<PAGE>
FORM 10-K405
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1995
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 1-1657
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CRANE CO.
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(Exact name of registrant as specified in its charter)
Delaware 13-1952290
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No)
100 First Stamford Place, Stamford, CT 06902
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 363-7300
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
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Common shares, par value $1.00 New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
7 1/4% senior notes due June, 1999
8 1/2% senior notes due March, 2004
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(Title of Class)
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 _____
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Indicate by check mark if the disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (X)
Based on the closing sales price of January 31, 1996 the aggregate market value
of the voting stock held by nonaffiliates of the registrant was $1,194,520,787.
The number of shares outstanding of the registrant's common stock, $1.00 par
value was 30,145,635 at January 31, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Portions of the annual shareholders report for the year ended December 31, 1995
are incorporated by reference into Parts I, II and IV.
Portions of the proxy statement for the annual shareholders meeting May 6, 1996
are incorporated by reference into Parts I and III.
<PAGE>
PART I
ITEM 1. BUSINESS
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Crane is a diversified manufacturer of engineered industrial products and
the nation's largest American distributor of doors, windows and millwork.
Founded in 1855, Crane employs over 10,000 people in North America, Europe, Asia
and Australia.
STRATEGY
The company's strategy is to grow the earnings of niche businesses with high
market share, build an aggressive and committed management team whose interests
are directly aligned to those of the shareholders, and maintain a focused,
efficient corporate structure.
ACQUISITIONS
In the past five years, the company has completed twelve acquisitions.
During 1995, the company completed three acquisitions at a cost of $9.4 million.
In February the company, through its Barksdale subsidiary, acquired Unimess
GmbH, a German-based manufacturer of a full line of solid state pressure
switches and transducers, level switches and indicating systems, and flow
measurement and control components for specialized instrumentation requirements
in numerous industrial processes. In the fourth quarter, the company acquired
Process Systems, Inc. based in Michigan. Process Systems is a manufacturer of
vertical turbine pumps and accessories for industrial applications. In November
1995, the company acquired Kessel PTE Ltd., a fluoropolymer plastic lined pipe
manufacturer with facilities in Singapore, Malaysia and Thailand.
The company completed three acquisitions in 1994 at a total cost of $240
million. The company, through its wholly-owned subsidiary Huttig Sash & Door
Company, acquired a moulding and millwork manufacturing operation in Prineville,
Oregon in May 1994. In April, 1994, the company purchased Mark Controls
Corporation, a manufacturer of automatic and manually operated valves, and
specialized instruments and controls, for commercial and industrial customers.
The company acquired ELDEC Corporation in March 1994. ELDEC's products are used
worldwide on all major commercial and business aircraft and include: position
indication and control systems, proximity switches and components, true mass
fuel flowmeters, and power conversion components and systems.
In 1993, the company completed five acquisitions at a total cost of $106
million. In December, the company acquired Burks Pumps, Inc., which has
manufacturing facilities in Piqua, Ohio and Decatur, Illinois and provides
engineered pumps for an array of specialized commercial, industrial and
municipal fluid handling applications. The products are marketed under the
Barnes, Burks, Weinman and Prosser brand names. Also included was a line of tank
cleaning equipment sold under the Sellers brand name for the industrial clean-
in-place market. This acquisition substantially increased Crane's involvement in
niche pump markets.
In October 1993, the company acquired Filon, a manufacturer of fiberglass-
reinforced plastic (FRP) panels. Filon was integrated with the company's Kemlite
unit in the fourth quarter of 1993. The Filon acquisition significantly expanded
Kemlite's position as a supplier of FRP panels to the recreational vehicle
market.
In April and May 1993 Huttig Sash & Door Company expanded its nationwide
millwork distribution by acquiring Rondel's Inc., a millwork distributor serving
the eastern Washington/western Idaho region, and the Whittier-Ruhle Millwork
Company, serving the Mid-Atlantic region.
Perflow Instruments, Ltd., a British manufacturer of pressure and flow
measurement equipment, was added to Crane Ltd. in 1993.
/1
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PART I (CONTINUED)
ITEM 1. BUSINESS (CONTINUED)
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In 1992, certain assets of Jenkins Canada, Inc., a manufacturer of bronze
and iron valves, were acquired as an addition to the company's North American
valve unit.
DIVESTITURES
In the past five years, the company has divested three businesses. In
December 1994, Huttig sold its window manufacturing business for $2.4 million.
The transaction excluded real estate and receivables. In July 1994, the company
sold Modulinc, the fiber optic channel product line of ELDEC. In April 1993,
the company sold its precision ordnance business, UniDynamics/ Phoenix for
approximately $6 million.
LONG-TERM FINANCING
In June 1994 the company sold $150,000,000 of 7 1/4% notes that will mature
on June 15, 1999. During March 1992 the company sold $100,000,000 8 1/2% notes
that will mature on March 15, 2004.
BUSINESS SEGMENTS
See pages 28 and 29 of the Annual Report to Shareholders for sales,
operating profit and assets employed of each business segment.
FLUID HANDLING
The Fluid Handling segment consists of valve, pump and water treatment
businesses. The Crane Valve business with five manufacturing facilities in
North America, as well as plants in the United Kingdom, Australia, Norway, China
and Indonesia, sells a wide variety of commodity and special purpose valves and
fluid control products for the chemical and hydrocarbon processing, power
generation, marine, general industrial and commercial construction industries.
Products are sold under the Crane, Jenkins, Pacific, Westad, Flowseal and Center
Line brands. Crane Pumps has six manufacturing facilities in the United States
located in Ohio, Illinois, Pennsylvania, West Virginia and Michigan. Pumps are
manufactured under the Deming, Weinman, Chempump, Burks, Chem/Meter, Barnes and
Process Systems brand names. Pumps are sold to a broad customer base which
includes chemical and hydrocarbon process industries, automotive, municipal,
industrial and commercial wastewater, power generation, commercial heating,
ventilation and air-conditioning industries and original equipment
manufacturers. The water treatment business has a manufacturing facility in
Pennsylvania and serves the water and wastewater treatment market. Its products
are sold under the Cochrane name. This group employs 3,200 people and had
assets of $261.2 million at December 31, 1995.
The Fluid Handling business continued to focus on reducing product costs.
Crane has established a low cost base of suppliers in China, South Korea, India,
Mexico, Romania and Poland. Cellular manufacturing techniques were successfully
implemented at Crane Ltd. in 1995 and are planned for our Brantford, Canada
bronze valve facility in 1996. Two valve manufacturing joint ventures were
established in the Far East in 1995, one in China and one in Indonesia. Both
were manufacturing and shipping valves in the fourth quarter of 1995.
Crane acquired Process Systems Inc., a manufacturer of industrial line shaft
turbine pumps in the fourth quarter of 1995. This company, with annual sales of
$9.0 million, will be integrated into Crane's existing vertical turbine pump
business in 1996.
Products in this group are sold directly to end users through Crane's sales
organization and through independent distributors and manufacturers
representatives.
/2
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PART I (CONTINUED)
ITEM 1. BUSINESS (CONTINUED)
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AEROSPACE
The Aerospace segment consists of ELDEC, Hydro-Aire, and Lear Romec.
The group employs 1,500 people and had assets of $166.6 million at year end.
The order backlog totaled $211 million at December 31, 1995, slightly above the
prior year level.
ELDEC designs, manufactures and markets custom position indication and
control systems, proximity sensors and components, true mass fuel flowmeters,
power conversion components and systems for the commercial, business and
military aerospace industries, and military marine and telecommunications
markets. These products are custom designed for specific aircraft to meet
technically demanding requirements of the aerospace industry.
ELDEC also has a $5.0 million 47% equity investment in Powec AS, a Norwegian
manufacturer of power conditioning products and systems, whose products are
complementary to the products and complex power systems engineering
capabilities at ELDEC. This accelerates the transfer of our Aerospace power
conversion technology to the commercial wireless telecommunications market.
Hydro-Aire designs, manufactures and sells anti-skid and automatic braking
systems, fuel and hydraulic pumps, and coolant pumps and systems, hydraulic and
pneumatic valves and regulators, actuators and solid state components for the
commercial, business and military aerospace industries as original equipment.
In addition, the company designs and manufactures systems similar to those above
for the retrofit of aircraft with improved systems and manufactures replacement
parts for systems installed as original equipment by the aircraft manufacturer.
All of these products are largely proprietary to the company and, to some
extent, are custom designed to the requirements and specifications of the
aircraft manufacturer or program contractor. These systems and replacement
parts are sold directly to airlines, governments, and aircraft maintenance and
overhaul companies.
Lear Romec designs, manufactures and sells lubrication and fuel pumps for
aircraft, aircraft engines and radar cooling systems for the commercial and
military aerospace industries. Lear Romec has a leading share of the non-
captive market for turbine engine lube and scavenge oil pumps. Lear Romec also
manufactures fuel boost and transfer pumps for commuter and business aircraft.
/3
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PART I (CONTINUED)
ITEM 1. BUSINESS (CONTINUED)
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ENGINEERED MATERIALS
The Engineered Materials segment consists of five businesses: Kemlite, Cor
Tec, Resistoflex, Polyflon and Crane Plumbing.
This group had assets of $100.6 million at December 31, 1995 and employed
1,200 people. Order backlog at year end 1995 was strong at $22.5 million.
Although down significantly from the inflated level at year end 1994 which was
caused by anticipated fiberglass shortages, this backlog is historically high
compared to normal order backlog levels.
Kemlite manufactures fiberglass-reinforced plastic panels for use
principally by the transportation industry in refrigeration and dry van truck
trailers and recreational vehicles. Kemlite products are also sold to the
commercial construction industry for food processing, fast food restaurant and
supermarket applications, and to institutions where fire rated materials with
low smoke generation and minimum toxicity are required. Kemlite sells its
products directly to the truck trailer and recreational vehicle manufacturers.
Kemlite uses distributors to serve its commercial construction market and some
segments of the recreational vehicle market.
Cor Tec manufactures fiberglass-reinforced laminated panels serving the
truck and truck trailer segment of the transportation industry. Cor Tec
markets its products directly to the truck and truck trailer manufacturers.
Resistoflex is engaged in the design, manufacture and sale of corrosion-
resistant, plastic-lined steel pipes, fittings, tanks, valves, expansion joints
and hose used primarily by the pharmaceutical, chemical processing, pulp and
paper, petroleum distribution, ultra pure water and waste management
industries. It also manufactures high-performance, separable fittings for
operating pressures to 8,000 PSI used primarily in the aerospace industry.
Resistoflex sells its industrial products through distributors who provide
stocking and fabrication services to industrial users in the United States.
Its aerospace products are sold directly to the aerospace industry.
In the fourth quarter of 1995, Resistoflex acquired Kessel PTE, Ltd., a
plastic-lined pipe manufacturer with facilities in Singapore, Malaysia and
Thailand. This acquisition will provide Resistoflex with immediate market
access to the rapidly expanding Asian chemical process industry.
Polyflon manufactures radio frequency and microwave components, capacitors,
circuit processing, and antennas for commercial and aerospace uses.
Crane Plumbing manufactures plumbing fixtures in Canada. Its products are
sold through distributors in Canada and it has a large share of the Canadian
plumbing fixtures market.
/4
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PART I (CONTINUED)
ITEM 1. BUSINESS (CONTINUED)
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CRANE CONTROLS
This segment includes five businesses: Barksdale, Powers Process Controls,
Dynalco Controls, Azonix, and Ferguson. The companies in this segment design,
manufacture and market industrial and commercial products that control flows and
processes in various industries including the petroleum, chemical, construction,
food and beverage, power generation industries and transportation. Crane
Controls had assets of $128.5 million at December 31, 1995, and employs 800
people. On December 31, 1995, Crane Controls had a backlog of $26.2 million,
equivalent with last year.
Barksdale manufactures solid state and electromechanical pressure and
vacuum switches, pressure transducers, temperature switches, and directional
control valves which serve a broad range of commercial and industrial
applications. It has manufacturing and marketing facilities in the United
States and Germany. The February 1995 acquisition of Unimess GmbH brought a
full line of solid state switches, transducers and indicating systems to
Barksdale, complementing existing German and United States product lines and
market channels.
Powers Process Controls designs, manufactures and markets microprocessor-
based process controllers and instrumentation, pneumatic actuated control
valves, self-contained temperature regulators, water mixing and thermal shock
protection shower valves and plumbing brass for industrial applications and the
institutional construction industry.
Dynalco Controls designs and manufactures rotational speed sensors,
monitoring instruments, and ignition and air to fuel control systems. Dynalco's
products are used worldwide by industries in a variety of applications,
including stationary natural gas engines, power generation, oil and gas
production and transmissions, and agriculture equipment.
Azonix manufactures high precision data acquisition, control systems and
operator interfaces for a wide range of industries which require equipment to
withstand harsh environments.
Ferguson designs and manufactures in the United States and through Ferguson
Machine S.A. in Europe, precision index and transfer systems for use on and with
machines which perform automatic forming, assembly, metal cutting, testing and
inspection operations. Products include index drives and tables, mechanical
parts handlers, in line transfer machines, rotary tables, press feeds and custom
cams.
The products in this segment are sold directly to end users, and engineering
contractors through the company's own sales forces and cooperatively with sales
representatives, stocking specialists and industrial distributors.
MERCHANDISING SYSTEMS
The Merchandising Systems segment has two operating units: National
Vendors, the industry leader in the design and manufacture of a complete line of
vending merchandisers for the food/service vending market; and NRI, which
manufactures electronic coin validators in Buxtehude, Germany for the automated
merchandising and gambling/amusement markets in Europe. National Vendors
products include electronic vending merchandisers for refrigerated and frozen
foods, hot and cold beverages, snack foods, single cup individually brewed hot
drinks and combination vendors/merchandisers, designed to vend both snack foods
and
/5
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PART I (CONTINUED)
ITEM 1. BUSINESS (CONTINUED)
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MERCHANDISING SYSTEMS (CONTINUED)
hot/cold drinks, or snacks and refrigerated/frozen foods in one machine.
National Vendors manufactures its products in a 463,000 sq. ft. state of the art
facility in Bridgeton, Missouri. National Vendors' products are marketed
directly to customers in the United States and Europe by company sales and
marketing personnel, and in other international markets through independent
distributors. Merchandising Systems employs 1,150 people and had assets of
$88.9 million at year end 1995.
Order backlog totaled $14.7 million at December 31, 1995, which is normal
for Merchandising Systems.
In 1995, National Vendors expanded its international distribution and now
has six distributors in Latin America, five in the Pacific Rim, and six in the
Middle East. International sales, particularly in Europe, but also in Latin
America and the Pacific Rim, will be key to future growth along with continued
new product introduction.
WHOLESALE DISTRIBUTION
The company distributes millwork products through its wholly-owned
subsidiary, Huttig Sash & Door Company ("Huttig"). These products include
doors, windows, mouldings and related building products. Huttig assembles
certain of these products to customer specification prior to distribution. Its
principal customers are building material dealers, building contractors and home
remodelers that service the new construction and remodeling markets. Wholesale
operations are conducted nationally through forty-six distribution centers
throughout the United States, in both major and medium-sized cities. Huttig's
sales are made on both a direct shipment and out-of-warehouse basis entirely
through its own sales force.
Huttig has a manufacturing plant in Montana, where it produces certain of
the above products and other finished lumber, the bulk of which is sold directly
to third parties, some of whom compete with Huttig branches. Huttig acquired a
specialty moulding and millwork manufacturing operation in Prineville, Oregon in
1994. The majority of the moulding products are sold to third parties but
Huttig is the largest customer.
Valve Systems & Controls is a value-added industrial distributor providing
power operated valves and flow control systems to the petroleum, chemical, power
and general processing industries. It services its customers through facilities
in Texas and Louisiana.
Crane Supply, a distributor of plumbing supplies, valves and piping in
Canada, maintains thirty-six branches throughout Canada and distributes Crane
manufactured products in that country. Crane Supply also distributes products
which are both complementary to and partly competitive with Crane's own
manufactured products.
OTHER
The other segment consists of Crane Defense Systems, which is the only
Crane business focused on defense industry products. Crane Defense Systems is
engaged in the development and manufacture of specialized handling systems,
elevators, winches, ground support equipment, cranes and associated electronics.
These products are sold directly to the government and defense contractors and
represent less than 1% of 1995 sales.
/6
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PART I (CONTINUED)
ITEM 1. BUSINESS (CONTINUED)
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COMPETITIVE CONDITIONS
The company's lines of business are conducted under actively competitive
conditions in each of the geographic and product areas they serve. Because of
the diversity of the classes of products manufactured and sold, they do not
compete with the same companies in all geographic or product areas.
Accordingly, it is not possible to estimate the precise number of competitors or
to identify the principal methods of competition. Although reliable statistics
are not available, the company believes that it is an important supplier to a
number of market niches and geographic areas.
The company's products have primary application in the industrial,
construction, aerospace, automated merchandising, transportation, and fluid
handling industries. As such, they are dependent upon numerous unpredictable
factors, including changes in market demand, general economic conditions,
residential and commercial building starts, and capital spending. Because these
products are also sold in a wide variety of markets and applications, the
company does not believe it can reliably quantify or predict the possible
effects upon its business resulting from such changes.
Seasonality is a factor in Huttig and the Canadian operations.
The company's engineering and product development activities are directed
primarily toward improvement of existing products and adaptation of existing
products to particular customer requirements. While the company owns numerous
patents and licenses, none are of such importance that termination would
materially affect its business. Product development and engineering costs
aggregated approximately $51,900,000 in 1995, $46,400,000 in 1994 and
$18,400,000 in 1993, respectively. Included in these amounts were approximately
$12,600,000 and $9,500,000 received by the company in 1995 and 1994,
respectively, for customer sponsored research and development. The increase in
1995 was mainly due to the ELDEC acquisition.
The company is not dependent on any single customer nor are there any
issues at this time regarding available raw materials for inventory.
/7
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PART I (CONTINUED)
ITEM 1. BUSINESS (CONTINUED)
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Costs of compliance with federal, state and local laws and regulations
involving the discharge of materials into the environment or otherwise relating
to the protection of the environment are not expected to have a material effect
upon the company's capital expenditures, earnings or competitive position.
ITEM 2. PROPERTIES
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<TABLE>
<CAPTION>
MANUFACTURING FACILITIES* NUMBER AREA
- ------------------------- ------ ----
<S> <C> <C>
Fluid Handling
United States 14 1,318,000 sq. ft.
Canada 2 140,000 sq. ft.
International 7 910,000 sq. ft.
Aerospace
United States 3 536,000 sq. ft.
International 1 7,500 sq. ft.
Engineered Materials
United States 7 689,000 sq. ft.
Canada 3 601,000 sq. ft.
International 2 11,000 sq. ft.
Crane Controls
United States 7 423,000 sq. ft.
International 2 53,000 sq. ft.
Merchandising Systems
United States 1 463,000 sq. ft.
Other International 1 197,000 sq. ft.
Wholesale Distribution 2 888,000 sq. ft.
Other 1 113,000 sq. ft.
- ----------------------
</TABLE>
*Includes plants under lease agreements.
<TABLE>
<CAPTION>
Leased Leases
Manufacturing Expiring
Facilities Number Area Through
- ------------- ------ ---- --------
<S> <C> <C> <C>
United States 8 433,000 sq. ft. 2017
Canada 1 12,000 sq. ft. 2000
Other International 7 83,000 sq. ft. 2013
</TABLE>
Fluid Handling operates four valve service centers in the United States, of
which two are owned. This segment operates internationally six distribution and
six service centers.
/8
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PART I (CONTINUED)
ITEM 2. PROPERTIES (CONTINUED)
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Crane Controls operates one distribution center internationally.
Merchandising Systems operates eight distribution centers in the United
States and six internationally
Wholesale Distribution has forty-six Huttig branch warehouses in the
United States, of which twenty-seven are owned. The Canadian wholesale
operation maintains thirty-six distribution branch warehouses in Canada, of
which sixteen are owned. Valve Systems & Controls operates three leased
distribution facilities in the United States.
In the opinion of management, properties have been well maintained, are
in sound operating condition, and contain all necessary equipment and facilities
for their intended purposes.
/9
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PART I (CONTINUED)
ITEM 3. LEGAL PROCEEDINGS
Neither the company, nor any subsidiary of the company has become a
party to, nor has any of their property become the subject of any material legal
proceedings, other than ordinary routine litigation incidental to their
businesses, except for the following.
On February 28, 1991, the company was served with a complaint filed in
the U.S. District Court for the Eastern District of Missouri naming the company
and its former subsidiary, CF&I Steel Corporation ("CF&I"), as defendants and
alleging violations of the federal False Claims Act in connection with the
distribution of the company's shares of CF&I to the company's shareholders in
1985. A subsequent complaint with substantially similar allegations was served
on the company on September 22, 1992. The two actions have been consolidated by
the court (Civil Actions Nos. 91-0429-C-1 and 4:92CVOO5144JCH). On June 1,1993
the district court dismissed the case for lack of subject matter jurisdiction
under the False Claims Act and the plaintiff appealed. On November 16, 1994,
the U.S. Court of Appeals for the Eighth Circuit reinstated the action. The
company's petition for a writ of certiorari to the U.S. Supreme Court was denied
on or about June 16, 1995 and the case has been returned to the District court
to further proceedings. The case was brought in the name of the U.S. Government
by a private individual (the "relator") and involves allegations of a conspiracy
between the company and CF&I to cause the Pension Benefit Guaranty Corporation
("PBGC") to assume certain unfunded liabilities under a CF&I pension plan
(alleged to have been approximately $270 million), to prevent the PBGC from
obtaining any reimbursement from the company and to publish and file misleading
information in furtherance of those alleged objectives. The suit seeks treble
damages and attorney's fees. Discovery in the case has been substantially
completed. The company believes that the allegations are without merit, and has
filed motions for summary judgment and judgment on the pleadings. Although the
Department of Justice has declined to intervene in the action, the relator may
proceed to trial, which is currently scheduled for June 1996. The company has
vigorously defended itself in the litigation and will continue to do so, and
believes that it will ultimately prevail.
The following proceedings are not considered by the company to be
material to its business or financial condition and are reported herein because
of the requirements of the Securities and Exchange Commission with respect to
the descriptions of administrative or judicial proceedings by governmental
authorities arising under federal, state or local provisions regulating the
discharge of materials into the environment or otherwise relating to the
protection of the environment.
In a letter dated October 15, 1992 the office of the Attorney General of
the State of Ohio advised Cor Tec, a division of Dyrotech Industries, Inc. which
is a subsidiary of the company, that Cor Tec's plant facility in Washington
Court House, Ohio, had operated numerous air contaminant sources in its
manufacturing process which emitted air pollutants for an extended period of
time without the required state permits and in some instances in amounts
exceeding the limits allegedly allowed under applicable rules. The Ohio
Attorney General's office also alleged that certain contaminant sources at the
Cor Tec facility were installed without obtaining permits to install. The main
air contaminant in question is styrene, a volatile organic compound that is
alleged to be a carcinogen. In 1993, Cor Tec constructed an emission control
system in its plant which included the installation of a hood, vent and
incinerator to capture and incinerate the styrene emissions. At a meeting in
Columbus, Ohio on March 4, 1993 the Attorney General's office proposed that Cor
Tec and the company sign a Consent Decree which would include general injunctive
relief and civil penalties in the amount of $4.6 million which Cor Tec has
refused to do. In a letter dated July 17, 1995 the Attorney General's office of
the State of Ohio delivered a draft Complaint to Cor Tec (Court of Common Pleas,
Fayette County, Ohio) alleging failure by Cor Tec to obtain various permits to
install and to operate sources of contaminants and also alleging violations of
air emissions standards, for periods 1974 to 1993. Penalties of $25,000 per day
for each violation are demanded in the draft complaint. In a letter dated
November 9, 1995, the Attorney General's office presented a civil penalty demand
for $1.8 million and, by letter dated February 1, 1996 the Attorney General's
office presented a draft Permit to
/10
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PART I (CONTINUED)
ITEM 3. LEGAL PROCEEDINGS (CONTINUED)
Operate the principal equipment in the Cor Tec facility that generates the
styrene emissions. Cor Tec has responded in writing that, among other things,
(i) the rule upon which the state's demands are based was not adopted in
accordance with applicable statutory directives and is, therefore,
unenforceable, (ii) Cor Tec has nevertheless complied with the rule as it is
currently applied by the state, (iii) the penalties sought by the state are
wholly out of proportion with the nature of the alleged violations and (iv) the
proposed Permit to Operate does not comply with the emission limit criteria
specified in the applicable state rule. Cor Tec has proposed revisions to the
proposed Permit to Operate to conform to the applicable state rule and actual
technical operating parameters. Cor Tec continues to believe it has adequate
defenses to the allegations made by the Attorney General and it plans to
vigorously resist paying any damages, fines, or penalties.
On July 12, 1985 the company received written notice from the United
States Environmental Protection Agency (the "EPA") that the EPA believes the
company may be a potentially responsible party ("PRP") under the Federal
Comprehensive Environmental Response Compensations and Liability Act of 1980
("CERCLA") to pay for investigation and corrective measures which may be
required to be taken at the Roebling Steel Company site in Florence Township,
Burlington County, New Jersey (the "Site") of which its former subsidiary, CF&I
Steel Corporation ("CF&I") was a past owner and operator prior to the enactment
of CERCLA. The stated grounds for the EPA's position was the EPA's belief that
the company had owned and/or operated the Site. The company had advised the EPA
that such was not the case and does not believe that it is responsible for any
testing or clean-up at the Site based on current facts. CF&I also has received
notice from the State of New Jersey Department of Environmental Protection,
Office of Regulatory Services ("NJDEP)", advising CF&I that an investigation
by the NJDEP had identified what was considered an existing and potential
environmental problem at the Site. As a past owner and operator at the Site,
CF&I was notified of the NJDEP's belief that further investigatory action was
needed to identify all potential environmental problems at the Site and
thereafter formulate and implement a remedial plan to address any identified
problems. The NJDEP has subsequently requested information from CF&I, and CF&I
has cooperated in providing information, including results of tests which CF&I
has conducted at the Site. The EPA identified sources of contamination, which
must be examined for potential environmental damage, including: chemical waste
drums, storage tanks, transformers, impressed gas cylinders, chemical
laboratories, bag house dust, rubber tires, inactive railroad cars, wastewater
treatment plants, lagoons, slag disposal areas, and a landfill. On November 7,
1990 CF&I filed a petition for reorganization and protection under Chapter 11
of the United States Bankruptcy Code. The EPA has disclosed that two surface
clean-ups have been performed at a cost in excess of $2,000,000 and a further
surface clean-up has been announced at an estimated cost of approximately
$5,000,000.
On July 1, 1991 the company received a letter from the EPA providing
an update of the clean-up at the Site. The EPA's July 1, 1991 letter describes
a proposed third phase of the investigation, including a Focused Feasibility
Study which defined the nature of contaminants and evaluated remedial
alternatives for two portions of the Site. The estimated cost for the preferred
remedy selected by the EPA for these locations is $12,000,000. In the
bankruptcy proceeding of CF&I the EPA was allowed an unsecured claim against
CF&I for $27.1 million related to EPA's environmental investigations and
remediation at the Roebling Site. Based on the analysis above, the company does
not believe it is responsible for any portion of the clean-up.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1995.
/11
<PAGE>
PART I (CONTINUED)
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the registrant are as follows:
<TABLE>
<CAPTION>
Officer
Name Position Business Experience Age Since
- ---- -------- ------------------- --- -------
<S> <C> <C> <C> <C>
Robert S. Evans Chairman and Chief Chairman and Chief 51 1974
Executive Officer Executive Officer of the company
since 1985 and previously
President of the company
L. Hill Clark (1) President and Executive Vice President of 51 1994
Chief Operating the company, previously
Officer President of Lear Romec,
and previously held
various positions within
Allied Signal Inc., a diversified
manufacturing company
Robert J. Muller, Jr. Executive Vice Executive Vice President of 49 1988
President the company
Augustus I. duPont (2) Vice President, Vice President and General 44 1996
General Counsel Counsel of Reeves Industries, Inc.,
and Secretary a manufacturer of apparel textiles
and industrial coated fabrics, from
May 1994 to December 1995; Vice
President, General Counsel and
Secretary of Sprague Technologies,
Inc., a manufacturer of electronic
components, from May 1987 to
December 1993
Anthony D. Pantaleoni Vice President Vice President - Environment, 41 1989
Environment, Health & Safety of the company
Health & Safety
Richard B. Phillips Vice President Vice President - Human 52 1987
Human Resources Resources of the company
David S. Smith Vice President- Vice President - Finance 38 1991
Finance and and Chief Financial Officer
Chief Financial of the company, previously
Officer Vice President - Corporate
Development of the company,
and previously Vice President
of Corporate Finance of
Bankers Trust Company
Michael L. Raithel Controller Controller of the company 48 1985
Gil A. Dickoff Treasurer Treasurer of the company, 34 1992
previously Assistant Treasurer
of the company
</TABLE>
(1) Effective October 23, 1995.
(2) Effective January 22, 1996.
/12
<PAGE>
PART II
The information required by Items 5 through 8 is hereby incorporated by
reference to Pages 8 through 31 of the Annual Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is incorporated by reference to the
definitive proxy statement which the company will file with the Commission
pursuant to Regulation l4A except that such information with respect to
Executive Officers of the Registrant is included, pursuant to Instruction 3,
paragraph (b) of Item 401 of Regulation S-K, under Part I.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference to the
definitive proxy statement which the company will file with the Commission
pursuant to Regulation l4A.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated by reference to the
definitive proxy statement which the company will file with the Commission
pursuant to Regulation 14A.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated by reference to the
definitive proxy statement which the company will file with the Commission
pursuant to Regulation 14A.
/13
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
Page
----
(a) Financial Statements and Schedule:
Independent Auditors' Report 17
Schedule VIII Valuation and Qualifying Accounts 18
The consolidated balance sheets of Crane Co. and subsidiaries as of December
31, 1995 and 1994 and the related consolidated statements of income, changes in
common shareholders' equity and cash flows for the years ended December 31,
1995, 1994 and 1993 and the financial review, appearing on Pages 8 through 31 of
Crane Co.'s Annual Report to Shareholders which will be furnished with the
company's proxy statement as required by Regulation 14A, Rule 14a-3(c), are
incorporated herein by reference and are supplemented by the schedule on Page 16
of this report.
All other statements and schedules for which provision is made in the
applicable regulation of the Securities and Exchange Commission have been
omitted because they are not required under related instructions or are
inapplicable, or the information is shown in the financial statements and
related notes.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended December 31, 1995.
(c) Exhibits to Form 10-K:
(3) Exhibit A-By-laws
There is incorporated by reference herein:
(a) The company's Certificate of Incorporation contained in Exhibit D
to the company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1987.
(4) Instruments Defining the Rights of Security Holders, including
Indentures:
(a) There is incorporated by reference herein:
(1) Preferred Share Purchase Rights Agreement contained in
Exhibit 1 to the company's Report on Form 8-K filed with the
Commission on July 12, 1988.
(2) Amendment to Preferred Share Purchase Rights Agreement
contained in Exhibit 1 to the company's Report on Form 8-K
filed with the Commission on June 29, 1990.
/14
<PAGE>
PART IV (CONTINUED)
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(CONTINUED)
(b) There is incorporated by reference herein:
1) Indenture dated as of April 1,1991 between the Registrant
and the Bank of New York contained in Exhibit 4 to
Registration Statement No. 33-39658.
(10) Material Contracts:
(iii)Compensatory Plans
Exhibit B:
There is incorporated by reference herein:
(a) The forms of Employment/Severance Agreement between the company
company and the executive officers (form I) and (form II) which
provide for the continuation of certain employee benefits upon a
change of control as contained in Exhibit C of the company's
annual report on Form 10-K for the fiscal year ended December 31,
1994.
(b) The E.V.A. incentive compensation plan for executive officers
contained in Exhibit B to the company's annual report on Form 10-
K for the fiscal year December 31, 1994.
(c) The Crane Co. Restricted Stock Award Plan as amended through May
10,1993 contained in Exhibit A to the company's annual report on
Form 10-K for the fiscal year ended December 31, 1993.
(d) The Crane Co. Non-Employee Directors Restricted Stock Award Plan
as amended through May 10, 1993 contained in Exhibit B to the
company's annual report on Form 10-K for the fiscal year ended
December 31, 1994.
(e) The indemnification agreements entered into with each director
and executive officer of the company, the form of which is
contained in Exhibit C to the company's definitive proxy
statement filed with the Commission in connection with the
company's April 27, 1987 Annual Meeting.
(f) The Crane Co. Retirement Plan for Non-Employee Directors
contained in Exhibit E to the company's Annual Report on Form 10-
K for the fiscal year ended December 31, 1988.
(g) The Crane Co. Stock Option Plan as amended as of February 27,
1995 contained in Exhibit 4(a) to the company's Registration
Statement No. 33-59389 on Form S-8 filed with the Commission on
May 17, 1995.
(11) Statement re computation of per share earnings:
Exhibit B: Computation of net income per share.
(13) Annual report to security holders:
Exhibit C: Annual Report to shareholders for the year ended
December 31, 1995.
(21) Subsidiaries of the Registrant:
Exhibit D: Subsidiaries of the Registrant.
(23) Consent of Experts and Counsel
Exhibit E: Independent auditors' consent.
All other exhibits are omitted because they are not applicable or the
required information is shown elsewhere in this Annual Report on Form 10-K.
/15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section l3 or l5(d) of the Securities Exchange
Act of l934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CRANE CO.
-------------------
(Registrant)
By s/D. S. Smith
--------------------
D. S. Smith
Vice President-Finance
Date 2/26/96
-------
Pursuant to the requirements of the Securities Exchange Act of l934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
OFFICERS
s/R. S. Evans
-----------------------
R. S. Evans
Chairman, Chief Executive Officer and Director
Date 2/26/96
-------
s/D. S. Smith s/M. L. Raithel
----------------------------- ----------------------------
D. S. Smith M. L. Raithel
Vice President-Finance Controller
Date 2/26/96 Date 2/26/96
------- -------
DIRECTORS
s/C. J. Queenan, Jr.
---------------------------
C. J. Queenan, Jr.
Date 2/26/96
-------
s/M. Anathan, III s/E. T. Bigelow s/J. Gaulin
----------------- ------------------- ----------------
M. Anathan, III E. T. Bigelow J. Gaulin
Date 2/26/96 Date 2/26/96 Date 2/26/96
------- ------- -------
D. C. Minton
- -------------------- -------------------- --------------------
R. S. Forte D. C. Minton B. Yavitz
Date Date 2/26/96 Date
-------
s/D. R. Gardner
--------------------
D. R. Gardner
Date 2/26/96
-------
/16
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS OF CRANE CO.:
We have audited the consolidated financial statements of Crane Co. and
subsidiaries as of December 31, 1995 and 1994, and for each of the three years
in the period ended December 31, 1995 and have issued our report thereon dated
January 22, 1996; such financial statements and report are included in your 1995
Annual Report to Shareholders and are incorporated herein by reference. Our
audits also included the consolidated financial statement schedule of Crane Co.,
listed in Item 14. This financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion on this
schedule based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
/s/ Deloitte & Touche LLP
Stamford, Connecticut
January 22, 1996
/17
<PAGE>
CRANE CO. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
<TABLE>
<CAPTION>
Balance at Additions Balance
Beginning Charged to at End
Description of Year Cost & Expenses Deductions of Year
- ----------- ---------- --------------- ---------- -------
<S> <C> <C> <C> <C>
Year Ended December 31, 1995:
Allowance for doubtful accounts $ 2,200 $ 2,433 $ 2,247 $2,386
Allowance for cash discounts,
returns and allowances 1,493 13,885 14,166 1,212
------- ------- ------- -------
$ 3,693 $16,318 $16,413 $ 3,598
======= ======= ======= =======
Year Ended December 31, 1994:
Allowance for doubtful accounts $ 2,054 $ 8,434 $ 8,288 $2,200
Allowance for cash discounts,
returns and allowances 1,000 17,096 16,603 1,493
------- ------- ------- -------
$ 3,054 $25,530 $24,891 $ 3,693
======= ======= ======= =======
Year Ended December 31, 1993:
Allowance for doubtful accounts $ 859 $ 2,747 $ 1,552 $2,054
Allowance for cash discounts,
returns and allowances 812 11,839 11,651 1,000
------- ------- ------- -------
$ 1,671 $14,586 $13,203 $ 3,054
======= ======= ======= =======
</TABLE>
/18
<PAGE>
(Page 1 of 2)
CRANE CO. AND SUBSIDIARIES
EXHIBIT B TO FORM 10-K
ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1995
Computation of Net Income Per Share
(In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
Primary 1995 1994 1993 1992 1991
- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income before a change in
accounting $76,337 $55,933 $48,893 $24,286 $44,993
Cumulative effect of a change
in accounting - - - - (22,341)(a)
------- ------- ------- ------- --------
Net Income $76,337 $55,933 $48,893 $24,286 $22,652
======= ======= ======= ======= =======
Per common share before a change
in accounting $ 2.50 $ 1.86 $ 1.62 $ .79 $ 1.42
Cumulative effect of a change
in accounting - - - - (.70)(a)
------- ------- ------- ------- --------
Net income per share $ 2.50 $ 1.86 $ 1.62 $ .79 $ .72
======= ======= ======= ======= =======
Average number of primary
shares 30,544 30,146 30,217 30,845 31,628
</TABLE>
(a) Postretirement benefits other than pensions.
/19
<PAGE>
(Page 2 of 2)
CRANE CO.
EXHIBIT B TO FORM 10-K (CONTINUED)
ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1995
Computation of Net Income Per Share
(In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
Fully Diluted 1995 1994 1993 1992 1991
- ------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income before a change in
accounting $76,337 $55,933 $48,893 $24,286 $44,993
Conversion of debentures:
Add back interest, net
of income tax - - 25 30 32
------- ------- ------- ------- -------
Income assuming conversion of
debentures before change in
accounting 76,337 55,933 48,918 24,316 45,025
Cumulative effect of a change
in accounting - - - - (22,341)(a)
------- ------- ------- ------- --------
Net income - assuming
conversion of debentures $76,337 $55,933 $48,918 $24,316 $22,684
======= ======= ======= ======= =======
Income per share before a change
in accounting $ 2.49 $ 1.85 $ 1.61 $ .78 $ 1.41
Cumulative effect of a change
in accounting - - - - (.70)(a)
------- ------- ------- ------- --------
Net income $ 2.49 $ 1.85 $ 1.61 $ .78 $ .71
======= ======= ======= ======= =======
Average number of primary shares 30,544 30,146 30,217 30,845 31,628
Add:
Adjustment to primary shares
for dilutive stock options
(ending market price higher
than average market price) 79 14 - 18 55
Shares reserved for conversion
of debentures - 90 187 217 231
------- ------- ------- ------- -------
Total average number of
shares 30,623 30,250 30,404 31,080 31,914
======= ======= ======= ======= =======
</TABLE>
(a) Postretirement benefits other than pensions.
/20
<PAGE>
EXHIBIT 3
EXHIBIT A
CRANE CO.
BY-LAWS
ARTICLE I
DEFINITIONS, OFFICES
Section 1. Definitions. When used herein, "Board" shall mean the
-----------
Board of Directors of the Corporation, "Chairman" shall mean the Chairman of the
Board and "Corporation" shall mean this Corporation.
Section 2. Principal Office. The principal office of the Corporation
----------------
shall be located in the City of New York, State of New York.
Section 3. Other Offices. The Corporation may have and maintain such
-------------
other business office or offices, either within or without the State of New
York, as the Board of Directors may from time to time determine.
Section 4. Registered Office. The registered office of the
-----------------
corporation shall be at such address as from time to time the Board of Directors
may determine.
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of the stockholders of
--------------
the corporation shall be held at the hour of ten o'clock a.m. on the fourth
Monday of April in each year beginning in 1986 unless the Board shall fix a
different date and time, for the election of Directors and for the transaction
of such other business as may properly come before the meeting. If the day fixed
for the annual meeting shall be a legal holiday, such meeting shall be held on
the next succeeding business day. If the election of Directors shall not be
held on the day designated herein for the annual meeting, or at any adjournment
thereof, the Board of Directors shall cause the election to be held at a special
meeting of the stockholders as soon thereafter as such meeting can conveniently
be convened and held.
<PAGE>
Section 2. Special Meetings. Special meetings of the stockholders for
----------------
any purpose may be called at any time only by a majority of the entire Board or
by the Chairman of the Board.
A call for a special meeting of stockholders shall be in writing, filed
with the Secretary, and shall specify the time and place of holding such meeting
and the purpose or purposes for which it is called.
Section 3. Stockholder Action. Any action required or permitted to be
------------------
taken by the stockholders of the Corporation must be effected at a duly called
annual or special meeting of stockholders of the Corporation and may not be
effected by any consent in writing by such stockholders.
Section 4. Place of Meetings. The annual meeting of stockholders and
-----------------
all special meetings of stockholders for the election of directors shall be held
either at the principal office of the Corporation or at such other place
suitable for the holding of a stockholders' meeting as shall be designated in
the notice thereof. Special meetings of stockholders for a purpose or purposes
other than the election of directors may be held at such place, either within or
without the State of New York, as shall be specified or fixed in the call for
such meeting and the notice thereof as the place for the holding of a special
meeting for any purpose or purposes.
Section 5. Notice of Meetings. Except as otherwise provided by
------------------
statute, written or printed notice stating the place, day and hour of the
meeting and, in case of a special meeting, stating the purpose or purposes for
which the meeting is called, shall be delivered not less than 10 nor more than
60 days before the date of the meeting, either personally or by mail, by or at
the direction of the Secretary, to each stockholder of record entitled to vote
at such meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail in a sealed envelope addressed to the
stockholder at his last known post office address as it appears on the stock
record books of the Corporation, with postage thereon prepaid.
Attendance of a person at a meeting of stockholders, in person or by
proxy, constitutes a waiver of notice of the meeting, except when the
stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened.
<PAGE>
Section 6. Record Dates. The Board may fix in advance a date, not
------------
more than 60 nor fewer than 10 days prior to the date of any meeting of
stockholders, nor more than 60 days prior to the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital stock shall go into effect, as a record
date for the determination of the stockholders entitled to notice of, and to
vote at, any such meeting and any adjournment thereof, or entitled to receive
payment of any such dividend, or to any such allotment of rights, or to exercise
the rights in respect of any such change, conversion or exchange of capital
stock, and in such case such stockholders and only such stockholders as shall
the stockholders of record on the date so fixed shall be entitled to such notice
of, and to vote at, such meeting and any adjournment thereof, or to receive
payment of such dividend, or to receive such allotment of rights, or to exercise
such rights, as the case may be, notwithstanding any transfer of any stock on
the books of the Corporation after any such record date fixed as aforesaid.
Section 7. Voting Lists. The officer or agent having charge of the
------------
transfer book for shares of the Corporation shall prepare and make, at least 10
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at such meeting, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall be produced and kept at the time and
place of the meeting during the whole time thereof and may be inspected by any
stockholder present. The original share or stock ledger or transfer book or a
duplicate thereof, shall be the only evidence as to who are the stockholders
entitled to examine such list or share ledger or transfer book or to vote at any
meeting of stockholders.
Section 8. Quorum. At any meeting of stockholders the holders of a
------
majority of the shares of the capital stock of the corporation issued and
outstanding and entitled to vote, present in person or represented by proxy,
shall constitute a quorum of the stockholders for all purposes unless a greater
or lesser quorum shall be provided by law or by the Certificate of Incorporation
and in such case the representation of the number so required shall constitute a
quorum. The stockholders present in person or by proxy at a meeting at which a
quorum is present
<PAGE>
may continue to do business until adjournment, notwithstanding withdrawal of
enough stockholders to leave less than a quorum.
Whether or not a quorum is present the meeting may be adjourned from
time to time by a vote of the holders of a majority of the shares present. At
any such adjourned meeting at which a quorum shall be present, any business may
be transacted which might have been transacted at the meeting if held at the
time specified in the notice thereof.
Section 9. Voting and Proxies. Each holder of Common Stock shall be
------------------
entitled to one vote per share held of record upon each matter on which
stockholders generally are entitled to vote.
At all meetings of stockholders, a stockholder entitled to vote may
vote in person or by proxy executed in writing by the stockholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the Secretary of
the Corporation before or at the time of the meeting. Unless otherwise provided
by law, all questions touching the validity or sufficiency of the proxies shall
be decided by the Secretary.
Directors shall be elected by a plurality of the votes cast at an
election.
All other action (unless a greater plurality is required by law or by
the Certificate of Incorporation or by these By-laws) shall be authorized by a
majority of the votes cast by the holders of shares entitled to vote thereon,
present in person or represented by proxy, and where a separate vote by class is
required, by a majority of the votes cast by stockholders of such class, present
in person or represented by proxy.
Section 10. Voting of Shares by Certain Holders.
-----------------------------------
(a) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent or proxy as the By-laws of such
corporation may prescribe, or, in the absence of such provision, as the Board of
Directors of such corporation may determine.
(b) Shares standing in the name of a deceased person may be voted by
his administrator or his executor either in person or by proxy.
(c) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the
<PAGE>
transfer thereof into his name, if authority so to do be contained in an
appropriate order of the court by which such receiver was appointed, and a
certified copy of such order is filed with the Secretary of the Corporation
before or at the time of the meeting.
(d) A stockholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so transferred.
(e) Shares of the Corporation belonging to it shall not be voted,
directly or indirectly, at any meeting, and shall not be counted in determining
the total number of outstanding shares at any given time, but shares of the
Corporation held by it in a fiduciary capacity may be voted and shall be counted
in determining the number of outstanding shares at any given time.
Section 11. Inspectors. At each meeting of stockholders, the chairman
----------
of the meeting may appoint one or more inspectors of voting whose duty it shall
be to receive and count the ballots and make a written report showing the
results of the balloting.
ARTICLE III
DIRECTORS
Section 1. Number. The business and affairs of the Corporation shall
------
be managed under the direction of the Board which shall consist of not less than
three nor more than fifteen persons. The exact number of directors within the
minimum and maximum limitations specified in the preceding sentence shall be
fixed from time to time by the board pursuant to a resolution adopted by a
majority of the entire Board.
<PAGE>
Section 2. Election and Terms. The directors shall be divided into
------------------
three classes, as nearly equal in number as reasonably possible, with the term
of office of the first class to expire at the 1986 annual meeting of
stockholders, the term of office of the second class to expire at the 1987
annual meeting of stockholders and the term of office of the third class to
expire at the 1988 annual meeting of stockholders. At each annual meeting of
stockholders, directors elected to succeed those directors whose terms expire
shall be elected for a term of office to expire at the third succeeding annual
meeting of stockholders after their election.
Section 3. Newly Created Directorships and Vacancies. Newly created
-----------------------------------------
directorships resulting from any increase in the authorized number of directors
or any vacancies in the Board resulting from death, resignation, retirement,
disqualification, removal from office or other cause shall be filled only by a
majority vote of the directors then in office, and directors so chosen shall
hold office for a term expiring at the annual meeting of stockholders at which
the term of the class to which they have been elected expires. No decrease in
the number of directors constituting the Board shall shorten the term of any
incumbent director.
Section 4. Removal. Any director, or the entire Board, may be removed
-------
from office at any time, but only for cause and only by the affirmative vote of
the holders of at least two-thirds of the voting power of the shares of the
Corporation then entitled to vote at an election of directors, voting together
as a single class.
Section 5. Regular Meetings. The regular annual meeting of the Board
----------------
shall be held at such time and place as the Board may by resolution determine
from time to time without other notice than as set forth in such resolution.
The regular monthly meetings of the Board shall be held at such time
and place as the Board may by resolution determine from time to time.
<PAGE>
The Board may by resolution change the times and places, either within
or without the State of New York, for the holding of such regular monthly
meetings, and such times and places for the holding of other regular meetings
without notice other than such resolution.
Section 6. Special Meetings. Special meetings of the Board may be
----------------
held at any time on the call of the Chairman or at the request in writing of a
majority of the directors. Special meetings of the Board may be held at such
place, either within or without the State of New York, as shall be specified or
fixed in the call for such meeting or notice thereof.
Section 7. Notice of Special Meetings. Notice of each special meeting
--------------------------
shall be deposited in the United States mail by or at the direction of the
Secretary to each director addressed to him at his residence or usual place of
business at least seventy-two (72) hours before the day on which the meeting is
to be held, or shall be sent to him by telegram, be delivered personally, or be
given orally at least twenty-four (24) hours before the day on which the meeting
is to be held. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail in a sealed envelope so addressed, with
postage thereon prepaid. If notice be given by telegraph, such notice shall be
deemed to be delivered when the same is delivered to the telegraph company. If
the Secretary shall fail or refuse to give any such notice, then notice may be
given by the officer or any one of the directors making the call.
Notice may be waived in writing by any director, either before or after
the meeting. Any meeting of the Board of Directors shall be a legal meeting
without any notice thereof having been given if all directors shall be present
thereat, except where a director attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting is not lawfully
called or convened.
Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting, and any and all business may be
transacted thereat.
<PAGE>
Section 8. Quorum. A majority of the members of the Board then in
------
office, or of a committee thereof, shall constitute a quorum for the transaction
of business, except that the presence of the Chairman of the Board shall be
necessary to constitute a quorum of the Executive Committee of the Board, and
the vote of a majority of the members present at a meeting at which a quorum is
present shall be the act of the Board or of the Committee thereof, except for
the amendment of the By-laws which shall require the vote of not less than a
majority of the members of the Board then in office.
Section 9. Action without a Meeting. Action required or permitted to
------------------------
be taken pursuant to authorization voted at a meeting of the Board, or a
committee thereof, may be taken without a meeting if, before or after the
action, all members of the Board or of the Committee consent thereto in writing.
The written consents shall be filed with the minutes of the proceedings of the
Board or Committee. The consent shall have the same effect as a vote of the
Board or Committee thereof for all purposes.
Section 10. Organization. At all meetings of the Board the Chairman,
------------
the Vice Chairman of the Board, the President, an Executive Vice President or a
Vice President, or in their absence a member of the Board to be selected by the
members present, shall preside as Chairman of the meeting. The Secretary or an
Assistant Secretary of the Corporation hall act as Secretary of all meetings of
the Board, except that in their absence the Chairman of the meeting may
designate any other person to act as secretary.
At meetings of the Board business shall be transacted in such order as
from time to time the Board may determine.
Section 11. Compensation. In the discretion of the Board, directors
------------
may be paid a fixed fee for attendance at meetings and allowed reimbursement for
expenses incurred in such attendance or otherwise in performance of duties as
directors. In addition each director may be paid a fixed annual fee, in an
amount to be determined by the Board, payable in convenient installments.
Directors shall also be entitled to receive compensation for services rendered
to the Corporation as officers, committee members, employees, or in any other
capacity than as directors.
<PAGE>
Section 12. Presence at Meeting. A member of the Board or of a
-------------------
Committee designated by the Board may participate in a meeting by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. Participation in this
manner constitutes presence in person at the meeting.
Section 13. Executive Committee. The Board, by resolution adopted by
-------------------
a majority of the entire board, may designate two or more directors to
constitute an Executive Committee, which committee, to the extent Provided in
such resolution or in these By-laws, shall have and exercise all of the
authority of the Board in the management of the Corporation provided such
Committee shall not have the authority of the Board in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation
involving the corporation, recommending to the stockholders the sale, lease, or
exchange of all or substantially all of the property and assets of the
Corporation, recommending to the stockholders a dissolution of the Corporation
or a revocation thereof, filling vacancies on the Board or on any committee of
the Board (including the Executive Committee), amending, altering or repealing
any By-laws of the Corporation, electing or removing officers of the
Corporation, fixing the compensation of any member of the Executive Committee or
amending, altering or repealing any resolution of the Board which by its terms
provides that it shall not be amended, altered or repealed by the Executive
Committee.
Section 14. Committees of the Board. The Board may designate one or
-----------------------
more other committees, each consisting of one or more directors of the
Corporation as members and one or more directors as alternate members, with such
power and authority as prescribed by the By-laws or as provided in a resolution
adopted by a majority of the Board. Each Committee, and each member thereof,
shall serve at the pleasure of the Board.
<PAGE>
ARTICLE IV
OFFICERS
Section 1. Officers' Number. The officers of the Corporation shall be
----------------
a Chairman of the Board, a President, a Vice Chairman, one or more Executive
Vice Presidents, Senior Vice Presidents and Vice Presidents, a Secretary, a
Treasurer, a Controller, and such other subordinate corporate or divisional
officers as may be elected or appointed in accordance with the provisions of
Section 3 of this Article IV. The Board may designate a variation in the title
of any officer. Any two or more offices may be held by the same person except
the offices of President and Secretary.
Section 2. Election, Term of Office, and Qualifications. The officers
--------------------------------------------
of the Corporation shall be elected annually by the Board at the first meeting
of the Board held after the annual meeting of stockholders. If the election of
officers shall not be held at such meeting, such election shall be held as soon
thereafter as the same can conveniently be held. Each officer, except such
officers as may be elected or appointed in accordance with the provisions of
Section 3 of this Article IV, shall hold his office until his successor shall
have been duly elected and shall have qualified or until his death, resignation
or removal.
Section 3. Subordinate Officers.
--------------------
(a) Subordinate Corporate Officers. The Board may annually appoint
one or more Assistant Controllers, Executive Assistants, Assistant Vice
Presidents, a Secretary of the Board, one or more Assistant Secretaries,
Assistant Treasurers, Auditors or Assistant Auditors, and such other subordinate
corporate officers and agents as the Board may determine, to hold office as
subordinate corporate officers for such period and with such authority and to
perform such duties as may be prescribed by these By-laws or as the Board may
from time to time determine. The Board may, by resolution, empower the Chairman
of the Board to appoint any such subordinate corporate officers or agents to
hold office for such period and to perform such duties as may be prescribed in
said resolution. In its discretion the Board may leave unfilled, for any such
period as it may fix by resolution, any corporate office, except those of
President, Secretary and Treasurer.
(b) Divisional Officers. The Board, the Chairman of the Board or the
-------------------
President may from time to time appoint employees of the Company divisional
officers who shall have such operating and divisional responsibilities as may be
designated
<PAGE>
by the President. Such divisional officers shall not be corporate officers and
shall serve at the discretion of, under the direction of, and subject to removal
by, the President.
Section 4. Resignations. Any officer may resign at any time by giving
------------
written notice to the Board or to the Chairman of the Board or Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 5. Removal. Any of the officers designated in Section 1 of
-------
this Article IV may be removed by the Board, whenever in its judgment the best
interests of the Corporation will be served thereby, by the vote of a majority
of the total number of directors then in office. Any subordinate corporate
officer appointed in accordance with Section 3 of this Article IV may be removed
by the Board for like reason by a majority vote of the directors present at any
meeting, a quorum being present, or by any superior officer upon whom such power
of removal has been conferred by resolution of the Board. Any divisional
officer appointed in accordance with Section 3 of this Article IV may be removed
by the Chairman of the Board at any time and at his sole discretion or by any
superior officer upon whom the power of removal has been conferred by the
Chairman of the Board. The removal of any officer, subordinate officer or agent
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 6. Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification or otherwise may be filled for the
unexpired portion of the term in the same manner in which an officer to fill
said office may be chosen pursuant to Section 2 or 3 of this Article IV, as the
case may be.
Section 7. Bonds. If the Board shall so require, any officer or agent
-----
of the Corporation shall give bond to the Corporation in such amount and with
such surety as the Board may deem sufficient, conditioned upon the faithful
performance of their respective duties and offices.
<PAGE>
Section 8. The Chairman of the Board. The Board shall elect a
-------------------------
Chairman who shall be the Chief Executive Officer of the Corporation. He shall
preside at all meetings of the stockholders and of the Board. He shall have
general and active management of the business of the Corporation and shall see
that all orders and resolutions of the Board are carried into effect, subject,
however, to the right of the Board to delegate any specific powers, except such
as may be by law exclusively conferred upon the President, to any officer or
officers of the Corporation. All papers, documents, deeds, and other
instruments required to be executed by the Corporation shall be signed and
executed for the Corporation by the Chairman or the President when directed by,
and in the manner prescribed by, the Board. He shall have the general powers
and duties of supervision and management which are usually vested in the Chief
Executive Officer of a Corporation.
Section 9. The President. The President shall have supervision over
-------------
all such matters as may be delegated to him by the Board or the Chairman. In
the absence of the Chairman or whenever the office of Chairman is vacant the
President shall have the general powers of and shall perform the duties
pertaining to the office of Chairman.
Section 10. The Vice Chairman of the Board. The Vice Chairman of the
------------------------------
Board shall elect a Chairman who shall be the Chief Executive Officer of the
Corporation. He shall preside at all meetings of the stockholders and of the
Board. He shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the Board are
carried into effect, subject, however, to the right of the Board to delegate any
specific powers, except such as may be by law exclusively conferred upon the
President, to any officer or officers of the Corporation. All papers,
documents, deeds, and other instruments required to be executed by the
Corporation shall be signed and executed for the Corporation by the Chairman or
the President when directed by, and in the manner prescribed by, the Board. He
shall have the general powers and duties of supervision and management which are
usually vested in the Chief Executive Officer of a Corporation.
Section 11. Executive Vice Presidents; Senior Vice
--------------------------------------
Presidents and Vice Presidents.
- ------------------------------
(a) Executive Vice Presidents and Senior Vice Presidents shall have
supervision over all such matters, other officers of the Company, including Vice
Presidents, and in the case of Executive Vice Presidents, Senior Vice
Presidents, and other employees as may be designated or assigned to them by the
<PAGE>
President or Chairman of the Board, and shall perform such duties as the Board
of Directors may designate or as may be assigned to them by the President or by
the Chairman of the Board in the event of absence or disability of the
President. Whenever the term "Vice President" is used in any other Article of
these By-laws, it shall be deemed to include Executive Vice Presidents and
Senior Vice Presidents.
(b) The Vice Presidents shall perform such duties as the Board may
designate or may be assigned to them by the President, or the Chairman of the
Board in the event of absence or disability of the President.
Section 12. Treasurer. The Treasurer shall:
---------
(a) Subject to the supervision and direction of the Vice President -
Finance, have the custody of all moneys, notes, bonds, securities and other
evidences of indebtedness belonging to the Corporation, and shall keep full and
accurate accounts of all moneys and securities received and of all moneys paid
by him on account of the Corporation. He shall daily deposit all moneys, checks
and drafts received to the credit and in the name of the Corporation, in such
banks or other depositories as shall from time to time be authorized, approved
or directed by the President, the Vice President - Finance, or the Board, and
shall, on behalf of the corporation, endorse for deposit or collection, checks,
notes, drafts and other obligations, provided, however, that checks of the
United States Government or of any state or municipal government, which may be
received by any branch house of the Corporation, may be endorsed for deposit by
the local manager of the house receiving the check, and provided further,
however, that checks, warrants, drafts, notes and other negotiable instruments,
which may be received by any branch house of the Corporation, may be endorsed by
the local manager in the name of the Corporation for collection or deposit by or
in the local bank authorized to carry the local accounts.
(b) Furnish to the Board, to the President and to such other officers
as the Board may designate, at such times as may be required, an account of all
his transactions as Treasurer.
(c) Perform such other duties pertaining to the business of the
Corporation as shall be directed or required by the President, the Vice
President - Finance, or the Board and, subject to the control of the Vice
President - Finance, the Board and these By-laws, perform all acts incident to
the office of the Treasurer.
<PAGE>
(d) Give such bond of the faithful discharge of his duties as the
Board may require.
The books and papers of the Treasurer shall at all times be open to the
inspection of the President and each member of the Board.
Section 13. Secretary. The Secretary shall:
---------
(a) Attend all meetings of the stockholders and also, in the event
that no Secretary of the Board is elected or appointed, he shall attend meetings
of the Board, and keep the minutes of such meetings in one or more books
provided for that purpose.
(b) See that all notices are duly given in accordance with the
provisions of these By-laws, or as required by law.
(c) Be custodian of the corporate records and of the seal of the
Corporation and see that the seal of the Corporation or a facsimile thereof is
affixed to or impressed on all certificates for shares prior to the issue
thereof, and all documents, the execution of which on behalf of the Corporation
under its seal, is duly authorized.
(d) Sign with the President or a Vice President certificates for
shares of the Corporation, the issue of which shall have been authorized by
resolution of the Board.
(e) See that the reports, statements, certificates and all other
documents and records required by law are properly made, kept and filed.
(f) In general, perform all other duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the President or the Board.
Section 14. Controller. The Controller shall:
----------
<PAGE>
(a) Maintain adequate records of all assets, liabilities, and
transactions of this Corporation; see that adequate audits thereof are currently
and regularly made; and in conjunction with other officers and department heads
initiate and enforce measures and procedures whereby the business of the
Corporation shall be conducted with the maximum safety, efficiency, and economy.
His duties and powers shall extend to all subsidiary corporations and to all
affiliated corporations.
(b) Prepare and furnish such reports and financial statements covering
results of operations of the Corporation as shall be required of him by the
President or the Board. Prepare and furnish such reports and statements showing
the financial condition of the Corporation as shall be required of him by the
President or the Board, and have the primary responsibility for the preparation
of financial reports to the stockholders.
(c) Perform such other duties pertaining to the business of the
Corporation as shall be directed or required by the President or the Board and,
subject to the control of the President, the Board and these By-laws, perform
all acts incident to the office of the Controller.
The books, records and papers of the Controller shall at all times be
open to the inspection of the President and each member of the Board.
Section 15. Assistant Treasurers. If one or more Assistant Treasurers
--------------------
shall be elected or appointed pursuant to the provisions of Section 3 of this
Article IV, then in the absence or disability of the Treasurer, the Assistant
Treasurers shall perform all the duties of the Treasurer, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
Treasurer, except that they shall have no power to sign in the name of the
Corporation contracts as described in Section 1 of Article VII, unless
specifically authorized by the Board. Any such Assistant Treasurer shall
perform such other duties as from time to time may be assigned to him by the
Board or any superior officer.
Section 16. Assistant Secretaries. If one or more Assistant
---------------------
Secretaries shall be elected or appointed pursuant to the provisions of Section
3 of this Article IV, then in the absence or disability of the Secretary, the
Assistant Secretaries shall perform the duties of the Secretary, and when so
acting shall have all the powers of, and be subject to all the restrictions
imposed upon, the Secretary. Any such Assistant Secretary shall perform such
other duties as from time
<PAGE>
to time may be assigned to him by the Board or any superior officer.
Section 17. Secretary of the Board. The Secretary of the Board shall
----------------------
record the minutes of meetings of the Board, deposit them with the Secretary of
the Corporation, and perform such other duties as may be assigned to him by the
Board.
Section 18. Compensation. The compensation of the officers shall be
------------
fixed from time to time by the Board; provided that the Board may authorize any
officer or Committee to fix the compensation of officers and employees. No
officer shall be prevented from receiving such compensation by reason of the
fact that he is also a director of the Corporation.
ARTICLE V
CAPITAL STOCK
Section 1. Certificates of Stock. The certificates for shares of the
---------------------
capital stock of the Corporation shall be in such form as shall be approved by
the Board. The certificates shall be signed by the Chairman or the Vice
Chairman of the Board, the President, an Executive Vice President, Senior Vice
President or Vice President and also by the Treasurer or the Secretary, and may
be sealed with the seal of the Corporation, or a facsimile thereof.
The signatures of the aforesaid officers may be facsimiles if the
certificate is countersigned by a transfer agent or registered by a registrar
other than the Corporation or its employee. The validity of any stock
certificate of the Corporation signed and executed by or in the name of duly
qualified officers of the Corporation shall not be affected by the subsequent
death, resignation, or the ceasing for any other reason of any such officer to
hold such office, whether before or after the date borne by or the actual
delivery of such certificate.
The name of the person owning the shares represented thereby, with the
number of such shares and the date of issue, shall be entered on the
Corporation's capital stock records.
All certificates surrendered to the Corporation shall be cancelled, and
no new certificates shall be issued until the former certificate for the same
number of shares shall have been surrendered and cancelled except in case of a
lost or destroyed certificate.
<PAGE>
The Corporation may treat the holder of record of any share or shares
of stock as the holder in fact thereof, and shall not be bound to recognize any
equitable or other claim to interest in any such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
save as expressly provided by law.
Section 2. Lost, Stolen or Destroyed Certificates. The Corporation
--------------------------------------
may issue a new certificate for shares in place of a certificate theretofore
issued by it, alleged to have been lost, stolen or destroyed, and the Board may
require the owner of the lost or destroyed certificate, or his legal
representative, to give the Corporation a bond in form satisfactory to the
Corporation sufficient to indemnify the Corporation, its transfer agents and
registrars against any claim that may be made against them on account of the
alleged lost or destroyed certificate or the issuance of such a new certificate.
Section 3. Transfer of Shares. Shares of the capital stock of the
------------------
Corporation shall be transferable by the owner thereof in person or by duly
authorized attorney, upon surrender of the certificates therefor properly
endorsed. The Board, at its option, may appoint a transfer agent and registrar,
or one or more transfer agents and one or more registrars, or either, for the
stock of the Corporation.
Section 4. Regulations. The Board shall have power and authority to
-----------
make all such rules and regulations as they may deem expedient concerning the
issue, transfer and registration of certificates for shares of the capital stock
of the Corporation.
<PAGE>
ARTICLE VI
[INTENTIONALLY OMITTED IN 1985]
ARTICLE VII
EXECUTION OF INSTRUMENTS ON BEHALF OF THE CORPORATION
Section 1. Contracts. Except as herein provided, all contracts of the
---------
Corporation shall be signed in the name of the Corporation by the Chairman, the
President, a Vice President or the Treasurer, sealed with the Corporate Seal and
attested by the Secretary or an Assistant Secretary.
Bids and contracts for the purchase or sale of merchandise in the
ordinary course of business of branch houses or divisions of the Corporation,
together with bonds given to secure the performance thereof, shall be executed
in the name of the Corporation or in an authorized divisional name by an officer
authorized to sign contracts as above specified in this section, or, if relating
to business of branch houses, by a District Manager, or by the Manager or
Assistant Manager of the branch houses, respectively, and if relating to the
business of a division, by an Officer, Manager or Assistant Manager of such
division.
Section 2. Bills of Exchange, Promissory Notes, Bonds or Other
---------------------------------------------------
Evidence of Indebtedness of the Corporation, Bonds of Indemnity, and Securities
- -------------------------------------------------------------------------------
Received. All bills of exchange, promissory notes, bonds, or other evidences of
- --------
indebtedness of the Corporation shall be signed in the name of the Corporation
by the Chairman, the President, or a Vice President, and shall be countersigned
by the Treasurer or by an Assistant Treasurer.
All forms of bonds of indemnity, the execution of which is required of
the Corporation, shall be signed in the name of the Corporation by the Chairman,
the President, a Vice President, the Treasurer or an Assistant Treasurer, and
shall be countersigned by the Secretary or an Assistant Secretary.
Any securities received by the Corporation in settlement or for
security for the payment of any indebtedness due the Corporation may be sold,
assigned, transferred and delivered by the Chairman, the President, a Vice
President or
<PAGE>
the Treasurer, and all instruments of conveyance, assignment or transfer thereof
shall be executed in the name of the Corporation by such officers, attested by
the Secretary or an Assistant Secretary, and the corporate seal attached.
Section 3. Checks and Accounts. All checks shall be signed by either
-------------------
the Chairman, the President, a Vice President, the Treasurer or an Assistant
Treasurer, the Controller or Assistant Controller and also signed by either the
Controller or an Assistant Controller, an Auditor or an Assistant Auditor, the
Secretary or an Assistant Secretary of the Corporation, and no other person or
persons shall be authorized to sign checks upon or against the funds of the
Corporation except as hereinafter provided.
The Chairman, the President, a Vice President, or the Treasurer is
authorized to establish and maintain Managers' funds for branch house's or
manufacturing division's general use including the meeting of payrolls, at the
various locations of the branch houses, or manufacturing divisions of the
Corporation, and special payroll funds at any location where the corporation
carries on business. Such funds shall be subject to withdrawal on the signature
or signatures of one or more persons, as determined and designated in writing by
either the chairman, the President, a Vice President, or the Treasurer.
Checks drawn for the payment of dividends on shares of the
Corporation's stock, and such other checks as may be designated in writing by
the Chairman or the President, together with a Vice President or the Treasurer,
may bear facsimile signatures, provided, however, that for the purpose of
transfer ring funds between banks in which the Corporation has monies on
deposit, the Treasurer or an Assistant Treasurer may direct or authorize the use
of checks payable to a depository hank for credit of the Corporation, which
checks shall have plainly printed upon their face "Depository Transfer Check"
and shall require no signature other than the printed name of the Corporation.
The respective Managers or Assistant Managers of the Corporation's
branch houses, Managers, Credit Managers or Credit Supervisors of Regional
Offices, and Officers, Managers or Assistant Managers of the Corporation's
Divisions, are authorized to file claims for and to collect on behalf of the
Corporation any amounts due for merchandise sold or invoiced from such branch
houses, regional offices or divisions, and in the name of the corporation, or in
an authorized divisional name, to give proper receipts, releases and waivers of
mechanics' and materialmen's liens in connection therewith.
<PAGE>
Section 4. Conveyances, Leases, Releases and Satisfaction of Judgment
----------------------------------------------------------
and Mortgages. All conveyances, leases and releases and satisfactions of
- -------------
judgment and mortgages shall be signed in the name of the Corporation by the
Chairman, the President, a Vice President or the Treasurer, sealed with the
corporate seal and attested by the Secretary or an Assistant Secretary.
Section 5. Other Instruments. All other instruments not hereinabove
-----------------
specifically designated shall be signed in the name of the Corporation by the
Chairman, the President, a Vice President, or Treasurer, sealed with the
corporate seal and attested by the Secretary or an Assistant Secretary,
provided, however, that notwithstanding the provisions contained in these By-
laws, the Board may at any time direct the manner in which and the person by
whom any particular instrument, contract or obligation, or any class of
instruments, contracts or obligations of the Corporation may and shall be
executed.
Section 6. Miscellaneous. Whenever the Board directs the execution of
--------------
an instrument, contract or obligation and does not specify the officer who shall
execute the same, it shall be executed as hereinabove provided.
ARTICLE VIII
CORPORATE SEAL
The corporate seal of the Corporation shall have inscribed thereon the
name of the Corporation and the words "Corporate Seal-1985-Delaware." Said seal
may be used by causing it or a facsimile or equivalent thereof to be impressed
or affixed or reproduced, and shall be in the custody of the Secretary. If an
when so directed by the Board, a duplicate of the seal may be kept and used by
the Treasurer, or by any Assistant Treasurer or Assistant Secretary.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 1. Dividends. Dividends upon the outstanding shares of the
----------
Corporation may be paid from any source permitted by law. Dividends may be
declared at any regular or special
<PAGE>
meeting of the Board and may be paid in cash or other property or in the form of
a stock dividend.
Section 2. Fiscal Year. The fiscal year of the Corporation shall end
------------
on the 31st day of December each year, unless otherwise provided by resolution
of the Board.
Section 3. Stock in other Corportions. Any shares of stock in any
---------------------------
other corporation which may from time to time be held by the Corporation may be
represented and voted at any meeting of stockholders of such corporation by the
Chairman or the President of the Corporation or by any other person or persons
thereunto authorized by the Board, or by any proxy designated by written
instrument of appointment executed in the name of the Corporation either by the
Chairman, the President, or a Vice President, and attested by the Secretary or
an Assistant Secretary.
Shares of stock in any other corporation which shares are owned by the
Corporation need not stand in its name, but may be held for its benefit in the
individual name of the Chairman or of any other nominee desinated for the
purpose by the Board. Certificates for shares so held for the benefit of the
Corporation shall be endorsed in blank, or have proper stock powers attached so
that said certificates are at all time in due form for transfer, and shall be
held for safekeeping in such manner as shall be determined from time to time by
the Board.
Section 4. Election of Auditors. The directors shall select
---------------------
independent auditors to audit the books and records of the Corporation for the
current fiscal year, subject to the approval of the stockholders at the annuyal
meeting. Should the auditors so elect resign, be removed for good cause shown,
or otherwise fail to serve during or with respect to said year, a majoirity of
the directors shall select a substitute firm of auditors to serve with respect
to said year.
ARTICLE X
INDEMNIFICATION
Section 1. Actions, Suits or Proceedings other than by or in the Right
-----------------------------------------------------------
of the Corporation. The Corporation shall indemnify any person who was or is a
- -------------------
party or is threatened to be made a party to any threatened pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
<PAGE>
Corporation) by reason of the fact that he is or was or has agreed to become a
director or officer of the Corporation, or is or was serving or has agreed to
serve at the request of the Corporation as a director or officer or trustee of
another corporation, partnership, joint venture, trust or other enterprise, or
by reason of any action alleged to have been taken or omitted in such capacity
against costs, charges, expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such action, suit or proceeding or any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
Section 2. Actions or Suits by or in the Right of the Corporation.
------------------------------------------------------
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was or has agreed to become a director or
officer of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as a director or officer or trustee of another
corporation, partnership, joint venture, trust or other enterprise, or by reason
of any action alleged to have been taken or omitted in such capacity, against
costs, charges and expenses (including attorneys' fees) actually and reasonably
incurred by him or on his behalf in connection with the defense or settlement of
such action or suit and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the court of Chancery of Delaware
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of such liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such costs, charges and
<PAGE>
expenses which the Court of Chancery or such other court shall deem proper.
Section 3. Indemnification for Costs, Charges and Expenses of
--------------------------------------------------
Successful Party. Notwithstanding the other provisions of this Article, to the
- ----------------
extent that a director or officer of the Corporation has been successful on the
merits or otherwise, including, without limitation, the dismissal of an action
without prejudice, in defense of any action, suit or proceeding referred to in
Sections 1 and 2 of this Article, or in defense of any claim issue or matter
therein, he shall be indemnified against all costs, charges and expenses
(including attorneys' fees) actually and reasonably incurred by him or on his
behalf in connection therewith.
Section 4. Determination of Right to Indemnification. Any
-----------------------------------------
indemnification under Sections 1 and 2 of this Article (unless ordered by a
court) shall be paid by the corporation unless a determination is made (1) by
the Board of Directors by a majority vote of the directors who are not parties
to such action, suit or proceeding, even though less than a quorum, or (2) if
there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion, or (3) by the stockholders, that
indemnification of the director or officer is not proper in the circumstances
because he has not met the applicable standard of conduct set forth in Sections
1 and 2 of this Article.
Section 5. Advance of Costs, Charges and Expenses. Costs, charges and
--------------------------------------
expenses (including attorneys' fees) incurred by a person referred to in
Sections 1 and 2 of this Article in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding; provided, however, that the payment of such costs, charges and
expenses incurred by a director or officer in his capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer) in advance of the final disposition of
such action, suit or proceeding shall be made only upon receipt of an
undertaking by or on behalf of the director or officer to repay all amounts so
advanced in the event that it shall ultimately be determined that such director
or officer is not entitled to be indemnified by the corporation as authorized in
this Article. The Board of Directors may, in the manner set forth above, and
upon approval of such director or officer of the Corporation, authorize the
Corporation's counsel to represent such person, in any action, suit or
proceeding, whether or not the Corporation is a party to such action, suit or
proceeding.
<PAGE>
Section 6. Procedure for Indemnification. Any indemnification under
-----------------------------
Sections 1, 2 and 3, or advance of costs, charges and expenses under Section 5
of this Article, shall be made promptly, and in any event within 60 days, upon
the written request of the director or officer. The right to indemnification or
advances as granted by this Article shall be enforceable by the director or
officer in any court of competent jurisdiction, if the Corporation denies such
request, in whole or in part, or if no disposition thereof is made within 60
days. Such persons' costs and expenses incurred in connection with successfully
establishing right to indemnification, in whole or in part, in any such action
shall also be indemnified by the Corporation. It shall be a defense to any such
action (other than an action brought to enforce a claim for the advance of
costs, charges and expenses under Section 5 of this Article where the required
undertaking, if any, has been received by the Corporation) that the claimant has
not met the standard of conduct set forth in Sections 1 or 2 of this Article,
but the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, its independent
legal counsel, and its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in Sections 1 or 2 of this Article, nor the fact that there has been an
actual determination by the Corporation (including its Board of Directors, its
independent legal counsel, and its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
Section 7. Other Rights; Continuation of Right to Indemnification.
------------------------------------------------------
The indemnification provided by this Article shall not be deemed exclusive of
any other rights to which a person seeking indemnification may be entitled under
any law (common or statutory), agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office or while employed by or acting
as agent for the Corporation, and shall continue as to a person who has ceased
to be a director or officer, and shall inure to the benefit of the estate,
heirs, executors and administrators of such person. All rights to
indemnification under this Article shall be deemed to be a contract between the
Corporation and each director or officer of the Corporation who serves or served
in such capacity at any time while this Article is in effect. Any repeal or
modification of this Article or any repeal or modification of relevant
provisions of the Delaware General Corporation Law or any other applicable laws
shall not in any way diminish any
<PAGE>
rights to indemnification of such director or officer or the obligations of the
Corporation arising hereunder.
Section 8. Insurance. The Corporation shall purchase and maintain
---------
insurance on behalf of any person who is or was or has agreed to become a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him or on his behalf in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article,
provided that such insurance is available on acceptable terms, which
- --------
determination shall be made by a vote of a majority of the entire Board of
Directors.
Section 9. Savings Clause. If this Article or any portion hereof
--------------
shall be invalidated on any ground by any court of competent jurisdiction, any
portion of this Article so invalidated shall be severable and such invalidity
shall not by itself render any other portion of this Article invalid, and the
Corporation shall nevertheless indemnify each director or officer of the
Corporation as to costs, charges and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement with respect to any action, suit
or proceeding, whether civil, criminal, administrative or investigative,
including an action by or in the right of the Corporation, to the full extent
permitted by any applicable portion of this Article that shall not have been
invalidated and to the full extent permitted by applicable law.
ARTICLE XI
AMENDMENTS
Except as otherwise required by law or the Certificate of
Incorporation, these By-laws may be amended or repealed, and new By-laws may be
adopted, either by the affirmative vote of two-thirds of the shares of stock
outstanding and entitled to vote thereon, voting together as a single class, or
by the affirmative vote of a majority of the Board then in office.
<PAGE>
EXHIBIT 13
Crane Co.
- --------------------------------------------------------------------------------
Annual Report
- --------------------------------------------------------------------------------
1995
<PAGE>
ABOUT THE COMPANY
Crane Co. is a diversified manufacturer of engineered industrial products and
the largest American distributor of doors, windows and millwork. Founded in
1855, Crane employs over 10,000 people in North America, Europe, Asia and
Australia.
<PAGE>
Crane Co.
Financial Highlights
(In thousands except per share data)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Sales $1,782,310 $1,653,466 $1,310,205 $1,306,977 $1,302,532
Operating Profit 142,948 109,889 85,856 45,244 78,902
Income before Taxes 121,468 91,227 79,818 38,689 72,405
Provision for Income Taxes (45,131) (35,294) (30,925) (14,403) (27,412)
---------- ---------- ---------- ---------- ----------
Income from Operations $ 76,337 $ 55,933 $ 48,893 $ 24,286 $ 44,993(a)
========== ========== ========== ========== ==========
Per Primary Share:
Income from Operations $ 2.50 $ 1.86 $ 1.62 $ .79 $ 1.42(a)
Dividends Per Common Share $ .75 $ .75 $ .75 $ .75 $ .75
Average Primary Shares Outstanding 30,544 30,146 30,217 30,845 31,628
---------- ---------- ---------- ---------- ----------
</TABLE>
(a) Income before cumulative effect of a change in accounting for postretirement
benefits other than pensions of $22,341 ($.70 per share).
Table of Contents
Financial Highlights 1
Letter to Shareholders 2
Crane Co. at a Glance 4
Management's Discussion
and Analysis of Operations 8
Consolidated Financial Statements 15
Notes to Consolidated
Financial Statements 20
Segment Data 28
Management's Responsibility/
Independent Auditors' Report 30
Shareholder Information 32
Directors and Officers Back Cover
<PAGE>
Letter to Shareholders
[PHOTO APPEARS HERE]
R. S. Evans
Chairman and
Chief Executive Officer
"Last year I said that Crane
had its best mix of businesses
and growth opportunities,
which would result in
the strongest cash flow and
earnings potential ever.
That assessment has proven true."
I am proud to report that in 1995 Crane Co. had the best financial performance
in its history. Sales were up 8% to nearly $1.8 billion, net income was up 36%
to $76.3 million and earnings per share were up 34% to $2.50.
Last year I said that Crane had its best mix of businesses and growth
opportunities, which would result in the strongest cash flow and earnings
potential ever. That assessment has proven true.
1995 was a year of consolidation and investment. Cash flow was used to repay $58
million in debt, resulting in a further upgrade of our debt rating and increased
financial flexibility. Our debt to total capital ratio improved from 52% to 44%.
During the year, $34 million was invested in fixed assets and working capital to
better serve our customers. We spent $14.5 million on acquisitions of three
businesses which strengthen our existing operations at Barksdale, Resistoflex,
and Crane Pumps and Systems, and an equity investment in a fourth which fits
well with ELDEC's strengths in power supply systems for the telecommunications
market. Also, we were able to return $40.7 million to shareholders by
repurchasing 551,900 shares for $17.9 million at an average price of $32.50 per
share, and paying dividends of $22.8 million or $.75 per share.
During 1995 we made a number of investments in support of our growth and
earnings strategies. We established a joint venture in China to produce iron
valves for distribution through our global network and developed several new
international sources for valve products; Chempump, long a leader in sealless
pump technology, introduced the NC series of pumps which permit continuous
monitoring of critical pump operating parameters; Resistoflex's new plastic
lined pipe and hose products help customers meet stringent emissions
requirements; Cor Tec is developing a new core for its structural panels for the
trans-
2
<PAGE>
portation industry; the sensor technology acquired by Barksdale in Germany is
being introduced to U.S. distribution channels; and National Vendors Cafe System
"7" continues to make new inroads in the office coffee service market.
One of the best examples of investing for the future is our Aerospace business
where Hydro-Aire has won nine of the last ten programs on which it has competed,
ELDEC fifteen of the last twenty and Lear Romec seven of the last eleven. Each
of these new aircraft programs requires substantial up-front investment in new
technology and new product applications. Our success over the past five years is
best exemplified by our position on the Boeing 777 aircraft where we have
proprietary market positions in brake control, proximity sensing and electrical
power control. Our investment in this program will have excellent returns as
Boeing's 777 orders grow. We expect similar success with the other programs.
The efficient use of capital continues to be a driving force at Crane. The EVA
incentive system, used by all our business units and the corporate office,
encourages this effort and continues to show results. Our use of working capital
as a percentage of sales has improved every year since implementation of the EVA
system in 1990. This year our average working capital as a percentage of sales
improved to 23.4% from 24.5% in 1994. Return on assets also improved to 7.6%
from 6.4% in 1994. While this is still not high enough, it is a marked
improvement.
The past year saw two important management changes at Crane. During the 12
years that I have been Chairman and CEO, I have also been President twice.
During 1995, it became clear to me that we needed to continue to strengthen our
operating management. With more than 30 business units, we needed a President
and Chief Operating Officer. L. Hill Clark was elected to that position in the
fourth quarter. Hill is ideal for the position. An engineer by training and an
operations manager by background, Hill joined Crane in 1990 as President of Lear
Romec. Since 1993 he has had group responsibilities for Fluid Handling and
Aerospace. Hill's efforts will be dedicated to increasing efficiency and
quality, reducing costs and developing new products and markets.
Also, in January 1996, Paul R. Hundt, Vice President, General Counsel and
Secretary, retired after more than 27 years with Crane. Paul and I have shared
many exciting and innovative business experiences over the years. His integrity,
broad business skills, wise and intelligent advice and daily participation in
management of the company will be truly missed by me and all those who worked
with him.
There are more than 10,000 employees at Crane. The success of our company is
due to the effective dedication of all of them, and with you, I am thankful for
their efforts.
Sincerely,
/s/ Robert S. Evans
Robert S. Evans
Chairman and
Chief Executive Officer
February 9, 1996
3
<PAGE>
Crane Co. at a Glance
<TABLE>
<CAPTION>
Business Unit PRODUCTS MARKETS SERVED BUSINESS HIGHLIGHTS BUSINESS OUTLOOK
- ------------------------------------------------------------------------------------------------------------------------------------
Fluid Handling
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CRANE VALVES Gate, Globe, Check Hydrocarbon Processing: Joint ventures were Sales and profits
North America and Ball valves in Refining, established in China expected to
all size ranges Petrochemical, Oil and to manufacture increase due to:
CRANE LTD. made from Bronze, Gas Production and resilient seat . operating
Ipswich, U.K. Cast Iron, Steel, Distribution; Chemical butterfly valves and improvements at
Stainless Steel, Processing; Pulp and in Indonesia to the Brantford,
PACIFIC VALVES Titanium and other Paper; Power Generation assemble and test Ontario bronze
Long Beach, CA special corrosion including Nuclear steel valves for the valve facility
resistant alloys applications; hydrocarbon . market
FLOWSEAL/CENTER LINE High performance, Commercial processing/refining expansion in Asia
Long Beach, CA resilient seat and Construction, HVAC, industry. . new product
composite Water and Sewage, Market share offerings at
WESTAD INDUSTRI A/S butterfly valves, Building and gains at Crane Crane Ltd.
Geithus, Norway HF Acid Valves; Engineering services, Ltd. based on new
extensive repair, Marine, Cryogenic product offerings
CRANE AUSTRALIA PTY., LTD. contract services and in the marine
Sydney, Australia maintenance and market at Westad.
"in-line" service Reorganized
capabilities, pipe sales/marketing
fittings organization and
manufactured in eliminated redundant
United Kingdom sales/distribution
channels.
Began
implementation of
bronze valve
modernization
project in
Brantford, Ontario.
Completed
consolidation of the
Mark Controls Center
Line product into
the Long Beach
facility.
CRANE PUMPS & Submersible Municipal, Industrial Acquired Process Sales and profit will
SYSTEMS, INC. Wastewater and Commercial Systems, a increase as a result
Piqua, OH Regenerative Wastewater, Specialty manufacturer of of:
Turbine and Industrial Markets, industrial line shaft . market share gains
BARNES PUMPS End Suction Original Equipment turbine pumps which for pressure sewer
Centrifugal, Manufacturers, Power will be integrated pump products
BURKS PUMPS Horizontal & and Construction with the Deming . full year results
Vertical Industries; vertical turbine pump at Process Systems
DEMING PUMP Centrifugal, Government Contracts, line, establishing a . market share gains
Standard Commercial HVAC solid market position for Chempump's new NC
WEINMAN Vertical Industry, Chemical in this niche series diagnostic
Turbine, and Hydro-Carbon industrial market. sealless pump
CHEMPUMP Air-Operated Processing Industries Introduced new . Increased sales to
Diaphragm, pressure sewer pump original equipment
CHEM/METER Submersible products to serve manufacturers.
Dewatering, growing market for
PROCESS SYSTEMS Split Case, alternative sewage
End Suction, collection system.
SELLERS In-Line, Introduced new
Leakproof sealless pump
Centrifugal, technology featuring
and Metering an electronic
Pumps, diagnostic system
Rotary Tank providing real time
Cleaners and monitoring of
Steam critical operating
Injectors parameters, allowing
pump users to plan
simple parts
replacements before a
costly failure occurs.
COCHRANE ENVIRONMENTAL SYSTEMS
King Of Prussia, Pa Water/wastewater Most industries New senior Sales and
treatment requiring water management team profitability
consisting of and wastewater with increased expected to
reverse osmosis, treatment focus on water increase as the
softening, including Power treatment market loss on the
filtration, Generation, Taiwan Power
clarification, Pharmaceuticals, Project is
demineralizers, Chemicals and brought to an
and condensate Petroleum end and the
booster pumps company focuses
on its
transition to a
full service
water treatment
organization
from a deaerator
manufacturer.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
BUSINESS UNIT PRODUCTS MARKETS SERVED BUSINESS HIGHLIGHTS BUSINESS OUTLOOK
- ------------------------------------------------------------------------------------------------------------------------------------
Aerospace
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ELDEC CORPORATION Position Indication Commercial, Business ELDEC was selected The Aerospace
Lynnwood, WA and Control Systems, and Military for major power market, which
Proximity Sensors, Aerospace conversion began to recover
Pressure Sensors and Industries, Military components on the in 1995 after a
Components, True Marine and Gulfstream V and three year
Mass Fuel Telecommunications the Canadair decline, is
Flowmeters, Power Global Express. expected to
Conversion Purchased a 47% continue to
Components and equity position in improve in 1996.
Systems Powec A.S., a This, along with
Norwegian additional
HYDRO-AIRE Anti-Skid and Commercial, Business manufacturer of equipment
Burbank, CA Automatic Braking and Military power conditioning penetration on the
Systems, Fuel and Aerospace Industries products and newest model
Hydraulic Pumps, systems serving aircraft in both
Coolant Pumps and the commercial the commercial and
Systems, wireless the business
Hydraulic and telecommunications aerospace markets
Pneumatic Valves market. and increased
and Regulators, Hydro-Aire was focus on the
Actuators and awarded the brake overhaul and
Solid State controls, fuel repair market by
Components pumps and all three
hydraulic operating units,
LEAR ROMEC Lubrication and Commercial and components for the will provide for
Elyria, OH Fuel Pumps for Military new Boeing 737-700 sales and profit
Aircraft, Aircraft, Ground and brake controls growth in 1996.
Aircraft Engines, Vehicles, Land for the new In addition, the
Radar Cooling and Marine McDonnell Douglas equity position in
Systems Applications and MD-95, both Powec A.S. is
Missiles launched in 1995. expected to
The first Rolls accelerate the
Royce Trent engine transfer of our
using a Lear Romec Aerospace power
lube and scavenge conversion
pump was put in technology to the
service in 1995. $800 million
wireless
telecommunications
market.
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ENGINEERED MATERIALS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kemlite Company, Inc. Fiberglass- Truck Trailer, Worldwide Solid results
Joliet, IL Reinforced Recreational shortage of are expected in
Plastic Vehicle and fiberglass 1996. Although
Panels used Commerical hindered sales the
as Truck Construction growth at transportation
Interior Wall Kemlite which market served
Liners and lost market by both Kemlite
Roofs; share in the and Cor Tec
Recreational first half of will be down
Vehicle 1995. Kemlite's from 1995
Sidewall and strong market levels, this
Roofs; and position should be
Wall and allowed it to offset by
Ceiling immediately market share
Systems for regain market gain resulting
the Building share as the from the easing
Products fiberglass of the
Market shortage eased fiberglass
in the second shortage and
half of 1995. the
Kemlite's displacement of
translucent aluminum in dry
roof for the van truck
dry van trailer trailer and
market and its recreational
COR TEC Fiberglass- Truck and Truck decorative vehicle
Washington Court Reinforced Trailer sidewalls for sidewall
House, OH Polyester Resin Manufacturers, the applications,
Laminated Infrastructure recreational and further
Panels for Construction vehicle market expansion in
Transportation, continued to global markets.
Construction, gain market Resistoflex
Marine, Signage share will benefit in
and Sound displacing 1996 from
Barrier aluminum. market share
Applications Cor Tec's gains in the
foam core FRP Asian chemical
Resistoflex Corrosion Pharmaceutical, panel "Encor" process
Marion, NC Resistant Chemical Pro- performed well industry
Plastic-Lined cessing, Pulp and in prototype through the
Pipe, Fittings, Paper, Ultra Pure truck body and acquisition of
Tanks, Valves, Water, Waste specialty Kessel PTE,
Expansion Management Industries, trailer Ltd. In
Joints and Hose Military and Aero- markets. This addition,
Assemblies, space Contractors new product investment in
High offers many new products,
Performance advantages to rotational
Separable customers molding and
Fittings for including lower vertical
Operating cost and extrusion
Pressures to weight. equipment over
8,000 PSI Resistoflex the last two
acquired Kessel years should
Crane Plumbing Manufacturer of Residential, Industrial PTE., Ltd., a improve its
Montreal, Canada Plumbing Commercial and Institutional plastic-lined domestic market
Fixtures Construction in Canada pipe position.
manufacturer Crane
Polyflon Radio Frequency Magnetic with facilities Plumbing sales
Norwalk, CT and Microwave Resonance in Singapore, will increase
Components, Imaging, Radar Malaysia and in 1996 with an
Capacitors, and Microwave Thailand. This improved
Circuit Manufacturers allows Canadian
Processing, Resistoflex housing market
Antennas immediate and expansion
access to the into the retail
rapidly distribution
expanding Asian market.
chemical
process
industry.
Crane Plumbing
restructured
its sales and
marketing
organization to
gain access to
the retail
distribution
channels in
Canada and
reduce costs.
</TABLE>
5
<PAGE>
CRANE CO. AT A GLANCE
<TABLE>
<CAPTION>
Business Unit PRODUCTS MARKETS SERVED BUSINESS HIGHLIGHTS BUSINESS OUTLOOK
- ------------------------------------------------------------------------------------------------------------------------------------
CRANE CONTROLS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BARKSDALE, INC. Pressure Switches Manufacturers of Unimess acquisition Sales and profit
Los Angeles, Ca and Transducers, Compressors, added solid state are expected to
Temperature Machine Tools, pressure switches increase in 1996
Switches and Trucks and Spa and level switches the result of:
Directional Heaters to Barksdale's . New products and
Control Valves product offerings. established
Barksdale's air distribution at
POWERS PROCESS CONTROLS Process Controllers Chemical Process suspension valve Barksdale
Skokie, IL and Instrumentation, Industry, Food continued to gain . Increased benefit
Control Valves, Processing, market share with of the plumbing
Temperature Pharmaceuticals, truck manufacturers brass product on
Regulators, Water Water and Wastewater capturing nine Powers Process
Mixing and Thermal Treatment, Light major accounts in . New products and
Shock Protection Commercial and 1995 compared to cost reductions
Shower Valves, Institutional only one in 1994. at Dynalco
Plumbing Brass Facilities, Powers Process . New products and
Residential Plumbing redirected its increased OEM sales
Brass marketing efforts at Azonix
on electronic . Lower cost base
DYNALCO CONTROLS Rotational Speed Stationary Engines, faucet and shower at Ferguson Europe
Ft. Lauderdale, FL Sensors, Instruments, Pipelines, control systems to and market share
Control Systems Construction, Marine satisfying specific gains in the
and Agriculture customer domestic market.
Equipment applications in the
institutional
AZONIX, INC. Data Acquisition Chemical, market.
Billerica, MA Products, Control Petrochemical, Dynalco began
Systems and Oil, Gas, Metal development process
Operator Processing for new modular
Interfaces product
architecture using
FERGUSON Index Drives Industrial and surface mount
St. Louis, MO and Tables, Commercial components.
Mechanical Machinery Ferguson completed
Parts Handlers, the consolidation
In-Line of its European
Transfer manufacturing
Machines, facilities into one
Rotary Tables, location
Press Feeds, significantly
Custom Cams, reducing its fixed
Special cost base and
Intermittent achieving
Motion Machines profitable fourth
quarter results.
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MERCHANDISING SYSTEMS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NATIONAL VENDORS Electronic Vending Automated 1995 was another 1996 prospects are
Bridgeton, MO Merchandisers for Merchandising record sales year strong due to
Refrigerated and for National lower costs and
Frozen Food, Hot Vendors. The Cafe market penetration
and Cold System "7" initiatives. Key
Beverages, Snack continued to opportunities lie
Foods, Coin and penetrate the in growing the
Currency Changers office coffee international and
market and convenience store
expanded into the markets.
convenience store The National
market. In Vendors plant
NATIONAL REJECTORS, INC. Electronic Validators, Automated addition, European expansion program
GmbH Chip Card Cashless Merchandising sales increased is essentially
Buxtehude, Germany Payment Systems dramatically. complete.
The international Reduced
distribution production costs
network was and increased
expanded in 1995 manufacturing
positioning flexibility will
National Vendors enable National
for global market Vendors to
growth. National successfully
Vendors now has satisfy the
six distributors requirements of its
in Latin America, present and future
five in the customer base.
Pacific Rim, and In addition, an
six in the Middle improved European
East. economy and bus
NRI GmbH operated ticketing
at a profit for applications in
the first time Latin America
since 1991 due to should help NRI
higher production operate profitably
and sales levels in 1996.
and the benefits
of the cost
reduction program
previously
instituted.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
BUSINESS UNIT PRODUCTS MARKETS SERVED BUSINESS HIGHLIGHTS BUSINESS OUTLOOK
- ------------------------------------------------------------------------------------------------------------------------------------
Wholesale Distribution
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HUTTIG SASH & DOOR COMPANY Distributor of Building Products Huttig's management 1996 profit expected
Chesterfield, MO Doors, Windows, Retailers, information system to improve due to:
Millwork, Contractors and became a . Stronger domestic
Specialty Home Remodeling competitive single family
Construction advantage - housing starts as a
Materials and inventories were result of low
Related Products reduced $11.4 interest rates
million in 1995 . Improved operating
CRANE SUPPLY Distributor of Pipe, Industrial, with inventory to efficiency at Huttig
Montreal, Canada Valves, Fittings, Municipal, sales ratio through the benefit
Plumbing Fixtures Commercial and improving to 12.4% of its management
Institutional compared to 14% in information system
Construction 1994. Additional . Improvement in the
benefits were Canadian economy
VALVE SYSTEMS AND CONTROLS Industrial Petroleum, realized in favorably impacting
Houston, TX Distributor of Chemical, Power and product/branch cost Crane Supply.
Automated Valves General Processing analysis,
and Integrated Industries purchasing, and
Control Systems warehouse operating
efficiency. Huttig
closed its Wharton,
New Jersey branch
which incurred a
loss of $2.2
million over the
last two years.
Crane Supply
achieved its best
results since 1988
through increased
management focus on
value added
services improving
operating margins.
Valve Systems and
Controls new
management emphasis
on its core
business, valve
actuation, produced
profitable results
compared to
operating losses in
the last two years.
Business Outlook
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CRANE DEFENSE Specialized Handling Shipbuilding Increased emphasis Stable results as
Conroe, TX Systems, Elevators, on core shipbuilding Crane Defense focuses
Winches, Ground products. on its core business -
Support Equipment, shipbuilding
Cranes and products.
Associated
Electronics
</TABLE>
7
<PAGE>
Management's Discussion and Analysis of Operations
<TABLE>
<CAPTION>
1995 OVERVIEW
(in millions) 1995 1994 1993
- ------------- ---- ---- ----
<S> <C> <C> <C>
Sales $1,782.3 $1,653.5 $1,310.2
Operating Profit 142.9 109.9 85.9
Operating Margin 8.0% 6.6% 6.6%
</TABLE>
In 1995 Crane Co. had the best overall financial performance in its history.
Sales increased $128.8 million (8%) in 1995 to a record $1.8 billion, and
operating profit rose $33 million to a record $142.9 million, an increase of 30%
from last year. Since 1993, sales have increased $472.1 million and operating
profit has risen $57 million. Net income was $76.3 million in 1995, an increase
of 36% from 1994 and 56% from 1993. Total cash flow (net income plus
depreciation and amortization) totaled $125.1 million, up 24% from 1994. In
addition, $27.7 million was received from the sale of an equity investment and
surplus real estate. As a result Crane Co. was able to invest $33.9 million in
capital equipment and working capital, acquire three operating companies and an
equity position in a fourth for $14.5 million and return $40.7 million to the
shareholders through dividends and stock repurchases. While Crane continued to
invest in improving its businesses, debt was reduced by $57.9 million,
significantly improving financial flexibility for 1996 and beyond.
REVENUE
Reflecting the inclusion of full year results of 1994 acquisitions, sales
increased 11% in Fluid Handling, 34% in Aerospace, 49% in Crane Controls, 9% in
Merchandising Systems and were flat in Engineered Materials, which more than
offset the 3% decline in Wholesale Distribution. In 1994, sales were $343
million higher than in 1993, of which $308 million was attributable to
acquisitions. Excluding the acquisitions, revenues increased 5% in Fluid
Handling, 7% in Engineered Materials and 5% in Wholesale Distribution, which
more than offset the 14% decline in the Aerospace business.
OPERATING PROFIT
Aerospace was the most significant contributor to the record 1995 operating
profit of $142.9 million. It also reported the largest operating profit increase
from 1994, reflecting the full year contribution from ELDEC, the impact of cost
reduction programs, returns on earlier investments in product programs for new
aircraft and higher aftermarket demand. Although sales in Wholesale Distribution
were down due to the impact of the 11% decline in domestic single family housing
starts on Huttig, profits were higher due to cost reductions and improved
industrial markets in Canada. All other business segments reported increased
earnings in 1995 with the exception of Engineered Materials where earnings were
in line with 1994 levels.
In 1994, operating profit increased $24 million to $109.9 million, from 1993.
Acquisitions accounted for the increase with Merchandising Systems and Fluid
Handling reporting increases in profits of 29% and 13%, respectively. However,
these strong results were adversely impacted by the general weakness in the
Aerospace industry. 1993 operating results showed improvements in Engineered
Materials, Wholesale Distribution and Merchandising Systems which more than
offset declines at Fluid Handling, Crane Controls and Aerospace.
FINANCIAL
Net interest expense increased $4.3 million to $24.9 million in 1995 due to the
full year effect of debt incurred to finance the acquisitions made in 1994. Net
interest expense increased $13.6 million in 1994 due to acquisition related
debt. Of particular significance, the company has repaid $145 million of debt
over the last eighteen months.
Miscellaneous income totaled $3.4 million in 1995 and included a $9.4 million
gain on the sale of the company's investment in Mid Ocean Limited, partially
offset by legal costs for a discontinued operation and a write down of excess
real estate to current market value. Miscellaneous income totaled $1.9 million
in 1994, compared to $.9 million in 1993.
The company's effective tax rate was 37.2% in 1995, 38.7% in 1994 and 38.7% in
1993. The lower effective tax rate in 1995 was principally due to favorable tax
treatment on higher export sales and a lower effective foreign tax rate due to
non-deductible foreign losses in 1994.
<TABLE>
<CAPTION>
FLUID HANDLING
(in millions) 1995 1994 1993
- ------------- ---- ---- ----
<S> <C> <C> <C>
Sales $343.8 $310.0 $197.7
Operating Profit 19.7 19.1 8.9
Operating Margin 5.7% 6.1% 4.5%
</TABLE>
Fluid Handling consists of valve, pump and water treatment businesses. The
Crane Valve business with five manufacturing facilities in North America, as
well as plants in the United Kingdom, Australia, Norway, China and Indonesia,
sells a wide variety of commodity and special purpose valves and fluid control
products for
8
<PAGE>
the chemical and hydrocarbon processing, power generation, marine, general
industrial and commercial construction industries. Products are sold under the
Crane, Jenkins, Pacific, Westad, Flowseal and Center Line brands. Crane Pumps
has six manufacturing facilities in the United States located in Ohio, Illinois,
Pennsylvania, West Virginia and Michigan. Pumps are manufactured under the
Deming, Weinman, Chempump, Burks, Chem/Meter, Barnes and Process Systems brand
names. Pumps are sold to a broad customer base which includes chemical and
hydrocarbon process industries, automotive, municipal, industrial and commercial
wastewater, power generation, commercial heating, ventilation and air-
conditioning industries and original equipment manufacturers. The water
treatment business has a manufacturing facility in Pennsylvania and serves the
water and wastewater treatment market. Its products are sold under the Cochrane
name. This group employs 3,200 people and had assets of $261.2 million at
December 31, 1995.
Sales in our Fluid Handling group increased 11% in 1995 primarily due to the
April 1994 acquisition of Mark Controls. In addition, Crane Ltd. shipments
increased by 15% in a flat market on the strength of new product offerings:
steel valves, the Center Line resilient seat butterfly valve and balancing
valves. Westad, our Norwegian valve operation, gained market share in 1995 by
capturing a number of marine projects. North American valve shipments were down
1% from the 1994 level. Pump sales totaled $89 million in 1995, down slightly
from last year.
Operating profit increased 3.5% due to market share gains at Crane Ltd. and
Westad, and the improved operating margins at Crane Pumps & Systems due to cost
reductions from product line and manufacturing rationalizations. Partially
offsetting these favorable factors were lower valve margins in North America and
Australia. The Mark Controls acquisition contributed marginally to the
improvement.
Fluid Handling order backlog at December 31, 1995 totaled $91 million, an
increase of $23 million from the prior year level.
1994 operating profit increased $10.2 million on a 57% increase in sales. The
improved results were due to the acquisition of Burks Pumps at the end of 1993
and the Mark Controls valve businesses in April 1994. Operating profit of $8.9
million in 1993 was $3.0 million lower than the prior year level with sales
declining 9%.
Fluid Handling continued to focus on reducing product costs. Crane has
established a low cost base of suppliers in China, South Korea, India, Mexico,
Romania and Poland. Cellular manufacturing techniques were successfully
implemented at Crane Ltd. in 1995 and are planned for our Brantford, Canada
bronze valve facility in 1996. Two valve manufacturing joint ventures were
established in the Far East in 1995, one in China and one in Indonesia. Both
were manufacturing and shipping valves in the fourth quarter of 1995.
Crane acquired Process Systems Inc., a manufacturer of industrial line shaft
turbine pumps in the fourth quarter of 1995. This company, with annual sales of
$9.0 million, will be integrated into Crane's existing vertical turbine pump
business in 1996.
With these initiatives in place, 1996 should show improvement.
AEROSPACE
(in millions) 1995 1994 1993
- ------------- ---- ---- ----
Sales $216.2 $160.8 $99.6
Operating Profit 56.0 31.3 31.2
Operating Margin 25.9% 19.5% 31.3%
Aerospace consists of ELDEC, the industry leader in design and manufacture of
position indication and control systems, Hydro-Aire, the industry leader in
design and manufacture of electronically controlled anti-skid and automatic
braking systems, and Lear Romec, a supplier of oil lubrication and fuel boost
pumps. Additional products manufactured by this group consist of proximity
sensors, fuel flowmeters, high and low voltage power conversion systems, fuel
and hydraulic pumps, coolant pumps and systems, valves, regulators and actuators
for the commercial, business and military aerospace industry. Aerospace operates
three manufacturing facilities located in Lynnwood, Washington; Burbank,
California, and Elyria, Ohio; and a small assembly facility in France. The group
employs 1,500 people and had assets of $166.6 million at year end.
The dramatic 1995 sales increase of 34% or $55.4 million and operating profit
increase of 79% or $24.7 million was the result of several factors. In 1995
Crane Co. had a full year contribution from ELDEC, which was acquired in March
1994. ELDEC has leading market positions in its product lines, but at the time
of the acquisition it was marginally profitable due to an inappropriately high
cost structure. After the acquisition, the organization was restructured and
right sized, facilities were consolidated and costs were dramatically reduced.
As a result, the business became increasingly profitable through 1994 and into
1995. Also contributing were slightly higher overall OEM shipments,
particularly for the position indication and control systems and power systems
products for the new Boeing 777 aircraft, and increased aftermarket demand.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS (continued)
In 1995, Aerospace aftermarket sales increased 28% from 1994 due to higher
aircraft utilization rates by airlines, spare parts provisioning requirements
for the new Boeing 777 aircraft and increased focus on the overhaul and repair
business by all three operating units. Performance in the Aerospace group has
benefited from the emphasis on cost control at both Hydro-Aire and Lear Romec
over the last four years, during the industry downturn. This has resulted in
higher profit margins as the market improved in 1995. Sales per employee at Lear
Romec and Hydro-Aire have increased 16% since 1993. The order backlog totaled
$211 million at December 31, 1995, slightly above the prior year level.
Crane has also continued to invest in developing new products and technologies
for specific aircraft applications such as the Boeing 777, Boeing 737, Cessna
Citation 10, Learjet 45, Canadair Global Express and Gulfstream V, Embraer 145,
Lockheed Martin F-22 and McDonnell Douglas MD-95. This investment in the future,
while hurting short term reported results, has built a stronger business.
In 1995, Crane also made a $5.0 million 47% equity investment in Powec AS, a
Norwegian manufacturer of power conditioning products and systems, whose
products are complementary to the products and complex power systems engineering
capabilities at ELDEC. This accelerates the transfer of our Aerospace power
conversion technology to the commercial wireless telecommunications market.
While this is not yet a major contributor to Crane's results, the company
believes its capabilities are well suited for the needs of this $800 million
market.
In 1994, sales increased $61.2 million due entirely to the ELDEC acquisition
which added $75.7 million to revenues. Operating profit totaled $31.3 million in
1994, up $.1 million from the 1993 level as additional ELDEC earnings offset
lower results at the other two Aerospace units.
The aerospace market, which began to recover in 1995 after a three year decline,
is expected to continue to improve in 1996. Though the Aerospace business is
faced with increased competitive pressures and a highly concentrated customer
base, Crane has demonstrated its commitment to face these challenges with
strategic acquisitions, continued cost reductions and investments in new product
technology. These efforts are being helped by increasingly effective cooperation
between Crane's facilities in Washington, California and Ohio across all
functional disciplines.
ENGINEERED MATERIALS
(in millions) 1995 1994 1993
- ------------- ---- ---- ----
Sales $202.1 $201.9 $161.8
Operating Profit 22.9 23.0 15.5
Operating Margin 11.3% 11.4% 9.6%
Engineered Materials consists of four principal operating units: Kemlite
manufactures fiberglass-reinforced plastic panels at facilities in Jonesboro,
Arkansas and Joliet, Illinois for the transportation, recreational vehicle and
commercial building products markets; Cor Tec manufactures fiberglass-reinforced
laminated panels in its Washington Court House, Ohio plant for use as structural
sidewalls by the truck and trailer industry; Resistoflex manufactures corrosion-
resistant, plastic-lined pipe, fittings and valves in its Marion, North Carolina
plant for the chemical process and pharmaceutical industries; and Crane Plumbing
manufactures china, acrylic and steel plumbing fixtures in three plants in
Canada for the Canadian construction industry. This group had assets of $100.6
million at December 31, 1995 and employed 1,200 people.
Sales in 1995 were in line with the prior year level, as strong sales to the
transportation truck and trailer industry at both Kemlite and Cor Tec and major
project wins at Resistoflex were offset by a 30% decline in the residential
housing market in Canada and the transfer of plumbing brass products to the
Controls group. In addition, sales were adversely impacted by a fiberglass
shortage, a key raw material in Kemlite's products, hurting its ability to fully
meet the demand from truck trailer manufacturers in the first half of the year.
Operating profit totaled $22.9 million in 1995 and was level with the prior
year's earnings. The productivity gains at Cor Tec and improved results at
Resistoflex were fully offset by the impact of the drastic decline in the
residential construction market in Canada on Crane Plumbing and the adverse
margin impact of higher fiberglass and resin costs at Kemlite.
Order backlog at year end 1995 was strong at $22.5 million. Although down
significantly from the inflated level at year end 1994 caused by anticipated
fiberglass shortages, this backlog is historically high compared to normal order
backlog levels.
1994 operating profit increased $7.5 million or 48% on a 25% increase in sales
due to Kemlite's Filon acquisition in October 1993, a strengthened
transportation market and improvement at Crane Plumbing. In 1993 operating
profit increased $9.4 million on a slight increase in sales due principally to a
$5.7 million charge in 1992 for product liability and environmental expenses.
10
<PAGE>
Kemlite's products continued to gain market share against alternative materials
in 1995. Kemlite's translucent roof for the dry van trailer market and its
decorative sidewall for the recreational vehicle market continued to gain market
share at the expense of aluminum. Kemlite continued to expand its global
distribution and though still only 6.5% of Kemlite's total sales, international
sales were up 35% in 1995.
Cor Tec is exploring the substitution of lighter and more durable materials for
plywood in the core of its panels, and if successful, this new product will
improve business performance dramatically by offering many advantages to
customers including lower weight and costs.
Resistoflex has strengthened its market position through investment in
rotational molding equipment and vertical extrusion equipment over the past two
years, as well as new product introductions designed to help its customers
comply with stringent emissions regulations. In the fourth quarter of 1995,
Resistoflex acquired Kessel PTE., Ltd., a plastic-lined pipe manufacturer with
facilities in Singapore, Malaysia and Thailand. This acquisition will provide
Resistoflex with immediate market access to the rapidly expanding Asian chemical
process industry.
In 1996, through continued product development, global market expansion and a
low cost position this group is expected to exceed 1995 results.
CRANE CONTROLS
(in millions) 1995 1994 1993
- ------------- ---- ---- ----
Sales $131.1 $88.0 $35.0
Operating Profit 11.3 4.4 .9
Operating Margin 8.6% 5.0% 2.5%
Crane Controls, the company's newest business, is an exciting addition because
of its technology content and growth prospects. Controls' products are used in a
wide variety of specialized industrial applications where process control is
required. Barksdale, which has manufacturing operations in Los Angeles,
California and Reichelsheim, Germany produces pressure, level and temperature
switches, transducers and directional control valves. Powers Process Controls
produces electronic sensors, pressure balancing and control valves, and plumbing
brass for both industrial and commercial markets at its facility in Skokie,
Illinois. Azonix, located in Billerica, Massachusetts, designs electronic data
acquisition products and measurement and control systems for harsh industrial
environments. Dynalco, in Fort Lauderdale, Florida, produces rotational speed
sensors, instruments and control systems for use in industrial engines, natural
gas production and pipelines, and agricultural and marine machinery. Ferguson
manufactures a complete line of motion control products for transferring and
positioning components in automated assembly processes. Ferguson has three
domestic manufacturing facilities: St. Louis, Missouri; Greenwood, Mississippi;
and Detroit, Michigan; and one in Brussels, Belgium. Crane Controls had assets
of $128.5 million at December 31, 1995, and employs 800 people.
Crane Controls operating profit of $11.3 million was more than double the level
of 1994 on a 49% sales increase. The favorable yearly comparisons were heavily
impacted by full year results of the Controls businesses added with the April
1994 Mark Controls acquisition. All units within our Controls group except
Powers Process had higher earnings. In addition, sales increased due to the
transfer of product line responsibility for plumbing brass products to Powers
Process Controls, which serves the same markets with its products. Powers'
results in 1995 were adversely impacted by costs associated with the
introduction of Crane Plumbing Brass product to its markets.
The February 1995 acquisition of Unimess GmbH brought a full line of solid state
switches, transducers and indicating systems to Barksdale, complementing
existing German and United States product lines and market channels. This,
combined with a 10% increase in sales of core products, an improved sales
organization and cost reduction initiatives, produced strong results at
Barksdale this year and positions it well for the future.
Dynalco and Azonix both achieved higher earnings levels in 1995 as they
maintained their leadership positions in their respective specialized markets
for measurement and control systems. Demand for Ferguson's domestic motion
control products was high in 1995. Substantial progress toward cost reduction
goals was made at Ferguson Europe, which was profitable in the fourth quarter of
1995 and had much improved results over 1994, when significant costs were
incurred in consolidating the company into one facility in Brussels. On December
31,1995, Crane Controls had a backlog of $26.2 million, equivalent with last
year.
Sales and operating profit were up dramatically in 1994 due to the acquisition
of the Mark Controls businesses. In 1993 only the Ferguson operations are
reported.
This group continues to penetrate niche markets through emphasis on quality and
introduction of value added products to their customers. Investments to reduce
product costs, enhance product functionality and develop larger markets are
important to this group and will continue in 1996.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS (continued)
<TABLE>
<CAPTION>
MERCHANDISING SYSTEMS
(in millions) 1995 1994 1993
- ------------- ---- ---- ----
<S> <C> <C> <C>
Sales $183.1 $168.5 $166.7
Operating Profit 23.6 23.2 18.0
Operating Margin 12.9% 13.7% 10.8%
</TABLE>
Merchandising Systems has two operating units: National Vendors, the industry
leader in the design and manufacture of a complete line of vending merchandisers
for the food/service vending market; and NRI, which manufactures electronic coin
validators in Buxtehude, Germany for the automated merchandising and
gambling/amusement markets in Europe. National Vendors products include:
electronic vending merchandisers for refrigerated and frozen foods, hot and cold
beverages, snack foods, single cup individually brewed hot drinks and
combination vendors/merchandisers, designed to vend both snack foods and
hot/cold drinks, or snacks and refrigerated/ frozen foods in one machine.
National Vendors manufactures its products in a 463,000 sq. ft. state of the art
facility in Bridgeton, Missouri. National Vendors' products are marketed
directly to customers in the United States and Europe by company sales and
marketing personnel, and in other international markets through independent
distributors. Merchandising Systems employs 1,150 people and had assets of $88.9
million at year end 1995.
Merchandising Systems had 9% higher sales in 1995 compared to 1994, as National
Vendors achieved record sales for the fifth consecutive year. The improvement
was due to a 40% increase in international shipments at National Vendors, market
share gains for the Cafe System "7" product in the office coffee service market
and higher shipments of coin validation equipment by NRI in Europe.
Operating profit improved marginally in 1995 to $23.6 million. Although NRI
operated at a profit for the first time since 1991, National Vendors margins
were lower due to increased promotional activities to entice new equipment
purchases and strengthen the company's leading domestic market position. The
margin decline at National Vendors was further compounded by the delayed
completion of the plant expansion and modernization project. This project, which
is expected to be completed by the end of the first quarter of 1996, will result
in increased manufacturing flexibility, reduced cycle times and lower inventory
levels.
Order backlog totaled $14.7 million at December 31, 1995, which is normal for
Merchandising Systems. The automated merchandising industry has always demanded
short lead times which should strengthen National Vendors market position as it
realizes the benefits of the plant modernization project.
Merchandising Systems profits increased 29% in 1994 to $23.2 million on slightly
higher sales as National Vendors' innovative products and low cost position
improved operating margins. In 1993, profit increased 8% on 10% higher sales.
In 1995, National Vendors expanded its international distribution and now has
six distributors in Latin America, five in the Pacific Rim, and six in the
Middle East. International sales, particularly in Europe, but also in Latin
America and the Pacific Rim, will be key to future growth along with continued
new product introduction.
Results in 1996 are expected to exceed the 1995 level with expanded
international sales focus, the cost benefits of the completed plant
expansion/modernization project at National Vendors and the return to
profitability at NRI.
<TABLE>
<CAPTION>
WHOLESALE DISTRIBUTION
(in millions) 1995 1994 1993
- ------------- ---- ---- ----
<S> <C> <C> <C>
Sales $710.8 $730.6 $655.2
Operating Profit 25.0 20.0 22.7
Operating Margin 3.5% 2.7% 3.5%
</TABLE>
Wholesale Distribution serves three end user markets. Huttig Sash and Door
Company, the largest American wholesale distributor of windows, doors and
specialty millwork, serves building product retailers, contractors and home
remodelers. Huttig operates forty-six distribution centers located throughout
the United States. Valve Systems and Controls, an industrial distributor of
automated valves and related products located in Houston, Texas, serves the
petrochemical, oil refining and pipeline transmission industries; and Crane
Supply, a distributor of pipes, valves, fittings, plumbing fixtures and related
supplies serving the industrial, municipal and institutional construction
industries in Canada. Crane Supply operates thirty-six distribution centers
located throughout Canada. The key success factors in Wholesale Distribution are
customer service and effective inventory and cost management. This group had
assets of $197.5 million at December 31, 1995 and employs 2,400 people.
12
<PAGE>
Wholesale Distribution experienced a 3% decline in sales in 1995 due to the
impact of an 11% decline in single family home construction on Huttig, the
closure of a large but unprofitable Huttig branch in New Jersey, and an exit
from the wood window manufacturing business at the end of 1994. This was
partially offset by an 8% increase in Crane Supply sales as the industrial
market served in Canada was stronger than in 1994, and a full year contribution
by Huttig's Prineville, Oregon wood moulding operation, which was acquired in
May 1994.
The operating profit increase in 1995 was due to improvement at Crane Supply and
Valve Systems. Though the sales increase at Crane Supply helped profits, margins
were higher primarily due to the focus by new management on costs and margins.
Valve Systems' new management concentrated their efforts on cost controls and
sales of higher margin, value added products.
Though Huttig operating profit declined due to lower sales, this was largely
offset by improved margins and greater focus on cost control as well as improved
asset management and productivity gains made possible by its management
information system that the company believes is the best in the millwork
industry and a competitive advantage for the future. Through effective inventory
management, Huttig reduced inventory $11.4 million in 1995 resulting in a LIFO
gain of $4.1 million. Huttig's average inventory as a percentage of sales
improved to 12.4% in 1995 from 14.0% in 1994.
In 1994, operating profit declined 12% on a 12% increase in sales compared to
1993. Sales were up due to acquisitions and improvement in Huttig's markets.
Operating profit was down due to losses at two of Huttig's manufacturing
operations, lower results at Valve Systems and inclusion of a pension gain in
prior year results. In 1993 operating profit increased $9.1 million from the
depressed level of 1992 due to a stronger United States housing market and a
pension gain of $2.7 million at Crane Supply.
With the current low interest rates, higher United States single family housing
starts and some expectation of improvement in the Canadian economy, 1996 should
be a good year for the Wholesale Distribution group.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW
1995 operating activities generated $106.6 million in cash flow allowing the
company to reduce debt by $57.9 million and return $40.7 million to shareholders
through dividends and share repurchases. This is the second consecutive year
Crane has generated cash in excess of $100 million from operations.
The increase in the level of working capital was attributable primarily to the
company's higher sales. However, the ratio of average working capital to net
sales declined 1.1%, which had a positive cash flow impact of $20 million. This
improvement is due to effective investment in management information systems,
better controls and Crane's compensation system which rewards higher returns on
invested capital. Future investments in working capital are expected to be
required to fund sales growth, geographic expansion and new products. These
increases will be largely offset by continued improvement in working capital
management.
Investing activities for 1995 consumed a significantly lower amount of cash
compared with 1994. The principal reason was fewer acquisition opportunities
this year that met the company's financial objectives. The company did utilize
$14.5 million for the purchase of three operating companies and an equity
interest in a fourth. Crane plans to seek acquisition opportunities in 1996
which complement existing businesses, have leading positions in niche markets
and can generate cash returns greater than the cost of capital.
Capital investments in 1995 of $26.6 million were primarily for cost reduction
and process improvements. In 1995, Fluid Handling made capital investments of
$5.7 million, Aerospace $3.6 million, Engineered Materials $3.2 million, Crane
Controls $3.2 million, Merchandising Systems $9.2 million and Wholesale
Distribution $1.5 million. Capital investments are expected to increase over the
next several years to fund manufacturing and business process systems projects.
These projects are designed to reduce business process and manufacturing cycle
times, increasing the company's ability to respond to customer needs.
In 1995, Crane sold its investment in Mid Ocean Limited for $19.4 million. The
cost basis for this investment made in 1992 was $10 million. Proceeds from asset
sales generated $8.2 million in cash flow in 1995 which related primarily to the
disposal of idle plants and properties.
During 1995, 551,900 shares of Crane Co. common stock were repurchased for $17.9
million and $22.8 million of dividends were paid.
Total borrowings of $57.9 million were repaid in 1995, reducing the company's
total debt outstanding at year end to $297.2 million. From its peak at June 30,
1994, the date immediately following Crane's last acquisition in 1994, the
company has repaid over $145 million in debt.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS (continued)
At year end, the company's net debt to total capital ratio was 43.8%, a
significant improvement compared to 52% at December 31, 1994. The company's
working capital increased $21 million to $257 million and the interest coverage
ratio rose to 5.5 times interest expense from 4.8 times in 1994. In June,
Moody's Investors Service upgraded Crane's senior unsecured debt rating to Baa2
from Baa3, citing improved operating results following the successful
integration of the company's recent acquisitions and improved debt protection
measurements.
LONG-TERM DEBT
As of December 31, 1995, Crane had a $200 million contractually committed
domestic long-term bank credit facility under which the company can borrow,
repay, or to the extent permitted by the Agreement, prepay loans and reborrow at
any time prior to the termination date of the Agreement. Proceeds may be used
for general corporate purposes or to provide bridge financing for acquisitions.
In 1995, an amendment to the credit facility was concluded which extended the
termination date of the Agreement to August 2000. The Agreement contains certain
financial covenants, customary in credit facilities of this nature, including
limitations on indebtedness and liens. No loans were outstanding under this
Agreement at year end.
At year end, the company and its subsidiaries were also party to contractually
committed long-term lines of credit underwritten by banks outside of the United
States. These facilities afford local currency borrowings for Crane subsidiaries
in the United Kingdom, Canada and Australia for up to $22.9 million. On December
31, 1995, $22.5 million in loans were outstanding with a weighted average
interest rate of 6.79%.
On June 8, 1994, Crane issued $150 million in Senior Unsecured Notes due 1999 at
a nominal rate of 7.25%, proceeds of which were used for acquisitions.
Incorporating the effects of underwriting fees, original issue discount and the
cost of a treasury lock agreement, the all-in cost of this financing was 7.6%.
This debt was issued under the company's $300 million shelf registration filed
on Form S-3 with the Securities and Exchange Commission on May 19, 1994. The
registration allows Crane to offer from time to time to the public, in one or
more series, senior debt securities and/or subordinated debt securities as a
direct unsecured obligation of the company. At December 31, 1995, $150 million
in debt securities remained registered but unissued.
On March 16, 1992, Crane issued $100 million in Senior Unsecured Notes due in
2004 at a nominal rate of 8.50%, proceeds of which were used for general
corporate purposes and the early optional redemption of two outstanding public
debentures. Incorporating the effects of underwriters fees and original issue
discount, the all-in cost of this financing was 8.6%.
SHORT TERM DEBT
At December 31, 1995, Crane had $215 million in short-term uncommitted,
unsecured money market bid rate lines of credit for domestic borrowings of which
$203.1 million was unused. Crane's foreign subsidiaries had $38.1 million in
United States dollar equivalent short-term borrowing lines available at year end
of which $17.2 million were contractually committed and $20.9 were uncommitted.
As of December 31, 1995, $11.2 million in loans were outstanding on these
foreign credit lines. The weighted average interest rates on the company's
short-term loans outstanding at year end were 5.81% and 6.76% for domestic and
foreign loans, respectively. All available short-term lines of credit are for
borrowings up to 364 days and are renewable at the option of the lender.
Crane is also party to a contractually committed off-balance sheet chattel paper
financing facility, which enables National Vendors to offer various sales
support financing programs to its customers. Recourse to Crane for all
uncollectible loans made to National Vendors' customers by the banks under this
Agreement is limited.
The company believes it has adequate access to both the public and private
credit markets to meet all of its operating and strategic objectives.
Financial Instruments
FININACIAL INSTRUMENTS
The company uses financial instruments from time to time, including interest
rate swaps, to manage the effect of fluctuating interest rates on outstanding
debt. No new interest rate swap contracts were executed in 1995 and none were
outstanding at December 31, 1995.
ENVIRONMENTAL
The company continues to be involved in various remediation actions to clean up
hazardous wastes as required by federal and state laws. Estimated future
environmental remediation cost was $15 million at December 31, 1995, which was
fully accrued. Not included in the accrual is the cost of cleaning one site for
approximately $3.6 million for which a full escrow was established when the
property was acquired in 1993. The company spent $10.3 million on environmental
costs in 1995, of which $7.0 million was spent in settling Crane's liabilities
in the San Fernando Valley Superfund sites in Burbank and Glendale, California.
Crane expects to pay remediation costs of approximately $3 million in 1996. The
annual level of future remediation expenditures is difficult to estimate because
of the many uncertainties relating to conditions of individual sites as well as
uncertainties about the status of environmental laws and regulations and
developments in remedial technology; however, the required remedial actions
being implemented or engineered are not individually or in the aggregate
expected to be material.
14
<PAGE>
Crane Co.
CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share data)
<TABLE>
<CAPTION>
For Years Ended December 31, 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
NET SALES $1,782,310 $1,653,466 $1,310,205
OPERATING COSTS AND EXPENSES:
Cost of sales 1,316,321 1,253,412 1,016,548
Selling, general and administrative 274,276 245,474 178,381
Depreciation and amortization 48,765 44,691 29,420
---------- ---------- ----------
1,639,362 1,543,577 1,224,349
---------- ---------- ----------
OPERATING PROFIT 142,948 109,889 85,856
OTHER INCOME (EXPENSE):
Interest income 2,025 3,616 4,465
Interest expense (26,913) (24,171) (11,396)
Miscellaneous-net 3,408 1,893 893
---------- ---------- ----------
(21,480) (18,662) (6,038)
---------- ---------- ----------
INCOME BEFORE TAXES 121,468 91,227 79,818
PROVISION FOR INCOME TAXES 45,131 35,294 30,925
---------- ---------- ----------
NET INCOME $ 76,337 $ 55,933 $ 48,893
========== ========== ==========
PRIMARY NET INCOME PER SHARE $ 2.50 $ 1.86 $ 1.62
Average primary shares outstanding 30,544 30,146 30,217
FULLY DILUTED NET INCOME PER SHARE $ 2.49 $ 1.85 $ 1.61
Average fully diluted shares outstanding 30,623 30,250 30,404
DIVIDENDS PER COMMON SHARE $ .75 $ .75 $ .75
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
15
<PAGE>
CONSOLIDATED BALANCE SHEETS (In thousands except share data)
<TABLE>
<CAPTION>
Balance December 31, 1995 1994
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,476 $ 2,072
Accounts receivable 240,787 234,695
Inventories
Finished goods 117,060 116,625
Finished parts and subassemblies 37,915 30,556
Work in process 35,364 39,286
Raw materials and supplies 54,662 50,598
---------- ----------
Total inventories 245,001 237,065
Other current assets 6,774 6,407
---------- ----------
TOTAL CURRENT ASSETS 498,038 480,239
PROPERTY, PLANT AND EQUIPMENT AT COST:
Land 36,975 38,841
Buildings and improvements 149,368 157,513
Machinery and equipment 326,642 316,994
---------- ----------
Gross Property, Plant and Equipment 512,985 513,348
Less accumulated depreciation 269,047 250,350
---------- ----------
NET PROPERTY, PLANT AND EQUIPMENT 243,938 262,998
OTHER ASSETS 26,874 30,173
INTANGIBLES 58,894 63,434
COST IN EXCESS OF NET ASSETS ACQUIRED 170,667 171,201
---------- ----------
$ 998,411 $1,008,045
========== ==========
</TABLE>
16 See Notes to Consolidated Financial Statements
<PAGE>
Crane Co.
<TABLE>
<CAPTION>
Balance December 31, 1995 1994
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 771 $ 1,272
Loans payable 15,359 20,986
Accounts payable 96,873 95,211
Accrued liabilities 115,530 119,382
U.S. and foreign taxes on income 12,743 7,444
---------- ----------
TOTAL CURRENT LIABILITIES 241,276 244,295
LONG-TERM DEBT 281,093 331,289
OTHER LIABILITIES 21,977 20,159
ACCRUED POSTRETIREMENT BENEFITS 43,071 43,066
ACCRUED PENSION LIABILITIES 8,272 8,804
DEFERRED INCOME TAXES 27,993 32,440
PREFERRED SHARES, par value $.01; 5,000,000 shares authorized -- --
COMMON SHAREHOLDERS' EQUITY:
Common shares, par value $1.00: Authorized 80,000,000 shares.
Outstanding 30,125,250 shares (30,047,355 in 1994) after
deducting 18,200,426 shares in treasury (18,351,321 in 1994) 30,125 30,047
Capital surplus 12,283 12,766
Retained earnings 342,330 296,268
Cumulative currency translation adjustment (10,009) (11,089)
---------- ----------
TOTAL COMMON SHAREHOLDERS' EQUITY 374,729 327,992
---------- ----------
$ 998,411 $1,008,045
========== ==========
</TABLE>
17
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
<TABLE>
<CAPTION>
For Years Ended December 31, 1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 76,337 $ 55,933 $ 48,893
Depreciation 35,746 35,453 24,144
Amortization 13,019 9,238 5,276
Deferred income taxes (4,317) (3,283) 980
Cash (used for) provided from operating working capital (7,320) 17,550 (3,400)
Other (6,847) 2,443 (4,874)
-------- --------- ---------
TOTAL FROM OPERATING ACTIVITIES 106,618 117,334 71,019
-------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (26,603) (28,199) (38,838)
Proceeds from disposition of capital assets 8,218 16,058 986
Purchase of equity investments (5,067) -- --
Sale of equity investments 19,440 49 --
Payments for acquisitions net of liabilities
assumed of $2,653, $138,797 and $18,802
in 1995, 1994 and 1993, respectively (9,419) (161,424) (111,457)
Proceeds from divestitures -- 2,580 6,029
-------- --------- ---------
TOTAL USED FOR INVESTING ACTIVITIES (13,431) (170,936) (143,280)
-------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
EQUITY:
Dividends paid (22,755) (22,518) (22,511)
Reacquisition of shares (17,940) (186) (10,405)
Stock options exercised 8,784 1,267 3,322
-------- --------- ---------
(31,911) (21,437) (29,594)
-------- --------- ---------
DEBT:
Proceeds from issuance of long-term debt -- 230,105 --
Repayments of long-term debt (47,527) (76,911) (11,737)
Net (decrease) increase in short-term debt (10,398) (88,774) 77,123
-------- --------- ---------
(57,925) 64,420 65,386
-------- --------- ---------
TOTAL (USED FOR) PROVIDED FROM FINANCING ACTIVITIES (89,836) 42,983 35,792
-------- --------- ---------
Effect of exchange rate on cash and cash equivalents 53 99 (43)
-------- --------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,404 (10,520) (36,512)
Cash and cash equivalents at beginning of year 2,072 12,592 49,104
-------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 5,476 $ 2,072 $ 12,592
======== ========= =========
DETAIL OF CASH (USED FOR) PROVIDED FROM OPERATING
WORKING CAPITAL (NET OF EFFECTS OF ACQUISITIONS):
Accounts receivable $ (3,034) $ (11,004) $ (8,503)
Inventories (4,474) 15,285 (10,581)
Other current assets (330) 2,406 (454)
Accounts payable (64) 10,358 9,895
Accrued liabilities (4,722) 1,743 2,055
U.S. and foreign taxes on income 5,304 (1,238) 4,188
-------- --------- ---------
TOTAL $ (7,320) $ 17,550 $ (3,400)
======== ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 26,262 $ 24,947 $ 17,418
Income taxes paid $ 43,474 $ 32,855 $ 34,721
-------- --------- ---------
</TABLE>
See Notes to Consolidated Financial Statements
18
<PAGE>
Crane Co.
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDERS' EQUITY
(In thousands except share data)
<TABLE>
<CAPTION>
Currency Total Common
Common Capital Retained Translation Shareholders'
Shares Surplus Earnings Adjustment Equity
------ ------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1992 $29,958 $ 15,252 $236,475 $(10,333) $271,352
Net income -- -- 48,893 -- 48,893
Cash dividends -- -- (22,511) -- (22,511)
Reacquisition of 394,220 shares (394) (10,011) -- -- (10,405)
Exercise of stock options, 216,792 shares 217 3,105 -- -- 3,322
Conversion of debentures, 25,962 shares 26 78 -- -- 104
Restricted stock awarded, 56,040 shares, net 56 1,736 809 --
Currency translation adjustment -- -- -- (2,537) (2,537)
------- -------- -------- --------- --------
BALANCE DECEMBER 31, 1993 29,863 10,160 263,666 (12,870) 290,819
Net income -- -- 55,933 -- 55,933
Cash dividends -- -- (22,518) -- (22,518)
Reacquisition of 6,990 shares (7) (179) -- -- (186)
Exercise of stock options, 82,942 shares 83 1,184 -- -- 1,267
Conversion of debentures, 71,569 shares 71 232 -- -- 303
Restricted stock awarded, 36,790 shares, net 37 1,369 (813) --
Currency translation adjustment -- -- -- 1,781 1,781
------- -------- -------- --------- --------
BALANCE DECEMBER 31, 1994 30,047 12,766 296,268 (11,089) 327,992
Net income -- -- 76,337 -- 76,337
Cash dividends -- -- (22,755) -- (22,755)
Reacquisition of 551,900 shares (552) (17,388) -- -- (17,940)
Exercise of stock options, 396,575 shares 397 8,387 -- -- 8,784
Restricted stock awarded, 233,220 shares, net 233 8,518 (7,520) --
Currency translation adjustment -- -- -- 1,080 1,080
------- -------- -------- --------- --------
BALANCE DECEMBER 31, 1995 $30,125 $ 12,283 $342,330 $(10,009) $374,729
======= ======== ======== ========= ========
</TABLE>
See Notes to Consolidated Financial Statements
19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES
Principles of Consolidation--The consolidated financial statements include all
majority-owned subsidiaries. All significant intercompany items have been
eliminated. Certain prior year amounts have been reclassified to conform with
the 1995 presentation.
General--The company's financial statements are prepared in conformity with
generally accepted accounting principles. These require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. The company evaluates the
recoverability of all long lived assets by assessing whether the unamortized
asset can be recovered over its remaining life through cash flows.
Cash Equivalents--Marketable securities with original maturities of three months
or less are included in cash equivalents.
Accounts Receivable--Receivables are carried at net realizable value. The
allowance for doubtful accounts at December 31, 1995 and 1994 were $3,598,000
and $3,693,000.
Inventories--Inventories are stated at the lower of cost or market principally
on the last-in, first-out (LIFO) method of inventory valuation. The reduction of
inventory quantities has resulted in a liquidation of LIFO inventories acquired
at lower costs prevailing in prior years. Liquidations have reduced cost of
sales by $4,000,000, $3,300,000, and $1,500,000 in 1995, 1994 and 1993,
respectively. Replacement cost would be higher by $49,460,000 and $52,739,000 at
December 31, 1995 and 1994.
Property, Plant and Equipment--Depreciation is provided primarily by the
straight-line method over the estimated useful lives of the respective assets
which range from three to twenty-five years.
Intangibles--Intangible assets are being amortized on a straight-line basis over
their estimated useful lives which range from five to twenty years. The
accumulated amortization was $11,020,000 and $7,716,000 at December 31, 1995 and
1994, respectively.
Cost in Excess of Net Assets Acquired--Cost in excess of net assets acquired is
being amortized on a straight-line basis ranging principally from fifteen to
forty years. The accumulated amortization was $22,482,000 and $16,730,000 at
December 31, 1995 and 1994, respectively.
Revenue Recognition--Revenues are generally recorded when title passes to the
customer. Revenues on long-term contracts are recognized under the percentage-
of-completion method of accounting and are measured principally on either a
cost-to-cost or a unit of delivery basis. These contracts represent less than 1
percent of sales this year. Accounts receivable include unreimbursed costs and
accrued profits to be billed of $1,943,000 and $4,893,000 at December 31, 1995
and 1994, respectively.
Income Taxes--Income tax expense is based on reported earnings before income
taxes. Deferred income taxes reflect the impact of temporary differences between
assets and liabilities recognized for financial reporting purposes and such
amounts recognized for tax purposes. In accordance with Statement of Financial
Accounting Standards (SFAS) 109, "Accounting for Income Taxes," these deferred
taxes are measured by applying currently enacted tax laws.
Currency Translation--Assets and liabilities of subsidiaries are translated at
the rate of exchange in effect on the balance sheet date; income and expense are
translated at the average rates of exchange prevailing during the year. The
related translation adjustments are accumulated in a separate component of
shareholders' equity.
Financial Instruments--The company periodically enters into interest rate swap
agreements to moderate its exposure to interest rate changes and to lower the
overall cost of borrowings. The differential to be paid or received is accrued
as interest rates change and is recognized in income over the life of the
agreements. In addition, the company periodically uses forward foreign exchange
contracts to hedge firm purchase and sales commitments. Gains and losses on such
contracts are deferred and recognized as part of the related transactions.
Amounts outstanding at December 31, 1995 for such contracts were not material.
Net Income Per Share--Primary earnings per share calculations are based upon the
weighted average number of common shares outstanding after the effect of
dilutive stock options. Earnings per share assuming full dilution was determined
in the same manner as primary earnings per share except that the year-end stock
price was used.
Recently Issued Accounting Standard--During 1995, Statement of Financial
Accounting Standard No. 123 "Accounting for Stock-Based Compensation" was
issued. The company will comply with the additional disclosure required by this
statement but is not required to change its method of accounting for stock-based
compensation.
RESEARCH AND DEVELOPMENT
Product development and engineering costs were approximately $51.9 million,
$46.4 million, and $18.4 million in 1995, 1994, and 1993, respectively. Included
in these amounts were approximately $12,600,000 and $9,500,000 received in 1995
and 1994 respectively, for customer-sponsored research and development.
20
<PAGE>
<TABLE>
<CAPTION>
MISCELLANEOUS--NET
(In thousands) For Years Ended December 31, 1995 1994 1993
<S> <C> <C> <C>
Gain (Loss) on disposal of capital assets $(3,037) $ 1,346 $ 425
Gain on investments 9,440 361 556
Other (2,995)* 186 (88)
------- ------- -----
$ 3,408 $ 1,893 $ 893
======= ======= =====
</TABLE>
*Includes $3.4 million for legal costs related to a previously
discontinued operation.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
The company's repair and maintenance costs for 1995 were $22.2 million as
compared to $19.5 million and $15.6 million in 1994 and 1993, respectively.
Amounts for amortization of intangible assets, taxes other than payroll and
income taxes, royalties and advertising costs were less than 1 percent of sales.
INCOME TAXES
U.S. and non-U.S. income (loss) before taxes is as follows:
<TABLE>
<CAPTION>
(In thousands) For Years Ended December 31, 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income before taxes:
U.S. operations $113,359 $90,765 $83,296
Non-U.S. operations 8,109 462 (3,478)
-------- ------- -------
$121,468 $91,227 $79,818
======== ======= =======
<CAPTION>
The provision for income taxes consists of:
(In thousands) For Years Ended December 31, 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current:
U.S. federal tax $ 38,396 $31,152 $25,898
State and local tax 6,952 5,702 5,151
Non-U.S. tax 4,100 1,723 (1,104)
-------- ------- -------
49,448 38,577 29,945
-------- ------- -------
Deferred:
U.S. federal tax (3,671) (3,356) 526)
State and local tax (619) (130) (11)
Non-U.S. tax (27) 203 1,517
(4,317) (3,283) 980
Total income taxes $ 45,131 $ 35,294 $ 30,925
========= ======== ========
Reconciliation of the statutory U.S. federal rate to actual tax rate
is as follows:
<CAPTION>
(In thousands) For Years Ended December 31, 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Statutory U.S. federal tax at 35% $ 42,514 $31,929 $27,936
Increase (reduction) from:
Non-U.S. taxes 753 1,495 1,415
Local U.S. taxes 4,116 3,622 3,341
Non-deductible goodwill 1,822 1,552 686
Non-taxable FSC income (1,986) (1,343) (737)
Effect of tax rate increase -- -- (510)
Other (2,088) (1,961) (1,206)
-------- ------- -------
Provision for income taxes $ 45,131 $35,294 $30,925
======== ======= =======
Actual tax rate 37.2% 38.7% 38.7%
======== ======= =======
</TABLE>
At December 31, 1995, the company had unremitted earnings of foreign
subsidiaries of $72 million. These earnings, which reflect full provision for
non-U.S. income taxes, are indefinitely reinvested in non-U.S. operations or can
be remitted substantially free of additional tax. Accordingly, no provision has
been made for taxes that might be payable upon remittance of such earnings nor
is it practicable to determine the amount of this liability.
The components of deferred tax assets and liabilities included on the balance
sheet at December 31 are as follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
---- ----
Deferred tax asset:
<S> <C> <C>
Postretirement benefits $16,587 $16,815
Inventory 3,154 3,612
Insurance 8,324 8,132
Environmental 5,787 8,184
Deferred compensation 6,162 5,032
Other 6,648 3,420
------- -------
Total deferred asset $46,662 $45,195
======= =======
Deferred tax liability:
Depreciation $11,432 $16,113
Difference between book basis and
tax basis of assets 19,301 19,330
Intangibles 15,913 16,928
Pension 4,075 3,396
Other 740 (51)
------- -------
Total deferred liability $51,461 $55,716
======= =======
</TABLE>
21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
At December 31, 1995 current deferred tax assets of $23.2 million ($21.9 million
in 1994) were included in other receivables. Net non-current deferred tax
liabilities of $28 million ($32.4 million in 1994) were included in deferred
income taxes.
POSTRETIREMENT BENEFITS
Postretirement healthcare and life insurance benefits are provided
for certain domestic and non-U.S. employees hired before January 1, 1990 who
meet minimum age and service requirements. The company does not pre-fund these
benefits and has the right to modify or terminate the plan.
<TABLE>
<CAPTION>
(In thousands) December 31, 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees $23,068 $23,059 $24,807
Fully-eligible active plan participants 2,295 1,983 1,973
Other active plan participants 6,093 5,934 6,669
------- ------- -------
Total 31,456 30,976 33,449
Unrecognized net gain 11,615 12,090 9,121
------- ------- -------
Accrued postretirement benefit $43,071 $43,066 $42,570
======= ======= =======
Net periodic cost:
Service cost-benefits earned
during the period $ 564 $ 722 $ 850
Interest cost on accumulated
benefit obligation 2,294 2,303 2,768
Amortization of gain (715) (448) (182)
------- ------- -------
Net cost 2,143 2,577 3,436
Benefits paid (2,138) (2,411) (2,482)
Burks Pumps acquisition -- -- 2,218
Mark Controls acquisition -- 330 --
Accrued postretirement benefit--
beginning of year 43,066 42,570 39,398
------- ------- -------
Accrued postretirement benefit--
end of year $43,071 $43,066 $42,570
======= ======= =======
</TABLE>
The cost of covered benefits was assumed to increase 11.1% for 1995, and then to
decrease gradually to 5.2% by 2007 and remain at that level thereafter. In 1994,
the cost of covered benefits was assumed to increase 12% for 1994, and then to
decrease gradually to 6% by 2007 and remain at that level thereafter. An
increase in the assumed health care cost trend rate by one percentage point
would increase the accumulated postretirement benefit obligation by
approximately $2.8 million at December 31, 1995 and the net periodic cost by
approximately $.3 million for the year. The discount rate used in determining
the accumulated postretirement benefit obligation was 7.5% in 1995, 8.25% in
1994, and 7.25% in 1993.
The company participates in several multi-employer insurance plans, which
provide benefits to certain employees under collective bargaining agreements.
Total contributions to these plans were approximately $2,602,000 in 1995,
$2,320,000 in 1994, and $2,193,000 in 1993.
PENSIONS
The company and most of its subsidiaries have defined benefit pension plans for
their employees and directors. The plans generally provide benefit payments
using a formula based on length of service and final average compensation,
except for some hourly employees for whom the benefits are a fixed amount per
year of service. The company's policy is to fund at least the minimum amount
required by the applicable regulations. The pension plan for salaried employees
in Canada was changed in 1993 from a defined benefit to a defined contribution
money purchase plan, resulting in a curtailment gain of approximately $3.1
million. The following table sets forth net periodic pension costs for company
sponsored defined benefit plans.
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
<S> <C> <C> <C>
Benefits earned during the period $ 8,004 $ 8,743 $ 7,305
Interest cost on projected benefit obligation 15,990 15,435 13,979
Actual return on plan assets (62,311) 6,678 (35,872)
Net amortization and deferral 41,320 (27,468) 13,443
-------- -------- --------
Pension expense (income) $ 3,003 $ 3,388 $ (1,145)
======== ======== ========
</TABLE>
22
<PAGE>
The following table sets forth by funded status the amounts
recognized in the company's balance sheet at December 31, for
company sponsored defined benefit pension plans:
<TABLE>
<CAPTION>
1995 1994
---- ----
(In thousands) OVERFUNDED UNDERFUNDED Overfunded Underfunded
---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligation:
Vested $190,472 $7,285 $168,177 $ 6,772
Non-vested 6,670 235 4,988 229
-------- ------ -------- -------
Accumulated benefit obligation 197,142 7,520 173,165 7,001
Effect of future pay increases 29,331 421 28,043 354
-------- ------ -------- -------
Projected benefit obligation 226,473 7,941 201,208 7,355
-------- ------ -------- -------
Assets and book accruals relating to such benefits:
Funded assets at fair value 293,725 6,796 239,104 5,448
Book accruals, net (10,734) 892 (8,863) 1,604
282,991 7,688 230,241 7,052
Assets and book accruals greater (less) than projected
benefit obligations $ 56,518 $ (253) $ 29,033 $ (303)
======== ====== ======== =======
Consisting of:
Unrecognized net asset (liability) at date of adoption less
amortization $ 11,801 $ (478) $ 12,072 $ (561)
Unrecognized net gains (losses) 46,205 (754) 18,420 (1,269)
Unrecognized prior service cost (1,488) -- (1,459) --
Adjustment required to recognize minimum
liability -- 979 -- 1,527
-------- ------ -------- -------
$ 56,518 $ (253) $ 29,033 $ (303)
======== ====== ======== =======
</TABLE>
The following rates were used to determine the projected benefit obligation:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
U.S. Plans:
Discount rate 7.50% 8.25% 7.25%
Expected long-term rate of
return on assets 8.75% 8.75% 8.25%
Rate of compensation increase 4.75% 5.00% 4.75%
Non-U.S. Plans:
Discount rate 7.50%-8.25% 8.25%-8.50% 7.50%-8.25%
Expected long-term rate of
return on assets 8.25%-9.00% 8.25%-9.00% 8.25%-9.00%
Rate of compensation increase 6.25%-6.50% 7.5% 7.5%
</TABLE>
At December 31, 1995, substantially all plan assets are invested in listed
stocks and bonds. These investments include common stock of the company which
represents 4% of plan assets.
The company participates in several multi-employer pension plans, which provide
benefits to certain employees under collective bargaining agreements. Total
contributions to these plans were approximately $1,724,000 in 1995, $1,533,000
in 1994, and $1,482,000 in 1993.
A subsidiary of Crane, ELDEC Corporation, has a non-contributory target benefit
(defined contribution) plan to provide retirement benefits for all eligible
employees. The annual contribution is aimed at funding targeted retirement
benefits for each eligible employee. The contributions for 1995, 1994, and 1993
were $1,899,000, $2,073,000 ($1,343,000 since acquisition), and $2,451,000,
respectively.
23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The company and its subsidiaries sponsor savings and investment plans which are
available to eligible employees of the company and its subsidiaries. In 1995,
the company made contributions of approximately $4.2 million to the plans ($3.4
million and $2.4 million in 1994 and 1993, respectively).
ACCRUED LIABILITIES
(In thousands) December 31, 1995 1994
---- ----
Employee-related expenses $ 46,281 $40,944
Insurance 17,305 16,755
Environmental 3,788 10,876
Warranty 8,485 8,213
Sales allowances 7,007 5,458
Interest 3,936 4,087
Taxes other than income 3,315 3,055
Pensions 3,777 4,023
Other 21,636 25,971
-------- --------
$115,530 $119,382
======== ========
OTHER LIABILITIES
(In thousands) December 31, 1995 1994
---- ----
Environmental $ 11,863 $10,192
Insurance 3,337 4,346
Warranty 1,781 2,533
Employee benefits 1,057 665
Other 3,939 2,423
-------- -------
$ 21,977 $20,159
======== =======
SHORT-TERM FINANCING
As of December 31, 1995, the company had $236 million in domestic and foreign
uncommitted, unsecured lines of credit of which $216 million was unused. The
weighted average interest rate for short-term borrowings at December 31, 1995
and 1994 was 6.76% and 6.70%, respectively. These lines of credit are typically
available for borrowings up to 364 days and are renewable at the option of the
lender. Short-term obligations of $11.9 million and $58.8 million at December
31, 1995 and 1994, respectively, were classified as long-term debt since the
company has entered into finance agreements that permit it to refinance short-
term obligations on a long-term basis.
LONG-TERM FINANCING
(In thousands) December 31, 1995 1994
---- ----
CRANE CO.:
Senior debt:
8 1/2% notes due 2004 $100,000 $100,000
Original issue discount (686) (769)
Deferred financing costs (562) (630)
-------- --------
98,752 98,601
-------- --------
7 1/4% notes due 1999 150,000 150,000
Original issue discount (238) (308)
Deferred financing costs (1,568) (2,039)
-------- --------
148,194 147,653
-------- --------
Various bank loans 11,900 54,400
-------- --------
TOTAL CRANE CO. 258,846 300,654
-------- --------
SUBSIDIARIES:
Industrial revenue bonds 904 3,444
Capital lease obligations 2,343 2,831
Various bank loans 18,618 24,372
Other 1,153 1,260
-------- --------
TOTAL SUBSIDIARIES 23,018 31,907
-------- --------
Total long-term debt 281,864 332,561
Less current portion 771 1,272
-------- --------
Long-term debt net of current portion $281,093 $331,289
======== ========
At December 31, 1995, the principal amounts of long-term debt repayments
required for the next five years are $771,000 in 1996, $626,000 in 1997,
$511,000 in 1998, $169,092,000 in 1999, and $12,320,000 in 2000.
As of December 31, 1995, Crane Co. had $200 million in contractually committed
lines of credit, under a long-term bank credit facility which expires in August
2000. There were no borrowings outstanding under this facility at year end 1995.
Commitments under the facility are for general corporate purposes and to provide
bridge financing for acquisitions. In addition, the company has other
international long-term credit arrangements with banks totaling $22.9 million of
which $22.5 million was outstanding at December 31, 1995.
The effective interest rates at December 31, 1995 were 5.81% and 6.79% on the
domestic and foreign bank loans, respectively. The long-term credit facilities
contain certain financial and restrictive covenants, including limitations on
indebtedness and liens.
In June 1994, the company issued $150 million 7 1/4% Senior Notes due 1999.
Incorporating the effects of underwriting fees, original issue discount and the
cost of a treasury lock agreement, the effective cost of this financing was
7.6%. This public debt was issued under the company's $300 million shelf
registration as filed with the Securities and Exchange Commission in May 1994.
24
<PAGE>
Financial Instruments--The company periodically enters into interest rate swap
agreements to manage its exposure to interest rate changes and to lower the
overall cost of borrowings. All interest rate swaps are subject to market risk
as interest rates fluctuate. No new interest rate swap agreements were executed
in 1995 and 1994. At December 31, 1995 and 1994, the company had no interest
rate swap contracts outstanding. Two outstanding agreements with notional
amounts of $20 million each which converted the company's interest rate exposure
from fixed to floating were terminated and recognized in 1994 at a loss of
$487,000.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial instruments
was made in accordance with the requirements of SFAS No.107. The estimated fair
value amounts have been determined by the company using available market
information and appropriate valuation methodologies.
(In thousands) December 31, 1995 1994
Estimated Estimated
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- --------- -------- ---------
Assets:
Investments $ 5,067 $ 5,067 $ 10,000 $ 10,000
Liabilities:
Short-term debt 16,130 16,130 22,258 22,258
Long-term debt 281,093 300,313 331,289 322,059
Investments--In 1995 the company sold its shares of Mid Ocean Limited. The
company purchased an equity investment in Powec, a Norwegian manufacturer. The
carrying value of Powec approximates the company's interest in its underlying
net assets.
Short-term and 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.
COMMITMENTS AND CONTINGENCIES
The company leases certain facilities, vehicles and equipment under capital and
operating leases with various terms. Certain leases contain renewal or purchase
options. Future minimum payments, by year, and in the aggregate, under these
leases with initial or remaining terms of one year or more consisted of the
following at December 31, 1995:
Minimum
Capital Operating Sublease
(In thousands) Leases Leases Income Net
1996 $ 554 $11,315 $1,065 $10,804
1997 448 9,060 717 8,791
1998 366 6,550 485 6,431
1999 215 4,994 172 5,037
2000 204 3,243 160 3,287
Thereafter 1,077 9,001 309 9,769
------ ------- ------ -------
Total minimum
lease payments 2,864 $44,163 $2,908 $44,119
======= ====== =======
Interest (521)
Present value $2,343*
======
* Includes $420 due within one year.
The weighted average interest rate for capital leases is 7.54%.
Rental expense for all operating leases was $16,567,000, $16,164,000, and
$15,865,000 for 1995, 1994 and 1993, respectively.
The cost of assets capitalized under leases is as follows at December 31:
(In thousands) 1995 1994
---- ----
Buildings and improvements $ 7,056 $ 7,671
Machinery and equipment 7,619 8,286
------- -------
14,675 15,957
Less accumulated depreciation 12,278 13,181
------- -------
$ 2,397 $ 2,776
======= =======
The company has established insurance programs to cover product and general
liability losses. These programs have deductible amounts
of $5 million before coverage begins, with the exception of aircraft products
which have first dollar coverage. The company does not deem its deductible
exposure to be material.
At December 31, 1995, the company had received certain proposed notices of
adjustment to federal income tax and was involved in various claims and legal
actions arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not have a material
adverse effect on the company's financial condition and results of operations.
25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The company continues to be involved in various remediation actions to clean up
hazardous wastes as required by federal and state laws. Estimated future
environmental remediation cost was $15 million at December 31, 1995, which was
fully accrued. Not included in the accrual is the cost of cleaning one site for
approximately $3.6 million for which a full escrow was established when the
property was acquired in 1993. The company spent $10.3 million on environmental
costs in 1995, of which $7.0 million was spent in settling Crane's liabilities
in the San Fernando Valley Superfund sites in Burbank and Glendale, California.
Crane expects to pay remediation costs of approximately $3 million in 1996. The
annual level of future remediation expenditures is difficult to estimate because
of the many uncertainties relating to conditions of individual sites as well as
uncertainties about the status of environmental laws and regulations and
developments in remedial technology; however, the required remedial actions
being implemented or engineered are not individually or in the aggregate
expected to be material.
The company has also been advised by the Environmental Protection Agency (EPA)
that it is a potentially responsible party (PRP) with respect to the Roebling
Steel Company Superfund site in Roebling, New Jersey previously operated by a
former subsidiary, CF&I Steel Corporation. The company has advised the EPA that
it was not an owner or operator of the site and has rejected all assertions of
PRP status.
Crane Co. is a defendant in a class action arising out of the contamination of a
creek in eastern Ohio by a chemical pesticide sold under the trade name Mirex.
This chemical was not manufactured or sold by Crane but was manufactured by
another company, also a defendant, at a site adjacent to a Crane facility. The
complaint seeks compensatory damages of $10 million and a like amount in
punitive damages against Crane, and compensatory damages of $100 million and a
like amount in punitive damages against the manufacturer. Crane has asserted
cross-claims for contamination of its property and for indemnification against
any liability to the plaintiffs against the manufacturer, its foreign parent
company and the seller of the pesticide that arranged for its manufacture. The
lawsuit is currently scheduled for trial in November 1996. Based on data from
environmental studies available to date, the company believes that it not only
has meritorious defenses to the plaintiffs' class action but also has valid
claims against the other parties. Accordingly, the company believes that these
actions are not likely to have a material effect on its results of operations or
financial condition.
Crane Co. is a defendant in a lawsuit under the False Claims Act seeking treble
damages and attorneys' fees in connection with the assumption by the Pension
Benefit Guarantee Corporation of the unfunded pension liabilities (allegedly
$270 million) of CF&I Steel Corporation. The company believes the allegations
are without merit and will be dismissed either pursuant to the company's pending
motions for summary judgment or at trial, which is currently scheduled for June
1996. Accordingly, the company believes the lawsuit is not likely to have a
material effect on the company's results of operations or financial condition.
In January 1996, the company's subsidiary Crane Canada, Inc. was served as the
defendant in an action, which is seeking class certification, alleging damages
to property from water escaping from toilet tanks manufactured by Crane Canada.
Crane Canada has settled past claims for property damage arising from water
escaping from cracked toilet tanks on a case by case basis. At December 31, 1995
approximately 1,000 known claims were outstanding. At the present time, the
company does not have sufficient information to determine whether the new legal
action will have a material impact on its liabilities. Based on the historical
trends for claims related to cracked toilet tanks and the experience of Crane
Canada in resolving such claims, the company believes that it has established
sufficient accruals and that pending and reasonably anticipated future claims
are not likely to have a material effect on its results of operations or
financial condition.
As of December 31, 1995, Crane Co. was a defendant (among a number of
defendants, typically 15 to 40) in approximately 9,500 actions filed in various
state and federal courts alleging injury or death as a result of exposure to
asbestos in products allegedly manufactured or sold by the company. Of these
claims, approximately 8,500 were filed in 1995. Because of the unique factors
inherent in each case and the fact that most are in preliminary stages, the
company lacks sufficient information upon which judgments can be made as to
their validity or ultimate disposition. Based on the limited information
available to the company and its experience in the disposition of lawsuits of
this type, the company believes that pending and reasonably anticipated future
asbestos actions are not likely to have a material effect on its results of
operations or financial condition.
ACQUISITIONS, DIVESTITURES AND INVESTMENTS
The company always reviews potential acquisition candidates with market and
technology positions that provide meaningful opportunities in the markets in
which it already has a presence, or which afford significant financial reward,
and may possibly dispose
of operations when consistent with its overall goals and strategies.
During 1995, the company completed three acquisitions at a cost of $9.4 million.
In February the company, through its Barksdale subsidiary, acquired Unimess
GmbH, a German-based manufacturer of a full line of solid state pressure
switches and transducers, level switches and indicating systems, and flow
measurement and control components for specialized instrumentation requirements
in numerous industrial processes. In the fourth quarter, the company acquired
Process Systems, Inc. based in Michigan. Process Systems
26
<PAGE>
is a manufacturer of vertical turbine pumps and accessories for industrial
applications. In November 1995, the company acquired Kessel PTE Ltd., a
fluoropolymer plastic lined pipe manufacturer with facilities in Singapore,
Malaysia and Thailand. In September, ELDEC made a 47% equity investment in
Powec, a Norwegian manufacturer of power conditioning products and systems.
During 1994, the company completed three acquisitions at a cost of $240 million,
including debt. In May the company, through its wholly-owned subsidiary Huttig
Sash & Door Company, acquired a moulding and millwork manufacturing operation in
Prineville, Oregon. In April the company purchased Mark Controls Corporation, a
manufacturer of automatic and manually operated valves, specialized electronic
and mechanical instruments and controls, regulators, and pneumatic and
electronic controllers. In March the company acquired ELDEC Corp., whose
products are used worldwide on nearly every aircraft model and include:
proximity switches and sensing systems, power conversion equipment, fuel flow
measurement systems, data acquisition, monitoring and control equipment; flat
panel displays and integrated modular systems.
In 1993, the company completed five acquisitions at a cost of approximately $106
million, which included Burks Pumps and Filon. The three remaining acquisitions
included two Huttig distribution businesses and the purchase of Perflow by Crane
U.K., Ltd.
In 1994, the company sold Modulinc, the fiber optic channel product line of
ELDEC and excess ELDEC facilities for $14.3 million. In December, 1994, Huttig
sold its window manufacturing business for $2.4 million. The Huttig transaction
excluded real estate and receivables.
During March, 1993 the company sold the precision ordnance business of its
subsidiary, Unidynamics/Phoenix, Inc. for $6 million.
All acquisitions were accounted for by the purchase method. The results of
operations for all acquisitions have been included in the financial statements
from their respective dates of purchase.
STOCK OPTIONS AND STOCK AWARD PLANS
A summary of stock option transactions follows:
Number of Shares 1995 1994 1993
- ---------------- ---- ---- ----
Outstanding January 1 1,505,669 1,277,674 1,215,966
Options granted 336,000 349,500 287,000
Options cancelled (47,000) (38,563) (8,500)
Options exercised (396,575) (82,942) (216,792)
Outstanding December 31 1,398,094 1,505,669 1,277,674
At December 31, 1995, options for 847,844 shares were exercisable and 854,447
shares were available for grant. Per share option prices ranged from $10.13 to
$34.44.
The company's Restricted Stock Award Plan provides for awards of common stock to
key officers and employees, subject to resale restrictions. The restrictions on
outstanding awards are scheduled to lapse upon the achievement of certain
performance objectives or over time.
In 1993, the shareholders approved an amendment to the company's Restricted
Stock Award Plan, extending the expiration date from April 30, 1993 to May 30,
1998 and increasing as of May 10, 1993 the common shares available for grant to
500,000 shares. The company awarded 303,900 shares in 1995, of which 129,000
shares were awarded with restrictions based on lapse of time. As of December 31,
1995, 72,100 shares are available for future awards.
Pursuant to the Non-Employee Director Restricted Stock Plan, non-employee
directors received 2,320 shares of company stock as a group in 1995. Directors
who are not full-time employees of the company receive the portion of their
annual retainers which exceeds $15,000 in shares of common stock. The shares are
issued each year after the company's annual meeting, are forfeitable if the
director ceases to remain a director until the company's next annual meeting,
and may not be sold for a period of five years, or until the director leaves the
Board.
PREFERRED SHARE PURCHASE RIGHTS
In 1988, the company distributed one preferred share purchase right for each
outstanding share of common stock. The preferred rights were not exercisable
when granted and may only become exercisable under certain circumstances
involving actual or potential acquisitions of the company's common stock by a
person or affiliated persons. Depending upon the circumstances, if the rights
become exercisable, the holder may be entitled to purchase shares of the
company's Series A Junior Participating Preferred Stock, or shares of common
stock of the acquiring person. Preferred shares purchasable upon exercise of the
rights will not be redeemable. Each preferred share will be entitled to
preferential rights regarding dividend and liquidation payments, voting power,
and, in the event of any merger, consolidation or other transaction in which
common shares are exchanged, preferential exchange rate. The rights will remain
in existence until June 27, 1998, unless they are earlier terminated, exercised
or redeemed. The company has authorized five million shares of $.01 par value
preferred stock.
ANALYSIS BY SEGMENT OF BUSINESS
An analysis of sales, operating profit, assets, capital expenditures and
depreciation and amortization appears on page 28 and 29.
27
<PAGE>
ANALYSIS BY SEGMENT (In thousands)
Crane Co. is a diversified manufacturer of engineered industrial products and
the largest American distributor of doors, windows and millwork.
<TABLE>
<CAPTION>
1995 1994 1993
----------------------------------------------------------------
Amount % Amount % Amount %
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales:
Industry Segments:
Fluid Handling $ 343,751 19 $ 309,969 18 $ 197,656 15
Aerospace 216,161 12 160,843 10 99,587 7
Engineered Materials 202,073 11 201,868 12 161,759 12
Crane Controls 131,127 7 87,973 5 35,009 3
Merchandising Systems 183,082 10 168,543 10 166,668 13
Wholesale Distribution 710,844 40 730,646 44 655,218 49
Other 11,520 1 12,501 1 14,945 1
---------- --- ---------- --- ---------- ---
1,798,558 100 1,672,343 100 1,330,842 100
Intersegment Sales (16,248) (18,877) (20,637)
---------- ---------- ----------
$1,782,310 $1,653,466 $1,310,205
========== ========== ==========
Geographic Region:
United
States $1,428,495 78 $1,348,285 80 $1,031,724 77
Canada 173,312 10 161,492 10 171,576 13
Other International 208,885 12 164,224 10 135,752 10
---------- --- ---------- --- ---------- ---
1,810,692 100 1,674,001 100 1,339,052 100
Interregional Sales (28,382) (20,535) (28,847)
---------- ---------- ----------
$1,782,310 $1,653,466 $1,310,205
========== ========== ==========
Operating Profit:
Industry Segments:
Fluid Handling $ 19,723 12 $ 19,062 16 $ 8,855 9
Aerospace 56,030 35 31,316 26 31,159 32
Engineered Materials 22,911 15 22,987 19 15,493 16
Crane Controls 11,322 7 4,438 4 865 1
Merchandising Systems 23,573 15 23,167 19 17,998 18
Wholesale Distribution 25,032 16 20,007 17 22,679 23
Other (629) -- (749) (1) 789 1
---------- --- ---------- --- ---------- ---
157,962 100 120,228 100 97,838 100
---------- ---------- ----------
Corporate (15,150) (10,347) (12,279)
Intersegment Elimination 136 8 297
---------- ---------- ----------
$142,948 $ 109,889 $ 85,856
========== ========== ==========
Geographic Region:
United States $ 143,672 91 $ 114,091 95 $ 94,751 97
Canada 3,094 2 2,623 2 3,930 4
Other International 11,332 7 3,522 3 (546) (1)
---------- --- ---------- --- ---------- ---
158,098 100 120,236 100 98,135 100
Corporate (15,150) (10,347) (12,279)
---------- ---------- ----------
$142,948 $ 109,889 $ 85,856
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
28
<PAGE>
<TABLE>
<CAPTION>
Crane Co.
1995 1994 1993
Amount % Amount % Amount %
<S> <C> <C> <C> <C> <C> <C>
Assets:
Industry Segments:
Fluid Handling $ 261,201 27 $ 240,789 25 $174,789 26
Aerospace 166,599 18 169,303 18 59,289 9
Engineered Materials 100,579 11 101,069 11 113,326 17
Crane Controls 128,523 13 122,353 13 21,321 3
Merchandising Systems 88,936 9 87,846 9 82,396 12
Wholesale Distribution 197,528 21 222,876 23 207,716 31
Other 10,796 1 12,608 1 12,638 2
-------- --- ---------- --- -------- ---
954,162 100 956,844 100 671,475 100
Corporate 44,249 51,201 72,690
-------- ---------- --------
$998,411 $1,008,045 $744,165
======== ========== ========
Geographic Region:
United States $760,536 80 $ 781,136 82 $513,649 76
Canada 86,163 9 83,653 9 84,194 13
Other International 107,463 11 92,055 9 73,632 11
-------- --- ---------- --- -------- ---
954,162 100 956,844 100 671,475 100
Corporate 44,249 51,201 72,690
-------- ---------- --------
$998,411 $1,008,045 $744,165
======== ========== ========
Capital Expenditures:
Industry Segments:
Fluid Handling $ 5,678 $ 7,825 $ 5,935
Aerospace 3,589 2,671 2,001
Engineered Materials 3,177 6,384 4,227
Crane Controls 3,174 2,043 880
Merchandising Systems 9,161 6,484 10,663
Wholesale Distribution 1,451 2,580 8,615
Other 146 112 169
Corporate 227 100 6,348
-------- ---------- --------
$26,603 $ 28,199 $ 38,838
======== ========== ========
Geographic Region:
United States $ 20,522 $ 19,176 $ 31,999
Canada 1,975 2,726 3,182
Other International 4,106 6,297 3,657
-------- ---------- --------
$26,603 $ 28,199 $ 38,838
======== ========== ========
Depreciation and Amortization:
Industry Segments:
Fluid Handling $ 10,866 $ 10,029 $ 5,107
Aerospace 9,896 9,133 3,137
Engineered Materials 5,499 6,558 5,896
Crane Controls 6,760 5,199 2,325
Merchandising Systems 4,929 4,736 3,605
Wholesale Distribution 6,534 6,493 5,279
Other 493 655 694
Corporate 3,788 1,888 3,377
-------- ---------- --------
$48,765 $ 44,691 $ 29,420
======== ========== ========
Geographic Region:
United States $ 40,915 $ 37,632 $ 22,372
Canada 3,051 3,202 3,264
Other International 4,799 3,857 3,784
-------- ---------- --------
$48,765 $ 44,691 $ 29,420
======== ========== ========
</TABLE>
29
<PAGE>
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying consolidated financial statements of Crane Co. and subsidiaries
have been prepared by management in conformity with generally accepted
accounting principles and, in the judgment of management, present fairly and
consistently the company's financial position and results of operations and cash
flows. These statements by necessity include amounts that are based on
management's best estimates and judgments and give due consideration to
materiality.
The accounting systems and internal accounting controls of the company are
designed to provide reasonable assurance that the financial records are reliable
for preparing consolidated financial statements and maintaining accountability
for assets and that, in
all material respects, assets are safeguarded against loss from unauthorized use
or disposition. Qualified personnel throughout the organization maintain and
monitor these internal accounting controls on an ongoing basis. In addition, the
company's internal audit department systematically reviews the adequacy and
effectiveness of the controls and reports thereon. The consolidated financial
statements have been audited by Deloitte & Touche LLP, independent auditors,
whose report appears on this page.
INDEPENDENT AUDITORS' REPORT
DELOITTE &
TOUCHE LLP
- -----------
[LOGO]
TO THE SHAREHOLDERS OF CRANE CO.
We have audited the accompanying consolidated balance sheets of Crane Co. and
its subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of income, cash flows and changes in common shareholders' equity for
each of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
The Audit Committee of the Board of Directors, composed solely of outside
directors, meets periodically with management and with the company's internal
auditors and independent auditors to review matters relating to the quality of
financial reporting and internal accounting control and the nature, extent and
results of their audits. The company's internal auditors and independent
auditors have free access to the Audit Committee.
/s/ R. S. Evans
R. S. Evans
Chairman and Chief Executive Officer
/s/ David S. Smith
D. S. Smith
Vice President--Finance and Chief Financial Officer
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Crane Co. and its subsidiaries at
December 31, 1995 and 1994, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Stamford, Connecticut
January 22, 1996
30
<PAGE>
Crane Co.
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA (In thousands except per share
data)
<TABLE>
<CAPTION>
Years Ended December 31, 1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET SALES $1,782,310 $1,653,466 $1,310,205 $1,306,977 $1,302,532
Depreciation and Amortization 48,765 44,691 29,420 28,530 28,411
OPERATING PROFIT 142,948 109,889 85,856 45,244 78,902
Interest Expense 26,913 24,171 11,396 14,464 11,540
INCOME BEFORE TAXES 121,468 91,227 79,818 38,689 72,405
PROVISION FOR INCOME TAXES (45,131) (35,294) (30,925) (14,403) (27,412)
---------- ---------- ---------- ---------- ----------
INCOME FROM OPERATIONS $ 76,337 $ 55,933 $ 48,893 $ 24,286 $ 44,993(a)
========== ========== ========== ========== ==========
INCOME PER COMMON SHARE
Primary $ 2.50 $ 1.86 $ 1.62 $ .79 $ 1.42(a)
Fully Diluted 2.49 1.85 1.61 .78 1.41(a)
CASH DIVIDENDS PER COMMON SHARE $ .75 $ .75 $ .75 $ .75 $ .75
ASSETS $ 998,411 $1,008,045 $ 744,165 $ 630,211 $ 630,237
LONG-TERM DEBT $ 281,093 $ 331,289 $ 105,557 $ 111,048 $ 83,847
---------- ---------- ---------- ---------- ----------
(a) Income before cumulative effect of a change in accounting for postretirement
benefits other than pensions of $22,341 ($.70 per share).
<CAPTION>
QUARTERLY RESULTS FOR THE YEAR (In thousands except per share data)
Quarter Year
-----------------------------------------------------------
First Second Third Fourth
----- ------ ----- -------
<S> <C> <C> <C> <C> <C>
1995
Net Sales $ 432,578 $ 451,479 $ 453,344 $ 444,909 $1,782,310
Cost of Sales 323,458 332,763 336,860 323,240 1,316,321
Depreciation and Amortization 10,001 9,977 9,903 9,736 39,617
---------- ---------- ---------- ---------- ----------
Gross Profit $ 99,119 $ 108,739 $ 106,581 $ 111,933 $ 426,372
---------- ---------- ---------- ---------- ----------
Net Income $ 13,275 $ 20,117 $ 22,029 $ 20,916 $ 76,337
Primary Net Income Per Share $ .44 $ .66 $ .71 $ .69 $ 2.50
---------- ---------- ---------- ---------- ----------
1994
Net Sales $ 331,705 $ 428,729 $ 451,108 $ 441,924 $1,653,466
Cost of Sales 259,754 324,769 339,806 329,083 1,253,412
Depreciation and Amortization 6,523 9,573 10,881 10,182 37,159
---------- ---------- ---------- ---------- ----------
Gross Profit $ 65,428 $ 94,387 $ 100,421 $ 102,659 $ 362,895
---------- ---------- ---------- ---------- ----------
Net Income $ 7,409 $ 15,666 $ 16,002 $ 16,856 $ 55,933
Primary Net Income Per Share $ .25 $ .52 $ .53 $ .56 $ 1.86
---------- ---------- ---------- ---------- ----------
MARKET AND DIVIDEND INFORMATION-CRANE CO. COMMON SHARES
<CAPTION>
New York Stock Exchange Composite Price Per Share Dividends Per Share
1995 1994 1995 1994
----------------------------------------------------------------------------------------
Quarter HIGH LOW High Low
- ------- ---- --- ---- ----
<S> <C> <C> <C> <C> <C> <C>
First $ 31 $ 25 7/8 $ 29 1/2 $ 24 3/4 $.1875 $ .1875
Second 38 5/8 30 1/8 27 1/4 24 1/8 .1875 .1875
Third 39 1/2 30 27 1/4 24 1/4 .1875 .1875
Fourth 38 3/8 32 3/4 27 7/8 24 7/8 .1875 .1875
$.75 $ .75
</TABLE>
At December 31, 1995 there were approximately 6,000 holders of record of
Crane Co. common stock.
See Notes to Consolidated Financial Statements
31
<PAGE>
SHAREHOLDER INFORMATION
FORM 10-K
Copies of Crane Co.'s report on Form 10-K for 1995 as filed with the Securities
and Exchange Commission are available upon written request from the Secretary's
Office at Crane Co., 100 First Stamford Place, Stamford, CT 06902
ANNUAL MEETING
The Crane Co. annual meeting of shareholders will be held at 10:00 a.m. on
Monday, May 6, 1996 at the Sheraton Stamford Hotel, One First Stamford Place,
Stamford, CT 06902 in the Rainbow Meeting Room.
STOCK LISTING
Crane Co. common stock is traded on the New York Stock Exchange, listed under
the symbol "CR".
AUDITORS
Deloitte & Touche LLP
Stamford Harbor Park
Stamford, CT 06902
EQUAL EMPLOYMENT OPPORTUNITY POLICY
Crane Co. is an equal opportunity employer. It is the policy of the company to
recruit, hire, promote and transfer to all job classifications without regard to
race, color, religion, sex, age, disability or national origin.
ENVIRONMENT, HEALTH & SAFETY POLICY
Crane Co. is committed to protecting the environment and will strive to protect
the biosphere by taking responsibility to prevent serious
or irreversible environmental degradation through efficient operations and
activities.
Crane Co. recognizes environmental management among its highest priorities
throughout the corporation, and has established policies and programs which are
integral and essential elements of the business plan of each of the business
units.
Crane Co. will strive to minimize environmental, health and safety risks to all
its employees, and to public health in the communities in which it operates, by
utilizing safe technologies, training programs and emergency preparedness.
Crane Co. will seek to continually improve the development, design and operation
of its facilities through the efficient use of energy and the sustainable use of
renewable resources, minimizing adverse environmental impact through waste
reduction, recycling and responsible waste disposal.
Crane Co. will manufacture and produce products or services that minimize
environmental impact and that are safe when properly used and maintained, and
will promote the adoption of these principles by its contractors and suppliers.
Crane Co. will promptly communicate to all affected persons the known hazards
and safeguards associated with its manufacturing processes and activities while
utilizing good science and research to define and efficiently manage all
significant risks.
Crane Co. has committed management resources to these goals by adopting the
above policies, and by establishing the position of Vice President-Environment,
Health and Safety, which is responsible for assuring compliance, measuring
environmental performance and conducting regular environmental audits in order
to provide appropriate information to the Crane Co. management team and to
regulatory authorities.
STOCK TRANSFER AGENT AND REGISTRAR OF STOCK
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Customer Service: 1-201-324-1225
Non-Postal Deliveries
14 Wall Street; Ste. 4680
New York, NY 10005
Dividend Reinvestment & Optional Payments
P.O. Box 13531
Newark, NJ 07188-0001
General Correspondence & Changes of Address
P.O. Box 2500
Jersey City, NJ 07303-2500
Transfer of Stock Certificates
P.O. Box 2506
Jersey City, NJ 07303-2506
BOND TRUSTEE AND DISBURSING AGENT
THE BANK OF NEW YORK
Corporate Trust Department: 1-800-438-5473
101 Barclay Street
New York, NY 10286
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Crane offers shareholders the opportunity to participate in a Dividend
Reinvestment and Stock Purchase Plan. The plan provides two convenient methods
for increasing your investment in Crane Co. common shares, without paying fees
and commissions.
DIVIDEND REINVESTMENT: for all or part of your dividends on Crane common
shares; and
VOLUNTARY CASH PAYMENTS: of any amount from $10 to a maximum of $5,000 a
month.
Under terms of the Plan, First Chicago Trust Company of New York will act as
agent for shareholders interested in purchasing additional Crane common shares
automatically, on a regular basis.
The details of this plan and its benefits to you as a Crane shareholder are
described in a brochure available by writing to:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Dividend Reinvestment Plan
Crane Co.
Post Office Box 2598
Jersey City, NJ 07303-2598
32
<PAGE>
DIRECTORS
MONE ANATHAN, III [2]
President, Filene's Basement Corp.
Retailer
E. THAYER BIGELOW, JR. [1,2]
President and Chief Executive Officer
Time Warner Cable Programming Inc.
ROBERT S. EVANS [1]
Chairman and Chief Executive Officer of the Company
RICHARD S. FORTE [2]
President, Forte Cashmere Company, Inc.
Importer and Manufacturer
DORSEY R. GARDNER [2,3]
President, Kelso Management Co., Inc.
Investment Management
JEAN GAULIN [3]
Chairman and Chief Executive Officer
Ultramar Corporation
DWIGHT C. MINTON [1,3]
Chairman, Church & Dwight Co., Inc.
Manufacturer of Consumer and Specialty Products
CHARLES J. QUEENAN, JR. [2]
Partner, Kirkpatrick & Lockhart LLP
Attorneys at Law
BORIS YAVITZ [1,3]
Dean Emeritus, Columbia University
Graduate School of Business
CORPORATE OFFICERS
ROBERT S. EVANS
Chairman and Chief Executive Officer
L. HILL CLARK
President and Chief Operating Officer
ROBERT J. MULLER, JR.
Executive Vice President
GIL A. DICKOFF
Treasurer
AUGUSTUS I. duPONT
Vice President, General Counsel and Secretary
ANTHONY D. PANTALEONI
Vice President, Environment, Health and Safety
RICHARD B. PHILLIPS
Vice President, Human Resources
MICHAEL L. RAITHEL
Controller
DAVID S. SMITH
Vice President, Finance and Chief Financial Officer
[1] Member of the Executive Committee
[2] Member of the Audit Committee
[3] Member of the Organization and Compensation Committee
<PAGE>
[Logo]
CRANE(R)
CRANE CO.
EXECUTIVE OFFICES
100 First Stamford Place
Stamford, CT 06902
(203) 363-7300
<PAGE>
EXHIBIT 21
CRANE CO.
EXHIBIT D TO FORM 10-K
ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1995
SUBSIDIARIES OF REGISTRANT
The following is a list of active subsidiaries of the registrant and
their jurisdictions of incorporation. All of these subsidiaries are wholly-
owned, directly or indirectly, and all are included in the consolidated
financial statements. The names of several other subsidiaries have been omitted
as they would not, if considered in the aggregate as a single subsidiary,
constitute a significant subsidiary. Subsidiaries of subsidiaries are indicated
by indentation.
Crane Australia Pty., Limited Australia
Crane Canada Inc. Canada
Crane Limited Great Britain
Crane Pumps & Systems, Inc. Delaware
Dyrotech Industries, Inc. Delaware
ELDEC Corporation Delaware
Huttig Sash & Door Company Delaware
Kemlite Company, Inc. Delaware
Mark Controls Corporation Delaware
Barksdale GmbH Germany
Powers Process Controls Limited Canada
Westad Industri A.S. Norway
UniDynamics Corporation Delaware
Crane, GmbH Germany
National Rejectors, Inc. GmbH Germany
Ferguson Machine Company, S.A. Belgium
Unidynamics/St. Louis, Inc. Delaware
Unidynamics/Phoenix, Inc. Delaware
<PAGE>
EXHIBIT E
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No. 33-
44688 on Form S-8, Post-Effective Amendment No. 2 to Registration Statement No.
33-18251 on Form S-8, Registration Statement No. 33-22700 on Form S-8 and Post-
Effective Amendment No. 7 to Registration Statement No. 33-22904 on Form S-8 of
our reports dated January 22, 1996, appearing in and incorporated by reference
in this Annual Report on Form 10-K of Crane Co. for the year ended December 31,
1995.
/s/ Deloitte & Touche LLP
Stamford, Connecticut
March 18, 1996
