre Dame. Tragedy struck the community when a fire destroyed the church in 1914. It was almost 10 years later when the new and present church was built under the leadership of a new pastor, Father John Rhein. It was dedicated on May 27, 1923 with the current rectory being built in 1925. Father John Rhein died in 1938 and is buried in St. Peter Cemetery. A number of Pastors have led St. Peter Parish since, including:
Father Halloran arranged for the new and present school and the new convent (the current Parish Center) to be built along with making many Church renovations. Father Liam Kitt added to the school and completed the new gymnasium in 1975. St. Peter has had only 4 pastors in the last 30+ years:


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Sleeping with Your Smartphone How to Break the 24/7 Habit and Change the Way You Work Does it have to be this way? Can't resist checking your smartphone or mobile device? Sure, all this connectivity keeps you in touch with your team and the office--but at what cost? In "Sleeping with Your Smartphone," Harvard Business School professor Leslie Perlow reveals how you can disconnect and become more productive in the process. In fact, she shows that you can devote more time to your personal life and accomplish more at work. ExcerptReview
TED Institute Leslie Perlow: Thriving in an overconnected world While email and mobile technology have greatly accelerated the way we do business, Leslie Perlow argues that the always "on" mentality can have a long-term detrimental effect on many organizations. In her sociological experiments at BCG and other organizations, Perlow found that if the team – rather than just individuals - collectively rallies around a goal of personal value, it unleashes a process that creates better work and better lives.
The Economist Intelligence Unit report The personalization challenge: business culture and mobile security Video Interview: EIU Editor Riva Richmond interviews Harvard Business School Professor Leslie Perlow about the risks to organisations from the undirected, always-connected work enabled by mobile devices.
Overcome Your Work Addiction Consider the following: Works long hours. Carries wireless device everywhere. On the phone at kid's soccer game. Checks in frequently over vacation. Does this describe your life? If you're like the hundreds of executive education students I teach each year at the Harvard Business School, you point to the hours you work, the places from which you work (even on vacation), the times at which you work (even when supposed to be spending time with family and friends), the fact that your wireless device is never far from reach, and declare without any hesitation that you're always "on". And, you probably declare yourself an addict.